Waikato has an 8000-home shortfall, and counting
John Kenel
20 Years of Property Development Success Secrets Packed into One Course - Join The Property Development Club Today!
I whole-heartedly agree with the concerns about the shortfall in housing. Despite the critical need, we’re not building enough houses.
Several factors are working against us: high interest rates, restrictive zoning laws, a shortage of infrastructure (especially in inner cities), and high development contributions. All these obstacles make new housing development a challenging endeavour.
As a developer, I continue to build even during housing slumps. This isn’t my first rodeo; I build to keep properties in my own portfolio when sales are difficult to achieve. When the market is active and people are buying, I develop properties to sell. This is why I’m currently acquiring development land and obtaining consents, preparing for the next market upturn.
Unfortunately, we are caught in these destructive boom-bust cycles driven by the Reserve Bank’s fluctuating interest rates. When rates are too low, people borrow and spend excessively. When rates are too high, people and businesses go bust, causing irreparable damage. For example, I recently spoke to a builder who had to lay off a large portion of his team. As a result, half of the young workers moved to Australia and may never return. When the rates drop again and demand for homes rises, we won’t have the necessary labour to build quickly enough.
High interest rates discourage borrowing, making it harder for developers to fund projects and for buyers to secure mortgages.
Restrictive zoning limits where and how much we can build, while the lack of infrastructure, particularly in inner cities, hampers our ability to develop efficiently.
High development contributions further increase costs, making new projects less viable.
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Despite these challenges, I remain committed to building. I know that in the long run, these cycles will continue. By preparing now, I can take advantage of the next market upswing.
However, the volatility caused by these cycles is frustrating and damaging. We lose skilled workers, slow down our progress, and ultimately fail to meet the housing needs of our communities. It’s a shame that our housing market is subject to such extreme fluctuations. If we could find a way to stabilise interest rates and create a more consistent, supportive environment for development, we could build more homes and meet the needs of our growing population without the devastating boom-bust cycle. Until then, we continue to navigate these challenges, build when we can, and prepare for better times ahead.
In conclusion, the current state of the housing market is a testament to the need for more stable, long-term policies that support continuous development. By addressing high interest rates, restrictive zoning, infrastructure shortages, and high development contributions, we can create a more resilient housing market that benefits everyone.
John Kenel
Assured Property and The Property Development Club
Property developer and your next JV partner
7 个月The boom bust environment brought about by volatility in rates coupled with any form of government involvement seems to be doing a good job of ticking the box of ‘not just building more’. So how do we build smarter?
Xpect Property Development - Complex/Unique Projects, Scale Development, & Continuous Improvement. Call me to diagnose.
7 个月Big dev contribution announcement going to hit Auckland like a wet fish across the face on the 22nd August.