The Growing Housing Affordability Problem in New Zealand's Regional Towns and Cities: An Analysis of Likely Causes and Potential Solutions

Abstract

Housing policies of successive New Zealand governments have been designed to address Auckland’s housing crisis and have paid scant attention to the growing housing affordability problem in New Zealand’s regional towns and cities. This thesis undertakes a literature review into the causes of housing affordability problems in regions before examining the Bay of Plenty region as a case study exhibiting complex regional housing issues. Utilising publicly available data and local council information this thesis takes a deeper look into reports of growing housing deprivation and rising unaffordability in Rotorua, Tauranga and the Eastern Bay of Plenty. This thesis finds that high levels of unaffordable housing in Auckland triggered a ripple effect which resulted in increased internal migration of ex-Aucklanders moving to Tauranga. This in turn increased migration to cheaper locations within the wider Bay of Plenty. Tauranga is grappling with a deficit of readily developable urban land due to population pressures, poor planning and infrastructure funding issues. Rotorua is experiencing high rates of homelessness as a lack of new housing supply and tourism demand for Airbnb properties has led to skyrocketing rents and vulnerable communities being squeezed out. The Eastern Bay is struggling with population pressures, demand for seasonal accommodation, difficulties utilising Māori land for housing and rising housing costs relative to very low average household incomes. These local housing issues are reflected in the wider academic literature on factors which place pressure on regional housing markets. This thesis concludes that addressing poor outcomes in the regional housing space will require a coordinated approach taking into account each aspect of the wider housing ecosystem. Long-term regional spatial planning, reducing barriers to housing supply and policy changes and funding increases to the Progressive Home Ownership scheme are suggested as potential policy options to turn around New Zealand’s declining rate of home ownership. Measures to reduce inflated housing demand and mitigate negative impacts of Airbnbs on the local community in combination with an expanded government state housing build programme are also recommended.