It would be fair to say that over the years the majority of Kiwi’s have had a strong desire to own their own home. It has been suggested that home ownership is in our DNA and a house and a quarter acre section were firmly in the sights of most young people once they became established in the working environment. Then there was a trend perhaps a decade ago when there was a growing swing towards rental accommodation becoming a popular option thereby leaving capital free for recreational uses, travel and the purchase of items of personal enjoyment. There was even a body of opinion that suggested renting was a sound option based purely on financial and economic considerations. In this article we will look at some of the considerations buyers should contemplate today when looking at their housing options.
Firstly let’s consider the pros and cons of renting. It is no secret that demand in and around Wellington for rental property exceeds supply resulting in rental levels hitting an all-time high. Consider then what effect recent Government announcements affecting landlords may have on the available supply of rental property. There is little doubt some landlords will see the introduction of the Healthy Homes standards and other regulatory changes as a burden and will take the easy option of selling their rental properties.
According to the Ministry of Housing and Urban Development, nearly 600,000 households are rental properties in New Zealand and that NZ’s rental housing is generally of poorer quality than owner-occupied homes. The Healthy homes standards aim to make a significant change to the quality of NZ rental properties with minimum standards being set for heating, insulation, ventilation, draught stopping and the prevention of water ingress. Tommy’s share the views of the Ministry that everyone should be entitled to a warm and dry rental home and it has not unreasonably been suggested that by achieving these minimum standards, there will be considerable savings in the country’s health expenses.
Add to this the real threat of a Capital Gains Tax coming into effect and we can anticipate a number of landlords and investors moving on from the rental market or at the least, endeavouring to pass on to tenants some of the compliance costs. The end result seems certain to reduce the numbers of rental properties available through the private sector and to further escalate what are already barely affordable rental levels. We don’t see a lot of upside for tenants if this scenario plays out!
Now for the consideration of those planning to purchase a home. At the fear of stating the obvious, Tommy’s are strong advocates of home ownership. Yes, we have a vested interest in homes being bought and sold but consider the following.
- Interest rates remain at low levels with little indication they will increase dramatically in the near future.
- The supply of homes available for purchase should increase in coming months if landlords bale out in numbers.
- Tommy’s has assisted many clients in achieving significant capital gains in recent years. As long as buying is seen as being a medium to long term strategy, we feel confident that future gains will accrue to homeowners.
- We referred earlier in this article to the Kiwi tradition of seeking out a quarter acre section. This has certainly changed and demand is strong for the contrasting lifestyle of apartment living. In this regard, Wellington is fortunate in that we have a wide range of inner city accommodation available and much more in the planning stage. Tommy’s can offer a range of apartments from small one bedroom units through to the top of the range penthouse apartments. If we haven’t got the right one available now, we will make every endeavour to find it for you.
- Owning your own home gives security of tenure. You decide if and when you want to move and you are not in the hands of a landlord whose circumstances may change at short notice.
- Home ownership gives the scope to make alterations, modernize, replace an outdated kitchen or bathroom and to generally make the house a home and to add value along the way.
- No one wants a mortgage but for most of us, a mortgage is a means to an end. Look at your mortgage as being a compulsory savings scheme. After all, isn’t it better to be reducing your own mortgage than your landlord’s mortgage?
- Retirement security. Having a roof over your head that is yours is comforting in retirement. This is a time of life when income is usually limited but it is also a time when you will reap the rewards of previous years of planning and sacrifice.
Tommy’s sales team will be pleased to discuss these matters with prospective home buyers and renters at no cost and without obligation.