New Zealanders are at the bottom of the heap when it comes to affording their homes, according to a recent report from Demograhia's international housing affordability survey.
The survey claims urban markets in New Zealand and Australia have the worst housing affordability - 6.3 times higher than annual household earnings. This compares with the United Kingdom at 5.5, Ireland 4.7, the United States at 3.6 times, and Canada at 3.1 times annual household earnings.
The New Zealand government introduced a Bill in December 2007 to try and combat rising prices by enabling more houses to be built cheaply, but councils, developers and builders have come out against it.
The Auckland City Council approved a submission against the Affordable Housing Enabling Territorial Authorities Bill (AHETA Bill) and sees the issue as central Government's responsibility. The council agrees that housing for young Aucklanders at reasonable prices is posing a problem.
"Young Aucklanders trying to buy their first home are finding it quite difficult. Our view is this bill is not the smartest way to deal with this issue and could make things worse," Councilor Paul Goldsmith said.
He said rates were rising at a rate of between 10 and 15 percent a year and implementing policy changes would add to that.
"We are trying to keep this down," he said.
Demograhia co-author and Christchurch developer Hugh Pavletich said the bill was only playing with the problem.
"This bill is completely ineffective, I'm delighted to see businesses and local bodies come out against it," Mr Pavletich said.
Increasing land prices across New Zealand has been a major contributor to rising housing costs.
"The reality is we need to open up more land on the fringes of cities," Mr Pavletich said.
"The existing house prices are exorbitant. We need to bring costs for first homebuyers down to $140,000 to $160,000 per house. This means $30,000 for the section," Mr Pavletich said.
The Master Builders Association agrees that land or the lack of it is keeping costs high. A study carried out over a five-year period showed a major increase in land prices. Regulatory impact fees and general compliance costs from the Resource Management Act (RMA) and the Building Act are the next two big cost drivers.
"There seems to be different impact fees that councils charge around New Zealand. The fees need to be appropriate. Increased time spent with consents is also adding to the cost," said Pieter Burghout, Chairman of the Master Builders Association.
National Party housing spokesperson Phil Heatley said they want to free up land for building and streamline acts like the Resource Management Act and Building Act.
"For instance, while the cost of materials used on an average house has risen by 25 percent in five years, the cost of infrastructure levies and fees have increased by around 900 percent and consent fees have increased by about 58 percent, Mr Heatley said.
"National's big focus is to increase take home pay and bring down interest rates."
"We also want to streamline acts like RMA and building act too. Councils are doing lot of inspections, so builders stand around," Mr Heatley said.
"We've been warning Labour about the costs of its red-tape and bureaucracy. It is a handbrake on the economy, and a drain on the public purse," Mr Heatley said.
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