What did the Budget deliver for housing?
- By : Daniel Carney
- In : Residential Investment Property,Residential Investment Property Market Updates
- Comments : 0
After months of waiting with only a few snippets of information and plenty of speculation, the 2016 Budget has finally arrived. And with it, of course, comes the inevitable torrent of potential ramifications for the country, residential property investors included.
Auckland and its apparent unaffordability has been on the lips of everyone from first home buyers to seasoned landlords, and no wonder: if current trends continue, the median Auckland home will soon be valued by QV at over a million dollars. While that has proven to be fantastic for anyone looking to retire comfortably, it has unfortunately pushed a great number of others out of the city and into Tauranga and Hamilton, bringing up the prices there in turn.
It's no surprise, then, that the Budget had some big changes in store for the housing industry. Let's take a look!
Freeing up the Crown land
There are concerns that we won't be seeing the benefits of this additional housing anytime soon.
Possibly the largest change for the average property buyer will be the announced $100 million that will be spent on freeing up underutilised Crown land in order to create more space for housing supply. A similar technique was used in Christchurch, though only to the tune of $13.9 million and 420 houses: the Auckland project is on a far greater scale, having started in 2015 with a funding of $52.2 million.
This new pipeline of housing supply in Auckland will likely ease the rapid price growth that has been seen throughout the city and surrounding metropolitan hubs. Hamilton and Tauranga, for example, are seeing over 20 per cent year on year capital gains as a result of investors and first home buyers alike being pushed out of Auckland. However, there are concerns that we won't be seeing the benefits of this additional housing anytime soon, due to the bureaucracy of the Resource Management Act, as well as a greater need for more builders and consents.
For the time being, at least, it is unlikely we will be seeing supply meet demand anytime soon, and prices will only continue to grow in Auckland.
The Residential Tenancies Act was passed unanimously on May 31, which requires landlords to ensure that all their rental properties are safe and warm through the installation of insulation and smoke alarms. New Zealand housing is notoriously lacking in insulation, which can lead to some seriously unpleasant living conditions, particularly as we head into the colder months.
While a smoke alarm is not an expensive investment, some landlords may have been worrying about the cost of the new insulation. Thankfully, the Budget has covered this as well, providing $18 million of operating funding for the Warm Up New Zealand initiative. This scheme provides up to 50 per cent funding for landlords struggling to meet the cost of the new insulation requirements.
These fresh laws will hopefully result in a healthier, warmer New Zealand without putting too much strain on residential property investors in the building upgrades.
Social and emergency housing
Everybody deserves a shelter over their head, and it appears that the Budget is aiming to deliver just that for the more unfortunate members of New Zealand society. About 3,000 emergency homes will be built, with the Government providing over $40 million over the next four years for the construction efforts.
"Emergency housing provides an essential safety net for people in crisis, and is an opportunity to intervene and support families with complex needs," said Social Housing Minister Paula Bennett.
Considering the recent reports of families needing to live in cars throughout Auckland, this new housing spike will certainly be relief for those in need.
There are, of course, plenty of other changes that will affect your life as a residential property investors: these are just some of the more direct ones. If you want to get a full picture of building wealth in light of the 2016 Budget, make sure you get in touch with one of our financial planning experts today!
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