Housing crisis or infrastructure crisis that is the question. International trends show that the percentage of renters increases alongside the housing shortage in cities with economic developments. Is renting the "way of life" for Millennials who follow good paid jobs?
Trends for Renters
Result of the Housing Crisis?
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Who can predict the housing market for tomorrow?
Leading economists have failed to predict the housing market and economic future. When looking at the wider picture New Zealand has been following the global economies and is strongly influenced by consumer’s behavior. Think about, what kind of products people keep buying? What type of cars are parked in your street, or how much do you spend on communication and products like Smartphones, etc?
Internationally Renters outnumber Home Owners
In terms of housing the international trend continues that the percentage of renters outnumbers owner-occupied homes. Renting is becoming the "way of life" for younger generations who want to have it all higher housing standards, flashy cars, hire purchases, travelling and of course a smartphone and career (Millennials). How much motivation is left to buy and renovate a home?
Locally you can witness a shift from rural to industrial lifestyles. People move to cities because of jobs and want to live close to work, entertainment and conveniences. That causes the housing shortage in certain areas. Take for instance smaller towns like charming Napier with new built housing and vacancy rates. In contrast Auckland is already helplessly congested and on top of it the house crisis - why would you want to live there?
More Single Households and Couples
The social structures have been changing as well. More single households, retirees (Baby Boomers), and professional couples prefer renting for various reasons and keen to live in apartments and townhouses. That is trendy.
In my observations the housing crisis goes alongside with a structure crisis. If people cannot find good paid jobs and businesses cannot emerge because of lack of infrastructure such as broadband communication or high-speed Internet people have to move. Young people are more flexible, anyway. Globalization versus job security, why would you take the risk, having an unfinished renovation, a mortgage and made redundant?
What are the Options for Renters?
There is only one option; learning to live with the things you can't change. Nobody will find a job for life. And finding a good paid job in a city with a lack of housing requires making compromises. As you would expect the housing shortage does not go away soon.
There is a strong indication that housing costs are still on the way up. The banks have changed their rules, credit is tighter and interest rates are on the rise.
That pressures the rental housing market for two reasons: potential buyers remain renting and investors pass on increasing expenses.
When comparing NZ’s rental housing market with my experiences as renter over 25 years in different countries I have the strong feeling that NZ’s housing policies backfire. Now, during the 2014 election campaigns the roaring guns are louder than ever. For building more housing investors are needed. How many people have the resources to build their own house? Since the last election first-time homebuyers keep renting and investors left the market Who will fill the gap in the housing market?
The only option I can recommend to improve individual situations, be identified as desirable or preferred tenant and get a tenancy agreement in place that covers your plans and use that time to save towards your future.
If you look for a long-term rental it will pay off dealing with a landlord directly as an agent between two parties has his/her own agenda. All services between you and the landlord are additional costs. Ask yourself, when the landlord cannot deal with you, what service can you expect? What does not look right first time – never will.
Consider to rent on fixed-term as long as you can. Sign the tenancy with the option to extend under same conditions that would protect you from erratic rent increases and the impact of the housing crisis that looks to me more than a infrastructure crisis. Good luck.
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Klauster Properties Ltd - Renter’s Blog
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