• Neil Binnie is the manager of the Bays Community Housing Trust, a community housing provider on the North Shore

Much has been written about the housing crisis in Auckland, and elsewhere in New Zealand, but the issue of affordable housing is not well explained. Kiwis in upper wage brackets can always afford the high prices especially when they are buying and selling on the same market. It is the first home buyers and those with lower wages who are in trouble.

"Affordable housing" is a phrase that has been used in the media in different ways. A common definition is that a house is said to be affordable if its asking price is 75 per cent of the median selling price of houses in the area. In a few months the median house price in Auckland will be a million dollars. Does that mean that a house costing $750,000 dollars is suddenly "affordable"? Likewise we are told 20 per cent of houses at Hobsonville are "affordable".

An alternative definition is that housing is affordable if the cost of housing is 40 per cent of take-home pay. Clearly what is affordable for a family depends on what they earn, so in this scenario the family income needs to be the starting point. Statistics NZ gives the median family income in Auckland for 2015 as $1575 a week. Using the IRD tax calculator and taking 3 per cent for KiwiSaver leaves $1183 take-home pay.

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Taking 40 per cent of this gives $473 a week to pay the mortgage (or rent). If interest on the mortgage is 5 per cent this will sustain a mortgage of $350,000. With a 20 per cent deposit, a house costing $440,000 is therefore affordable under this definition. (Prudence suggests you should be prepared for an increase in mortgage rates to 7 per cent, meaning you should only spend $360,000 on a house.)

When Labour promises 10,000 "affordable homes" a year costing $500,000 to $600,000, the discussion above shows they are not affordable to more than half of the population. In fact Labour have shut out exactly the families they are claiming to help.

This is consistent with the analysis by Simon Collins, "Affordable houses a Dream" in the Herald on July 12. He stated that only 46 per cent of people aged 20 to 65 are able to afford a house priced at $500,000. Incidentally I am wondering how these families save the $100,000 deposit while paying an unaffordable (median) rent of over $500 a week.

There are properties for sale in Auckland with prices less than $440,000. The vast majority of these are one-bedroom apartments with body corporate fees of at least $50 a week which will blow the budget. These one-bedroom units are inappropriate for young families. Half of Auckland's families have less income than this, so they have no hope of ever buying their own home. This is the reality for a family on the median wage or less.

When the price of houses means that half of the families in Auckland are shut out of the market, this is certainly a crisis, a word National cannot pronounce.

Adequate housing is a basic human right recognised in the 1948 Universal Declaration of Human Rights, of which New Zealand is a signatory. That should be true for low- to middle-income earners also. The system in New Zealand should ensure that all people are able to afford adequate housing.

Currently hundreds of houses are being built around Auckland. The prices show they are catering for the top of the market. Clearly developers are aiming to optimise their profit. The important question is, what innovative mechanisms are there to build affordable houses for the other half of the population? The Government has settled for income-related rent subsidies to community housing providers. This is slow, cumbersome and probably the most expensive option.

What other options could be considered? We could expand the stock of Housing NZ through increased public investment, re-establish capital subsidies to community housing providers, follow the Australian approach and transfer assets free of charge to community housing providers, or make Crown land and Housing NZ land available to community housing providers for long-term lease at peppercorn rental.

The providers would build houses at no cost to the Government. The Crown will still own the land and more affordable houses will be available.

Major, innovative, immediate policy changes are needed to create houses that are truly affordable before this generation permanently become "generation rent".