Right now we have a housing market that doesn't work for anyone except a very small percentage at the top.
Yes, I mean renters, owners, investors; the current system isn't doing well for anyone.
The problem is that it took a while for us to get here, and it's going to take a while for us to dig ourselves out. There isn't a single silver bullet fix.
That only makes it more urgent that we get going on the various different fixes that we'll need.
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Renters are the ones suffering the most, obviously.
Done well, renting can be a good living choice. You get flexibility, as you can move for new work or lifestyle opportunities, and don't have to worry about maintenance of the house you live in.
But we're currently doing it pretty badly.
Rents are climbing by the day, leaving many unable to ever imagine buying their own home.
Home ownership is at its lowest levels since the 1950s, and those who do get there are often saddled with an eye-watering amount of debt that leaves them vulnerable to any change in their finances.
Many rental houses are cold and damp, something new healthy homes legislation aims to address.
Flexibility has been replaced by instability, something the new rental agreements aim to address by pushing landlords to periodic tenancies instead of fixed-term ones.
I certainly hope such measures prove effective. My own memories of renting icy damp properties gives me little sympathy for landlords yelping about finally having to install some insulation.
Despite that, I meant it when I said the current system doesn't work for the majority of landlords either.
Sure, you can find headlines with someone who has built up 10, 20, 100 properties and is crowing about how well they're doing.
But the majority of landlords in New Zealand own one or two houses, possibly homes they used to live in and held on to as a rental investment.
Spend time talking to these people and you find many were sold a gilded dream with little substance behind it.
The core idea of investing is risk versus return. You have to accept more risk if you want to create the possibility of making a bigger investment profit.
Property is an investment classed as medium risk, medium return, and it requires active management for repairs, maintenance, and communication with tenants.
Yet many small-time investors have been sold a dream of low-risk, sky-high returns, and no need to put in any work day to day.
This was always unrealistic. And now the bills are coming due.
How many of those people would have been better suited to a different type of investment, something that truly offered higher returns, and required less daily management from them?
Maybe we would find out, if as a nation we stopped depending so heavily on one asset class.
One of the most obvious, but difficult, solutions to climbing prices is to build more houses. It would not only make it cheaper to buy a home, it would likely also make it cheaper to rent.
But it's not just building more; it's also what type of building we need.
Build-to-rent is an idea that hasn't had its time in New Zealand yet, and deserves more of our attention.
Currently many of our homes are standalone houses, each with a patch of garden out the back, often built to order.
That's nice and all, but we've got too many of them, and not enough of other types of housing that are just as needed.
There's a critical shortage of affordable homes in this country, the type that you rent in, or buy as your first home.
Part of the problem is that historically we haven't been fans of higher density housing. You can thank constraints including the Resource Management Act for that, and customer demand making it more profitable for developers to build McMansions than affordable townhouses.
Meanwhile, build-to-rent is a widely accepted idea overseas, that should be added into the mix in New Zealand.
It would mean new developments built specifically for the rental market, rather than to be sold to individual owners.
In practice, this often means an apartment block, which is built by a professional residential investment company, which also intends to be the one to rent it out.
The building is often central, with shared amenities like a gym or rooftop areas, in order to attract high-quality tenants.
Having the same group building it as renting it encourages a long-term view that means higher quality construction.
The focus is on rental income, rather than increasing value of capital gain, which means a professional landlord that has more incentive to look after their tenants.
It also encourages increased density in our city centres, which we need.
Apartments fell out of favour in New Zealand for many reasons, including the low quality of some of the buildings, and lower capital gain.
The increasing value of housing is usually down to the land beneath it, rather than the structure itself.
When you have apartments, you're all sharing the increased value of that land beneath you, so capital gains can traditionally be lower.
But once again, if you're building to rent, these problems are addressed, hopefully in a way that works for both renters and landlords.
The other, roomier homes are then left for when the renters are ready to buy their first home, and want the space needed for a family, or pets, and don't mind living in the suburbs to get it.
We got here by being unwilling to accept new ideas, especially anything that could pose the slightest threat to our "right" to make money from house prices keeping climbing skywards.
The time for change is overdue. If we do it right, we could even continue making money. Just in a different way.
This column is general information only, and not individual financial advice.
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