Building consents too low to meet demand

November 3, 2013

Tips & Ideas

The New Zealand Government wants 39,000 new homes built in the Auckland region within the next three years however building consents issued are far too low to meet demand.

The NZHerald article quotes Senior Economist Michael Gordon of Westpac Institutional Bank:

Building consents in the under-supplied Auckland market remain “worryingly subdued”, particularly compared to the booming Canterbury region, says Westpac Institutional Bank senior economist Michael Gordon.

Source

The Auckland region will remain ‘red hot’ until supply catches up with demand.  Last year there was a 12 percent rise in home values and to take some of the heat out of the market the Government introduced the new Loan to value (LVR) restrictions.

These restrictions have taken a lot of first time home buyers out of the market leaving it to the property investors.

Property investors can meet the new LVR restrictions and they are generally cashed up ready to purchase at short notice.  First home buyers generally are prepared to pay more to secure their home so property investors are securing property for prices they are happy to pay.

However unless the number of building consents pick up residential property values will continue to rise.

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