Professional Investment Services

Many people are asking what will happen if the proposed tax reforms are introduced and investment property does not get as many tax benefits as before.

My simple, quick and dirty answer has always been. Rents Will Rise.

The following information pulled from From the Housing NZ (Auditor General)website will provide you with a bit more of an understanding however:

Role and structure of Housing New Zealand Corporation

1.2
Housing New Zealand Corporation (the Corporation) is the entity responsible for managing state housing on behalf of the Crown.1 It provides housing to people who are unable to find suitable and sustainable accommodation through the private sector. It houses about 190,000 people, and controls an asset portfolio of more than 66,000 state houses with a value of $11,300 million. The Corporation also works to increase levels of home ownership, and has a lead role in advising the Government on housing policy.

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The Corporation’s services are in high demand. As at 30 June 2005, there were 11,458 applicants on the state housing waiting list. Of these applicants, the Corporation assessed 4288 as being of high priority for state-provided housing. Although 57% of the high-priority applicants live in Auckland, only 44% of all state houses are located in Auckland. In response to this demand, the Corporation plans to increase the number of state houses by 3164 between 2005-06 and 2008-09. Most of the additional state houses will be in Auckland.

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Some of the additional houses will be built by the Corporation, and some will be buildings bought or leased from private owners. The Corporation will also reconfigure some houses to make them better match the needs of applicants on its waiting list. Most state houses are made available to applicants on the general waiting list, but some are specifically for people in rural areas, and some are made available only to providers of residential

Did you get that? 11,458 applicants in 2005 !! That was the number then  so guess what it might be now!

So lets do some maths with that information.  11,458 x 2.2. people average per dwelling (thats from the last census) = 25,000 people who need housing supplied by the state.

In 2010 the figure must be even larger and I would guess there might be 30,000 people today or 13,600 extra homes that need to be built to provide just the state housing demand – almost a years building.

Now we add to this already significant problem a bunch of nuffnuts who want to punish the private sector for providing homes either directly or to the Corporation.

There is only one way for rents to go- and that is up!