The Wakatipu must learn to live with unaffordable housing.
That’s the get-used-to-it message from a visiting British boffin, coincidentally backed up by stats from Queenstown Lakes District Council.
Brought to New Zealand by Auckland University, Professor Christine Whitehead made a side trip to the resort and popped in to see QLDC and its affordable-housing quango last week.
Whitehead is professor of housing at the famous London School of Economics and also directs housing and planning research at Cambridge University.
How unaffordable is our housing?
“I’m sure if you live here, you’d feel it’s extremely unaffordable,” Whitehead says. “But the reason it’s not wildly out of line with other places in the world is that the visual amenities here are so phenomenal.”
She likens Queenstown to “other fabulous places” like England’s Cotswolds or the South of France.
The house-price-to-income ratios of her “fabulous places” are 10-12 times income – Queenstown is about 8.5.
“We’re not saying that makes affordable housing – we’re just saying you’re not out of line with the real problems elsewhere.”
QLDC housing guru Scott Figenshow, who’s worked on local unaffordability studies for more than five years, also has a recent report out which reinforces Whitehead’s call.
There’s evidence, he says, of “housing affordability [being] a structural problem” – that is, entrenched in the local economy.
Using an international benchmark, Figenshow says Wakatipu homes haven’t been affordable since 1992.
After each boom, “pressures on affordability ease, but only slightly, and never enough to undo the ratcheting-up of prices relative to income”.
Figenshow also looks at “debt service ratios” (DSRs), the percentage of household income required to service mortgages, saying affordability is affected when there’s a “misalignment” of house prices, incomes and borrowing costs.
Figures show Queenstown’s DSR tops Auckland, Wellington and Christchurch.
In 2008, our DSR was over 70 per cent and Auckland’s just under 50 per cent. Our 2009 DSR eased to 55 per cent against Auckland’s 41 per cent.
QLDC’s housing quango has put 32 families into homes so far and aims for another 19 in 2010-11. Whitehead says she talked to the trustees about twisting central government’s arm for help – “Which I’m afraid is what it’s about.”
She’s been told of big local developers fighting QLDC tooth-and-nail in court over the council’s proposed affordable housing levy.
“As a developer, you should fight it as hard as you can,” Whitehead concedes, but she nevertheless believes developers should pay the full cost of “infrastructure and amenity”.
The effect of QLDC’s levy may ensure they don’t pay over the odds for land, she says.
Simplistically, is our housing-affordability problem really a low-wage problem in disguise?
Whitehead: “I would go for something which really did concentrate on ensuring employers are making a reasonable contribution to enabling affordable housing to be provided.”