Homes in Tauranga are the ninth most unaffordable in the world. Photo/File
Homes in Tauranga are the ninth most unaffordable in the world and are more out of reach than in many major cities including Los Angeles, San Francisco and London, new figures show.
The city and the rest of the Western Bay was the ninth most unaffordable area for housing from 406 metropolitan housing markets in nine countries surveyed by Demographia International.
Compared with previous surveys, Tauranga hit an all-time high at the least affordable end of the spectrum, with the median house price of $592,000 being 9.7 times larger than the median income of $61,200.
New Zealand's other severely unaffordable city was Auckland. It ranked sixth from the bottom in the survey, with a price-to-income ratio of 10.
The survey, which rated middle-income housing affordability, also covered Australia, Canada, China (Hong Kong), Ireland, Japan, Singapore, UK and the USA.
Tauranga Mayor Greg Brownless said unaffordable housing was a major issue for increasing numbers of people. "It started in Auckland and spread out."
He said it was great that people wanted to come to live in Tauranga but it was at the expense of ordinary families that had normal jobs. "How can they afford to buy a house here?"
Mr Brownless said house prices were being distorted by people who were not residents of New Zealand investing in this country's residential property market.
"Residential properties should be for residents. Speculating in residential properties is not a foundation for the long-term economic prosperity of this country."
He said the market moved in cycles. A major correction or breather was needed to give hope to the younger generation's dream of owning their own property.
Western Bay's Mayor Garry Webber said a lot of people were retiring here. "It's a bit like the sunbelts in Australia and America - it's a good place to retire."
He did not see any quick solution to Tauranga's housing affordability problem because it was part of an international trend. House prices could come down if people opted for the economies of scale of buying units in high-rise developments, but the market was still driven by people wanting a traditional house and section.
Tauranga Chamber of Commerce chief executive Stan Gregec said the council was committed to freeing up land in areas of the city. Everyone was aware of the problem and everyone was trying to do their best, he said. "But where is the tipping point?"
He said the commercial sector had a role to play by upping wages and building a business environment that put a big emphasis on attracting the best talent and making it as easy as possible for these people to stay.
Labour housing spokesman Phil Twyford said the survey showed Tauranga was feeling the effect of the Auckland disease.
Home ownership rates were dropping because wages were not going up by anything like house prices and rents, with homelessness a direct result of this crisis. "Such an acute crisis needs bold systematic reforms."
Labour's solution included stopping non-resident foreigners bidding up the price of houses and the Government intervening in the market by building 100,000 affordable houses in 10 years for first-home buyers.
Bay of Plenty MP Todd Muller said average wages had increased significantly over the last eight years and house prices had gone up because of the huge demand from people moving to the area.
''That is a good thing. The answer is that we should continue to build as many houses as we can, and Tauranga has a fantastic record in that regard.''
A significant number of Special Housing Areas were seeing developments coming on stream much quicker than would be the case normally. The challenge of success was better than going the other way, he said.
Tauranga's growing imbalance between house prices and incomes
2017 Median house price = 9.7 times the median income
2016 Median house price = 8.1 times the median income
2015 Median house price = 6.8 times the median income
2014 Median house price = 6.6 times the median income
2013 Median house price = 5.9 times the median income