Wednesday 5 June 2024

NZ housing still severely unaffordable

Demographia's annual study on housing affordability around the world has just been released for 2024.

The good news is that Auckland has become marginally more affordable. 


The bad news is that still doesn't mean it's anywhere near affordable. And one major reason for that good news has been in abeyance since the last election campaign.

A city's Affordability Index is generally measured as the city's median house price divided by its median annual salary.  Increased densification allowed under the new Unitary Plan and then the Labour-National bipartisan agreement on house-building (essentially  relaxing rules to allow 3 story 3-unit developments "as of right"), allowed a brief period in which more building was allowed to be done, and was. The effect was to reduce Auckland's Index Number from the severely affordable  8.6 (i..e, median house price was 8.6 times median annual salary) to the still frightening 8.3 (the number should be much closer to 3.0).

That puts Auckland squarely in the top rank of the world's unaffordable cities, edging out more affordable cities such as Miami and Greater London (8.1), New York, NY-NJ-PA (7.0), and Brisbane and Perth (8.1, 6.8).

The graph showing building consents up to mid-2022 tells the increased-supply part of the good story. Research reinforces it: "Five years after zoning regulations were relaxed across more than three-quarters of Auckland, Dr Greenaway-McGrevy's research has found the changes have resulted in more than 20,000 additional homes across the city."

The even more bad news however is that building has almost slowed to a halt since National backtracked on that bipartisan agreement — "figures from Statistics NZ show building consents were issued for 2931 new dwellings throughout the country in March. That's down 26.2% compared to the 3971 consents issued in March last year." In Auckland, the number of consents issued dropped by 30.6%! Housing researcher Dr Greenaway-McGrevy now says "any future benefit from the up-zoning change now had a 'question mark over it'."

You can blame the big mouth of Christopher Luxon and his housing minister for much of that.

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