Tauranga's economic growth is threatened by housing costs skyrocketing out of reach of ordinary working families.
That's the warning from the Tauranga Chamber of Commerce, which says the plight of low to middle income workers struggling against the city's soaring house market was a major impediment to development.
Tauranga Chamber of Commerce president Adrienne von Tunzelmann said economic development initiatives could hit a brick wall if something wasn't done to achieve more parity between house prices and incomes.
Ms von Tunzelmann told a Tauranga City Council annual plan hearing yesterday that the price of a typical home-starter package - a section and three-bedroom home - had risen from $200,000 to $300,000 in three years.
Wages had moved nothing like this 50 per cent increase in new home prices, she said.
"Where is the workforce going to live?"
Her warning was delivered as major initiatives gain momentum to redress the big shortage of industrial land in the Western Bay, including opening up huge commercial and industrial subdivisions at Rangiuru, Papamoa East, and Tauriko.
The chamber wants the council to explain what it intends doing to ensure there is an adequate supply of affordable housing for the workforce in Tauranga's core business sectors.
It is concerned about the impact of council policies on the shortage of affordable housing, particularly last year's hefty increase in building and development impact fees.
Ms von Tunzelmann said anything that had a significant effect on the cost of new housing spilled over into an equivalent increase in the cost of existing housing, which in turn flowed through into rentals.
"The health of Tauranga's economy is dependent on continuing growth.
This in turn depends on Tauranga continuing to be seen as a desirable and affordable place to live."
The council will respond to 158 annual plan submissions on May 17.
Affordable housing was a huge issue in another area of New Zealand experiencing rapid growth - the tourism resort of Queenstown.
In its attempt to grapple with the problem, the Queenstown council had even suggested a special rate on the tourism sector to pay for cheap accommodation, but the idea had been dropped.
Yesterday's meeting did not formally respond to the chamber's challenge, although Mayor Stuart Crosby had raised affordable housing as one of his post-election priorities last year.
Cr Mary Dillon did, however, say yesterday that affordable housing was one of the priorities in Western Bay's SmartGrowth planning study.