Bond Growth Shrinking

NZ Bond growth is shrinking, the logarithmic scale of my chart below shows that since 2008, the GFC, investors have failed to add proportionally to the market (Logarithmic scale shows similar proportions). This is leading to shortages of Private Rental properties. Especially so for Wellington, Hamilton, and Tauranga. Smaller regions are even worse, with many going negative. (I can only show those that do not go negative, Nelson reduced to 0 or 1 gain per year which also cant be plotted easily)

The Government actions

Housing New Zealand were selling houses as fast as they could up to 2016, 1000 in Tauranga and 2000+ in Auckland in 2016/17. This resulted in a mixed market, because many of those houses have dropped off market monitoring due to lack of stats from the provider. "On 1 April 2017, IHC subsidiary Accessible Properties Limited took over responsibility for 1138 former Housing New Zealand houses and tenancies in Tauranga for an initial 25-year term.”

However new investment by HNZ in some regions is completely missing from the stats at present. HNZ publish details of houses under construction, but they are difficult to use, a quick summary of Wellington shows there are 244 dwellings under construction now, that will show as a thick wedge in the chart below in future, about twice the size of the 2018 Wellington additions.

Is the government assisting? Notice that where Private Rental shortages are forming such as Wellington and Tauranga, there has been no net investment. Investment in Hamilton appears well focussed, but the Private market is quickly heading into surplus - maybe due to this investment. Investment in Auckland may be perfectly well focussed, the growth in Auckland vacancies is not strong yet, despite being already in surplus, the surplus may not be where HNZ clients need properties.

Here is the changes since 2016 as a percentage of HNZ Managed homes in mid 2016, excluding transfers.

Coordination between the Private Market and Social housing providers is not evident, we are in danger of creating a wave of new homes exceeding demand, creating price reductions like has happened due to the same forces in post-earthquake Christchurch (government over-investment)

For reference, here is my chart showing the shortage of private listings by region, based on 2.5% vacancy rate, ie listings as % of Active Bonds. (note, this chart will update with time unrelated to this page) Click on the subheadings such as “Surplus Percentage?” to see further charts.

Jonette 2011