Houses in New Zealand's major cities are becoming increasingly expensive to buy and much of the blame can be attributed to the Resource Management Act, according to an international survey of housing markets.
The International Housing Affordability Survey for 2010, released today by Australian company Demographia, looked at 272 markets in Australia, Canada, Ireland, Britain, the United States and New Zealand.
Australia was the least affordable of the countries surveyed, followed by New Zealand. Vancouver was the most unaffordable city, followed by Sydney and then Australia's Sunshine Coast.
The survey gauged housing affordability by taking the median house price divided by gross annual median household income to get a "median multiple".
Historically, the median multiple has been remarkably similar among the nations surveyed, with median house prices generally being up to three times median household incomes.
However, the median multiple had escalated sharply in Australia, Ireland, Britain and New Zealand in recent years.
In New Zealand, retirement capital Tauranga was again the least affordable market, with a median multiple of 6.8.
It ranked as the 20th least affordable place to live among all the cities in the survey.
Auckland, ranked 22nd, was the least affordable larger market, with a median multiple of 6.7, while Christchurch, 6.1, ranked 31st, and Wellington, 5.7, ranked 41st, were also severely unaffordable.
Palmerston North, Napier-Hastings and Hamilton were seriously unaffordable.
Overall, housing in New Zealand was severely unaffordable, with a median multiple of 5.7, nearly double the historic maximum norm of 3.0.
Since 1991, housing affordability has declined substantially in New Zealand, when the Resource Management Act replaced the more prescriptive Town and Country Planning Act, the survey said.
It was passed with the intent of establishing a demand-driven regulatory framework, subject to reasonable environmental and building standards, however the Act was widely assessed as having failed to achieve its objectives, due to implementation failures at virtually all levels of government, the survey said.
"It is likely that New Zealand would not have experienced a housing bubble if the Resource Management Act had been administered as intended."
The survey noted that the Government was looking at ways to address the problem.
Housing Minister Phil Heatley said big steps were being taken to help the many thousands of Kiwis who could not afford new homes, including changes to the Resource Management Act and Building Act.
"National understands there'll be property cycles but the recent cycle has been so extreme as to suggest there are fundamental problems with how the market is operating, notably around the supply of land," he said.
NZPA