Hawke's Bay houses 'seriously' expensive

Hawke's Bay houses are "seriously unaffordable" according to the eighth annual Demographia International Housing Affordability Survey.

Napier-Hastings was ranked sixth-equal most unaffordable in New Zealand with Hamilton-Waikato, behind Wellington, Dunedin, Tauranga-Western Bay of Plenty, Christchurch and Auckland respectively.

The study noted most areas in New Zealand were affordable 20 years ago.

Housing should not be more than three times annual income to be ranked affordable, Demographia said.

Napier-Hastings' median house price, at $265,300, was 4.8 times the household income of $55,200. Auckland was 6.4 times the income of $72,500.

The highest ranking city in the world was Hong Kong at 12.6, second was Vancouver at 10.6 and Sydney came in third at 9.2.

Napier-Hastings nearly made the highest category of affordability, severely unaffordable, at 5.

Co-author Hugh Pavletich told Hawke's Bay Today that restrictive land policies were to blame for pushing up land values compared with incomes in New Zealand.

Two years ago, the Government announced advisory groups to support the Government's programme of resource management reforms.

Environment Minister Nick Smith said there were major question marks over the way the Resource Management Act was working in urban areas.

"I don't think we have the incentives right for developers to do the best urban design in our largest cities," he said.

"There are also questions about the policy of metropolitan urban limits, the effect they have on section prices and the negative flow-on effects to the broader economy. Nor do we have a good track record of having the right infrastructure in place at the right time for supporting urban development."

Mr Pavletich said the high cost of building in New Zealand was also a problem.

"In New Zealand per sq m metre it costs $1200-$1400. In Australia it's $800 and in the US, $500."

The Demographia study was dedicated to "younger generations who have the right to expect they will live as well or better than their parents but may not in large part due to the higher cost of housing".

"I cannot stress enough the importance of affordable houses," Mr Pavletich told Hawke's Bay Today.

The report follows the recent Massey University Home Affordability Report which was criticised because high-value farms and lifestyle blocks could skew the median house price and many low-wage seasonal workers did not live in Hawke's Bay.