Another article on Auckland’s housing problems underlining what I have been saying in these columns for some time.
Articles like these won’t make the slightest difference as the causes remain as stubborn as ever.
Immigration, leaky homes, low interest rates, little development, anti- landlord sentiment, threats of capital gains tax, GST, infrastructure costs, etc etc have all been discussed on this site before.
What hasn’t been explored properly is the role that immigrants from Asia play in the property market.
It is no secret that local developers cannot compete with Asian buyers who “launder” their money through overpaying for real estate. Then using their cheap labour and imported materials they can go on and develop a property and make up the difference.
Who can blame them? They work long and hard, are prepared to make sacrifices, and do not expect the State to support them.
Kiwi developers could take a lesson from their book if they wish to compete in a market that is crying out for more affordable houses.
Auckland in grip of housing crisis
When you see feverish media headlines featuring the word “crisis” the more cynical among us tend to think ‘yeah, right’. But in the case of the so- called Auckland housing crisis, there’s more behind it than a desire by journalists to grab your attention whatever way they can.
This is not just any crisis. This one is a like a highly infectious disease that has already begun to choke the life out of that most hallowed of many Kiwi dreams – home ownership.
There are naysayers such as Prime Minister John Key and Auckland Mayor Len Brown who campaigned on the slogan of Auckland being the world’s most livable city, But those who agree there is a serious housing problem include economists, other Auckland councillors, the Productivity Commission, and academics.
Why a crisis? Because the staggering housing shortage isn’t keeping pace with Auckland’s rapidly growing population, with natural growth fuelled by new migrants and expatriates returning home. The latest population forecasts from Statistics New Zealand show Auckland’s population of just under 1.5 million is expected to rise by half a million in the next 20 years. By 2031, the Auckland region is likely to be home to 38 per cent of New Zealand’s population.
By best estimates the city is about 10,000 houses shy of what it needs and it’s only likely to worsen. According to the Salvation Army, under current trends over the next 20 years Auckland will be short of 90,000 houses – more houses than were destroyed in the Christchurch earthquake.
High demand plus sluggish response from property developers and builders due to problems getting funding, equals inflated house prices. While it’s nothing new for Auckland house prices to be well above the national average, more concerning is how high they have risen above the growth in people’s incomes.
The median house price was $505,500 in August this year, up from $453,000 a year ago – a rise of 11.6 per cent, according to the Roost home loan affordability index. In contrast, the median weekly take home pay for a typical buyer only rose 2.7 per cent over the same period, from $820.43 to $842.39.
It means your average house is becoming unaffordable for many Auckland families, even when both adults work.