33,000 ghost homes in Auckland...

Rise of the ghost homes - More than 33,000 Auckland dwellings officially classified empty

7:32 PM Sunday Jun 12, 2016

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11654495

More than 33,000 Auckland dwellings are officially classified empty as the city grapples with a crisis of affordable housing and homelessness.

Auckland's 6.6 per cent vacancy rate is higher than either Sydney (5.2 per cent) or Melbourne (4.8 per cent), where there has been an uproar over "ghost houses" deliberately left empty by speculators trading on a soaring market.

Critics such as Labour's Phil Twyford claim the figures show the same is happening here, especially as the 2013 Census figures predate an increase in foreign buyers in 2014-2015.

But sceptics, including Housing Minister Nick Smith and an independent analyst who examined the figures for the Weekend Herald, say there is no evidence that large numbers of local or foreign buyers are deliberately leaving their houses empty while prices increase.

The figures follow news this week that major banks are restricting loans to foreign buyers.

BNZ yesterday joined ANZ and Westpac, saying it would no longer recognise foreign income for non-New Zealand or Australian citizens and would require a 40 per cent deposit from New Zealand and Australian citizens not currently living in New Zealand but using foreign income to service a loan.

John Polkinghorne, associate director of Parnell-based specialist property consultancy RCG, said a breakdown of Auckland suburbs showed Hobsonville East had the most empty places, "presumably because many of the homes have just been built and not yet occupied".

The CBD had 2200 apartments or dwellings empty on census night, which he attributed to intermittent tenancy by owners and many vacant between short-term tenancies.

Not surprisingly, the analysis showed the largest number of vacant dwellings in the Auckland region were baches, inflating figures for Great Barrier Island, Karekare and Waiheke Island.

Labour's Housing spokesman Phil Twyford said it was not surprising that the super-rich were happy to leave houses empty when Auckland prices were rising so fast.

"It's madness, and says a lot about the housing crisis, that we've got thousands of homes deliberately left vacant by their owners while in South Auckland there are kids sleeping under bushes."

He said Labour would crack down on property speculators, starting with a ban on non-resident foreigners buying existing homes.

Auckland councillor Chris Darby expressed concerns about vacancies in multi-million dollar Stanley Pt houses near where he lives on the North Shore.

If the empty houses were maintained "the only people who are there are the pool cleaners and gardeners," he said.  Some places were left unattended and grass berms remained unmowed, raising social and community issues.

Chris Haturini of Mt Albert said her family had suffered for two years living alongside a "ghost house", which she said was owned by an overseas-based investor.

It had been infested with rats and occupied by squatters and drug users who left used syringes lying about.

Ms Haturini, who is in the property management and now home staging business, said she had heard up to 35,000 residences in the city could be empty.  "People are afraid to talk about this ... But it's just nuts."

Some empty Auckland houses are thought to be owned by overseas-based owners, but some are owned by local investors, holding them short-term to sell for huge profits without the hassle of finding tenants in the interim.

Mr Polkinghorne said he doubted there were widespread problems.

"Unless things have changed significantly since the census three years ago, my view is that it's very unlikely that people are leaving homes empty en masse across Auckland."

Asked how he knew that, based on outdated data, he said: "It's certainly possible that it's become a bit more of an issue in the last three years."

Mr Twyford said the census data was collected before the large number of Chinese-based investors swooped on Auckland properties.

Editorial: Banks' move could be turning point for housing

5:00 AM Saturday Jun 11, 2016

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11654388

The decision of two of the country's big four trading banks to stop lending to foreign buyers of houses here appears to have taken everyone by surprise. If the Reserve Bank had any warning, Governor Graeme Wheeler gave no hint of it in his monthly announcement of the official cash rate the same day.

Commentators had not raised the possibility and economists, even those employed by the banks, were unable to explain the decision yesterday. That suggests it was taken purely for the reasons the banks gave: they do not want higher exposure to the particular risk of loans to non-New Zealanders living and earning incomes outside this country.

The decision must come as a blow to the Government's credibility on foreign buyers. For years it has been insisting they were not a significant presence in the New Zealand residential property market.

Ministers strenuously maintained this view after the moves by Westpac and ANZ on Thursday, but the banks' actions simply speak louder than the Government's words.

Trading banks are not known for restricting their business for the sake of public applause. If they are worried about the level of credit they have given to borrowers living overseas, the level must be substantial.

The same decision had already been taken by their parent banks in Australia, when bank lending policies have been under much heavier public criticism than here, and the political climate across the Tasman has been heated by the election to be held four weeks from today. But even there, it is hard to believe the banks would act for a political purpose.

But whether they desire public applause or not, they deserve it. The stability of both the financial system and the housing market is well served by closing the door to further foreign lending. The fact that the banks regard incomes earned overseas as less reliable than those earned in this country is further evidence of the relative strength of the New Zealand economy and the continuing worry about the world outside. The United States economy, which appeared to be picking up since last year, delivered weak employment figures this week.

If [banks] are worried about the level of credit they have given to borrowers living overseas, the level must be substantial.

House prices should soon show the effects of the absence of new foreign buyers. If auctions become a little easier for bidders domiciled here, so much the better. And if the rate of house price inflation slows, the Reserve Bank will be relieved too.

The Governor was moved to issue another warning on Thursday that no market rises indefinitely. Nobody wants prices to fall when many have borrowed nearly all of their property's value. The bank counts its loan-to-value restrictions a success and says it is considering increasing the present restriction on lending on investment houses in Auckland. It should do so, having found investors accounted for 46 per cent of sales at the last count.

Too many houses are standing empty around Auckland at a time of acute public concern for the homeless sleeping rough or in cars, or crowding in with relatives where they can. Social Housing Minister Paula Bennett is clearly scrambling for emergency accommodation for these people, talking of paying for motels if necessary.

The Government has been too slow to admit there is any sort of crisis, bereft of ideas beyond the supply side of the market and now we are watching banks take the lead. It could be the turning point.