Bank says the figure will balloon further if the market shows no improvement
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New Zealand faces a significant shortage of affordable housing, according to Kiwibank’s property insights report.
Kiwibank estimated that the country is short 130,000 affordable homes – a figure that will balloon to 150,000 this time next year if the market does not improve.
Read more: ANZ and Kiwibank further drop mortgage rates
Most of the housing shortage is in Auckland as more residents look outside the city for more affordable lifestyles and environments – which in turn boosts house prices in other regions.
Dramatic changes in Auckland’s house prices between 2012 and 2016 also fed into other regions, which contributed to the shortage. However, the report estimated that housing prices will rise across the country this year, while today’s fast-paced regions will experience a huge loss of momentum in 2020 or 2021.
Kiwibank says the fundamental issue is a lack of affordable housing – with emphasis on ‘affordable,’ because unaffordable housing is not likely to unlock any pent-up demand. The bank says Auckland’s house prices will likely experience further declines, but may stabilise next year as a result of chronic shortage combined with ongoing population growth.
Mortgage credit growth might also experience restrictions next year as banks prepare to load more capital.
When it comes to rates, Kiwibank traders unsurprisingly say that “lower is likely.”
"Like an aging heavy weight boxer that keeps getting up from the floor, so is our rates market that keeps trying to sell-off only to get clobbered to the floor on unsteady legs,” senior portfolio manager Ross Weston commented.
“Once again, the week started with optimism only to finish on a whimper – a common theme over the past months.”
