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Real estate’s house of cards


Too many houses, or not enough?

There is light at the end of the tunnel for renters and buyers alike as a new report suggests New Zealand could soon be facing a housing surplus.

In the latest Inner Kiwi release, Kiwibank said the market was turning from a “famine” to a “feast”, adding that there was a growing surplus of houses ahead.

Kiwibank senior economist Jeremy Couchman said the ongoing construction boom and positive net migration as people move overseas had culminated in a surge of available properties. Wairarapa was no exception.

“Since our last housing market note a year ago the building industry has been busy. Really busy,” he said.

“Despite all the disruption from covid, despite the lack of materials, and despite the difficulty finding staff, StatsNZ estimates a total of over 41,000 homes were built in the year to June, 2022.”

Couchman said it was the largest addition to New Zealand’s housing stock in available data, which went back to 1991.

“The seismic shifts we’ve seen in housing supply and demand drove down New Zealand’s housing shortage to an estimated 23,000 homes, still large but massively down from a revised 57,000 shortage estimated last year.”

Kiwibank also expected house prices to drop by as much as 13 per cent by the end of the year, exceeding previous estimates of about 10 per cent.

Wairarapa Property Investors Association president Tim Horsbrugh said he agreed with what Kiwibank was saying, saying that the big difference now was the sharp decline in immigration.

“When house prices increased 30 per cent in two years it was expected that this was not normal and they would reduce back.

“Landlords are seeing surplus rentals on the market. It’s starting to get harder to find good tenants, so rents will stabilise.

“The new builds are not cheap to rent so, unfortunately, you still need a good income to afford these.”

However, Horsbrugh said there were still too many people on the emergency housing waitlist and rules would need to change to get a roof over their heads.

“It would be good to see rentals become available for these people.

“Government changes to tenancy laws have made it harder for these people to fill private rentals as landlord’s rights have diminished.”

In March this year there were 206 applicants on the Housing Register across Wairarapa, according to data obtained from the Ministry of Housing and Urban Development.

Of those, 18 were in Carterton, 28 in South Wairarapa and 160 were in Masterton.

Harcourts Masterton managing director Prue Hamill said changes in the market were already being felt in Wairarapa.

“The market has changed everywhere except Christchurch and Otago.

“Locally, as I’ve touched on before, we’ve had less of a [price] drop and more of a correction.

“There are more open homes and more offers on properties.”

Hamill said more properties available for sale would bring great relief to Wairarapa’s rental market, which was already easing up.

“On the rental side of the market we just did not have enough.

“There is still a shortage of properties but it is nothing like it was, people are in a better position and more able to get a home, whereas before they just could not get a property.”

Hamill said homes in the region were taking longer to sell, typically sitting on the market for about 60 days.

However, reluctance from buyers was starting to disappear and people were beginning to make decisions and purchase property.

It was a change in attitude from the past several months, when buyers were reluctant to put an offer on a house in case prices continued to fall further.

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