Housing Affordability: New Zealand requires Political Action Now

New Zealand house sales halve in year - Stuff NZ

Winter of discontent predicted for housing market - 09 Apr 2008 - NZ Herald: Property / Real Estate News from New Zealand and around the World

While the Real Estate Institute of New Zealand (REINZ) median house price stabilized for this month of March 2008 – this is due to sales volumes falling dramatically at the lower end of the market.

In reality – house prices are falling.

It is expected new house construction to “fall off the cliff” from this point. Anecdotal evidence from building suppliers indicates that “plan pricing” dropped in half from the beginning of March.

The reality is that people do not believe in property prices any more. The finance sector will increasingly become reluctant to lend in to “fake value” (where housing exceeds three times gross annual household earnings) going forward as well.

New starter housing on the fringes of New Zealand and Australian urban markets should be going in at $140,000 to $160,000 - as set out within the paper Getting performance urban planning in place, the Demographia Open Letter to the New Zealand Housing Minister Street and within a Television New Zealand interview with Hugh Pavletich.

An earlier Report from mid last year by Fitch Ratings as reported in the New Zealand Herald, indicated that when household debt to wealth were considered - New Zealand is the riskiest in the developed world. The United Stateswas rated 10th.

NZ housing market "riskiest in developed world"

Of the six Anglo counties surveyed by Demographia in its 2008 4th Annual Survey (here and here) – New Zealandwas found to be the most housing stressed – with Australiaa close second.

These commercial and political pressures will require Local Government to loosen and open up land supply and finance infrastructure appropriately now – to allow the building industry to start in to the process of providing affordable housing. The New ZealandPrime Minister and Housing Minister have already recently stated they estimate New Zealandis currently under building by 18,000 to 20,000 residential units annually. New Zealandis currently building on an annual basis - just an anaemic 24,000 residential units, with these rates currently falling dramatically.

Hugh Pavletich
Co author – Annual Demographia International Housing Affordability Survey
Christchurch
New Zealand
Tel + 64 3 343 9944

Further information –
Demographia
Scoop New Zealand articles - Hugh Pavletich
"Our young New Zealanders deserve affordable housing" - Letter to NZ politicians

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