The New Zealand Housing Market - Is It as Bad as It Seems?

March 2, 2018

Talk of reform to address the ‘housing crisis’ has been dominating our headlines since the new coalition government took up house in parliament back in October 2017. One could be forgiven for assuming all is not well in the housing market and that now is not the time to buy, sell or rent. But a quick revision of recent developments paints a not so gloomy picture for all those involved.

 

Foreign house-buyer ban policy may be eased, resulting in more housing stock

At a conference on Tuesday 13 January, Minister of Housing, Phil Twyford, suggested a controversial clause in the government’s developing Overseas Investment Amendment Bill may be altered. As is, the clause would require non-citizens and non-residents to sell their new-build New Zealand lifestyle and residential properties within one year of completion.

Speaking about the clause at the Auckland Housing Collective Action Forum, Twyford said, “We've had a lot of submission on it. My view is the first version of the bill didn't get it right and we are now considering submissions and fine-tuning it.

“We want to protect the domestic housing market from uncontrolled offshore speculation but we want to encourage offshore investors and development.”

Parties openly objecting to the foreign investor clause – including REINZ – say it will hinder the development of NZ’s housing stock, resulting in increased property prices and rents.

The Overseas Investment Amendment Bill is now with the Finance and Expenditure Select Committee, awaiting its second reading in the House and is due at the end of May. Watch this space.

 

First-home buyers still a driving factor in regulating house prices

First-time home buyers appear to be having a positive impact on Christchurch’s housing market, according to property advisors, CoreLogic. The company’s figures report that first-time buyers are now responsible for a quarter of house purchases in the Garden City, their highest share in 12 years.

The first-timers are making the most of a perfect property market storm – prices having been flat for over a year, and there being less competition from investors who lack confidence with the recent change of government.

Head of research from CoreLogic, Nick Goodall explained the flat prices had afforded many renters enough time to save enough money for a deposit. He also cited KiwiSaver grants                and historically low mortgage interest rates as contributing factors.  

 

How Phil Twyford plans to address the renting crisis

There may be light at the end of the tunnel for renters tired of being subjected to increasing rental prices. Housing Minister, Twyford has indicated he plans to reform the Residential Tenancies Act (RTA) by way of legislation by the end of 2018.

Having ruled out rent controls, Twyford has made it clear that he thinks keeping rental prices within reach of tenants will ultimately be a case of increasing the supply of rental properties. He envisages the Government’s KiwiBuild plan (building 100,000 affordable private homes over ten years) freeing up rental properties as their tenants move into the resulting private homes.

While we wait for KiwiBuild to help alleviate the shortage of rental housing stock, Twyford plans to build his RTA reform on a foundation of values including the cessation of letting fees being charged to tenants; legislation that dictates rents can only be raised annually, instead of every six months; a required inclusion in tenancy agreements of a formula for how rent rises are calculated; and an end to no-reason tenancy agreement terminations.  

 

Some advice from experts with skin in the game

It’s easy to be overwhelmed by all the media attention the housing market is getting, but it pays to take it with a grain of salt and consider all sides of the story. If you’d like to hear some well-rounded and informed advice from real estate experts who walk the walk in the rental, sale and purchase of properties on a daily basis, drop us a line at First Avenue Property.

 

Images:

‘Wellingtion Airport at Sunset’ by Stewart Baird under CC BY-NC-ND 2.0

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Filed under Information for home buyers \ Real Estate Investment

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