Rate runs on rental market

John McMahon
Insights Newsletter
2 February, 2018

In recent years, the housing rental market has become New Zealand’s newest national sport. Complete with arm-chair critics and commentators. As competition for housing heats up, the tenants are on the back foot, the market is down on properties and politicians are failing to deliver strong policy.

According to the TradeMe Property Price Index, weekly rents are 6.7% higher than December 2016. Yet, the Wellington Landlords are just getting warmed up.

The government has been slow bowling on rental property policy. This weak delivery will allow the landlords to keep batting for the foreseeable future.

Add to that the $50 boost in the Student Allowance, and more punters are bound to cram into the rental stadium which is already overcapacity.

Each time a new property steps up to the crease, it is quickly snapped up by the slips nearest the agent. All tenants viewing from the outfield and the stands are barred from a piece of the action.

The delivery of tougher regulation during a housing shortage might wind up a no-ball in favour of the landlords, but a lot will depend on the pitch conditions. If the cost of regulations can be hooked straight into the hands of desperate renters, the landlords and rental rates will continue their partnership. But, if the pitch runs the other way, then some landlords may also lose their wicket.

With the home ground advantage firmly in favour of the landlords, the call to limit housing supply further should check with the third umpire. Given the tenant alternatives of sub-standard housing or roughing it in a car, that call was surely made in bad light.

Overall, the current housing policy is a donkey drop for stabilising rent rates.

A spell of policy reform will increase housing supply, but we need the government to make good on their delivery.

As the pace of rental rates dismantles the tenant lower order, the government must call time on ineffective housing policy.

Unless the government prefers tenants sleeping in cars or worse, they should spend more time practicing good policy and less time perfecting its spin. 

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