By Chris Holden
In February 2010 the average Auckland house price was $521,000 - by contrast it's now $992,000.
The Government has blamed Helen Clark's Government, and Winston Peters the 155,000 migrants who have migrated to Auckland since 2010.
But both are wrong. The reality is the Auckland housing crisis has been caused by a historic lack of supply, which has seen house prices skyrocket towards the $1 million mark.
As a result, houses are commonly being sold for more than $400,000 over valuation to both families and developers in the hope that millions will be made.
But after considering the five reasons below, you might just conclude that buying a house in Auckland at the moment could be a million-dollar mistake.
In the 1980s, Auckland Council forced all new houses to be built within a metropolitan urban limit. Fast forward 30 years and Auckland has virtually run out of land to build on.
The recently passed Auckland Unitary Plan has re-zoned land the size of Hamilton currently outside the ring-fence which will see 111,000 new houses built.
"The immediate increase of land supply to fill a shortage will decrease land prices in Auckland," says former Reserve Bank Governor Don Brash.
Such land price decreases will be worst felt by the homeowners who have purchased houses for prices well in excess of valuation.
Put simply: Who would pay the $1.1 million someone paid in 2014 for a house worth $800,000 when a similar home in a new subdivision 10 minutes away can be purchased bang on valuation for $700,000?
As a result, potentially thousands of homeowners may find their home is now worth less than what they paid for it. This could result in a flood of mortgagee sales, which often result in houses being forcefully sold at bargain prices.
Labour leader Andrew Little has committed to banning offshore ownership of New Zealand properties, "even if that means disobeying the Trans-Pacific Partnership Agreement to do so".
Recent data shows up to 30 percent of house sales are to non-IRD registered buyers, which is code name for foreigners. This will reduce demand.
One Asian property investor, who wanted to be referred to as "Angela", told Newshub she's selling all 25 of her Auckland properties because of a "fear of house price drops" and the "possibility of more tax on her profits".
Labour has committed to "significant tax reform", which is likely to see the introduction of a capital gains-style tax, which will see a large proportion of investors leaving the virtually tax-free Auckland housing market in search of higher returns elsewhere.
This month the Reserve Bank cut the official cash rate to a new low of 2 percent and Reserve Bank Governor Graeme Wheeler signalled more cuts are on the way.
Dr Brash also expects that interest rates "will stay low for the foreseeable future".
This means a lower portion of household income is spent servicing the mortgage.
The Unitary Plan is designed to see 422,000 houses built in Auckland by 2040, many of which will be family-style apartments.
Currently with a budget of around $700,000 you'd be lucky to secure a run-down property in south Auckland. But if you wait a few years, you might find comfort in a modern, insulated property that's zoned for good schools and requires little maintenance.
Newshub.
