A Demographia International Housing Affordability survey showed that residential properties in Auckland are the fourth most expensive in the world in 2017, with prices at 10 times more than the median income.
The city moved up one spot from being the fifth costliest city last year for homes. Auckland even outranked London and New York in the survey, due to its high prices yet moderate wages.
Homes in Hong Kong are the least affordable markets, followed by Sydney and Vancouver. The survey based its findings from 406 global cities.
Home prices in nearby cities in countries, like Australia, showed a slight improvement in terms of affordability. Melbourne, for instance, dropped to sixth place this year from being the fourth most expensive market in 2016.
The survey results indicated a growing problem for Auckland’s affordable housing, as the city’s price to income ratio nearly doubled from 5.9 in 2004 to the current rate of 10. However, New Zealand’s economy has been on a roll thanks to an influx of construction activity, which partly offset the housing affordability crisis in some cities.
This is evidenced by the proliferation of caution signs and other construction equipment in various sites and despite the issue of more expensive homes, demand for residential properties remains surprisingly strong.
New Zealand Building and Construction Minister Nick Smith acknowledged that the government is making progressive efforts to check home price inflation in Auckland, as new housing investments increased 32% in 2017 that have resulted in more than 10,000 new properties in the city per year.
Auckland Mayor Phil Goff said that to solve the issue of high prices, the local government has floated the Unitary Plan, which will aim to build a total of 572,000 homes on different sites. Along with a housing task force, the plan is expected to mitigate the shortage of new homes and somehow bring supply in line with population growth, according to Goff.