Christchurch housing became more affordable in 2016, bucking the trend across New Zealand's housing markets tracked by the Demographia International Housing Affordability Survey.

Produced by Illinois-based Wendell Cox and Christchurch-based urban planner Hugh Pavletich, the Demographia report compares 92 housing markets in nine mainly English-speaking countries, using a "median multiple" approach that relates housing costs to household income. Markets ranked above 5.0 on that scale are judged 'severely unaffordable'.

Affordability across the eight markets tracked in New Zealand deteriorated, rising to 5.9 in the third quarter of 2016 from 5.2 a year earlier. Auckland, the country's only major market, was ranked a 10.0, up from 9.7 a year earlier, and making it the fourth least affordable market across the entire survey. Over the course of the year, the median house price in Auckland rose 9.7 per cent to $830,800, outpacing a 7.1 per cent rise in the median household income to $83,000.

However, Christchurch, the country's second biggest city which is in the tail-end of a major reconstruction effort after a series of earthquakes in 2010 and 2011, improved its affordability ranking to 5.9 from 6.1 a year earlier, with house prices falling 5.5 per cent $435,300 while incomes rose 3.5 per cent to $73,900.

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The report said New Zealand's housing became severely unaffordable in Auckland, Christchurch and Wellington after urban containment policies were adopted in the 1990s, and noted New Zealand and Singapore as the only nations in the survey "with a serious public policy priority to restore and maintain middle-income housing affordability".

New Zealand policymakers have been grappling with the rapid appreciation in house prices over recent years, blaming councils for limiting land use and poor infrastructure planning. More recently, the Reserve Bank's prolonged period of extraordinarily low interest rates has stoked credit expansion, prompting governor Graeme Wheeler to impose lending restrictions to curb mortgage lending.

Globally low inflation has allowed interest rates to stay lower for longer, and rapid population growth fuelled by record net migration has meant wages have been stagnant over the past 18 months with an expanding labour market.

The Demographia survey said lower incomes in part of New Zealand reduced affordability, with Napier-Hastings' ranking rising to 5.7 from 5.0 as house prices rose 14 per cent to $340,500 against a 0.5 per cent decline in household incomes to $59,300, while Palmerston North-Manawatu's ranking rose to 4.7 from 4.1, with house prices up 12 per cent to $255,800 and incomes down 1.8 percent to $54,900.

In a foreword to the report, New Zealand Initiative executive director Oliver Hartwich said planning reform and liberalisation are one component to improving housing affordability, but need to operate with a financial framework that encourages development.

"We need to tackle housing affordability urgently because the effects of unaffordable housing on society are becoming more visible by the day," Hartwich said. "Policies that raise housing costs are always likely to hit those on low incomes the hardest."

New Zealand's second least affordable market was Tauranga-Western Bay of Plenty with a ranking of 9.7, up from 8.1 a year earlier, with prices up 20 per cent to $591,900 and incomes up 1.3 per cent to $61,200.

Hamilton-Waikato was the third least affordable market in New Zealand at 6.2, up from 5.1 a year earlier, with house prices rising 26 per cent to $444,900 and incomes up 4.5 per cent to $72,100.

Wellington affordability was ranked 5.8 compared to 5.2 a year earlier, with a 15 per cent rise in the median house price to $463,700 and a 3 per cent increase in incomes to $79,600. Dunedin affordability attracted a ranking of 5.4 from 5.2 a year earlier, with house prices increasing 10 per cent to $322,000 and incomes rising 6.2 per cent to $59,700.