Forsyth Barr Central Otago

Onwards and Upwards

The history of human progress is closely linked to mobility. In New Zealand’s case, those in the Pacific saw new opportunities over the horizon and undertook arduous ocean journeys to get here. Those from Europe saw gold in the hills and money on the land and uprooted from the old world to make a go of it. And people from all over the world still come here in search of better lives for themselves and their families.

At an individual level, the idea of mobility is crucial for those who hope to progress up the educational and economic ladder. And at the heart of this quest is access to housing.

Housing unaffordability remains one of our region’s biggest issues. There are many complex reasons for that, but addressing it is crucial to our broader economic aspirations.

Some employers have recognised the need to provide their own accommodation because their businesses simply won’t be viable if they don’t. This could be extrapolated out to the region as a whole: we need teachers, nurses, rubbish truck drivers, police officers, cleaners, chefs and many other essential workers for the region to function, but the economy will grind to a halt if there is nowhere for them to live - and the wealthy few who can actually afford to live here may not be able to get the services they require (or the things they desire).

If we’re only looking a few years ahead, we may be able to keep pushing the pieces around the board and rely on workers commuting into the main centres from other towns in the region, but at Forsyth Barr we have longer time horizons and think we should be looking 50 years ahead - and plan as a region, rather than as separate fiefdoms.

Central Otago has long been reliant on transient labour, but as property prices and rents continue to rise in places like Cromwell, Hāwea, Luggate and Kingston, where will the workers we need go next if they are priced out here as well? If we want the economy to grow and diversify, we need to provide people with the opportunity to put down roots, without having to travel a few hours every day.

There are lots of good intentions in this space, plenty of collaborations and a range of factors like the rise of short-term rentals that are getting in the way, but if we want progress, as the new book Abundance by Derek Thompson and Ezra Klein suggests, it’s clear we need to build. And when we build, we need to think holistically about how the infrastructure - whether roads, healthcare, public transport, schools or pipes - will cope with all the people in those buildings.

We can’t do it in a piecemeal fashion, as we have historically done. And we can’t just keep spreading outwards because we need more density to make our infrastructure more efficient, something that’s particularly important with such a small ratepayer base.

If you already own a nice house on a thousand square metre section, it’s too easy to pull up the drawbridge and complain about how the region is changing. There is a long history of NIMBYism (not in my back yard) and maybe even BANANAism (build absolutely nothing anywhere near anything) in this region, but this isn’t about wants, it’s about needs.

To create more wealth and reap the benefits of that, we need more people. Many of those people will need affordable rental apartments, homes on smaller sections without gardens, or build-to-rent options. That may look different from the past and for some it is confronting, but it is necessary.

As land prices continue to rise, we are starting to see greater housing density, more options and increased supply, and, as we have seen in Auckland, this combination of factors led to rents decreasing for the first time in many years recently.

Central Otago is one of the most sought-after regions in the country, and it’s pretty obvious why, but it can’t just be a walled garden for the well-off. It needs to be a place where those who see opportunities are able to grab them and where those who want to live here can. It needs to be a place of mobility and for that, there’s no place like a home.

To talk investment - either for yourself or the region – get in touch with us at Forsyth Barr Investment Advice Central Otago on 03 443 2980.