But writer and activist Deirdre also has a warning for those on the property ladder. Here’s her report:
“Get any middle class family together for long enough and you will probably hear an older person advising a younger one on investing. ‘Get on the property ladder as soon as you can. You need the capital gain to get ahead.’ Or some variation of this.
The longer property bubble
The long property bubble in Auckland has spread to Wellington and up the coast.
Quotable Value now says “The average house value in the Kapiti district is now $541,500, an increase of 37% on capital values three years ago.”
This gives the average home owner a total of $146,245 potential capital gain for the three years. Nice if you can get it, but shattering for those who can’t get on the property ladder. And if you multiply that by the number of properties you get something like $37 billion. That is the total rise in value over three years for Kapiti’s property owners.
It’s the increase in land values
So why does the land value grow? One of the reasons is that government and local government build infrastructure to service the site – it’s an advantage to be near transport and schools and population growth. Others build houses, the community gets more organisations and so on.
So those who own land have an advantage of those who don’t. There were stories in Otaki of people having to sell their homes to move to Shannon or Levin because they couldn’t keep up with mortgage payments, rates and insurance. A housing co-operative has begun in Paekakariki to enable valuable longtime residents to stay.
ANZ economist Sharon Zollner’s view
It was good to see Chief Economist of the ANZ bank Sharon Zollner saying in July that not only does the high hurdle to purchasing homes have important implications for wealth equality, generational equity and financial stability, but it also affects the economy’s productive potential.
A look on Trade Me found that the highest price house in the district was over a million dollars and the lowest a one bedroom house in Rimu Road. The highest price section was $1,385,000 of 4,363 sq m in Matatua Road on beach front lush tranquil for discrimination buyers. A removable house without land can cost as little as $115,000 whereas a section in Otaihanga is going for $350,000.
Highest rents are $695 a week in Raumati and lowest $340 for a 2 bedroom house in Otaki. QV tell us there has been a 12.5% increase in e-valuer rent in the last year.
A look on Trade Me found that the highest price house in the district was over a million dollars and the lowest a one bedroom house in Rimu Road. The highest price section was $1,385,000 of 4,363 sq m in Matatua Road on beach front lush tranquil for discrimination buyers. A removable house without land can cost as little as $115,000.
QV tell us there has been a 12.5% increase in e-valuer rent in the last year.
But land prices don’t always go up. They have dropped in Sydney lately.
So who knows what is ahead?