Tracking Auckland's housing affordability

The purpose of this page is to summarise information on Auckland's housing affordability*.

Auckland has a particularly significant problem because land supply is tightly constrained by a strict urban/rural boundary, development rules and consents are restrictive, voters elect representatives who impose restrictive nimby rules, and immigrants (internal and international) are attracted to the jobs and natural amenities in the region. The new Urban Plan seeks to codify the restrictions further.

The issue is further exacerbated by a Council that has in the past defined affordable housing as social housing, and adopts European concepts of 'Smart Growth', all adding to the costs of the house building development that is actually done. Thankfully, however, their views on affordability are evolving to be more inclusive and more structural.

The housing stresses in Auckland are growing acute again after a period of improvement, and the issue may be an part of the 2014 election debate.

Hopefully the tracking and data on this page will inform that debate.

(H/T to Peter Jeffries at CORT for suggesting this summary.)

* Actually unless otherwise noted, most of the measures on this page are 'home loan affordability' rather than housing affordability. Home loan affordability measures the relationship between take-home pay (after tax) and a mortgage payment (which includes both an interest and principal component). That means that costs like rates, insurance and maintenance are not usually included. However, when we compare 'renting' and 'owning' options we do adjust to include these costs.

First home buyer affordability (individual)

This is the relationship between take-home pay and a mortgage payment. We measure it for one 25-29 year old earner on a median pay who is buying a first-quartile priced house.

 

Standard home buyer affordability (individual)

This is the relationship between take-home pay and a mortgage payment. We measure it for one 30-34 year old earner on a median pay who is buying a median priced house.

 

First home buyer affordability for households

This is the relationship between take-home pay and a mortgage payment. We measure it for a household of two 25-29 year old people earning 100% of the median pay, and no children.

[Also see this Auckland Council report.]

 

Standard home loan affordability for households

This is the relationship between take-home pay and a mortgage payment. We measure it for a household of one 30-34 year old partner earning 100% of the median pay, one earning 50%, and they have a 5 year old child. If WFF applies, this is added to household income.

 

Rental affordability advantage

This shows how much more of the median income of a two-person 25-29 year old household to takes to buy a lower quartile house than to rent the same house. (We adjust the costs so that ownership includes the mortgage payment, rates, insurance and maintenance, to give a more matched comparison.)

 

Rent ratio

This is the relationship between annual median rent levels and the cost of a median house. It is a core measure of viability or sustainability of core rental stock.

 

Median multiples

This is the relationship between gross household income and median house prices. We measure it for standard buyers in the 30-34 yr age group. (But it is based on gross incomes and does not factor in the effect of any of our three recent tax cuts.)

 
Median
Median
--------------   Median multiple   -------------
 
Population
House
price
H'hold Income
Mar-16
Feb-16
Jan-16
Mar-15
Mar-14
 
Mar-16
Mar-16
Mar-16
times times times times times
 
 
 
annual
 
 
 
 
 
Auckland:
1,530,000
$820,000
$88,000
9.3
8.5
8.2
8.4
7.6
- North Shore
225,800
$974,000
$93,000
10.4
10.0
9.8
9.4
8.4
- West
204,500
$734,700
$86,000
8.5
7.9
7.9
7.6
6.7
- Central
444,100
$995,000
$91,000
10.8
9.7
8.7
9.9
8.6
- South
368,500
$754,000
$82,000
9.1
7.4
7.9
7.6
6.9
 
 
 
 
 
 
 
 
 
New Zealand 4,510,000 $495,000 $84,000 5.8 7.3 5.3 5.8 5.5

 

We welcome comments for improvements of the data on this page. Use our feedback page, or the comment box below (which will show if you are registered).

Contact:

For sources, definitions, and methodologies, please contact:

David Chaston
Publisher,
www.interest.co.nz
JDJL Limited
206 Jervois Road, level 1, Herne Bay
PO Box 47-756, Ponsonby
Auckland, New Zealand

Phone: +64 (0)9 360-9670
Mobile: +64 (0)21 997 311
Fax:       +64 (0)9 360-9319
Email:   david.chaston@interest.co.nz

 

2 Comments

Pop!

What we all neglect to accept is the social issues around Generation Rent. Children who are born to renters move schools more, and therefore achieve less. (I hear Paula Benefit blaming the teachers...) Communities that have high renters become less desirable and couples fail to make friends in the area due to constant movement. I think we are seeing the start of something far great: Aucklanders move to Hamilton and Tauranga to seek cheaper housing, when they go up, the seek further ie Australia. Society won't function correctly in 10-20 years due to our failings of today. I wish there was another Political Party that could rise up and be the defining change we need in order to create a country of home owners, not apartment renters and owners. NZ is desirable but at what cost??