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How Much Higher Can Auckland Prices Go?

Do We Have a Housing Crisis --- Or a Housing Affordability Crisis? How Much Higher Can Auckland Prices Go?
Smith v Twyford


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National's plan to liberalise the use of Kiwisaver funds and its proposal to raise ts cheap "Welcome Home" loan thresholds to help buyers purchase a new home has been welcomed by home building companies but attacked as a "welfare scheme for property developers" by housing industry experts.

Christchurch housing commentator, Hugh Pavletich, of Christchurch, co-author of the annual Demographia international housing affordability, survey, says making more money available to first-home borrowers “should properly be regarded as a land speculators’ welfare scheme, paid for unnecessarily out of young first-homebuyers’ savings and by excessively taxed taxpayers.

"This is a cynical attempt by the National Party to buy votes at others’ expense.

" It only fuels housing inflation.

"It is likely the Reserve Bank will need to respond by lifting deposit requirements further and increasing interest rates.

" This will in turn lift the $NZ, damaging the export sector further."

On the other hand Grant Porteous of national builder G.J. Gardner, which has its headquarters at Albany, said he was confident more first-home buyers would be able to enter the market thanks to the proposed change.

"Anything that helps new home buyers in the market helps New Zealanders.
"This has got to be good."

Housing Minister Nick Smith said price limits for KiwiSaver HomeStart and Welcome Home loans would be $550,000 in Auckland, $450,000 in Wellington, Christchurch and other similarly priced housing markets, and $350,000 for the rest of the country.

At present, first-home buyers are eligible for a grant of $3000 after three years in KiwiSaver, $4000 after four years and $5000 after five years.
Under KiwiSaver HomeStart, this grant will double to $6000 after three years, $8000 after four years and $10,000 after five years for the purchase of a newly built home.

Porteous said new Auckland house and land packages could be bought under the Auckland $550,000 threshold.

The G.J. Gardner-franchised businesses were selling new three-bedroom, two-bathroom, single-level 120sq m house-and-land packages on 260sq m sites in the Takanini area for $499,000. For $509,000, buyers could get a new 136sq m to 142sq m two-level house on a 206sq m to 235sq m site in that area, he said.


QUESTIONS ABOUT WHETHER WE ACTUALLY HAVE A HOUSING SHORTAGE


The "NZ Herald" this week in an editorial questioned whether we actually had a housing shortage.

It said: "The central problem is not supply, it is the demand for investment property. But National is tackling only the supply side with its efforts to have councils zone more land for housing, and the increased first home subsidy it announced at its campaign launch. These steps will do nothing to limit our appetite for investment property and may simply feed it."

This theme was echoed by Dominic Stevens, Westpac's chief economist who raised doubts about whether housing was in critically short supply:
"Interest rates are really the key driver<" he said.

" I'm not completely convinced that the shortage of housing is causing housing prices to rise because I have not seen rents going up."

ends

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