The housing crisis has been a hot topic since the general election, which saw Jacinda Arden become the 40th Prime Minister of New Zealand. The crisis is well-entrenched. Rents are climbing and Auckland’s property market has become almost impossible to break into. 2018 could be an interesting year for housing. Now a new government has taken the reigns of our country, the housing market could be set for a shake-up.
Based on some of the announcements made by Labour, it’s expected there will be major changes in key areas of the market. These include building more homes through the KiwiBuild programme. The plan is to build 100,000 affordable, high-quality homes across the country in 10 years. 50% of them will be in Auckland. KiwiBuild homes will only be sold to first-time buyers, in a bid to help younger people break into the property market. Only a quarter of adults under 40-years-old own their own home in New Zealand. Also, the government will ban foreign buyers and immigration is set to be reduced.
The market has an ongoing imbalance of supply and demand. As the housing shortage is so large, it’s uncertain whether the KiwiBuild programme will have a significant impact on the imbalance. Since banks are tightening up their lending in light of the uncertainty, it remains to be seen how developers will get the funding required to achieve the build target.
Despite the changes in lending, the market continues to grow but at a slower rate. New findings have revealed the Auckland market softened in January and house listings were down 7.8 percent on the previous year, while the total number of stock has increased. This could indicate that people are now more uncertain about selling their home.
It will not be clear until the latter stages of 2018 whether the listings drop is a permanent slump. While Auckland has years of work ahead to correct its shortage, Christchurch could end up with an oversupply of properties. There has also been a number of predictions for 2018 from real estate firm Colliers International. They have said New Zealand investment groups will dominate rural property purchases, and government efforts to increase skilled labour will be constrained. They believe other policies, such as reduced immigration and free tertiary education for a year, will be prioritised over plans to increase labour.
Amidst the speculation and predictions, what’s most important is finding a way to resolve the problem. A working group has come together to find a solution to New Zealand’s housing crisis. The group was formed by an array of key individuals in the industry, such as Housing Minister Phil Twyford, Auckland deputy Bill Cashmere, and housing strategist Leonie Freeman. It’s a step in the right direction to alleviating the problem with these figures around the same table.
There’s no doubt 2018 will present some challenges for the housing market. There is widespread uncertainty of whether the government’s increased spending will benefit the economy and the welfare of New Zealanders. But with government policies to build new homes and curb immigration, there could be a fall in house prices. A clearer picture of the market will likely reveal itself over the next quarters of 2018.
What do you think will happen to the NZ housing Market in 2018? Let us know in the comments box below.
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