Unaffordable housing a Government failure: survey

 
None of the surveyed urban markets of Australia, Ireland, the United Kingdom and New Zealand achieve affordability. To achieve the internationally accepted standard of housing affordability, house prices should not exceed three times annual household income.  
 
All the affordable markets are in North America, with 35 in the United States and seven in Canada. There are 28 moderately unaffordable markets in the United States, six in Canada and two in the United Kingdom. Of the 22 seriously unaffordable markets, 17 are in the United States, two each in Canada and the United Kingdom, with one in Australia.
 
There are 59 severely unaffordable markets, where the house prices exceed five times annual median household earnings: 27 of these are in the United States, 19 in the United Kingdom, seven in Australia and two in Canada. All three major urban markets in New Zealand are rated severely unaffordable.
 
Overall Canada achieves the best performance, where its citizens only require 3.2 years of annual income to purchase a home. In the United States it takes 3.7 years; Britain, 5.5 years; Ireland, 5.7 years; and in New Zealand, six years. Australians fare the worst, crippled with the burden of 6.6 years of income on average to house themselves.
 
The ‘years of income’ required to purchase a house within individual markets is understated, because the majority of house purchasers require mortgages and interest charges tend to more than double the full cost of a house, say the surveyors.
 
The survey authors are Wendell Cox of the Wendell Cox Consultancy (Demographia) of metropolitan St Louis, USA and Hugh Pavletich, Pavletich Properties Limited, Christchurch, New Zealand.
 
Demographia uses the method of assessing housing affordability recommended by the United Nations and World Bank.
 
Demographia has four categories of housing affordability. Those that require three years or less annual median household income are rated affordable; four and below, moderately unaffordable; five and below, seriously unaffordable and above five years annual income, severely unaffordable.
 
The Survey suggests seven key areas that need to be focused on to restore housing affordability:
·    Housing affordability targets.
·    Liberalising land use processes
·    Minimising peripheral land price distortions
·    Equitable infrastructure finance
·    Economic impact analyses
·    Professional education
·    Research.