I have been doing some research into housing affordability in Auckland. This is the first of a little cluster of blogs about this. You will find others following. Link to the full report is below, at the end of this blog.....
Research:
....While segments of the Auckland housing economy function more or less in accordance with freemarket rules of supply and demand, there are notable exceptions where some sort of intervention or regulation is required to correct failures in the housing market to address issues that arise.
Significant among these is the issue of affordability.
In its Auckland Regional Affordable Housing Strategy, the Auckland Regional Council (ARC, 2003), defined housing as affordable: “if households can access suitable and adequate housing by spending a maximum of 30% of their gross income.”
In its recent Auckland Regional Community Outcomes report, the Auckland Regional Council (ARC,2009), reporting against its “Proportion of households that spend more than 40% of net income on housing costs”, reported that:
In 2007, an estimated 21.7% of households in the Auckland region spend more than 40% of their net income on housing costs (this includes mortgage, rents and rates), significantly higher than the national count at 17%, and higher than the other selected regions on Waikato, Canterbury, and Wellington…. The overall proportion of net income spent on housing in Auckland households was 31.7%. When this is broken down by tenure, it appears that households who are renting carry a higher financial burden, with an estimated 45.8% of net income spent on housing compared to 23.6% for households who owned the home in which they lived. (ARC, 2009, Pg 28)
Affordability – measured in this way – is one of the issues that can arise in the housing market. Other issues, some of them associated with stress, can arise as a consequence of households attempting to make housing affordable by adapting homes to make them more affordable. Key among these issues is crowded housing: when too many people live in one home. In the Auckland Regional Community Outcomes report mentioned above, the Auckland Regional Council (ARC,2009), reported that:
At the 2006 census, 15.7% of the regional population was living in housing that required one or more additional bedrooms – a total of 190,017 people, of which 33.3% were children aged under 14 years… the proportion of people living in crowded households varies considerably across the region, and Manuku has the highest proportion. This is linked to the large Pacific population in Manukau city.
On the face of it, Auckland has a significant affordable housing problem.
A Housing Market Assessment which addresses the problem appropriately can be a useful tool in making related policy decisions. The DTZ HMA Manual was developed to present: “a framework for undertaking housing market assessments in New Zealand”. In relation to affordability and stress the manual recommends that:
Affordability / stress and estimates of housing need should be derived for the following groups:
- renter households;
- first home buyers; and
- owner occupier households (DTZ, 2009, pg 22)
The manual lists a number of measures of housing affordability and housing stress (caused by household costs being above particular thresholds). The manual suggests that housing need includes, at least: the number of financially stressed renter households; plus financially stressed owner occupied households; plus Housing New Zealand households.
The challenge is to find this information from existing data sources and available reports.
The approach taken in this research is to consider this challenge from a range of perspectives. Because DTZ’s advice for New Zealand has been drawn from the experience it has gained in the UK – where Housing Market Assessments are an established practice in certain parts of the country – we have first of all briefly explored a typical affordability tabulation prepared in the Cambridgeshire Region as a sort of exemplar. This includes an account of the innovative work conducted by Queenstown Lakes District Council in preparing an assessment of the need there for affordable housing for itinerant workers and new residents. (See Housing Affordability:Exemplary Practice blog)
The Housing Affordability: Auckland Report blog contains a summary of relevant data identified in other reports that have been prepared in relation to housing affordability in New Zealand.
And the Housing Affordability:Manukau City blog contains an assessment of housing affordability and stress in Manukau City.
The summary findings of this research:
While more work could be done in terms of producing reliable, location specific data quantifying affordability, it is evident from the reports that are available that New Zealand – and Auckland in particular – has a very serious housing affordability and stress problem.
It is equally clear that there are no serious and effectively funded policy initiatives in place – either at local, regional or national level to address the issue.
The key findings of this work are summarised below:
- Manukau City is home to more than 20,000 households living in housing that is not affordable (ie household expenditure on housing related costs is more than 40% of household income), with the greatest proportion of these living in homes rented from a private sector landlord;
- Manukau City will require 200 new affordable homes each year into the future to ensure that its affordable housing problem does not worsen, but there is no matching commitment from either Housing New Zealand or Manukau City Council to build these homes;
- At least 10% of all households occupied by Maori and Pacific Island Peoples are crowded, requiring 1 or 2 extra bedrooms to accommodate the occupants appropriately
The whole report (which contains tables and references and etc) can be downloaded from:
http://www.joelcayford.com/JoelCayfordHMAAucklandHousingAffordabilityandStress.pdf
Enjoy.
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