Due to having some time out for surgery it has been a while since I posted an article. During this time an enormous amount of hot air has been exhaled about the Auckland Property market – so much in fact that it may have contributed to our mild winter. Unfortunately that may be the only positive that we will be able to take from it. That’s because the panic created by the housing crisis is likely to be the catalyst for 3 major problems which will impact on housing in Auckland over the following months and years.
Let’s start with the Unitary Plan which was approved by Council in August. This plan has had a huge amount of careful consideration but the impact of the changes it brings to Auckland will take many years to be seen in the practical terms of increased numbers of houses available. This is because of the time it takes to prepare land for housing and for those houses to be built.
And sadly, just as more opportunity for building is being put in place the Australian banks have decided to reduce their lending to developers who would be expected to build these new houses. We may have a new plan in place but there is no vision on how the building will be financed.
The consequence of this is likely to be that those developers who have funding will continue to focus on a smaller number of high-end and high priced properties rather than trying to get finance for larger, lower priced developments. After all, they are business people and that makes complete commercial sense. So we are unlikely to see the influx of houses that will alleviate the crisis being built any time soon.
Another aspect of the housing crisis is that as the Auckland population continues to grow; less and less of the population can afford to buy their own home yet the Reserve Bank has decided to target property investors as a group rather then property speculators in an attempt to curb increasing property prices.
While most people understand the impact that speculation can have on market prices it is not as clear that trying to reduce all property investment will actually help to hold prices in place. What it is likely to do is to reduce the numbers of rental properties available to those who can’t afford to buy a house and that won’t help anyone.
So with no likelihood of the supply of available properties increasing any time soon the next progression of the crisis is likely to be panic by those who get elected into local government and those seeking to be elected (or re-elected) into central government next year.
Auckland has huge voting power (if it’s citizens choose to vote) so I anticipate promises and “fast-tracking” programmes as those who want those votes try to get houses built as quickly as possible.
This is the scariest scenario of all as far as I’m concerned because whenever processes are rushed or “fast-tracked” then the potential for mistakes and dishonesty to occur increases greatly.
Panic created by poor decision making right through our economic infrastructure could allow new building disasters which may one day be as bad as our “leaky house syndrome” is now. How stupid would that be?
I wish the Government would consider the big picture when it comes to New Zealand housing and take action based on an orderly plan to gradually change the situation we find ourselves in. And I wish they would start communicating with us in a straightforward and honest way without worrying about future elections. Isn’t that what they are employed to do? Oh dear, maybe my brain is still clearing out the last of the anesthesia and I am not thinking straight. Who knows?
Advising Auckland property buyers