Housing Minister's concern as report reveals New Zealand cities 'performing poorly'

Phil Twyford is concerned about the performance of New Zealand cities after a report revealed we're struggling to compete against Australia's.

High house prices, sluggish income growth and higher transport and food expenditure are to blame for New Zealand cities lagging behind, the report found.

"Our cities are performing poorly because we have not been managing growth properly," Twyford, the Housing and Urban Development Minister, told Newshub.

QwC New Zealand's Competitive Cities: A Decade of Shifting Fortunes report compared six New Zealand cities to Australia's five main centres, comparing household prices, income and public transport.

It found that Australian cities have enjoyed significant improvements in discretionary income - the money left over after tax and spending on housing, transport and other essentials - relative to New Zealand.

The New Zealand cities

  • Auckland
  • Hamilton
  • Tauranga
  • Wellington
  • Christchurch
  • Queenstown

The Australian cities

  • Sydney
  • Melbourne
  • Brisbane
  • Perth
  • Adelaide

Auckland was singled out as a major concern, since unlike the other cities analysed, discretionary incomes actually fell. The median Auckland household now has $96 less in their pocket at the end of each week than they did 10 years ago.

Hamilton, Tauranga, Wellington, Christchurch and Queenstown are now competing more strongly for talent in New Zealand than Auckland, the report found.

"From an income and living costs perspective, New Zealand's smaller cities have made significant gains in competitiveness over the decade," PwC chief economist Geoff Cooper said.

But despite being New Zealand's top performing city, Wellington's median household discretionary income increase of $137 per week was around one-third that of Perth.

And earlier this year, an international housing affordability study found that Tauranga had the eighth most unaffordable housing in the world when measured against income, just ahead of Auckland.

Tauranga. Photo credit: Getty

"Our research reveals [New Zealand's smaller cities] all face greater challenges than many Australian cities when it comes to housing costs and basic expenditure," Cooper said.

Infrastructure New Zealand chief executive Stephen Selwood said the report "underlines the urgent need for the Government to deliver affordable housing and efficient transport systems in our growing cities".

"High urban land prices have increased the amount households and businesses must spend on accommodation and rent," he said, adding that increasing congestion combined with higher transport taxes and fares have pushed up travel costs.

"New Zealand's failure to manage growth is seeing the standard of living fall further and further behind Australia's attractive second tier cities."

Twyford said he agreed New Zealanders were spending too much on accommodation, and that gridlock on roads takes a "terrible toll" on quality of life and cities' productivity.

Housing Minister Phil Twyford.
Housing Minister Phil Twyford. Photo credit: Getty

"Our Government is implementing a bold plan to tackle these challenges and build high performing cities," he said, adding that it's "investing in modern urban transport systems including more public transport to reduce congestion".

Cooper recommended the Government follow Australia and appoint a Minister for Cities to champion the competitiveness of New Zealand cities, and develop urbanisation "taking a comprehensive view of urban living costs".

Selwood pointed to positives such as the Government's Urban Growth Agenda which calls for intensified residential development on both green and already-approved subdivisions/neighbourhoods.

He said increasing the supply of land is one critical response, and urban land "must be made more affordable in sufficient quantities to attract investment and enable scale".

The Government's answer to the "housing crisis" has been KiwiBuild. But it failed to meet the interim target of 1000 homes by the end of its first year, and had to be "re-calibrated" by Twyford in January.

National believes the housing market has been restrained by the Resource Management Act, saying it takes too long to develop housing in cities that could otherwise be growing.

National MP Stuart Smith said in January that the party will release draft legislation this year to replace the RMA.