The Great Aotearoa Home Ownership Dream
For generations, owning a home has been a cornerstone of the New Zealand dream. However, for many young people today, this dream feels increasingly out of reach. New Zealand is currently facing a severe housing affordability crisis, meaning that the cost of buying or renting a home is extremely high relative to average incomes. In 2023, a report from Demographia International found Auckland to be the 9th least affordable city for housing in the world, with the median house price being over 11 times the median household income. A widely accepted benchmark for affordable housing is a ratio of 3.0 or less.
Several complex factors have contributed to this situation. For decades, the supply of new houses has not kept up with population growth, creating a fundamental shortage. This is partly due to strict planning rules and a lack of available land for development. At the same time, demand has been fuelled by low interest rates (making it cheaper to borrow money) and the view of housing as a secure financial investment. This combination of high demand and low supply has inevitably driven prices skyward, benefiting existing homeowners but creating a major barrier for those trying to enter the market.
The social consequences of this crisis are profound. High rental costs consume a large portion of household incomes, leaving less money for other essentials like food, healthcare, and education. It can lead to overcrowding and housing instability, which disproportionately affects low-income families and children. In response, various solutions are being debated, including government-led building programs (like KiwiBuild), changes to planning laws to encourage urban density, and policies aimed at discouraging property investment. Tackling this issue is one of the most significant challenges facing Aotearoa, as it strikes at the heart of fairness, equality, and the wellbeing of future generations.