The latest annual Demographia's International Housing and Affordability Survey has found that Tauranga house prices are now 8.9 times the median income - making it "severely unaffordable".
This beats out Auckland where the median cost of a house is 8.8 times the median income, which is also "severely unaffordable".
Housing is considered affordable when it costs about three times the average income.
While Auckland is ranked the ninth most unaffordable city in the world, it is actually a little more affordable than it has been in the past.
Last year it was ranked as the fourth most unaffordable city by the survey which covers 92 major centres around the world.
The most “severely unaffordable” city in the world remains Hong Kong.
Tauranga is not a major centre, but it features in an extensive list of cities, and their house price to income ratios, from the countries surveyed.
Palmerston North was the most affordable New Zealand city in this list.
Survey co-author Wendall Cox says the housing affordability crisis results from demand that continues to exceed supply.
Nearly all of the severely unaffordable markets have urban containment policy or the equivalent and this has limited the building of low cost housing tracts, he says.
“There is an emerging understanding that more new housing supply is required to address housing affordability.”
To date, moves toward this have been largely limited to higher density infill, while leaving the urban periphery restrictions in place, Cox says.
“This seriously diminishes the potential for improving housing affordability, because the lowest land prices tend to be on the urban periphery.
“Unless urban fringe restrictions are relaxed enough to restore the competitive market for land, housing affordability is unlikely to improve and could continue to worsen.”
However, there is one government that seems determined to tackle the housing affordability issue – and that is New Zealand’s, he adds.
“The new government takes office with a mandate to squarely address both housing supply and infrastructure finance for new development. We should all hope them success.”
Just before Christmas, Housing and Urban Development Minister Phil Twyford announced that the implementation of the government’s flagship KiwiBuild programme, which aims to build 100,000 affordable starter homes and units, is now underway.
While it will take about a year to formally establish an urban development authority – which will be called the Housing Commission – an interim KiwiBuild Unit has been established.
The Unit, which will sit within the Ministry of Business, Innovation and Employment will enable building to get underway while the legislation to establish the Housing Commission is developed.
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