Hey guys, guess what? GOOD NEWS! TradeMe Property has analysed house rental listings for the last three months and determined that tenant demand is up. The number of enquiries from potential tenants about rental properties in the December quarter was up 13 percent since the same time in 2010. Great news, right?
If you’re a landlord.
If you’re a potential tenant, it’s crap news. It probably means endless rejected applications, missing out on the rare gems that are suitable and reasonably priced in a matter of minutes, and ending up signing a lease for an overpriced or unsuitable home just because you’re scared you won’t find something else. It means landlords can charge what they like because they know they’ll find someone willing to pay more than you. If you have children, pets, or other special circumstances, you probably won’t even get a look in because it’s just easier for the landlord (or property manager) to let to someone less complicated.
So yes, good news is definitely in the eye of the beholder. TradeMe’s stats also add weight to evidence of an emerging housing shortage, which is also bad news for all of us. As Metiria pointed out to interest.co.nz last year, a lack of supply drives rents up, and the Government foots part of the bill via the Accommodation Supplement (AS).
The AS is a government payment to people deemed unable to fully meet their housing costs (board, rent, or mortgage) and it cost the Government $1.2 billion in the year to June 2011. The Government’s official projections don’t predict a major increase in spending on the AS in the next five years, but the Housing Shareholders Association and the Salvation Army say a combination of lack of supply, increasing rents, and an increase in the number of people claiming the AS as the recession bites mean the real cost could be much higher, perhaps as much as $2.2 billion per annum by 2016.
So not only will more people struggle to make ends meet paying higher rents (one quarter of all New Zealand households now spend more than 30 percent of their income on housing costs), with the resulting poor consequences for children and families, but the cost to the Government is significant. And instead of improving outcomes for those to whom the AS is targeted, the main beneficiaries are landlords and property investors, to whom it is effectively a subsidy. There’s something very wrong with this picture.
Without messing with the AS (which hundreds of thousands of people now rely on), wouldn’t it be wise for the Government to invest in the easing the supply side of the housing market, by increasing the provision of affordable state and social housing?
The Green Party has proposed building 2,000 new state and community houses before the rebuild of Christchurch gets underway, to create employment, help to ease housing demand, and keep skilled builders in New Zealand where they’re desperately needed.
What do you think?