18 October 2011
New Zealand is currently facing a housing shortage of approximately 45,000 homes. Bank of New Zealand’s Tony Alexander says there will need to be some extreme changes in New Zealand’s property sector and building code over the next few years if the Government is to help the shortage. But one thing is clear that property values look to increase, and property owners should experience increased valuations of their homes.
Alexander said that no matter what polices the government put in place to try and increase housing supply, the market will not be able to supply the amount of housing needed, putting more pressure on property prices. He also believes the shortage would be around for “a number a years.”
Alexander credited the property shortage to a number of factors including a reducing building trade in New Zealand including the introduction of builders being licensed next year. It’s also becoming more challenging to get finance for new subdivisions; New Zealand has an ageing population, and the current economic situation is adding to the process of purchasing property and household decisions.
The housing shortage will also result in New Zealand property investors sitting tight on their current investments, and will be looking to increase their portfolio before property prices reach even higher levels. Property investors should look to capitalise on the current market situation.