The super city is also super pricey: Auckland's houses are more unaffordable than those in London or Los Angeles.
An average house in Auckland will cost eight times more than the average household income, making it the seventh least affordable housing market of the 85 major markets ranked, says a new study published on Monday.
The median house price was up by $NZ54,900 ($A52,127) to $NZ561,700, while the median household income was down $NZ4,700 to $NZ70,600, says the Demographic International Housing Affordability Survey’s study for the third quarter of 2013.
Auckland has been rated severely unaffordable for all 10 years of the survey – a distinction shared only with Australia’s major markets.
The report describes affordability as an urban household renting a home for less than 25 per cent of its monthly income or buying a house for less than three times its yearly income.
And it’s not only Auckland – all New Zealand cities are rated severely or seriously unaffordable.
Tauranga-Western Bay of Plenty is the second least affordable urban area, with a median multiple of 6.6 – houses cost an average of $NZ364,800, while the median income is $NZ55,000.
Overall, New Zealand has an average median price-to-income ratio of 5.5.
The study’s co-author Hugh Pavletich says the unaffordable trend is due to urban containment policy decisions of local authorities.
“The major problem is the major councils have lost control of their costs,” he told NZ Newswire.
“They strangle land supply and then they start whacking on all sorts of charges and levies onto new house construction which blows it up through the roof.”
He says the government should be supplying starter homes on the fringes of cities for about $NZ200,000 to $NZ250,000.
He praised the government’s approach in entering into land accords with local councils and the amount of building beginning on the outskirts of Christchurch and said he expected New Zealand to start getting more affordable – though he couldn’t say when.
“I suspect Christchurch is going to be the leader in solving the problem.”
The report says New Zealand had a price-to-income ratio of three or lower in the late 1980s – and Mr Pavletich says it’s “most definitely” possible for New Zealand to return to those levels.
Mr Pavletich, a former president of the Property Council of New Zealand’s Southern District, co-authored the study with Alain Bertaud, the former principal planner for the World Bank.
In his introduction to the report, Mr Bertaud wrote that there was no silver bullet to increase the supply of affordable housing.
“But if planners abandoned abstracts and unmeasurable objectives like smart growth, livability and sustainability to focus on what really matters – mobility and affordability – we could see a rapidly improving situation in many cities.”
By far the most unaffordable city in the world was Hong Kong, where house prices are almost 15 times more than the median income.
Sydney, Melbourne, Vancouver and San Francisco also rated among the most unaffordable major markets.
By Julia Hollingsworth