New Zealand homes less affordable than in Australia

New Zealand homes became less affordable than Australia in 2012 as constrained land supply and government levies, combined with low borrowing costs, pushed prices higher, according to a survey.

The median home price in New Zealand's major urban centres rose to 6.7 times gross annual median household income from 6.4 times a year earlier, according to the ninth annual report by American consulting company Demographia. House prices in New Zealand jumped 6.7 per cent in 2012, with 74,000 houses sold, the most since 2007, according to the Real Estate Institute of New Zealand.

The survey examined housing prices in Australia, Canada, Hong Kong, Ireland, New Zealand, the UK and the US. A reading of 5.1 or more is considered "severely unaffordable", while below 3 is seen as affordable.

"It costs too much and takes too long to build a house in New Zealand," Bill English, the country's finance minister and deputy prime minister, said in an introductory letter accompanying the survey. "Land has been made artificially scare by regulation that locks up land for development."

The structure of infrastructure financing, government levies and higher building material costs than Australia had also raised home prices, English said.

The Reserve Bank of New Zealand has kept the nation's benchmark interest rate at a record-low 2.5 per cent since March 2011 to help revive growth after earthquakes devastated the country's third-biggest city, Christchurch, and the surrounding Canterbury region. The central bank's governor, Graeme Wheeler, said in December he would monitor the housing market and was prepared to raise rates if property price rises fanned spending and borrowing.