The greatest social scandal of our time barely raises eyebrows anymore.
Every year for the past 16 years, urban consultancy Demographia releases their international ‘Housing Affordability Survey’.
In New Zealand’s case, it should be called an ‘Un-Affordability Survey’. It documents our ridiculous house price-to-income ratio.
Each of New Zealand’s eight surveyed local areas is now classified as ‘severely unaffordable’. This means median households need more than five times their annual income to buy a median house.
Consider this: At a ratio of 9.3, Tauranga is now the fifth most expensive of 305 analysed global housing markets. Even San Francisco (8.3), London (8.2) and Singapore (4.6) are more affordable.
Given these figures, a public outcry would be appropriate. However, there was little media coverage for the Demographia report. And what there was sounded like a well-rehearsed routine.
Yet there is nothing in our housing affordability data we should ever get used to. They are and remain outrageous.
In a country that barely uses 1 percent of its land for development, house prices should never be as high as ours. As recently as the early 1990s, New Zealand price-to-income ratio was below 3.0 – a level Demographia rates as ‘affordable’.
What has happened since is a political scandal, an economic disaster and a social tragedy. The loss of affordability has driven two generations of Kiwis deep into debt. It is the main driver behind poverty, inequality and deprivation. It has locked young people out of the housing market. It has exposed our economy to the volatility of the property sector.
The Initiative’s research has revealed the factors responsible for this disaster. They include our restrictive land-use planning regime, lack of alternative infrastructure finance and insufficient fiscal incentives for councils.
Other researchers and organisations have come to similar findings. After decades of research, there are no doubts as to the roots of our housing crisis.
The housing market spun out of control under both National- and Labour-led Governments. Neither party could honestly blame the other without getting into pots and kettles territory.
Because they are jointly responsible for the current mess, it is time for joint, bipartisan action to fix it.
The Government and the Opposition worked together on the Zero Carbon Bill last year. What is stopping them from finding consensus on the biggest domestic policy challenge of our time: restoring housing affordability?
It should not take another dozen Demographia reports until we get real political action on housing.