NZPIF Media Release
The latest OECD Housing report claims that New Zealand house prices are 70% too high compared to rental prices. There are a number of reasons why this is inaccurate.
There are structural reasons for why housing costs in New Zealand are high (only some of which Government can influence), there are short term economic cycle reasons and rents in New Zealand are too low.
Structural reasons for high house prices are predominantly shortage of supply, our desire for large houses on individual sections, high building costs and high council charges.
Supply shortages currently adding to house price pressures are:
as well as
A NZ Property Investors Federation (NZPIF) study demonstrates that rental prices in New Zealand are too low. The study shows that it is currently $159 per week cheaper to rent than to own the average house in New Zealand.
"If the New Zealand public want house prices that are a lower ratio to incomes and rents, we need to accept that this means smaller houses. We also need Government to address the high cost of building materials and Council charges" says NZPIF Executive Officer, Andrew King.
"We need to accept that economic conditions are constantly changing and resist the urge to 'do something' about it as there are always unintentional and potentially long reaching negative effects" says King.
"The fact that rental prices as a percentage of housing costs are low is something tenants should enjoy while they can" says King. "As interest rates and Government regulations are increasing, rents are likely to increase at a faster rate."