Government unmoved as Auckland, Christchurch rental crisis deepens

A looming rental crisis belies assurances from senior government members of resurgence in housing.

Aucklanders are bidding up rents in the face of a construction hiatus and Christchurch is facing an accommodation crisis as thousands of houses start to be demolished.

The blame may be sheeted home to lack of developer funding with the demise of finance companies.

But affordability is equally significant. Several recent state sector and private studies have highlighted the connection between council rezoning and an immediate hike in property values.

Pegasus Town developer Bob Robertson tells NBR that councils should leave identification of potential sub division sites up to developers who would then make resource consent applications.

Otherwise, Mr Robertson says, councils are simply signaling to landowners on the fringe of cities that their land can command huge prices from developers who must then pass on the land costs.

Ngai Tahu Properties chief executive, Tony Sewell, highlights the 40%-odd in government and local body taxes and fees.

Both developers say that government predictions of a rapid development of sub divisions are unrealistic.

The rental crisis in Christchurch is looming ahead of the April 2013 deadline for approximately 6000 red zoned residents. It also threatens the rebuild if workers cannot find accommodation.

UBS economist Robin Clements is calling for the government to take a more interventionist approach.

But so far, the Earthquake Recovery Minister Gerry Brownlee has restricted his activities to helping speed up rezoning processes that were already under way.

The Real Estate Institute reports that there are virtually no rental properties available in Christchurch.

A survey by the real estate lobby group found two-thirds of real estate agents in the city, managing some 11,500 houses, needed to relocate tenants so repairs on earthquake-damaged property can be carried out.

About 41% of those agents are finding it “impossible” and a further 44% say it’s “very difficult” to place local homeowners for short-term stays.

“There is a need for a circuit breaker if the rebuild of homes is to be carried out efficiently,” Real Estate Institute Canterbury regional director Tony McPherson says.

One renting couple told NBR that their lease is due to run out and their landlord had indicated he would be advertising the property because rentals were skyrocketing and other tenants were prepared to pay more.

The housing shortage also throw into sharp relieve the plans by Labour leader David Shearer to impose a capital gains tax on investment properties – just when the country needs them more than ever.