A "dramatic reversal" in Auckland housing affordability has offered hope to first-home buyers, but many remained locked out of the market by steep prices and huge deposits.
A new report by Auckland Council's chief economist David Norman finds housing affordability has improved 26 per cent since the frenzy of 2015 and is now the best it's been in six years.
This is thanks to looser planning restrictions allowing greater density of housing, the foreign buyer ban, lending restrictions that took the heat out of Auckland's searing property market, tighter exchange controls in China, and a strong Auckland economy delivering wage growth.
It also comes amid record low interest rates, making it cheaper to borrow money from banks.
However, Auckland is still considered among the least affordable housing markets in the developed world.
The city's median house price of $850,000 is 8.3 times the median household income, compared to less than 3 times median incomes in the most affordable US cities of Pittsburgh, Rochester and Oklahoma.
Norman's report - Apples and oranges: Simplicity and complexity in world house prices - measured affordability by factoring in house prices compared to people's incomes, deposit requirements and interest rates.
The report says that at current interest rates, the average Auckland household could afford a property worth 6.5 times their annual income - assuming they could scrape together the required 20 per cent deposit.
This meant a family earning the median wage could not afford a median priced house.
Norman told the Herald housing affordability "bottomed out" in 2015.
"Since then we've seen a dramatic reversal.
"Incomes have continued to rise in real terms, deposit requirements have basically flat lined over the last three years but interest rates have continued to fall.
"While that is very good news for people trying to get on to the property ladder ... we have a long way to go."
Land supply and deregulation were often touted as the solution to housing affordability, Norman's report said.
"While this is part of the puzzle, fixation on one factor fails to provide a full understanding of why Auckland's housing market has remained unaffordable for many."
Housing shortages reflected a complex range of factors, including incomes and employment rates, tax and ownership structures, the cost of material, regulatory hurdles and a city's geography, he said.
While prices had surged during the last boom, over the past six years, Auckland's housing market had benefitted from a raft of changes that had helped moderate growth.
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New consenting data showed Auckland was finally making inroads on its historic housing shortfall, Norman said.
The council estimated about 14,000 dwelling consents were needed each year to keep up with current population growth. A record 14,634 dwellings were consented in the year to September 2019.
Loan Market mortgage broker Bruce Patten said while the affordability figures were encouraging, it remained tough for first home buyers to get a foothold, especially if they were single borrowers.
"We are certainly seeing a significant increase in market activity over the past few months, which is most likely as a result of the lower interest rate environment, and expectations that the rates will remain low for some time to come."
A Real Estate Institute spokeswoman said Auckland's median house price had increased 10.5 per cent in the last four years, compared to a 63 per cent jump in the previous four years.
"Measures such as the LVRs and foreign buyer ban have certainly played their part in moderating growth and therefore stabilising house prices in Auckland. However, a number of Aucklanders have also taken advantage of more affordable parts of the country thereby contributing to an uplift in prices around the regions."
Auckland Mayor Phil Goff said while there was no single solution to Auckland's housing problems, the improved affordability showed progress was being made.
"The Unitary Plan is working as it is intended to, helping Auckland become more compact, with 94 per cent of dwelling consents issued in the past year being within the Rural Urban Boundary."