Auckland is the world’s 8th least affordable place in the world for housing as outlined in the latest Bloomberg results for January 2020.
Recent Housing Crisis headline news by Tauranga Mayor Tenby Powell demonstrates that the issue continues to be a major issue facing most New Zealanders.
It doesn’t look like this issue is going to change anytime soon as New Zealand’s population continues to grow especially in the “Golden Triangle” of Auckland, Hamilton and Tauranga.
The lack of affordable housing is likely to be another major campaign issue during the 2020 New Zealand Elections since the failure of the KiwiBuild program to deliver on large scale housing solutions.
The New Zealand Government announced that KiwiBuild affordable housing in Auckland and Queenstown would be $650,000 and $500,000 in the rest of the country. So, why does this still seem to be out of the reach of many New Zealanders?
Affordable housing is defined internationally that no more than 30 percent of your monthly gross income contributes to your rent or mortgage payments. This is well recognised internationally as the affordable housing standard but in New Zealand one in four households spend more than half of their income on housing costs.
So, if you take the median gross household income in New Zealand of $80,354 (Census 2019) and use the government website www.sorted.org.nz you realise that 30% ($463 per week) of your gross household income paid on mortgage payments would net you a House & Land package of $495,000 (this would include a mortgage of $450k at 3.4% for a term of 30 years with a deposit of $45k).
However according to REINZ, house prices in New Zealand soared in 2019 by 12.3% to $629,000. Which means that for more than 50% of New Zealanders the cost of buying a house is not affordable.