Real Estate Institute Needs To Talk Public Policy
4 May 2006
“Real Estate Institute Needs To Talk Public Policy Sense – Demographia”
The Press article “Older does not mean wiser in real estate” (4 May 2006 – Stuff) outlines a trend where younger first home buyers are purchasing property and renting it, whilst continuing to live with their parents. This method of purchasing first homes is being encouraged by the Real Estate Institute of New Zealand.
“One can understand to a degree this extraordinary advice, with the real estate market waning and the growing number of real estate agencies dropping their fees to the 1 to 2% mark” said Hugh Pavletich, co author of the Demographia International Housing Affordability Survey released late January.
“The New Zealand Real Estate Institute however needs to follow the responsible lead of the Australian Real Estate Institute, Housing Industry Association and others, so that the regulatory and structural problems denying young people access to good quality affordable housing are dealt with” he said.
The Demographia Survey of the 100 major urban markets of the UK, Ireland, United States, Canada, Australia and New Zealand, rated the three major markets of New Zealand as severely unaffordable.
“Normal well governed urban markets should swing between 2.5 to 3.0 times income through the property cycle. Not the near 6.0 as it is currently in New Zealand” said Mr Pavletich, adding “We all need to learn from the soundly governed urban markets that have maintained affordability, such as Houston”
Greater Houston with a population of 5.4 million people and growing by 110,000 a year (2%) is affordable with the current median house price of $US143,310 and less than 3 times household income.
Following Hurricane Katrina seven months ago, the population of Houston was further increased as 240,000 New Orleans citizens were displaced to Houston, where 150,000 have settled.
Due to these two factors, the population of Houston has increased by approximately 260,000 people or 4.8% over the past 12 months. During this period real estate transaction volumes have increased 22.4% and the dollar volume by 32.4%, according to the latest Monthly Report from the Houston Association of Realtors.
The median house price moved from $US136,000 to $US143,310 or 5.3% during this period, which represents approximately 2.8 times median household income.
“Property organizations have a duty to inform the public of the state of our urban property markets and articulate clearly and responsibly, the necessary regulatory changes required, to ensure New Zealanders get as a fair deal as Houstonians do” said Mr Pavletich.