Generation Rent TPA CHRISTCHURCH, 2 ND SEPTEMBER 2015 SHAMUBEEL - - PowerPoint PPT Presentation
Generation Rent TPA CHRISTCHURCH, 2 ND SEPTEMBER 2015 SHAMUBEEL EAQUB, CFA Economist, author, commentator EAQUB & EAQUB LTD +64 21 573 218 shamubeel.eaqub@gmail.com Broken dreams & impacts 2 Unaffordable housing Broken
TPA CHRISTCHURCH, 2 ND SEPTEMBER 2015
SHAMUBEEL EAQUB, CFA Economist, author, commentator EAQUB & EAQUB LTD +64 21 573 218 shamubeel.eaqub@gmail.com
Unaffordable housing Broken dreams, generation rent & ghettoisation Complex market… …with multiple issues Sustained poor regulation and lack of leadership.
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B R O K E N D R E A M S
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1 2 3 4 5 6 7 1957 1967 1977 1987 1997 2007 Multiple of household annual income
Sources: Statistics NZ, QVNZ, RBNZ 4
Sources: QVNZ, MBIE 5
Sources: REINZ, QVNZ
3% 4% 5% 6% 7% 8% 1994 1998 2002 2006 2010 2014 %pa
Auckland Rest of NZ
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G E N E R A T I O N R E N T G H E T T O I S A T I O N
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Sources: Statistics NZ
50% 55% 60% 65% 70% 75% 80% 1936 1946 1956 1966 1976 1986 1996 2006 Share of households
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Sources: RBNZ, QVNZ, Authors’ calculations in “Generation Rent”
10 20 30 40 50 60 1992 2013 Number of years
Pay off mortgage Save deposit
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Sources: Statistics NZ, QVNZ, RBNZ
500 1,000 1,500 2,000 2,500 West Coast Nelson Southland Otago Wellington Canterbury Taranaki Marlborough Manawatu-Wanganui Hawke's Bay Bay of Plenty Waikato Northland Auckland Gisborne Tasman
Average weekly household incomes Before and after mortgage payments
Income after mortgage Mortgage
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Sources: Statistics NZ
0% 20% 40% 60% 80% 100% Couple Without Child(ren) Not In Family Nucleus Couple With Child(ren) Sole Parent With Child(ren)
Owner-Occupied Rented
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A M U L T I T U D E O F S I N S
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for other reasons
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Sources: Statistics NZ, REINZ, MBIE
75 100 125 150 175 200 225 1992 1995 1998 2001 2004 2007 2010 2013 Index 1995=100
Section Existing home Construction cost (135
Rent
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Sources: Statistics NZ
5 10 15 20 25 30 1945 1961 1976 1991 2006 000s per year
Migration Household size change Natural Total
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Sources: CoreLogic, NZIER
Possible foreign cash buyers 8% First home buyer 19% Investor 45% Mover 28% Other 92%
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Sources: Author’s calculations using online bank calculators
$775k $414k 200 400 600 800 Using a bank calculator If 1/3 of income spent on mortgage $000
Deposit Mortgage
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Sources: Grattan Institute, NZIER, “Generation Rent”
Restrictive: NZ, Australia Standouts: Germany, Switzerland Indicative rental features:
Typical lease term Notice period for landlords Reasons lease can be terminated Pet ownership Minor alterations
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Sources: Statistics NZ, NZIER
0% 1% 2% 3% 4%
Northland Auckland Waikato Bay of Plenty Gisborne Hawke's Bay Taranaki Manawatu-Wanganui Wellington Tasman Nelson Marlborough Canterbury West Coast Otago Southland Total New Zealand
Realised supply in excess of notional demand, % of stock
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Sources: Statistics NZ
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 One Two Three Four Five+ # per year, 2006-2013 # of occupants/# of bedrooms
Demand Supply
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3.4% 4.1% 3.0% 2.2% 2.3% 2.1% 2.2% 2.5% 1.7% 6.0% 0% 1% 2% 3% 4% 5% 6% 7% 10 20 30 40 50 60 70 80 90 Expe cted Real % pa %pa over ‘x’ years
Sources: QVNZ, Statistiics NZ 21
T I M E T O A C T
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Complex market:
Better rental contracts Faster land supply Better banking regulation Remove tax incentives for housing
What is needed?
Revolution not evolution. 23
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