New Zealand's housing crisis

What it’ll take to halt New Zealand’s housing crisis? | SPECIAL REPORT

PHOTO: Housing Minister Megan Woods. Photo credit: Getty

Another week, another demoralising confirmation New Zealand’s housing boom has put homeownership out of reach for more desperate Kiwis.

This time it came courtesy of the Real Estate Institute (REINZ), who announced median house prices throughout the country had risen by nearly a fifth in a single year, from $612,000 in January 2020 to $730,300 in January 2021.

The increase was hailed as “jaw-dropping” by senior ASB economist Mike Jones.

“Nationwide house price inflation lifted to an annual pace of 19.2 percent in January,” he said. “That is a high not seen since 2004, a boom year for the New Zealand economy [in which] GDP growth exceeded 6 percent.”

Even more staggering, Jones said, were some of the finer details.

Gisborne and Hawke’s Bay’s house prices had ballooned more than 30 percent. Wellington’s had surged 26 percent. Even prices in Otago, a region beset by COVID-induced financial woe due to a lack of tourists, had grown by 12 percent over the year.

That’s not to mention prices in the ever-expensive Auckland and Queenstown/Lakes District regions, which grew to even more unthinkably inflated levels last year.

‘It’s ramping up to the point we can’t cope’

New Zealand’s housing market is now one of the least affordable in the developed world, according to price comparison website Compare the Market – with a house price to income ratio better than just six nations: France, Japan, Luxembourg, Switzerland, Israel and South Korea.

At the same time, homeownership rates have been plummeting to their lowest level since the 1950s. A Stats NZ report released last year shows one in three households is now rented.

Shamubeel Eaqub, an economist at Sense Partners and one of the leading critics of the handling of the housing crisis, says the escalating crisis has been ignored by successive governments over decades to create the predicament we’re experiencing today.

“We now have house prices that are extremely expensive, relative to incomes,” he explained.

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