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We are now seeing news items claiming that Auckland has become one of the most expensive places to rent in the world and it’s only set to become worse over time.
Infometrics principal economist and chief executive Brad Olsen has pointed out that rents in Auckland have increased by 8.5%between November 2022 and October this year.
This country recorded a net migration gain of 118,900 for the year ended September 2023, the highest on record for an annual period. Most immigrants arrive in Auckland, and the majority settle there. They then need accommodation, and rent long before they’re in a position to buy a property. This means that rental demand increases faster than house sales demand. You’ve got a lot more people demanding housing, but not necessarily a huge change in supply.
Even outside Auckland, Manawatū/Whanganui also hit a new high, with renters shelling out $20 more than the previous month, pushing the median weekly rent to $550. Palmerston North emerged as the priciest area within the region, reaching a new record of $580.
Meanwhile an analysis of the Tenancy Services bond deposit data shows a consistent decrease in new rental bonds since 2013, with a significant drop from 2019 onwards.
So what can politicians do to stop this from hurtling out of control?
Unfortunately, it is the political activism over past years that has been a significant cause of the problem.
It started in Labour’s first term with the vilification of property investors for house price inflation and accusations that they caused the wealth gap, peddled with a divisive dose of envy-based politics. The narrative was New Zealanders were transfixed with property as an asset class, which was driven by greedy landlords. This anti-landlord narrative was not only offensive; it was quite incorrect. Once property investors were thoroughly vilified with Finance Minister Grant Robertson leading the charge, it was a natural extension of Labour’s PR to label them unreasonable and overbearing in their relationships with tenants. This justified Associate Housing Minister Kris Faafoi’s anti-landlord tenancy laws, brought in to remedy a problem that never existed. Then followed Robertson’s punitive and targeted tax changes which have inevitably become a tenant tax.
Treasury, IRD, the Government’s own housing beurocracy and Renters United all warned the Labour Government that implementing these anti-landlord policies would lead to higher rents. This has proven correct.
With private landlords, who provide more than 80% of rental housing, exiting the market the socially acceptable option is more Government housing. Yet the Government is always an inefficient and high cost landlord. Kāinga Ora's debt is now forecast to peak at $28.9b in 2033 before it begins to be repaid and that the new debt will not be repaid by 2081 when $8.9b will still be outstanding. All this is taxpayer funded debt.
So why do private landlords invest in rental housing?
They do so in the anticipation of making a profit.
Is this so terrible?
Your local supermarket was established not through any overwhelming desire to provide you with a source of nourishment. It was set up to make a profit.
However, the current combination of Government-mandated bank lending policies, politically-motivated interest rates increases and burdensome tax penalties aimed at only residential landlords it is now impossible to buy an investment property, rent it out, and make a profit. For example, the average expense associated with purchasing the median New Zealand home currently exceeds that of renting by just over $38,000 per annum. That’s $730 each week a new landlord would need to make-up from another income source – impossible for most.
So what can politicians do to stop this rental shortage from hurtling out of control?
Simple – encourage and reward rather than punish residential rental property investment.
If landlords were no longer vilified, blamed and abused, and instead were recognised as businesspeople who are providing a necessary and valuable service for society the problem would, over time, be rectified.
Infometrics principal economist and chief executive Brad Olsen has pointed out that rents in Auckland have increased by 8.5%between November 2022 and October this year.
This country recorded a net migration gain of 118,900 for the year ended September 2023, the highest on record for an annual period. Most immigrants arrive in Auckland, and the majority settle there. They then need accommodation, and rent long before they’re in a position to buy a property. This means that rental demand increases faster than house sales demand. You’ve got a lot more people demanding housing, but not necessarily a huge change in supply.
Even outside Auckland, Manawatū/Whanganui also hit a new high, with renters shelling out $20 more than the previous month, pushing the median weekly rent to $550. Palmerston North emerged as the priciest area within the region, reaching a new record of $580.
Meanwhile an analysis of the Tenancy Services bond deposit data shows a consistent decrease in new rental bonds since 2013, with a significant drop from 2019 onwards.
So what can politicians do to stop this from hurtling out of control?
Unfortunately, it is the political activism over past years that has been a significant cause of the problem.
It started in Labour’s first term with the vilification of property investors for house price inflation and accusations that they caused the wealth gap, peddled with a divisive dose of envy-based politics. The narrative was New Zealanders were transfixed with property as an asset class, which was driven by greedy landlords. This anti-landlord narrative was not only offensive; it was quite incorrect. Once property investors were thoroughly vilified with Finance Minister Grant Robertson leading the charge, it was a natural extension of Labour’s PR to label them unreasonable and overbearing in their relationships with tenants. This justified Associate Housing Minister Kris Faafoi’s anti-landlord tenancy laws, brought in to remedy a problem that never existed. Then followed Robertson’s punitive and targeted tax changes which have inevitably become a tenant tax.
Treasury, IRD, the Government’s own housing beurocracy and Renters United all warned the Labour Government that implementing these anti-landlord policies would lead to higher rents. This has proven correct.
With private landlords, who provide more than 80% of rental housing, exiting the market the socially acceptable option is more Government housing. Yet the Government is always an inefficient and high cost landlord. Kāinga Ora's debt is now forecast to peak at $28.9b in 2033 before it begins to be repaid and that the new debt will not be repaid by 2081 when $8.9b will still be outstanding. All this is taxpayer funded debt.
So why do private landlords invest in rental housing?
They do so in the anticipation of making a profit.
Is this so terrible?
Your local supermarket was established not through any overwhelming desire to provide you with a source of nourishment. It was set up to make a profit.
However, the current combination of Government-mandated bank lending policies, politically-motivated interest rates increases and burdensome tax penalties aimed at only residential landlords it is now impossible to buy an investment property, rent it out, and make a profit. For example, the average expense associated with purchasing the median New Zealand home currently exceeds that of renting by just over $38,000 per annum. That’s $730 each week a new landlord would need to make-up from another income source – impossible for most.
So what can politicians do to stop this rental shortage from hurtling out of control?
Simple – encourage and reward rather than punish residential rental property investment.
If landlords were no longer vilified, blamed and abused, and instead were recognised as businesspeople who are providing a necessary and valuable service for society the problem would, over time, be rectified.
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