Solving the NZ and Australia housing crisis

It takes 18.6 years for the median household to buy the median house in NZ, and that’s excluding rates, taxes and maintenance. That’s via NBR, wo curiously neglect to mention that there is a giant photo of Don Brash on page 2 of the original Household Affordability report, as he is the Chairman of something called the Centre for Resource Management Studies. His commens about the downunder situation are telling:

Australia is perhaps the least densely populated major country in the world, but state governments there have contrived to drive land prices in major urban areas to very high levels

Governments continue to pretend that they are powerless to make housing more affordable or, worse still, implement futile interventions which make the situation worse, as the New Zealand government is proposing for this year

and from the executive summary:

 The housing affordability crisis is most pervasive in Australia and New Zealand…

The least affordable markets are generally in California, Hawaii, the US East Coast, Australia, the United Kingdom, New Zealand and Canada’s province of British Columbia.

Wellington comes in at 56th equal (or 50th) least affordable market, after Taranga, Auckland, Christchurch and Hamilton. Indeed:

New Zealand is the only surveyed nation in which all of its markets are rated “severely unaffordable.”

Meanwhile, over here in West Australia, there are Mandurah (6th worst in the world) and Rockingham (24th), which are closer to where I’m currently working than Perth itself (19th). That’s got to relate back to local planning laws, as well as the mining-related boom.
The report points to larger scale migration between cities, and notes that

A Sydney resident can save nearly $650,000 by moving to Adelaide, the equivalent of 13 years median income in Adelaide

And the solution? Again – let’s quote the report:

It is necessary to restore housing affordability to sustain the quality of life. Governments committed to a better future need to focus on (1) Allowing housing to be built on low-cost land in the urban fringe and (2) Removing unreasonable infrastructure charges on home buyers. In this process, governments can be aided by monitoring and publishing performance indicators, especially the Median Multiple.

Published by Lance Wiggs


One reply on “Solving the NZ and Australia housing crisis”

  1. The report quotes selected market statistics and has generated broad media coverage. What I think it fails to understand is the drivers of demand. It simply looks at supply side constraints.

    I read the book “The Rise of the Creative Class” by Richard Florida many years ago and believe this is the driver of these situations of rising house prices – simple economics, smart people seek out smart places to live and work, capital follows smart people and companies follow the money = demand increasing faster than supply and you have rising prices above rate of income growth.

    The reason for the growth in WA prices is global commodity demand for raw materials to feed China’s appetite for growth – an knock effect of the same situation

    Have a comment on my posting on this report and my views of the drivers of demand


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