• Houses are indubitably expensive in many parts of New Zealand, but how expensive? The answer depends on which flawed measure you look at.

If we measure saving for a deposit and the total cost of paying off the mortgage, houses are the most expensive they have ever been. That is why home ownership in New Zealand has been trending lower since 1991 and is now at the lowest level since the 1950s.

There are several measures that try to measure housing affordability. Most look at the cost of servicing a mortgage at the outset of buying a house, with little attention to saving a deposit while renting, or other costs of ownership like rates, insurance and maintenance.

Using these measures of housing affordability, many are puzzled why home ownership rates are falling. This is because these measures are unrealistic.

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Compared to 1982, it is now nearly three times harder to buy a house.