Certainly, there are also things happening that may negatively impact on the rental sector, but it is not all smooth sailing.
The Government has made ‘tweaks’ to recent Credit Contract and Consumer Finance Act saying that the legislation had inadvertently impacted on the ability of people to raise a mortgage. These relaxations of the terms and conditions to qualify for a mortgage may be beneficial to some first home owners and indeed to some buyers wishing to up-size but given the rapid increase in house prices over the latter half of 2021 the ability to raise the required deposit and to service the high level of borrowing will keep home ownership away from many. Note however that these ‘tweaks’ do not come into effect until early June. Different issues face those wishing to buy new homes. Severe delays in getting the necessary approvals, in getting materials, rapid increases in the price of materials and a high degree of uncertainty have resulted in many people deferring the decision to buy.
There is evidence that the rapidly increasing price of homes is slowing – some even predicting that prices may fall, one bank saying by up to 10%. Really? A 10% drop, following a 30% increase last year, doesn’t really make things better for home buyers. A big part of this drop has been created by an increase in the number of homes on the market coupled with the reducing number of people seeking to purchase. As both of these factors change, buoyed by the anticipated return of many New Zealanders following the lifting of border restrictions, this scenario could soon turn and other commentators are concerned that prices will once again start to move upwards. Inflation has reared its ugly head yet again and it is predicted that it could rise to over 7.5% over the next few weeks. The Ukraine situation has impacted fuel costs but families are really feeling the pinch as wages and disposable income struggle to keep up. The Government has finally agreed that New Zealand is facing a cost of living crisis (they prefer not to use the word crisis) and has taken steps to try and remedy this as best they can. It seems to us however that calls for a lift in the average wage to the living wage, whilst well intended, comes at a time when businesses already severely impacted by the Covid pandemic can least afford to pay this. A difficult dilemma with no easy solution.
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So still a long way to go to resolve New Zealand’s housing problems.
Going back to the matter of shortages of building materials. It appears that there is a booming market for materials on on-line auction sites. A recent auction for 23 sheets of GIB plasterboard attracted a bid of $3,260. The same items, IF available at Bunnings would cost $777. Other auctions saw 50 sheets of plasterboard got for $6,050. 18 sheets for $2,669 and 10 sheets for $1,210 – all at least 3 times the retail price. Incidentally the lead time being quoted for the supply of plasterboard is late May / June.