High house prices 'a threat to the middle class'

Housing affordability is getting worse around the country, not just in the major centres. Photo:...
Housing affordability is getting worse around the country, not just in the major centres. Photo: ODT files
The Dunedin housing market is more unaffordable than Wellington's according to a new report.

This comes as nurses, teachers and other middle class professionals are increasingly unable to buy homes in the cities where they work, with every housing market in the country now rated "severely unaffordable".


The 16th annual Demographia International Housing Affordability Survey released today, which examines 309 housing markets in eight countries, rated all eight markets in New Zealand as "severely unaffordable".

Tauranga-Western Bay of Plenty was the least affordable, costing 9.3 times the local median wage, edging out Auckland at 8.6, followed by Napier-Hastings, Hamilton, Dunedin, Wellington, Palmerston North and Christchurch.

Housing unaffordability grew at a rapid rate in Dunedin over last year's report, when the average price was 6.1 times the median wage, and the city has now overtaken Wellington in the unaffordability stakes.

In the latest report the average house price in Dunedin was 6.9 times the median wage, compared to 6.8 for Wellington.

Angus Dreaver said he and his partner spent eight months looking for a house last year before giving up.

"We both work in Wellington and we ended up looking around Paekakariki/Kāpiti area but then the transport costs started to weigh out the costs of having a cheaper house.

"Every time we saw something we thought we could afford, it turned out there's like $20,000 worth of work that needs to be done.

"It starts to grind you down after a while and you start losing a lot of hope."

The couple, who are in their mid-20s, earn $8000 too much to qualify for the government's $10,000 HomeStart grant.

"It just feels like we're kind of stuck in the middle where we are doing too well to qualify for assistance, but not well enough to actually afford a house."

According to the Demographia report, it cost seven times the median wage to buy a house in the third quarter of last year, up from six and a half times the median wage the year before.

Co-author Hugh Pavletich said there was no doubt housing affordability was getting worse.

"This survey is a huge wake-up call basically for all involved at central and local government.

"The whole situation has moved from a crisis to a disaster."

Pavletich said high house prices were "a threat to the middle class".

And that was a problem for everyone because the middle class includes teachers, nurses, firefighters, police officers, social workers.

"It's a massive social problem."

Wellington Hospital nurse Katrina Hopkinson feels lucky to own her own home, but she said many of her colleagues had no hope of getting a mortgage.

"The nearest bank to Wellington Hospital has been telling nurses that if they want to afford a house in Wellington, they should leave nursing."

Some were leaving for Australia.

Others were buying in Hutt Valley and on Kāpiti Coast, so they would not be able to get to work in the event of a disaster like a major earthquake, she said.

Meanwhile, the number of people on the waiting list for state housing has more than doubled in the last two years to just under 14,000.

The government has budgeted more than $2 billion this financial year for rent subsidies and emergency housing grants.

Hugh Pavletich said the most effective strategy to help low income households was to "improve middle-income housing affordability".

He is optimistic that legislation currently before Parliament to relax planning rules and allow councils to pay for infrastructure over time will make housing more affordable.

But meanwhile, councils should free up more land for development, he said.

However, economist Shamubeel Eaqub said developers were not interested in building affordable houses or houses to rent.

"That kind of belief that somehow if you build enough really expensive houses it will trickle down to help people at the bottom is a bit misplaced.

"There are specific parts of the market - particularly the small, more affordable end of the market - that the market is not very good at supplying.

"So it's not as simple as saying we need to open up more land."

The hundreds of thousands of New Zealanders languishing in over-crowded or substandard housing could not afford to wait for long term structural change, he said.

"The government needs to start building more social housing now."


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"economist Shamubeel Eaqub said developers were not interested in building affordable houses or houses to rent."
"The government needs to start building more social housing now."
So lets get this story straight.
Because the government has set rules on local councils that makes developing new housing estates or even revitalizing existing areas, excessively complex, time consuming and expensive, the private sector only builds for the top end of the market, therefore government needs to build more state housing, especially for our state employees, regardless of the fact that many recently received big pay increases.
This message is of course, conveyed to us by our state funded, legacy media.
Orwell's 1984 is alive and well in NZ.
Look forward to hearing what the Ministry of Plenty's message will be, for the upcoming election.

And exactly what are DCC's policies to help contain home costs. Yeah, I think that would be minimise land release for housing, oppose almost all subdivisions, add as much red tape as possible to every building application. Try make every home as ecologically "advanced" as they deem fit. That all helps push prices up.
Yes, Greens talk a lot, but do almost nothing to support people to get into their own home.
Funny how the new mayor and his greens cohort have been invisible for the past 6 months. Other than opposing oil drilling or trying to change national policy of course. Just what has the mayor been doing - he surely can't still be waiting for a lift into town can he?

Low interest rates stoking 'investments' in property pricing people out. Large corporate investors with access to low interest funding which we plebians can not access. Add in excessive immigration to 'improve NZ's GDP growth' also contribute to our housing crises. Both these are the main reasons for the high prices and the government controls both factors directly or indirectly.

Social housing works, and no-where has it worked as well as it did in New Zealand following the war. We were the envy of the world at the time and many other countries looked to us to see how to do it.
Today's problem has evolved slowly since then, with a lost focus on keeping the process and costs efficient.
-Housing density in New Zealand is really low, councils need to allow more.
-Materials are restricted to minimum options due to heavy regulation.
-Materials are only sold by a few big players, creating an oligopoly.
-Consenting is expensive and very much a black (or at least grey) box.
-The building code doesn't allow proven, but innovative designs.
-Training for a trade is not as attractive, with too much classroom time.
-Subdividing is expensive and full of unknown costs, putting people off.
-Tenants are treated as second class citizens, encouraging unscrupulous landlords and a demand for ownership.
These problems are not all unique to New Zealand and most have been solved elsewhere. Research into other markets in the world, with comparisons and insights for our own market, could yield a comprehensive set of changes to solve these and more problems over time.

Well said

The dcc, Dave cull and Aaron Hawkins have let Dunedin down.
This lack of housing has been 9 years in the making when John key relaxed migration
Its no great surprise

if they are already a threat to the middle class what hope is there for those hoping to be middle class . We now have an actual class system where upward mobility is almost impossible. Welcome to modern serfdom where land owners are the new lords and ladies and the rest barely survive .

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