Tauranga has outstripped London to rank as the eighth most expensive housing market in the world, according to a global study out today, heading off cities like San Francisco and Toronto.
The 15th annual Demographia International Housing Affordability Study compared house prices to incomes in New Zealand, Australia, Canada, Hong Kong, Ireland, Japan, Singapore, the United Kingdom and the United States and found Tauranga had again out-stripped Auckland as this country's least affordable.
The world's most expensive city is Hong Kong, followed by Vancouver, Sydney, Melbourne, Santa Cruz, San Jose, Los Angeles - and then Tauranga.
Tauranga residents have a median household income of $68,800/year yet its houses are a median $623,000 meaning it takes people in that city just over nine years to pay off a house, were they to pour every cent into their repayments.
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In Auckland, it takes a slightly shorter time because although that city's houses are a median $845,000, Aucklanders' median household income is $94,400/year, Demographia said.
Hamilton-Waikato is next least affordable, followed by Napier-Hastings, Wellington, Dunedin, Christchurch and Palmerston North-Manawatu.
"New Zealand's housing affordability has a severely unaffordable median multiple of 6.5," Demographia said. That is, using all a household income, it would take six-and-a-half years to pay off a median-priced home in this country.
The study blamed what it called "urban containment policies" or ring-fencing cities which it says has led to a land scarcity and pushed up house prices. Housing had been unaffordable in this country for the last quarter of a century, it said.
"Public opinion placed the issue of housing affordability to the top of the policy agenda in the last three national elections," the study noted.
It noted the Labour Party's urban growth agenda called for intensified residential development on both greenfield and infill sites.
Economists have noted in the years the Demographia study has been published that New Zealand has relatively low household income levels compared to many other countries and particularly those in the survey.
OneRoof editor Owen Vaughan said: "The report shows that what previously seen to be an Auckland-only problem has spread to the rest of the country, the consequence of lower-priced housing markets playing catch-up. Tauranga's median price has almost doubled in the last five years, fuelled in part by a rapid influx of Aucklanders - retirees and workers - who looked to take advantage of the city's lower prices. It should be no surprise that Tauranga, with its strong local economy beachside location and easy lifestyle, should be such a desirable location or Kiwis.
"However, like we're seeing in Auckland, the growth in prices in Tauranga has slowed and will ease affordability pressures in the market."
