A recent survey puts Tauranga houses among the most unaffordable in the world. Julia Proverbs talks to a family about their dreams to own their own home and explores the future of affordable housing in the Bay
Five-year-old Breeze Pawson is skipping around the living room of her Parkvale home, clasping a white remote control.
She pushes a button and an icy blast of air shoots out of the air-conditioning unit.
Standing in its stream, her wispy brown hair tickling her face, it provides welcome relief from the 30C heat outside.
It's better than any toy in her toybox.
Breeze and her little sisters, Katiya, 4, and Roxie, 3, love their new home.
"I like the flowers," says Breeze of their fully-fenced garden.
Mum Aleisha, 25, is enamoured with the new kitchen and bathroom. "I like this house," she says of the three-bedroom, 1960s bungalow.
"I like old houses, given that fashionable touch," she adds, running her painted toes over the newly-laid waffle carpet.
But, after only a couple of months, she and husband Tony, 27, are already thinking of moving. Because, as lovely as the house is, it isn't theirs. And, even if it were on the market, they would not be able to afford to buy it.
With a government valuation of more than $300,000, it is well beyond their reach.
On Tony's sales consultant salary of just under $50,000, it would give them an income-to-loan ratio of six times his earnings - double what is recommended.
The young couple are typical of first-home buyers in Tauranga, which has been ranked the most expensive place in New Zealand to buy a house and more expensive than New York, when incomes are taken into account.
According to the 7th Annual Demographia International Housing Affordability Survey, which puts Tauranga's median household income at $54,600 and the median house price at $352,900, it takes 6.5 times the average annual salary to pay for a house here compared with the New Zealand average of 5.3 and 6.1 in New York.
The survey includes 325 housing markets in New Zealand, Australia, Canada, Hong Kong, Ireland, the United Kingdom and the United States, ranking housing as: severely unaffordable, seriously unaffordable, moderately unaffordable and affordable. Tauranga is said to be "severely unaffordable", with New Zealand as a whole having no affordable housing.
"My friend just moved to Georgia in America and they've got a mansion," Aleisha says. "They bought it for $200,000. That's pretty standard prices."
The maximum Aleisha and Tony can afford is $220,000 - and houses of that value in Tauranga are few and far between. And they are certainly not mansions.
They have seen the odd 1970s house at Papamoa, but the move would mean a change of schools for Breeze, who has been attending Oropi School since November and has settled in well.
The repayments would be comparable to the rent they are paying but, as it is, things are tight. "Rent, power, phone, car, food - that's it," says Aleisha.
"It's dead money. We are sick of paying rent," says Tony. "We want to put something down for the girls."
They have applied for a loan under the Welcome Home Loan scheme and are "quite hopeful".
The Housing New Zealand initiative aims to help people on modest incomes, who are outside standard lending criteria, to get a home loan with little or no deposit. An individual or couple with a combined income of up to $85,000 gross, or three or more borrowers with a combined income of up to $120,000 gross, can borrow up to $200,000 with no deposit. Above that they must have a 15 per cent deposit.
Because of its unaffordability, Tauranga is one of 14 areas with a maximum loan amount of $350,000, compared with $280,000 in other parts of the country.
Murray Nelmes, KiwiBank mobile mortgage manager for the Tauranga area, says the majority of his work is now with Welcome Home Loans. "It was more restricted 18 months ago when $280,000 was the maximum you could borrow. Since it has increased to $350,000, there has been at least double the amount of applicants."
Murray receives about a dozen inquiries a week, mostly from young couples, of whom around half "get through". "It's made a big difference to what we can do in Tauranga, but Tauranga prices are still an issue."
Mortgage adviser Brian Berry, of Rothbury Financial Services, also says a lot of his work over the past year has been with first-home buyers, most of whom are young couples on two incomes or young families where one parent works part-time.
"Generally you need, these days, in Tauranga two incomes or one very good income to do something that's achievable."
And a lot of those jumping on the property ladder for the first time are getting a leg-up from their parents.
Hugh Pavletich, co-author of the affordability survey, blames high land prices, influenced in part by land supply restrictions (urban growth boundaries), excessive infrastructure fees and other overly strict land use regulations.
However he has praised Tauranga City Council for its approach in tackling this "serious issue". "At last young New Zealanders can have hope, that they are going to get a fair go too. Mayor Crosby is leading the way," says Pavletich.
Tauranga City Council's SmartGrowth growth management strategy, developed in the early 2000s to manage population growth out to 2051, includes plans to develop new housing in Papamoa East.
The first phase, Wairakei, is due to begin within the next six months. To be developed over the next 15 to 20 years, once completed, it is estimated to have about 3000 houses and a population of 8000. But the average house, with a floor area of 162m2, is estimated to cost $435,000.
A feasibility report went before the council's strategy and policy committee this week.
"The whole report was looking at the viability of Wairakei and how does it stack up for affordability," says one of its authors, council strategic planner Andrew Mead. "The conclusion is, not very well. We need to look at, potentially, ways of reducing costs to buyers."
The options are limited. And some spell political suicide. For instance, lowering council fees. To lower development contributions, which are paid by developers and passed on to buyers through house prices, the cost would have to be worn by the ratepayer.
"It would be a significant cost," says Mead, pointing out that development contributions at Wairakei work out at about $20,000 per house.
And there is little room to move when it comes to the cost of the houses themselves.
"The cost of building new homes is so high, materials are generally more expensive."
Smaller sections and houses would reduce costs but the number of attached dwellings, such as terraced houses, included in initial plans, was reduced significantly as it was thought there would not be the demand for them - the Kiwi dream still being to own a detached house with land.
And lenders prefer "traditional" housing, which makes it difficult for developers to borrow the money for this type of "high density" housing.
Although the current plan does include smaller sections, with an average size of 470m2.
"It's a mind-shift for people," says Elizabeth Hughes, the council's communications manager. "Smaller living spaces generate more space for recreation, communal space. You can see these open spaces working in some of the newer developments around but it's not going to be something that happens overnight. It's a slow pace of change, probably generational."
However these are not the concerns of little girls.
If the Pawsons have their home loan approved, Breeze will have her eye on two things - her own bedroom and a garden with flowers.