If you listen to any media you would think that Auckland house price inflation is a bad thing for everyone … but is it?
The Cause: Demand Out-Stripping Supply
Most people understand that Auckland house prices are being driven up because there are more people wanting to buy houses than there are houses for sale.
That is marketing 101.
Of course there are the media and some politicians (those in opposition) that would like to point the finger at the Council or Government and turn this issue into a hot topic for debating.
Where the successive Councils and Governments have been slack is in allowing the levels of red-tape to be introduced which has meant that releasing land for building new houses has taken far too long and it is good to see this being addressed along with a fund to help with the building of new infrastructure to support the new development.
Why Is The So Much Demand?
There are a lot of contributing factors to the high levels of demand for Auckland property but the underlying reason is people want to live in this great city, and of course some suburbs are more popular than others too.
Young People In Auckland
Young people are moving to Auckland from the regions, returning from overseas and also shifting from overseas. It is a popular place for young people to live and work with more opportunities to get ahead.
Yes, it does cost more to buy a house or rent a house in Auckland, but that is just one of the factors that young people will consider when deciding on where to live.
Older People In Auckland
As people get older a city like Auckland is attractive too with better access to public transport and healthcare plus there is a lot to do for older people who have time to enjoy like. Of course compared to much of the country the Auckland climate means warmer winters too.
Maybe we should be celebrating the success of Auckland and be grateful that so many people want to call this city their home.
People In Auckland Earn More
Of course this will not be true for everyone, but in general there are more opportunities for employment in Auckland and with that there are more opportunities to get into the higher paying jobs which in many cases just do not exist in the smaller towns.
Many businesses in Auckland are more profitable too with the higher population density making it better for many businesses.
- You will often see restaurants busy on a Tuesday night which is rarer in smaller towns.
- Telecommunications company’s enjoy having more people in a smaller area as it means a lower infrastructure cost.
- Builders and other trades have more work.
- And even mortgage brokers enjoy the larger loans.
There are a lot of businesses that are more profitable because there is a bigger population and that means they employ more staff, pay higher wages and pay more taxes to support other Kiwis.
Increasing House Prices Can Be Good Too
We know that as house prices increase it seems to make it harder for those first home buyers trying to get started, but there are a lot of people that already own a house and they have been benefiting from the increasing house prices.
Home owners have been able to borrow money at the low mortgage interest rates to buy vehicles and household goods where otherwise they might have paid a lot more in interest to finance companies.
The self-employed and business owners have been able to raise finance on their homes to invest in their businesses where otherwise they would have had to get more expensive business finance or not have been able to raise the finance and therefore not invested in their businesses.
Maybe Auckland house price inflation is not such a bad thing.
