Thursday, May 19 2016
High-priced cities share Auckland’s pain
• High house price-to-income ratios not an Auckland-only phenomenon
• Other high-priced cities have comparatively sluggish housing stock expansion
• Land use regulations are a likely influence on house price appreciation
Auckland is not the only city suffering from ‘unaffordable homes’ as its population grows and outstrips supply, ASB’s latest report on the housing market suggests.
The second issue of Home Economics examines Auckland within a wider context of international cities experiencing rapid population growth, indicating high house price-to-income ratios are not exclusive to Auckland.
Common to other high-priced cities is the likely influence of land use regulation on their sluggish housing stock expansion.
ASB chief economist Nick Tuffley says other cities where high house prices are also flagged as an issue (Sydney, Vancouver, London and San Francisco) have some form of urban containment policy limiting the supply of land available for housing.
In contrast, Houston, Texas, the fourth most populous city in the US, is singled out as a city with light land use regulation and some of the most affordable homes in the US. Alternative means of funding utilities infrastructure in Houston is another reason the sprawling metropolis has not experienced Auckland’s housing affordability problem.
“As we seek greater understanding of Auckland’s housing market with this series of reports, we thought it was necessary to explore whether Auckland’s key themes extend to other cities,” Mr Tuffley says.
“Interestingly, many of these cities share the problems we identified in our December report around the intense use of Auckland’s housing stock.”
The latest insights around land use regulation may not come as surprise, Mr Tuffley says. However, comment about land use and supply constraints is often without data to back it up.
“This is putting facts to the hearsay,” Mr Tuffley says.
“The report suggests Auckland can learn from the solutions and challenges in other cities to find effective policy solutions to slow the rate of house price appreciation in the city.”