Wakatipu home affordability study points to more renters

Owning your own home in Queenstown has become more difficult, if not impossible, for new entrants to achieve, new research by MAC Property shows. This could mean more people looking to rent accommodation and higher rents.

Friday, July 6th 2007, 4:05PM

by The Landlord

With a strong transient work force, increasing interest rates and continued growth in property values, home affordability is an ongoing point of discussion in the Wakatipu region.

MAC Property has recently completed a study of home affordability in the Wakatipu Basin, selecting dwellings sales in Lake Hayes Estate and unit sales in the Fernhill/Sunshine Bay as target areas.

The valuation company has also compared the median house sale price and median household incomes of the Queenstown Lakes District with the national medians and the medians of a number of other centres around New Zealand.

With a Queenstown Lakes District April median dwelling sale price of $529,500, a purchaser utilising 100% financing will be spending 75% of their median gross household income on debt servicing. This means it is becoming more difficult for single income families to purchase even the cheapest family dwelling or unit in the Wakatipu Basin.

The research report says this points to renting as a much more affordable option, “although some rental growth could be expected as demand increases and landlords seek to re-coop rising interest costs”.

“Rental levels have not increased substantially in the past five years and are low in comparison to the cost of purchasing and owning.”

If rental returns remain low, says MAC, there will be no incentive for investors to build or purchase new property for rental investment purposes, thus restricting supply.

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