| 12.12.08 :: Terrence Aschoff, Manager CHRANZ
The Centre for Housing Research, Aotearoa New Zealand (CHRANZ) has today released research that identifies the current and future demographics and spatial distribution of the intermediate housing market across New Zealand and investigates the market, social, and policy implications of the trends identified. Conducted by DTZ New Zealand this project was funded by CHRANZ.
The report author Ian Mitchell said "recent housing market trends will provide limited relief to some first time home buyers that cannot afford to buy at the lower quartile house price. At the same time changes in bank lending criteria requiring a higher deposit presents a hurdle. Forecasts of market trends to 2016 indicate that this group will remain a permanent feature of the New Zealand housing market."
The key findings include:
House price escalation in recent years has been accompanied by clear evidence of a growing “intermediate” housing market (IHM) made up of working households that cannot afford to buy at the lower quartile house price under standard bank lending criteria. The relative size of the IHM is a measure of housing affordability for first time buyers.
Across the country, the number of IHM households more than doubled from 72,300 to 187,300 households between 2001 and 2006. Of this total 68,000 (36 percent) were in Auckland, 25,500 (14 percent) in Canterbury, 21,700 (12 percent) in Wellington, 18,500 (10 percent) in the Waikato, and 13,000 (7 percent) in the Bay of Plenty. Together these five regions accounted for 79 percent of all IHM households in 2006.
In relative size, the IHM increased from 34 percent of the national private rental market in 1996 to 58 percent in 2006. The least affordable regions in 2006 included Tasman (where intermediate households comprised 72 percent of the private rental market), Marlborough (71 percent), Auckland (64 percent), Nelson (63 percent), and Canterbury (62 percent).
The IHM is concentrated in single and one or two-parent households where there are two or fewer income sources in lower income occupations and the reference person is under 40 years of age. While people living alone make up the largest individual household type (26 percent), at least 37 percent of IHM households now include children. This represents a minimum of 70,570 IHM households with children.
With the exception of a scenario predicting negative nominal house price growth, the absolute size of the IHM is projected to continue to increase in 2016, particularly in Auckland and the Upper North Island. The most likely scenario ‘low nominal house price growth’ predicts 219,051 IHM households in 2016.
Potential implications of a continued increase in the IHM include the marginalisation of lowest-income rental households in a more competitive market; growing pressure on Government housing and social support expenditure; and adverse economic and social effects, both for fast-growing regions struggling to accommodate key workers and for long-term IHM households excluded from the economic and social benefits of home ownership.
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:
Ian Mitchell
DTZ New Zealand
Phone: 04 460 3857
Cell: 021 389 335
or
Terrence Aschoff
CHRANZ
terrence.aschoff@chranz.co.nz
Phone: 04 439 3326
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