Comments from the Ground- February 2022

Whilst we have witnessed owners selling off rental property, we have also witnessed owners increasing their rent roll. There remains a high demand for ‘off plan ‘properties especially in Rolleston, Lincoln, Woodend and Rangiora.

A lot of this interest is from investors who do not live in Christchurch. Mainly from Auckland, Hamilton and now Wellington. Christchurch is seen as having better value for money, better growth potential and higher returns. These properties may not hit the market until late 2022 or even 2023.

Demand lies with suburban, 3-4 bedroom, compliant (healthy homes etc), modern, good school zones, near to transport, near to shops, near to recreation. Sadly, there is not enough properties that meet these criteria.

Inner city properties are picking up but traditionally these were often the choice of international students and other foreigners. So potentially good news looking forward.

If the Government was in any doubt as to where their key challenge, outside of Covid, was going to be as we head towards the next election, it is obviously going to be around housing. As mentioned soaring house prices, the costs of new construction being seemingly out of control, supply lines disrupted, contractor insolvency, rising interest rates, affordability – the list goes on. Their inability to generate the new builds as promised under Kiwibuild is telling and whilst they are building more state houses they are also selling off state house stock (some articles would suggest at a faster rate than when under National). And the big question. Does buying existing stock off developers really do anything to ease the housing crisis? Interesting times ahead.

The Associate Minister of Housing, Poto Williams, raised the possibility of the Government introducing Rent Controls. Very quickly shot down by the Prime Minister. With rental increases generally being lower than the rate of inflation over the past year and with rates, insurance, maintenance costs rising faster than the rate of inflation you need to ask what if anything would this achieve other than adding further costs for the owner. The longer-term consequences of rent controls may in fact work against tenants.

 A consequence of the current building issues is that owners are choosing to build smaller properties as they adjust their expectations to meet their budget. Building costs increased 6.1% over the past 12 months.