An international survey of housing affordability ranks Tauranga among the top unaffordable cities in the world for house prices.

Housing in Los Angeles, San Francisco, Melbourne and Honolulu is more affordable than Tauranga, according to the Demographia International Housing Affordability Survey.

Auckland is even worse than Tauranga on the affordability scale, being the fourth least affordable city on the planet. Beaten only by Hong Kong, Sydney and Vancouver.

The 2017 international housing report surveyed 406 metropolitan housing markets in nine countries, with Auckland's placement among just 26 markets in the ‘severely unaffordable' category.

Christchurch and Wellington housing markets are also classified as severe.

The survey rates middle-income housing affordability by dividing the median house price by the median household income.

The top eight New Zealand markets for unaffordability are:

Auckland, median house price $830,800, median income $83,000.

Tauranga-Western Bay of Plenty median house price $591,900, median income $61,200.

Hamilton-Waikato, $444,900, $72,100.

Christchurch, $435,300, $73,900.

Wellington, $463,700, $79,600.

Napier-Hastings, $340,500, $59,300.

Dunedin, $322,000, $59,700.

Palmerston North-Manawatu, $255,800, $54,900.

Increased subsidies, overcrowded households and lower home ownership are blamed in the report as contributors to unaffordability.

'The ‘median multiple' is not a perfect measure because it does not account for house sizes or build quality. But it is the only index that allows a quick comparison of different housing markets, and it is the best approximation of housing affordability measures we have to date,” says the writer of this year's Demographia survey introduction, Executive Director, The New Zealand Initiative, Oliver Hartwich.

'Demographia's reports and countless other surveys and studies do not leave the slightest doubt that unaffordable housing is almost everywhere and every time caused by the same factor: housing supply restrictions. The more restrictive the market, the more prices will increase over time.

'To any undergraduate student of economics, this will not come as a surprise. But it is still a relatively novel discovery for many planners and politicians.”

The report contrasts Germany which is the most ‘boring' housing market because house prices are so stable compared with countries like Australia, New Zealand and parts of the US.

The reason German and Swiss house prices are stable has a lot to do with the ways councils are funded, says Oliver.

In Germany and Switzerland, council budgets largely depend on their ability to attract new residents and taxpayers. This is why both countries are have traditionally had a more responsive and flexible housing supply side.

Housing affordability is an urgent problem because the effects of unaffordable housing on society are becoming more visible by the day. Policies that raise housing costs are always likely to hit those on low incomes the hardest.

'Thus in our work on different measures of poverty and inequality, we have argued that the best way to tackle both issues would be to make housing more affordable.”