Houses and our national icon, the kiwi, share one thing in common: they’re both in short supply. But while conservation efforts are seeing New Zealand’s world-famous bird thrive, our property problem isn’t so easy to solve.

There have been plenty of actions taken to untangle this problem and provide Kiwis (the people kind) with houses. But are they working? And if they are, how long will it be until supply equals the ever-increasing demand for properties? Let’s take a look at what the experts say, and what this means for housing prices and investor opportunity.

The need for new builds

There are plenty of steps in place to encourage building properties. New houses are exempt from Labour’s new property laws, meaning they can be sold after five years of purchase without incurring high tax rates (which has now been extended to ten years for existing properties). And unlike existing properties, new builds are still eligible for interest deductibility – so rental owners can offset their mortgage interest costs against their rental income. There are also a selection of exceptionally low home loan rate options available to incentivise building new properties.

We now find ourselves in the midst of a building boom. In fact, building consent numbers are at record levels, with over 40,000 new properties consented over the course of a year. And according to realestate.co.nz, property listings have increased 5.2% compared to last year. 

Other things that will turn renters towards your property is the inclusion of a carpark, extra bathrooms (especially for families), and storage space. New Zealand is also one of the leaders in pet ownership, so it doesn’t hurt to be pet friendly (if this is a selling point for your property, consider a fully-fenced outside section).

Out of stock

But even with all this activity, New Zealand’s housing stock has reached a historic low, with almost every region seeing a drop in available properties. 

Vanessa Williams, spokesperson for realestate.co.nz, said that “despite a lift in new listings and incentives to encourage new builds, we’re not yet seeing enough homes listed to ease the supply shortage. This is continuing to put pressure on property prices.”

The data from realestate.co.nz shows that new properties entering the market aren’t enough to quench Kiwis’ demand. In fact, they’re not even steadying the downwards curve of housing stock. This is also because homebuyers are hungry, and, thanks to low interest rates, are snapping up properties as quickly as they can. This is putting an upwards pressure on property prices, with the national average asking price increasing 13.6% year-on-year.

So, when will New Zealand have enough houses?

To be blunt, the housing shortage won’t be solved any time soon. Mike Craig, New Zealand Certified Builders chairperson, has noted that supply issues have slowed down projects, with some being pushed out months from their intended start dates. ASB’s chief economist, Nick Tuffley, said that the government is working to address this with new policies, but estimates that the housing shortage will “be resolved more gradually, reinforcing that lack of supply will continue to give house prices some degree of support.”

And this presents an enticing opportunity for property investors. With an end to the housing shortage nowhere in sight, new builds will continue to remain incredibly appealing to homebuyers across the country. And, if you take into consideration all the incentives for buying into new properties, you’ve got an attractive investment option. They’ll likely keep riding the upwards pressure of high demand – and if the last year or two have been anything to go by, these prices are doing nothing to deter buyers.