Property Institute chief executive Ashley Church expects housing rents to increase rapidly in the next two years – an issue which will overtake high house prices as a far larger problem.
“The cost of renting will continue to rise and this will replace the cost of housing as the number one housing issue in 2018,” he predicted.
“While it’s normal to see rent increases in the period following a property boom, the environment in which they will take place in 2018 will be made worse,” he said.
Rents would increase this year due to the continuation of high immigration, which has meant demand has exceeded supply Church said.
Loan-to-value restrictions have driven investors out of the market and that had taken a toll, he said.
Labour’s plans for a capital gains tax would not encourage landlords to begin buying again, further limiting supply, he said.
Further influencing factors, he said were ring-fenced tax losses and significant new compliance costs that had forced many property investors to increase rents.
“As a result, we’re in for big rent increases in some parts of the country over the next couple of years, with those increases already showing up in the Property Institute regional insights report,” Church said.
Church also predicted house prices would continue to flatten this year, mortgage rates would rise, new Auckland housing construction would only rise slowly and said loan-to-value rules would be further relaxed.
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