On average, 800 people arrive in Auckland every month looking for somewhere to call home. But nowhere near enough affordable homes are on the market to meet current demand.
Tony Alexander, the BNZ’s chief economist says the shortage will continue to get bigger in the next few years, mainly due to rising construction costs and red tape. He says delays are pushing some builders out of the sector, and that resources are in short supply.
Alexander expects investors will start quitting the market, but not in enough numbers to meet pent-up demand from people looking for a home.
“If the focus on some unhappy investors goes long enough, as I suspect it will, we will see the Reserve Bank ease LVR rules a little bit more,” he says. “When will ears start hearing the banging from frustrated buyers and renters? There is no way of knowing, but it could happen within 12 months.”
He also predicts a downside to the Government’s proposed shared home ownership scheme.
“That represents a rise in demand. That means higher prices,” says Alexander. “Where does this all end some years from now? Recognition that home ownership is an unrealistic expectation for many people until perhaps much longer in their working lives than currently desired.”
Glass half full
Can’t help but comment on a claim that if property investors are put upon by government regulations then there will be fewer rentals.
If property investors decide not to buy (or opt to sell) then it could mean more options for first-time buyers, and that’s got to be good.
Mixed market down south
Home sales in the South Island, via realtor Harcourts, puts the average price of a house at $469,789 — up 15 per cent on April 2017. In Christchurch the average sale is $517,034 (down almost 6 per cent on April last year).
Weekly rent up $20 a week
The cost of renting a three-bed home in Auckland went up by more than $20 a week (3.9 per cent) in the year to March according to realtor and property management firm Barfoot & Thompson. The current rate of inflation is 1.1 per cent and average pre-tax wages rose 4 per cent, during the same period says the Reserve Bank.
While in real terms this means the average rent for a three-bed home has gone up less than it has in the past, it is — says Kiri Barfoot — a notable turning point after the peaks of 2016 and a steady 2017. In 2016 rents rose by 4.3 per cent and in 2016 by almost 5 per cent.
“Despite rising operating and compliance costs, these figures indicate that landlords are choosing not to raise rents by as much as they may have in the past,” says Barfoot, the firm’s director.
“What remains to be seen is how other pending regulatory changes may affect landlords’ costs, and how they will accommodate these.”
These changes include the compulsory installation of ceiling and underfloor insulation by mid 2019. Barfoot is not seeing a mass exodus of landlords from the market.
“Auckland needs more great landlords and now is a great time to purchase a rental property,” she says. “While operating costs are going up, rental yields are now holding their ground in relation to house prices.”
Three-bed properties, which make up around 40 per cent of Barfoot & Thompson’s managed properties, are used as a measure of the market.
The outlier was one-bed properties with an increase of 5.3 per cent year-on-year to March. Prices for rentals of any size were most under pressure in the central suburbs and West Auckland, up 5.7 per cent, and rose the least in Pakuranga and Howick, at just 2.2 per cent.
The length of time tenants are staying in rentals managed by the firm is increasing with the average length of stay having increased to 25.5 months from 23.3 months.
This was first published by the New Zealand Herald.
Press release: Property consultant Stephen Gubb jailed
A property consultant who sold real estate in a business park near Christchurch has been sentenced to two years and nine months in prison on 14 charges of obtaining by deception brought by the Serious Fraud Office.
As an employee of Hughes Developments, Stephen Gubb sold land, leases, and design and build packages for Izone – a Selwyn District Council business hub development located in Rolleston.
Mr Gubb fraudulently obtained 13 commission payments of more than $300,000 from the Selwyn District Council between March 2007 and July 2015. Nearly $150,000 of these payments were eventually transferred into a bank account controlled by Mr Gubb and his co-defendant.
The SFO alleges that Mr Gubb’s co-defendant, who has name suppression, was complicit in obtaining the commission payments.
Mr Gubb also obtained $10,500 by submitting an invoice to the Selwyn District Council for services that were not provided.
Mr Gubb has previously been prosecuted by the SFO on fraud charges involving about $1.18 million. He was convicted and sentenced to four years imprisonment on these charges in December 2003.
SFO Director, Julie Read said, “The sentence reflects the seriousness of offending which was not only deliberate, planned and long running, but a repetition of previous offending. Stephen Gubb defrauded a government body of $300,829, took advantage of his position and betrayed the trust his employer had placed in him. Mr Gubb was given an opportunity to rebuild his life following his previous fraud convictions but instead chose to offend again.”