New Zealand ranks just behind Australia as having the least affordable homes of six countries, including the United States and Britain, according to the National Business Review.

The 2009 Demographia study of international housing affordability, which looks at the median house price divided by the gross annual median household income, ranked the six countries from least affordable to most affordable as follows:

• Australia (median house price costs 6.3 times annual household earnings);
• New Zealand (5.7);
• Ireland (5.4)
• United Kingdom (5.3)
• Canada (3.5); and
• USA (3.2).

None of the eight New Zealand urban markets covered by the survey, including Tauranga-Bay of Plenty (6.6), Auckland (6.4), Christchurch (6.1), and Wellington (5.9), and Palmerston North (4.9), were considered to be affordable.

A figure above five is regarded as severely unaffordable.

Housing Minister Phil Heatley said steps were being taken to make homes more affordable, including changes to the Resource Management Act and Building Act.

"This research proves that many first home buyers are excluded from entering the property market by a number of factors, including restrictive zoning and consent laws, which not only make life difficult for ordinary Kiwis but are major factors in New Zealand's poor productivity and economic growth levels," he said.

The Government would be ensuring local councils improve the supply of suitable land zoned for new housing and make it easier to redevelop existing land.

The Government was also exploring ways to give banks the confidence to back projects.