4 Nov 2020

Property Investors Federation doubles down on claim first home buyers contributing to housing crisis

9:52 am on 4 November 2020

Property Investors Federation executive officer Sharon Cullwick has doubled down on her claims that first home buyers are contributing to the housing crisis.

Aerial view of New Zealand houses at Mount Maunganui, Bay of Plenty, New Zealand

Aerial view of New Zealand houses at Mount Maunganui, Bay of Plenty. Photo: 123RF

Earlier this week Cullwick told RNZ that if a first home buyer purchases a property that was a rental property, another dwelling is needed to house the extra people living in that rental house.

"So every time a first home buyer buys a house - even though it's great they are getting into the market - it actually makes the housing crisis worse."

Cullwick repeated that claim on Morning Report on Wednesday.

"What they are doing is if a first home buyer lives in a flat that they are renting with others and they move out of that flat, you still need two houses to house them," she said.

"Often when they move out, they are moving out into a home by themselves without flatmates, so you still need another house for the flatmates to live in.

"If you have got a couple that move out of an existing rental property then they are taking up another house.

"The only way we can solve this housing crisis is by building more houses. And the only way we can build more houses is when there's a downturn in the market, ensuring we are continuing to build houses."

She hoped the Resource Management Act (RMA) would allow for more houses to be built.

Criticism from Infometrics' Brad Olsen and from economist Shamubeel Eaqub was put to her.

Olsen called Cullwick's initial claim "the most patently ridiculous I have ever heard" and Eaqub said it was "quite ridiculous" and "tone deaf".

Cullwick did not respond to the criticism but said: "I think if you are looking at the actual housing crisis as in pushing up the prices and things like that, everyone is pushing up the prices.

"It's everyone who is buying at the moment... anyone who is looking at the moment is causing competition and if there is demand and supply issues of course that is pushing up prices."

She said 90 percent of property investors owned their own home plus one other.

"The other 10 percent is such a small amount of people. I don't know [how many they own]."

Cullwick said she owned "multiple properties" but would not say how many.

"I'm a tenant at the moment, too. What I own ... has got nothing to do with the housing market. I'm not buying at the moment and most people who are established property investors are not buying in the market because the market is too hot. So we are not buying."

What the data says

Housing information analysed by ASB Bank shows lending to investors and first home buyers is neck-and-neck, making up about 20 percent of market sales - a record high for first home buyers.

In May the Reserve Bank temporarily removed rules around the size of a deposit buyers have to stump up, and between then and September lending to investors was up 60 percent.

Lending to highly-geared investors is up a whopping 134 percentage points.

Criticism from National

National Party leader Judith Collins said the Property Investors Association claim that first home buyers are contributing to the housing crisis is a "big stretch".

Collins told Morning Report: "I think that's a big stretch that one. I think it's very important that we have more supply of housing and what we have seen is the biggest impediment for that, I have said for some years, is the RMA.

"I think the Property Investors Association is possibly just overreaching somewhat and I think many New Zealanders would believe, like I do, that more first home buyers ... is a good thing.

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