October, 2019ASBs chief economist says the country needs to focus on how we build
houses to make them more affordable long-term.
Speaking to delegates at the 2019 Architectural Design New Zealand
conference in Queenstown on Friday, Nick Tuffley said the need to build
homes faster, more effectively and cheaper remains very, very strong.
Its one of the things, I think, under the new Government we are
seeing a lot more of a push into being a lot more open, a lot more
innovative in trying to figure out how we can support ways of building
smarter and cheaper.
But when were looking long-term, how do we make housing more
Theres a lot of structural changes that weve started looking at
harder, but we need to focus on going forward around how we build.
Other issues to be examined in closer detail included zoning, land-use
regulations and red tape, he says.
We probably do need to have a look at our regulation and also the
length of time it can take to get projects through, because uncertainty
Tuffley expects population growth through immigration to hold up over
a good year and slow, gradually, over time.
That means the country still needs to meet the housing needs of a
fairly fast-growing population.
New Zealands also entering new, unknown, territory where the
official cash rates now down to 1% and expected to fall to 0.5% by early
Thats caused substantial falls in floating and fixed-term interest rates,
which has changed affordability for households.
Mortgage rates were about 3.5% the lowest since at least the early
60s the effective mortgage rate has dropped like a stone and the
collective amount of income going towards servicing mortgages is
really, really low.
From a financial perspective, housing affordability has been getting a
little bit better recently and thats because of these dramatic drops in
We do think with interest rates falling we will get a little bit of a
second wind in the housing market, or a third or a fourth wind in some
He expects the Wellington market to pick up and Hawkes Bay, Dunedin
and Southland to continue the strong run, and Auckland might have
some price lifts, which is a catch 22 for affordability.
We want prices to be going up at a slower pace than peoples incomes
so that their incomes can buy a bigger house, or buy & a house.
Affordability is changing because house prices have been flat to down
and incomes have been creeping up.
Were in an environment where, from a financial point of view, its
getting slightly easier to afford a house, much of that because house
prices have stopped galloping up, but also because interest rates have
fallen and are likely to remain down for some time as well.
Source: Otago Daily Times
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