Auckland's housing affordability has worsened with the city climbing from the world's ninth most expensive city to fifth in a year.
The annual Demographia survey, released yesterday, compares prices to incomes in 367 cities. Auckland is one of the worst in the world due to extremely high house prices coupled with moderate wages.
With a median price of $748,700, and a $77,500 median income, Auckland has a house price-wage multiple of of 9.7. Any more than 3 is classified as unaffordable by the report's authors.
Report authors Hugh Pavletich, a Christchurch-based former property developer, and American Wendell Cox argue that a shortage of land drives up prices.
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Don Brash, former Reserve Bank governor, said housing affordability was "overwhelmingly a function of one thing: the extent to which governments place artificial restrictions on the supply of residential land".
Kim Campbell, Employers and Manufacturers Association chief executive, worries how essential workers would be able to afford to live in Auckland, with its tightly constrained geographic limits. Mr Campbell recommended more land be freed up for building.
Teachers, nurses, firefighters, bus drivers, police officers and other key workers often could not afford to buy in Auckland, leaving the city with a grim future when it needed the next generation of key workers, he said.
Property Council chief executive Connal Townsend expressed great disquiet at Demographia's findings.
"The crisis is getting worse and worse. It's all about lack of supply of land which in Auckland is more than 50 per cent of the cost of a new house.
"The solution is to free up more land and free up the constraints which prevent more density."
Nick Smith, Minister of Building and Housing and Construction, was unavailable to comment.