Unintended conseqences blow up in government’s face as housing crisis bites hard in Wellington

The perfect storm in housing has reached Wellington.

Anyone with a modicum of understanding of basic economics and how markets work could have predicted this:

Wellington renters are desperate for homes as the number of available rentals plummets a record 70 per cent.

“We haven’t seen anything like this before, it’s quite unusual,” said head of Trade Me Property Nigel Jeffries.

“It’s a record drop as far as our records go back.

Trade Me’s data shows the number of listings remains about the same, but the availability of them by the end of the month is drastically reduced as properties are snapped up much faster.

The 70 per cent drop is for available Wellington listings in December, compared to the same period a year ago.  

As I said, not really surprising. When you bash landlords, blame them for all the housing ills, change tax codes to limit landlords, then introduce a pseudo-capital gains tax, introducing a rental warrant of fitness and stoke the demand side of the market by chucking cash at renters in the form of free study then when all that comes together you end up with what has happened in Wellington.

Bidding for a rental is happening more too as renters fight it out to snap up a home.

One Trade Me listing for a two-bedroom rental had to be taken down only 25 hours after going up due to a deluge of 55 applications.

Excess of demand over supply…always leads to price rises, always has, always will.

Jeffries said some landlords would shortlist possible tenants and then go back to them and ask what the highest rent they were willing to pay way.

It’s a heavy blow on top of the jump in median rent – since October the average median rent has spiked $30 from $450 per week to $480 in December, to match the record set in January last year.

“We expect to see a new record price in January as the influx of university students heats the market even further,” Jeffries said.

He believed the spike in cost would reach about $50.

The rent spike is driven by a combination of factors including a lack of housing, first time buyers staying in their rentals longer while they save a deposit and the influx of people coming into Wellington, he said.

There’s a heap of reasons that have all contributed to the situation. All unintended consequences though.

Some owners have simply bailed on the rental market rather than deal with increased compliance, standards, warrants of fitness, heating and warmth law changes etc.

They’re learning the hard way why you don’t screw with markets to try and force idealistic outcomes. It doesn’t work.

You usually end up screwing over the very people you supposed to be making life easier for.

 

-NZ Herald


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

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