Housing market comparisons - Message to NZ PM
Housing - European and other markets comparisons - Message to NZ Prime Minister Helen Clark from Hugh Pavletich, Demographia
To: Helen Clark, Prime Minister, New Zealand
From: Hugh Pavletich, Co author, Demographia Survey
SUBJECT: European & other countries (including New Zealand) Housing Comparisons
Dear Ms Clark,
I’m delighted to learn of your belated interest in housing issues and that you have a particular interest in Europe and it would appear - European housing markets.
My view is that this years 4th Edition Demographia Survey ( www.demographia.com ) of 227 urban markets of the 6 nations of the Anglo world, is more than adequate, in illustrating clearly that New Zealand has a major housing crisis to deal with.
It is particularly relevant to New Zealand (which in population terms comprises about 1% of the countries surveyed) because of our shared histories and similarities with respect to cultural and legal traditions.
For your information – please find attached an XL file sent to me by a British colleague, who had been provided the above information free of charge by the Bank for International Settlements (BIS). Your recent media statements would suggest that your officials do not appear to have provided you with this information.
The BIS data attached provides inflation adjusted house price movements from 1970 to 2006 for the following sixteen countries –
(b) Great Britain
You will be disappointed to learn in reading this data –again - New Zealand scores poorly.
The BIS data must be kept in perspective – as the most important measure is the relationship between house prices and incomes.
The most appropriate measure for assessing housing affordability - is what is termed the “Median Multiple”where the median house price is divided by the gross annual median household income. This method is recommended by the United Nations and World Bank and employed by Demographia in producing its annual surveys.
Households should not have to pay any more than three times their annual household income to house themselves. Your Government has regrettably allowed this to explode out to 6.3 time’s household income with respect to the seven New Zealand urban markets covered within the latest international survey by Demographia.
When interest costs are added – New Zealanders are in the worst position of the six Anglo nations surveyed.
You may wish to ask your officials to generate the United Nations and World Bank recommended “median multiple” trends for the European countries of interest to you –and provide the public with results of this research.
Co author – Annual Demographia International Housing Affordability Survey