Blog 6
James Weir’s article released by the Dominion
Post implements how home ownership is dropping. This means less people own
their own homes as opposed to those who do. In the 1990's studies showed that
close to three out of four families owned their own homes. Now days this has
dropped by 65%. The age gap that thus fell mostly for, was people aged in there
thirties and forties (Kiernan).
The house pricing increase/boom in the 2000's
could reflect the decrease in households owning their own homes. In 2000
"house prices peaked at close to 6 times the average disposable
income" (Weir). First time home buyers and younger people are finding
it extremely difficult to buy into the property market, this could be due to
one of two things; prices have increased to over 6 times the amount of
disposable income or people are not settling down until an older age now or
more Asian migrants are migrating to NZ but reluctant to invest in the property
market which then in turn results in an increase in rental properties (Weir).
Due to prices for houses rapidly increasing,
renting is the next best option financially. “Recent research suggests on
average it is about $138 a week cheaper to rent than own a
house”(Weir). In comparison to home ownership and renting, it is easier
for those whom rent to move houses than those whose money is invested in the
asset. From 2001 to 2013 home owning has decreased by 54.6% over a range of age
groups between 20-70. From 2001 house price started to rise significantly and
the gap between renting and buying has widened greatly
(Kiernan). Homeownershave potential capital gain whereas those in rental
properties do not get this bonus (Weir).
Main focus point feature in the article:
Homeownership is become more and more unrelaisitc to average wage earner in
conjunction with renting.
The article released by the Dominion Post relates
to Welly Real-Estate as it forecasts how the lack of supply versus demand
results in more people choosing to rent. The result of supply and demand is a
branch in the market under Microeconomics that deals with the smaller part of
the market in terms of the decisions making and the implications on individuals.
Advise to Welly Real-Estate could be to
focus the business on property management as the market at present suggests
that many people are choosing to rent over homeownership and this could be
a niche in the market that Welly Real-estate could direct there business
and further generate income. Welly real estate could be in charge of taking on properties from
landlords and manging them whilst receiving a commission. In regards to the
article mentioning more people are choosing to rent this could be quite beneficial
to Welly Real-estate as they market for this is increasing and they have the
chance to expand the business in this way.
Work cited:
Kiernan, G. “More people choosing to
rent”. Web. May 2. 2014. http://www.stuff.co.nz/dominion-post/business/residential-property/9844647/More-people-choosing-to-rent
Weir,J. “More people choosing to rent”. Web.
May 2. 2014. http://www.stuff.co.nz/dominion-post/business/residential-property/9844647/More-people-choosing-to-rent
Smith, D. "House prices surge in
spite of loan restrictions". Web. March 10.
2014. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11213979.
Duncan, H. "House prices surge
in spite of loan restrictions". Web. March 10.
2014. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11213979.
Reserve Bank of New Zealand. "Loan
to valure ratio restrictions". Web. March 10. 2014. http://www.rbnz.govt.nz/financial_stability/macro-prudential_policy/5393159.html
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