Economist Ed McKnight just dropped some numbers that’ll get both landlords and tenants scratching their chins. Let’s dive in…

The tale of two housing paths

Picture this: A neat brick-and-tile house in South Auckland. 3 beds, 1 bath, currently renting for $650/week. OneRoof valuation? A cool $965k.

Own or rent? Here’s what you’re looking at:

Renting ($650/week)

  • Just rent
  • Netflix and chill (utilities not included)

Owning ($1,125/week, based on a mortgage with 20% deposit)

  • Mortgage: $1,010
  • Council rates: $63
  • Insurance + maintenance: $52
  • Total damage: $475 MORE than renting

The long game

Here’s the kicker that smart investors already know: This isn’t a sprint, it’s a marathon.

While renters might be saving $475/week initially, the math flips after about 14 years. Why? Because:

  • Rents keep climbing
  • Mortgage payments stay locked (interest rate changes aside)
  • Eventually, that mortgage disappears completely

Timeframes will vary according to location and affordability. For example:

  • Affordable Christchurch townhouse: Ownership wins after ~8 years
  • Fancy Remuera mansion: The break-even point is… way out there

The crystal ball says

Deloitte just dropped a bombshell: Less than 60% of Kiwis currently own homes, and that number’s heading south. In 25 years? We’re looking at a minority of homeowners. The rental market isn’t going anywhere but up.

Banks see an opportunity and are offering creative solutions to encourage more home ownership.

  • Westpac’s throwing $1B at affordable housing solutions
  • 152,000 Kiwis could qualify for shared ownership
  • But only 53,000 even know these options exist

Bottom line

  1. Short-term renters are saving cash (hello, stable rental demand)
  2. Long-term math favours owners (but that 20% deposit is a massive hurdle)
  3. The rental market’s getting bigger (more potential tenants)

Keep an eye on those shared ownership schemes. They might change the game for some of your future tenants – or create new investment opportunities.

How ever you see things right now, it’s looking pretty sweet for landlords.

Call 0800 GOODWINS to dive deeper into rental market projections or to discuss your portfolio.