23.04.07 :: Terrence Aschoff, Manager CHRANZ

The Centre for Housing Research, Aotearoa New Zealand (CHRANZ) has released today research that investigates how the Auckland Region’s private rental market might adjust to cope with the projected fall in home ownership rates and the implications of these trends particularly as low to medium income households become increasingly reliant on private rental accommodation. The research by DTZ New Zealand Ltd was jointly funded by CHRANZ and the Auckland Regional Council.

The key findings include:

Home ownership rates for the Auckland region have fallen 8.1 percentage points from 72.7% in 1991 to 64.6% in 2001 and are projected to decline to 58.3% in 2016.

House price to income ratios have increased across all territorial local authority areas in the Auckland region.

An increase in the proportion of home owners experiencing housing stress (paying more than 30% of their gross income in housing costs) has particularly impacted young home owners and households earning between $50,000 and $70,000.

Proportionally, 21.2% (55,120) of owner occupier households experience stress compared with 32.7% (52,400) of renter households.

There is clear evidence of a growing intermediate housing market where working households cannot afford to buy at the lower quartile house price. The number of households in the intermediate housing sub-market increased from 20,400 in 1996 to 54,900 in 2006, an increase of 169%.

The restriction of access to home ownership is likely to serve to increase the gap between socio-economic groups and could assume a spatial character.

Renters have become a more diverse group incorporating more households with children and older renters who will increasingly out-compete households (single parent and single person) that have traditionally relied on the private rental sector. In the Auckland region, better off households occupy 11.4% (6,630) of all affordable rental dwellings. There is also growing evidence of renting becoming a lifestyle choice for households that cannot afford to buy in suburbs of their choice.

The fall in ownership rates combined with underlying population growth suggests an additional 5,600 rental units will be required every year for the next 10 years in the Auckland region.

The necessary investment required in the private rental market is likely to be forthcoming under conditions of strong price growth, but investment might slow in conditions of moderate or low growth in house prices. The likely future scenario is for moderate house price growth of 5 to 8% per annum. Access to home ownership will remain problematic under conditions of population growth and medium to high capital value growth.

Given the limited capacity of housing policy to influence house price cycles, and the ability of government programmes to mitigate some of the affordability problems faced by target groups, the authors support a supply side focus for housing policy over the medium to long term.

A full copy of the research report is available online. A copy of the CHRANZ Research Bulletin is available online.

For further information please contact:

Terrence Aschoff
CHRANZ
terrence.aschoff@chranz.co.nz
Phone: 04 439 3326

or

Ian Mitchell
National Manager
DTZ Consulting and Research
ian.mitchell@dtz.co.nz
Phone: 04 917 9757
Cell: 021 389 355