Housing
Homeownership in New Zealand
New Zealand has a strong tradition of homeownership and investment in the housing sector. However, New Zealand's housing environment is not unique.It shares many of the trends, characteristics and policy dilemmas of similar western democracies. However, New Zealanders' household wealth is heavily concentrated in housing when compared to G7 countries. It is estimated that approximately 90 percent of New Zealand households' net assets are held in housing.
The probability that householders in New Zealand will own their own home has been falling since 1991 (73.8 percent ownership), and if current trends continue will fall to 61.8 percent by 2016. This trend is occurring despite the total number of householders owning property having risen since 1991.9 Accompanying the fall in ownership rates has been a redistribution of homeownership away from younger to older households.
Research produced on housing tenure by the Centre for Housing Research, Aotearoa New Zealand indicates that:
- homeownership aspirations remain strong among New Zealanders
- consumerism and high levels of personal debt are barriers to homeownership
- structural change is occurring in the housing market with increasing reliance on rental accommodation
- the current trends in homeownership rates combined with our aging population will have a maximum impact in 2050
- both the absolute number of houses required and the proportion of rental houses to owner-occupied houses will increase.
Implications for the Department
Homeownership and affordable rental housing are important public policy issues. We have taken steps to build our understanding of the homeownership market. We are continuing to work with other government agencies on ways to remove barriers to homeownership and to make housing more affordable to those on modest incomes.
The forecast decline in homeownership and changes in ownership mean policies and strategies may have to be more adaptable in the future.
Factors affecting homeownership and aspirations that need to be considered in future policies are:
- budget constraints
- mortgage servicing ability
- employment
- income
- relationship status
- number of dependants
- likelihood of moving
-leisure and recreation needs.
We will contribute to developing and implementing the New Zealand Housing Strategy in collaboration with Housing New Zealand Corporation, the Ministry of Social Development and The Treasury.
Trends in house prices
The market for existing housing cooled during 2004. Nearly all housing market indicators, such as house sales, house price inflation and residential investment, eased back from their peaks in late 2003 and early 2004 (see Figure 4).
Trends in rental housing
Another feature of the changing housing landscape is the growth in the number of rental units. As reported in the 2001 census, rental units stood at 461,440. This level is projected to grow by 206,490 units to reach 667,930 by 2016. Auckland, as the country's biggest city, is expected to dominate the growth in both owned and rented households during that period.
Approximately 80 percent of tenants in New Zealand rent their home from a private landlord or trust. The other 20 percent rent from a public landlord such as Housing New Zealand Corporation or a local council.10
Many landlords entering the market do so primarily because they see residential rental property as a good investment with an opportunity for making money, rather than seeing themselves in the business of providing people with homes. As a result, there is often a mismatch between the needs of the landlord as an investor and those of tenants who want a stable home.
Rents have increased at an annual rate of 2.5 percent in the December 2005 quarter. In comparison, the cost of homeownership has risen by 6.9 percent in the same period.
Implications for the Department
The mismatch between landlord and tenant expectations is an ongoing issue. Private-sector investment - and, more specifically, institutional investment in new housing stock - is going to be critical to ensuring availability of rental properties to meet the anticipated increase in demand.
We need to examine the regulatory and supply side of the rental market to better understand and respond to drivers of, and barriers to, the supply of rental accommodation, particularly affordable housing and housing that can accommodate the needs of an ageing population.
Changes in the types of people renting homes
The changing nature of the New Zealand population will increasingly have an impact on rental housing.
The individual and family circumstances of those renting are diverse and have also been changing. The main trends in the characteristics of people renting between the 1991 and 2001 censuses reveal changes in the age, household structure and ethnicity of renters.
| Table 1: Homeownership versus rental markets |
| |
Owner Occupied |
Not owned by the usual resident |
| |
Percent |
Number |
Percent |
Number |
| Census 1991 |
74% |
848,916 |
26% |
301,167 |
| Census 2001 |
68% |
868,656 |
32% |
412,197 |
| Rate of growth |
|
2% |
|
37% |
People renting in 2001 were more likely to be:
- older than those renting in 1991 with a sharp increase in the proportion aged over 29 and especially in those aged over 40
- sole parent families and couples with children than those renting in 1991
- from a wider range of ethnic and cultural backgrounds than those renting in 1991.
Those renting in 2001 were also less likely to be just flatting together.11
Implications for the Department
The anticipated increase in rental housing demand continues to point to the need for the right balance between the rights of property owners and those of occupiers. This is a nationwide need, but is particularly significant in the Auckland region where most growth is forecast to occur.
There will always be new tenants and landlords entering the market who are not aware of their rights and obligations. All parties need appropriate protection. Moreover, ensuring good-quality property management practices and meeting the needs of an increasingly diverse population within the rental market will provide challenges.
A key priority for getting the future balance right in rental market legislation is the Residential Tenancies Amendment Bill 2001 and the review of the Residential Tenancies Act 1986.
The proposed Residential Tenancies Amendment Bill broadens the scope of the Residential Tenancies Act to include addressing:
- long-term tenancies
- accommodation in general, including boarding houses and some hostels
- the diversity of tenants and their tenure options
- the quality and standards of rental housing
- the professionalism of the private residential rental market
- dispute resolution and enforcement
- information exchange, education, advice and advocacy.
The Government's aim for the review of the Residential Tenancies Act is to ensure the Act strikes the right balance between the tenants' need for affordable and stable rental housing, and the commercial needs of landlords to manage their properties efficiently and effectively.
Another piece of legislation that is being reviewed and is critical to keeping in touch with changes in the market is the Unit Titles Act. The rapid and anticipated growth of unit title developments (apartments), particularly in the Auckland region, necessitates change to the legislation. The parties affected are unit owners, bodies corporate, developers and tenants. Key areas for attention are:
- improving the clarity and flexibility in the current legislation around financial management, maintenance obligations, information disclosure, consumer protection and dispute resolution
- the transparency and accountability of the parties involved
- the enforcement provisions for breaches of the law or body corporate rules.
Finally, at an operational level, we will be giving priority to implementing a new service delivery approach for dispute resolution within Tenancy Services.