ANZ says too much focus in the housing affordability debate is being put on a shortage of supply.
It says any effort to make housing more affordability needs to look at lots of factors, including improving the income side of the equation.
In its latest housing market report, the bank’s economists say home ownership rates in Auckland have fallen by more than the national average and in most places around the country house prices and rents have been rising faster than incomes.
“There is clear evidence of a growing intermediate housing market where working households cannot afford to buy at the lower-quartile house price.”
There has been a lot of focus lately on the shortage of available housing, and this has been cited as a reason for rapidly rising prices, particularly in Auckland.
But ANZ said freeing up land for new builds to improve supply couldn’t be seen as a one-size-fits-all solution for housing affordability throughout the country.
“There are stark regional differences with the supply of available housing not always where it is needed.”
Auckland, Wellington and the Bay of Plenty are the main areas with a lack of housing supply. But that hasn't meant prices have been on hold in other areas.
“Despite regions outside Auckland being adjudged to have had an excess supply of dwellings over the last 15 years, these regions have tended to experience higher property growth (up 123%) than Auckland (11%), which has a housing shortage.”
ANZ says housing affordability could be improved by making Kiwisaver compulsory and increasing New Zealand’s reliance on consumption-style taxes.
“On the face of it, this sounds like a tough-love story for housing. It’s not. Housing’s attractiveness as an investment will be ultimately determined by its foundations. A nation built on excessive consumption and a persistent current account deficit is not a solid foundation.”
And as well as bemoaning increasing prices putting houses out of reach, ANZ says more focus should be put on improving New Zealanders’ incomes. This could be done, it says, by unlocking the country’s natural resources, driving productivity growth, offering tax incentives for research and development work, maintaining a commitment to limiting inflation, attracting foreign investment and focusing on producing the skills the country needs.
“The issues in regards to housing affordability are far more complicated than the current fixation with a shortage of housing stock acknowledges.”