Lack of land, infrastructure blamed for rising Tauranga house prices

House prices in Tauranga have risen over the last five years, making it one of the most unaffordable regions to own a home.

John Payne, a builder, is building a house in Tauranga - not for himself, but his children. He says it's the only way they will be able to own a home.

"It's pretty horrendous and it makes it unaffordable for young ones, or anyone, to have their own house in Tauranga or this region," Mr Payne says.

Unless first home buyers have a lot of family support, they are going to struggle, he adds.

"If we moved here now, there is no way we would be able to afford to buy anywhere."

Kelvin Davidson, a Core Logic property analyst, says Tauranga values have risen about $280,000 in the last five years, from $440,000 to $720,000.

"So that's a pretty big rise there," Mr Davidson says.

The Demographia Housing Affordability survey puts regional Tauranga at number eight on its top 10 list for housing affordability. All others on the list are major international cities.

The authors say council not supplying enough land and infrastructure is one of the factors driving prices up. In addition, household incomes are low.

Survey author Hugh Pavletich says council has been aware of the rising prices for years, so there's "no excuse for them not to be opening up land supply and properly financing infrastructure".

Mr Pavletich says people are moving to smaller centres where they can find something resembling affordable housing.

Local councillor Max Mason says the survey makes a point, but council is trying to get a better relationship with the housing minister to address the issue.

"In fact, our Mayors and chairman of the regional council are meeting with Minister Twyford soon and we expect an announcement early next month."

National leader and Tauranga MP Simon Bridges said the report "nails" the problem. He believes development of the country's housing market has been restrained by the Resource Management Act (RMA). 

"This is something that's a long-run problem. It says that effectively we've kept things in a regulatory straitjacket," he told The AM Show on Monday.

"Think about Tauranga, it's got plenty of land. Out Papamoa East, you could build something like 35,000-40,000 more houses."

Mr Bridges said successive governments have "dropped the ball on this". 

World's most expensive housing markets

1. Hong Kong

2. Vancouver

3. Sydney

4. Melbourne

5. Santa Cruz

6. San Jose

7. Los Angeles

8. Tauranga

9. Auckland