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Even high earners face a lifetime of renting, says report
5:00AM Tuesday April 24, 2007
By Anne Gibson
Aucklanders earning large five-figure incomes are faced with a lifetime of renting, locked out of home ownership by rising house prices.
Home ownership levels are falling, middle-income families cannot afford to buy and the city will need at least another 56,000 houses and flats in the next decade to meet the demand from those shut out of the property market.
So says a report from property consultants DTZ and others which predicts just 58.3 per cent of Aucklanders will own a house by 2016, down from 72 per cent in 1991.
The report found young families and the elderly would be hardest hit, being increasingly likely to rent and squeezed by relatively low incomes and high house prices.
The report, written by a team led by Ian Mitchell of Wellington, was released by the Centre for Housing Research and found even high-earning households getting $50,000 to $70,000 annually were suffering housing stress, paying more than 30 per cent of their gross income on housing costs.
It found the number of households unable to afford even a place in the cheapest quarter of the housing stock had risen from 20,400 in 1996 to 54,900 last year, a 169 per cent increase.
"Renters have become a more diverse group, incorporating more households with children and older renters who will increasingly out-compete single-parent and single-person households that have traditionally relied on the private rental sector.
"There is growing evidence of renting becoming a lifestyle choice for households that cannot afford to buy in suburbs of their choice," the report said.
"The fall in ownership rates combined with underlying population growth suggests an additional 5600 rental units will be required every year for the next 10 years in the Auckland region.
"The necessary investment required in the private rental market is likely to be forthcoming under conditions of strong price growth, but investment might slow in conditions of moderate or low growth in house prices."
The likely scenario was for moderate house price growth of 5 to 8 per cent a year. Access to home ownership would remain problematic under conditions of population growth and medium to high capital value growth.
"Given the limited capacity of housing policy to influence house price cycles," it said, "and the ability of Government programmes to mitigate some of the affordability problems faced by target groups, the authors support a supply side focus for housing policy over the medium to long term."
The problem
* Fewer Aucklanders can afford to buy a home.
* They are squeezed by high house prices and low wages.
* The number of people renting is rising rapidly.
Possible solutions
* Provide 56,000 new houses and flats in the next 10 years.
* Allow more new house and flat developments.
* Introduce a Government shared-equity scheme.
5:00AM Tuesday April 24, 2007
By Anne Gibson
Aucklanders earning large five-figure incomes are faced with a lifetime of renting, locked out of home ownership by rising house prices.
Home ownership levels are falling, middle-income families cannot afford to buy and the city will need at least another 56,000 houses and flats in the next decade to meet the demand from those shut out of the property market.
So says a report from property consultants DTZ and others which predicts just 58.3 per cent of Aucklanders will own a house by 2016, down from 72 per cent in 1991.
The report found young families and the elderly would be hardest hit, being increasingly likely to rent and squeezed by relatively low incomes and high house prices.
The report, written by a team led by Ian Mitchell of Wellington, was released by the Centre for Housing Research and found even high-earning households getting $50,000 to $70,000 annually were suffering housing stress, paying more than 30 per cent of their gross income on housing costs.
It found the number of households unable to afford even a place in the cheapest quarter of the housing stock had risen from 20,400 in 1996 to 54,900 last year, a 169 per cent increase.
"Renters have become a more diverse group, incorporating more households with children and older renters who will increasingly out-compete single-parent and single-person households that have traditionally relied on the private rental sector.
"There is growing evidence of renting becoming a lifestyle choice for households that cannot afford to buy in suburbs of their choice," the report said.
"The fall in ownership rates combined with underlying population growth suggests an additional 5600 rental units will be required every year for the next 10 years in the Auckland region.
"The necessary investment required in the private rental market is likely to be forthcoming under conditions of strong price growth, but investment might slow in conditions of moderate or low growth in house prices."
The likely scenario was for moderate house price growth of 5 to 8 per cent a year. Access to home ownership would remain problematic under conditions of population growth and medium to high capital value growth.
"Given the limited capacity of housing policy to influence house price cycles," it said, "and the ability of Government programmes to mitigate some of the affordability problems faced by target groups, the authors support a supply side focus for housing policy over the medium to long term."
The problem
* Fewer Aucklanders can afford to buy a home.
* They are squeezed by high house prices and low wages.
* The number of people renting is rising rapidly.
Possible solutions
* Provide 56,000 new houses and flats in the next 10 years.
* Allow more new house and flat developments.
* Introduce a Government shared-equity scheme.
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