Paying the price in Auckland

What's an affordable house worth in Auckland these days? The Prime Minister reckons 'it depends', but actually it doesn't. Plus, his Trade Me slip up

What's affordable? Usually that's entirely dependent on your circumstances. My six year-old's concept of what's "a lot" – the lego he wants or how much we just spent on groceries – is very different from mine. Yet I had a very wealthy friend who used to say that in his pomp he could hardly go through an international airport without spending thousands on a new watch.

And of course it's the same when you're trying to buy a house in Auckland.

John Key tried to make that point on The Nation on the weekend, when asked what now constitutes an affordable house in our biggest city. The Prime Minister replied:

"That depends enormously on whether you’re a two-income household. It depends whether you’ve got much equity in savings, but what we know is through the government’s KiwiSaver HomeStart scheme..."

Pressed again if he could name a number, he tried the same line of argument:

"Well, it just varies, doesn’t it? I mean, what I might be able to afford or what you might be able to afford could be very different to a first-home buyer".

Except it doesn't vary, as he knows. Under the new Special Housing Area guidelines created in 2013 by the government and Auckland Council to speed up house construction, a definition of affordable housing was agreed. You see, the government and council expected anyone given the opportunity of rushing through the consenting process to build at least some affordable houses, so they had to spell out what that meant.

There are two criteria you can meet to be affordable, but for our purposes we're just interested in the first one:

A dwelling is classed as relative affordable if it will be sold for no more than 75 per cent of the Auckland region median house price. The median house price is that published by the Real Estate Institute of New Zealand for the most recent full month of September, in relation to the relevant date.

So when you're talking about affordable housing in Auckland, you're talking about new builds. And you're talking about a set criteria. It does not, as Key tried to argue, depend. Presumably the Prime Minister knows that, but didn't know the amount or want to acknowledge what "affordable" means these days.

Because here's the rather dire fact. In 2013 when those Special Housing Areas were first created to start reining in rampant Auckland price rises, "affordable" – 75 percent of the media price across the region – was defined as $436,000.

Today, two and a half years later, it has climbed to $578,000. Yep 5-7-8. Thousand.

And the housing shortage in the city has grown, not shrunk. From being 20,000 houses short of population growth, Auckland is now anywhere between 30-50,000 short, depending on whose figures you go by.

While the rate of house building has grown, it's not been enough to match the growing population and thereby stabilise prices.

Key wouldn't say whether he thought $578,000 was a reasonable definition of affordable. Really, no-one can claim it is, but equally he can hardly say that everything that his government has tried – and it has tried quite a bit – is failing.

Key tried to change the question and said, 'hey, look on Trade Me for houses under $550,000'. That is, roughly affordable houses. He said there were "thousands" for sale.

So on Saturday afternoon I went on Trade Me and had a look. There were 1741. If you go on again today, it's down to 1688. And that's across the entire region, up to Rodney and down to Franklin, and so includes some far flung areas.

So that's not really "thousands" as the Prime Minister claimed.

If you drop the search price down to $450,000, near where the affordable price was in 2013, you are limited to smaller apartments or you're mostly heading well out of the city, to Pukekohe, Clendon Park, or Te Hana. Or you could get a bit of bush-clad land with no house on Great Barrier island.

The honest answer is that despite efforts by National, and the council for that matter, the idea of an affordable home is getting more and more farcical, even by the government's own definition.