Building blocks for Build to Rent in New Zealand

^{Source: REINZ, 2Q20}

Table 1: Residential sales statistics

^{Source: REINZ, 2Q20}

We expect to see a continued moderation in supply as owners who do not need to sell opt not to. This lack of sales momentum would support prices over the short term as has clearly been seen in 2Q20. Demand may also fall back over the coming months as a result of economic concerns and increased unemployment. However, this too will more likely lead to a lack of activity rather than widespread falling prices.

Of more immediate concern for the medium to the long-term housing sector in New Zealand, and Auckland more specifically, is the likely impact of an economic slow-down on future housing supply. It is already well-established that there are not enough homes for Aucklanders and the projected population growth; a factor amplified by a high percentage (~75%) of existing stand-alone homes rather than higher-density dwellings.

On the face of it, consents for new homes in Auckland remain relatively high, showing an understandable development appetite for residential property. However, a deep dive into statistics shows we are increasingly reliant on multi-unit developments, which are less likely to be financially viable today than they were pre-COVID.

Figure 2: Approved consents