A comprehensive new report on the affordability of housing in New Zealand says that the problem is getting worse, and that it is due to 'a massive failure of public policy', with the authors suggesting that the current Labour Government is constrained by its conventional ideology. The study shows that almost three-quarters of take-home pay is needed to service the mortgage on an average house in New Zealand - taking homeownership well out of the reach of most people. In fact in some areas, to afford the average home, the average wage earner would have to spend all their pay on mortgage payments.
The study - which you can read here - translates prices, wages and interest rates into the proportion of take-home pay needed to buy the average house. As a comparison with the 74% figure of payment needed, the authors say that in 2002, house ownership only required 40% of income. The most unaffordable places are Central Otago Lakes (where the average home requires payments of 104% of the average pay), and Auckland (92%) and then Northland (78%).
