13 November 2006
House prices still a major concern
"The fact that a 9.6% annual increase in house prices is seen as relatively low is a symptom of how far out of reach housing has become for many Kiwis" said Peter Conway CTU Economist today.
"Only a week ago, the latest wages data showed that pay went up by 3.2% in the last year, one-third of the latest increase in house prices.
"The average New Zealand household's debt has risen from around 60% of disposable income in 1991 to nearly 170% today.
The median house price is six times the median wage whereas three times would be seen as an affordable level.
Of course, many Kiwi homeowners are able to leverage expenditure out of their rising house value, but this is not a sustainable solution as house prices become even more out of line with wage levels”.
This whole situation is very difficult for those trying to buy their first home. The CTU has welcomed initiatives such as the first home deposit assistance which will be provided by KiwiSaver, but we also need wages to rise in addition to greater central and local government investment in affordable housing.