Jim Hopkins on current issues

Jim Hopkins is a Herald columnist

Jim Hopkins: Unaffordable? Eat this, London

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Demographia's housing affordability survey rates homes in New Zealand as less affordable than those in New York and London - two of the world's most expensive cities. Photo / Brett Phibbs
Demographia's housing affordability survey rates homes in New Zealand as less affordable than those in New York and London - two of the world's most expensive cities. Photo / Brett Phibbs

Celebration is a sometime thing in Outer Roa. We rarely get the chance to stick out our chests and strut our stuff. Swaggers we may have been, but swaggerers we're not.

Yes, we do okay in the sporting arena (viz the World Cup) but seldom do we taste victory in more seminal areas like the brutal world of international competition. In truth, we scarcely rate when it comes to commerce. We are the Black Caps of business, more accustomed to recurring defeats than occasional triumph.

But not this week. This week we can smile a winner's smile. Because we've done it. We've gone toe to toe with the big boys and thrashed them. And although this achievement has received scant acclaim, it remains true that we are, officially, masters of the metropolis, the Superman of surveys. Biff! Kapow! "Take that, New York!" "Eat lead, LA!" "Sit on it and rotate, London!"

They're simply not in our league. We've beaten them all to become, beyond any doubt, Number One in houses! Well, ummm, more precisely, Unaffordable Houses. But take heart. We're not talking a little bit unaffordable here, or even moderately unaffordable. Holy Spatial Plan, Batman, we are Severely Unaffordable.

Or so say Demographia, who do an International Housing Affordability Survey every year, comparing 325 urban markets in the United States, Canada, Britain, Ireland, Hong Kong, Australia and New Zealand.

In Demographia's view, housing becomes unaffordable when the median house price (MHP) is three times higher than "gross annual median household income"(GAMHI). Well, it's high fives all round for us, folks. We've aced it!

The facts speak for themselves. In Los Angeles, the MHP is a footling 5.7 times higher than the GAMHI and Sydney's much the same. Pshaw! Fingers out, Okkers! Even the Big Apple, New York, can only boast a Median House Price 6.2 times higher than the GAMHI and London's even lower. What can you expect with a Mayor called Boris!?!

But, here, yes, here, in the little ol' land of the long right crowd, we are 110 per cent leading the way. In Auckland, for instance, the MHP is 6.4 times the GAMHI. In Christchurch, it's 6.3; in Tauranga 5.9; in Dunedin (despite the best endeavours of the Women's Christian Temperance Union) it's 5.2, and, even in Wellington, where teeming throngs of policy analysts have been driven to honest work just to pay the bills, the MHP remains, stubbornly, 5.1 times higher than the GAMHI.

This is a stunning success for a country with as much land as Britain and a population that's less than three New York boroughs. Despite these crippling disadvantages - a profligate abundance of real estate and a relative handful of humans - we've somehow ensured that housing's less affordable in our itty bitty cities and higher priced than it is in squalid hamlets like New York and Los Angeles.

So poor people here must save harder, wait longer and pay more for the house they're supposed to dream of owning. That is the sum of our achievement and everyone who's helped make it happen should take a bow.

Not least because they rarely receive the recognition they deserve. Make no mistake, house hunters, the credit for our fantastic win in the Demographia Survey goes entirely to the gallant guys and gorgeous gals of local government. No wonder council CEOs are getting such hefty pay rises.

And don't be surprised if, perchance, when you drive past super-city HQ today, let's say, round morning tea-time, you suddenly hear, through an open window, a choir of managers chorusing the refrain from the great Queen classic, "We are the champions, my friends."

They are. The affordability, or more precisely, the unaffordability of housing is a direct result of land rationing. If more people want sections to build on than there are sections available, then the price per section goes up. Economics 101.

That's what we've got in Auckland, Christchurch, Tauranga and Such. Land rationing, high prices and unaffordable housing. Plans dictate it. Planners decide it. Politicians support it. Because the middle class doesn't like "sprawl", it's telling the working class they can't have cheap - or cheaper - housing.

This is the choice we've made. And an MHP of 6.4 x GAMHI in Auckland is the price of it. As Robert Bruegmann, Emeritus Professor of Art History, Architecture and Urban Planning at the University of Illinois, writes in his introduction to Demographia's 2011 Survey: "A good many well-meaning policies involving housing may be pushing up prices to such an extent that the negative side-effects are more harmful than the problems the policies were introduced to correct."

Speak for yourself, Prof. Bottom line, we're Number One, old son, and we won't be changing what we do any time soon. Wimps may crumble. Wallies may succumb.

But, mercifully, our trusty corps of planners, politicians and policy analysts are made of sterner stuff. They will not budge nor yield nor stray from their appointed path, no matter what you say!

- NZ Herald

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