Artificial Restrictions on Land Supply Behind High House Prices

The 9th Annual Demographia International Housing Affordability Survey reinforces what we already know – artificial restrictions imposed by councils on the supply of land for residential housing is the single biggest determinant of housing unaffordability, ACT Leader John Banks said today. 

“Auckland is now the ninth most unaffordable city to buy a home, just behind London, and the median house price is now almost seven times the median household income with prices still rising – it’s undesirable, unsustainable, unnecessary and inter-generationally outrageous,” Mr Banks said.

“The cause of the problem is the Resource Management Act and specifically local councils use of Metropolitan Urban Limits (MULs) to restrict land supply.   It is the RMA that stands between young Aucklanders and their first home.   

“The Demographia Survey states ‘Overwhelming economic evidence indicates that urban containment policies, especially land rationing mechanisms (principally urban growth boundaries), raise the price of housing relative to income.’ 

“But this is not the only effect.  The survey finds that artificial land restriction ‘…inevitably leads to a reduced standard of living and increased poverty rates, because the unnecessarily higher costs of housing leave households with less discretionary income to spend on other goods and services.’

“The findings of the survey are clear – if we are serious about affordable housing we must reform the Resource Management Act.   Failure to do so will see the emergence of a tenant generation. 

“ACT is committed to RMA reform and we will be pushing National to take bold steps in the RMA reform programme that is currently under consideration by Ministers,” Mr Banks said.


The 9th Annual Demographia International Housing Affordability Survey: 2013 can be found at: