Now that the new government has been established, so ends some of the uncertainty that has haunted the property market over recent times. What remains to be seen is the effect that any new policies concerning housing will have on the market going forward.
The government has clearly stated their stance on immigration and foreign ownership of existing property. Foreign investors, largely from China, have been relatively quiet in recent times due to the existing Loan to Value restrictions (which also affect New Zealand investors) together with monetary controls limiting the funds they can remove from their home country. It is difficult to see what significant outcome, if any, on supply or values, the proposed foreign ownership changes will have. Australia has had similar restrictions in place for some time and this has done little to kerb rising values, especially in the major cities of Melbourne and Sydney.
Cuts to immigration have the potential to be a two-edged sword – while it will temper housing demand, it also risks cutting the supply of desperately needed labour especially in the trades, required to achieve the new building objectives proposed under the government’s policies. I’m not convinced the backlog of demand will be satisfied any time soon, partly due to these labour shortages but also due to the woefully poor investment in infrastructure to service new developments – not just new subdivisions, but also further intensification allowed under the Unitary Plan in Auckland.
I recently returned from a property conference in Australia where it was interesting to see some of the large scale developments in and around the Sunshine Coast and Gold Coast in Queensland. Many involved developments of 20,000 sites or more, complete new cities with its associated masterplan including infrastructure development, transport links, schooling, retail and amenities. There were opportunities to purchase vacant lots around mid-A$200,000 together with new four bedroom home and land packages in the mid-A$400,000s.
While Queensland has the advantage of vast tracts of land, I liked their masterplan approach to developing new communities with good transport connections rather than focus on intensification within the expensive cities and all the strain this places on existing infrastructure. This concept has already been muted to develop a similar new sub-city south of Auckland, but is likely to be some 20 years or more in realisation.
Meantime, many economic commentators are predicting a fairly flat market going forward. With investor activity low, this could provide good opportunities for first home buyers, however most of the expectations may well be hoping for an easing in values that may or may not eventuate! This will create some uncertainty to commit, and therefore a continued subdued market activity.
This is Vicki’s final column with Hibiscus Matters. We thank her for all her contributions, which have been much appreciated.