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Another pointer to a drop in home ownership

Another pointer to a drop in home ownership

The latest survey from Massey University’s Real Estate Analysis Unit appears to confirm a growing shift from home ownership to rental accommodation.

The residential rental market quarterly survey shows an increasing rental population, based on tenancy bonds recorded by the Department of Building and Housing. Year to year figures show that new tenancy bonds have increased from just over 100000 in 1995 to well over 150000 in 2005.

That is an average increase rate of 4 per cent a year compared with average population growth of 1,16 per cent over the same period.

Professor Bob Hargreaves, who prepared the survey, says the results of the five yearly census, due out later this year, will provide the most reliable data on the percentage of households renting and those owning. He says the most likely scenario is an ongoing decline in ownership.

That decline is already showing up in statistics in the unit’s rental market surveys. “In the absence of hard data from the census, there is a clear trend emerging in the bond centre data,” he says. “The statistics show rental tenancies increasing at a faster rate than the rate of growth in the population. From a policy perspective this trend, likely to be confirmed by the census, has implications for home ownership.”

The release of the rental figures follows a report based on A.C. Nielsen research showing a drop in home ownership of 12 per cent in the 12 months to March 2006. It also follows the announcement of a new government advice service on home ownership, highlighting concern about falling rates.

Professor Hargreaves says a further interesting issue is future changes in the affordability of renting compared with owning. The Real Estate Unit’s latest survey uses figures from the recent Massey University Home Affordability Index to make a comparison with rental affordability, based on the median national recent divided into average wages. It shows that since mid 2004 renting has become relatively more affordable.

Over the last quarter the median national rent remained unchanged at $260 a week and was up only $10 or 4 per cent on the same period in 2005. Rents in the large North island cities were relatively static. Dunedin and Christchurch showed gains and small increases were recorded in some North Island cities.

Professor Hargreaves says overall the figures show that rents are still flat-lining. But he says there will be keen interest in where they go from here, driven by demand, as home ownership levels fall, and by variables such as net migration.

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