"House maintenance has been deferred. Most of these affordable houses need one to two years income spent on them to make them habitable. If you don't do it in time, thanks to harsh winters and crime, they become demolition material and an empty lot nobody wants. The higher multiple cities generally include a growth premium because their incomes are rising faster and the loan will be paid off faster.
"However, using Youngstown again as an example, incomes fell like a stone after the steel mills closed and half the city was left with only beneficiaries as potential renters. This means minimal income growth and more 'affordable' housing. Youngstown has only now attracted new industry and jobs and is slowly punching through the $400 per month rental income barrier."
Pavletich said he had heard all that a million times before. Normal healthy affordable markets range between two to three times household incomes.
"We are extremely clear of course both within the survey and release on this matter. There is no need to confuse all this simple stuff, unless one is in denial. The definition of an affordable market cannot be clearer. Well, that is the hope."
The survey showed Detroit scored slightly ahead of Youngstown at a 1.4 multiple with its houses costing just US$66,500 and annual after-tax household incomes of $48,700.
Marko Dowdeswell criticised Pavletich for having a vested interest in relaxing land policies to allow an increase the housing density and he also cited the property development role, saying people needed to know about that.
Phil Twyford, Labour's Auckland issues spokesman, said Demographia's diagnosis was right "but the cure would kill us. The survey tells Aucklanders what they already know: that house prices are unaffordable for growing numbers of low and middle income people. Auckland house prices relative to incomes are less affordable than New York.
"Pavletich gets the diagnosis right - we are cursed by unaffordable housing - but his cure would spell disaster for Auckland. Mr Pavletich, like the National Government, would tear down the urban-rural boundary and unleash suburban sprawl and traffic jams from Hamilton to Whangarei.
"Aucklanders are living with the consequences of 60 years of motorways and sprawl. The only way to make Auckland liveable is to build high quality medium density developments to house the city's growing population, and invest in a modern public transport system. National's solution, backed by the likes of Hugh Pavletich, is no solution. House prices have fluctuated wildly over the last 20 years due to the speculative economy and interest rates. Interest rates have come down since the 1990s but ordinary Aucklanders have seen no benefit because there is always a shortage of housing in Auckland.
"The real conversation we need to be having is how we can increase the supply of affordable housing all over Auckland, not just on some remote new development at the end of a traffic jam."
Ben Petch was concerned about research underpinning the report.
"While no one disputes that Auckland and New Zealand property is expensive in some areas, it is commonly accepted that regulations to control growth are best practice. The costs of unrestricted growth are not immediately present in the cost of houses and are instead borne by ratepayers. External costs from unrestricted growth include more expensive infrastructure, pollution, health costs, loss of productive land, etc. Demographia work has been used in the Herald before to indicate housing costs with blame for unaffordability pointed at planning restrictions on growth. The authors' viewpoint represents a minority of industry professionals."
Mark Burgess said land costs constituted the fastest rising component of housing.
"This is now of course being followed by the rises in permit costs and amended building code requirements, downstream from the Canterbury earthquakes, and a small bubble on top from insurance for the same reason. Land, however, remains a bogey nationwide, and most so in Auckland, as a result of centralisation. Decentralise by government policy and practical legislation, and we would take the heat out of that particular aspect." Andrew Montgomery said Auckland had a plentiful supply of spare land: "I don't get it."
Adrian Vogel was astonished at how much had changed.
"To think that we bought our house in 1964 for £2100 and my wage at that time was £800 per annum which were both average... The valuation of our place at present is $450,000 and I wonder how our grandchildren are ever going to be able to afford to buy their own place," Vogel wrote.
MOST EXPENSIVE
Annual after-tax income to house price ratio. Numbers show years needed to pay for a house.
Hong Kong - 12.6
Australia - 5.6
New Zealand - 5.2
Britain - 5.1
Canada - 3.5
Ireland - 3.3
United States - 3
