Affordable housing is a key challenge facing many developed cities, worldwide. Parts of New Zealand, particularly Auckland, are amongst the least affordable cities in the world. At present, for example, the median house price in Auckland is around 9.5 times the average household income; when this ratio exceeds 5:1, a market is said to be ‘severely unaffordable’. Economic fundamentals suggest that markets would, all else equal, provide a supply response that would address the issue. There are many complex reasons why this is not occurring, including in New Zealand. This paper largely focuses on the responses to alleviate the affordability issue.
Access to quality, affordable housing is fundamental to the health and well-being of people. It is important too for functioning economies. The current government is responding with its Kiwibuild Policy, but will this be enough?
What are the options for New Zealand to provide housing at a reasonable (affordable) ownership cost for our burgeoning low to middle income cohort where wage growth has fallen well short of the growth in the cost of housing?