Tauranga-Western Bay is the most unaffordable place to live in New Zealand after Auckland, a new report states.

In the latest Demographia International Housing Affordability Survey, Tauranga had a "severely unaffordable" median multiple score of 6.8, which measures the ratio of median incomes to median house prices.

Auckland's score was 8.2.

Tauranga mayor Stuart Crosby said the Demographia index was a "crude measurement" but it did highlight the issue of incomes versus house prices in Tauranga.


The use of medians in the index skewed the ratings as the city's multi-million dollar homes were not representative of Tauranga's usual housing stock, he said.

"I do accept the gap between incomes and house prices has increased. Trying to get into the housing market can be a challenge."

Mr Crosby said Auckland's biggest issue appeared to be lack of land but in Tauranga and the Western Bay there was land available but building the infrastructure was the biggest issue.

Click here to read about a shortage of houses for sale driven by the increasing number of Aucklanders relocating to the Western Bay saw Tauranga's average residential property value rise 3.7 per cent last year.

As much of the land supply in the region was from farms or orchards, the cost of this land was high to purchase for development.

"I disagree it's a crisis as some have said. Managing growth has been business as usual for 20 years and we've done a reasonable job."

Survey co-author Hugh Pavletich, of Performance Urban Planning in Christchurch, said house prices in Tauranga were "grossly expensive".

"Housing shouldn't exceed more than three times household income. It's an extremely serious situation in Tauranga."


Mr Pavletich disagreed the figures were skewed by higher-priced properties and said every market in the survey was rated the same way.

"Tauranga came out at 6.8 times household earnings - which is worse than New York. That's something to be ashamed about." He said the figure indicated the council had not supplied enough land and infrastructure was not being financed properly.

Tauranga Chamber of Commerce chief executive Dave Burnett said he thought places such as Mount Maunganui where properties were more expensive skewed these figures.

"It may be a reflection of the Mount with its million dollar properties along Marine Parade but other parts of Tauranga are not like that."

Realty Services chief executive Ross Stanway said the ratings were an indication of the desirability of the location.

"Would you want to be at the bottom of the list? Of course not because, to a very large extent, that index is an indication of the demand and the attraction of the region."

Mr Stanway said there were various initiatives from Priority One, local businesses and other organisations to lift the average income in Tauranga and the Bay.

Long search for good value

It took almost nine months for Jess Voon and her partner to find a house.

Miss Voon and Scott Curry had been renting in Mount Maunganui for nearly four years and had their hearts set on remaining in the beachside suburb.

But after six months of searching, Miss Voon said it became apparent the Mount was out of their price range.

"We really wanted to stay in the Mount and keep up with the Mount dream. We couldn't find anything affordable so we started broadening our search to Papamoa and realised it was better value for money and more affordable."

In October, the couple moved into their new three-bedroom, two-bathroom home. The house was only about three years old as well, meaning they would not have to pay for any alterations or repairs.

"We got a decent size section as well, a lot bigger than anything we saw in the Mount. The value for money was really a no-brainer."