The demand for rentals is growing at three times the rate of home ownership in New Zealand, a new study says.
In its new paper ‘Beyond Renting’ by the Salvation Army’s Social Policy and Parliamentary Unit, the effectiveness of the Government’s KiwiBuild initiative is called into question.
It suggests the Government introduce a KiwiBuy programme instead of KiwiBuild – a way of subsidising home ownership, to slow down the demand for rental properties.
“KiwiBuy should aim to help people earning around the medium income, not twice the medium income as KiwiBuild,” the report says.
“If we apply imagination and courage to the design of KiwiBuy, then opportunities exist to ensure Kiwis in need can have a KiwiBuild house.”
The Government announced the first KiwiBuild homes ready for sale in September, to be sold through a ballot system. Around 42,000 people have signed up to KiwiBuild that promises 1000 homes in its first year.
But the Salvation Army report says the Government needs to look beyond the private market and begin to “invest heavily” into home-ownership programmes and more public and social housing.
“The rental market is not going to be adequate to meet future demands for housing,” report author Alan Johnson says.
“KiwiBuild is a great initiative, but on its own, it is not enough for the problems we face. We need a KiwiBuy scheme.”
Mr Johnson points to New Zealand’s reliance on private rental housing and small-scale “mum and dad” investors to supply the majority of housing for New Zealand families and young people over the past 30 years.
During this time, rental housing supply has increased by 145 percent, the report says, which is almost three times the rate of growth of home ownership.
Over the past five years, more than two-thirds of new households have gone into rental housing.
“That outcome is not great for tens of thousands of tenant households given the likelihood that rents will continue to rise faster than wages and salaries,” Mr Johnson says.
“Household budgets will be stretched further–especially for low-income families–and there is a real chance the levels of homelessness will continue to rise.”
New Zealand is ranked fifth in a recent report on the world’s most at-risk housing markets.
Out of the ten most risky housing markets, New Zealand had the highest increase in real prices over five years at 43 percent.