‘No quick fix’ to Auckland housing price

Media release

Monday 25 January 2016

Property Institute says ‘no quick fix’ to Auckland housing prices

Property Institute of New Zealand Chief Executive, Ashley Church, says that there is ‘no quick fix’ to Auckland house prices following claims that Auckland is now the world’s fifth most expensive city in which to buy a house.

The claim is made in the annual Demographia survey, released today, which compares prices to incomes in 367 cities. With a median income of $77,500, and a median house price of $748,700, Auckland has a house price-wage multiple of 9.7 – the fifth worst in the survey.

Mr Church says that, while the trend is concerning - knowledge of the growing gap between house prices and incomes is not new and that the gap has been developing over decades.

“This isn’t something that has come about as a result of the current boom cycle. It’s a trend which started in the 80s and which mirrors Auckland’s growing status as an international city and as a place in which people want to live”.

Mr Church says that a two-pronged approach is required to reverse the trend.

“There are no quick fixes. The solution is to slow the rate of house price inflation while seeing a gradual increase in the median wage – and that will take time”.

Mr Church says that achieving these things will require a suite of measures and policies such as:

· A significant increase in the land available for development, in Auckland

· A commitment to targeted intensification in central parts of the city

· Further development of Auckland’s ‘metropolitan suburbs’ to encourage a spread of development

· A change in the kiwi home ownership culture to encourage ‘first house’ investment outside Auckland

· Measures which continue to celebrate economic growth, and which are coupled with meaningful and regular increases in real wages and salaries

Mr Church says that such policies would need to survive successive Governments and would require a high degree of consensus between the major political parties and the Auckland Council. He says that ‘knee-jerk’ responses and sloganeering about ‘bringing prices down’ aren’t the answer and actually risk making the problem worse.

“Around 65% of kiwis own their own home – and a large number of them use the equity in that home to buy businesses, invest in other assets, and buy things which fuel the economy. So reducing the value of their home could have a devastating effect on the economy and could bring the whole thing down like a house of cards”.

Ends

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