Building nests, not just nest eggs

Supply and demand is an economic principle that most people can grasp. When there’s more pressure on flights over Christmas, airfares go up. And when a location grows in popularity, rents and house prices tend to follow. 

Plenty of wealth has been created through property in New Zealand - and particularly Central Otago - over the past few decades, but when prices get too high and people can’t find anywhere to live, things start to unravel. 

Julie Scott, CEO of the Queenstown Lakes Community Housing Trust, is focused on finding solutions to that thorny problem. 

“What we see on the ground is that the need for affordable, secure tenure housing just continues to grow.”

The trust has assisted almost 400 households since it was established in 2007. It’s also built up a balance sheet of around $130 million to build more homes, but there are around 1,600 families on its waiting list right now (around 5% of that is seniors and that's growing all the time). 

The trust offers a range of options from social housing rentals to assisted ownership schemes, which Scott says “basically allows people to buy the improvements, not the land”. 

Any household with income under $130,000 who doesn’t already own a home is typically eligible for assistance, and one of the organisation’s catchphrases is that it’s about creating a nest, not a nest egg.

She says it can be hard to get through to parts of the community that access to housing is an essential part of a functioning and growing region, but she often uses teachers as an example of why everyone should care. 

Parents can see that teachers are regularly turning over or vacant roles are unable to be filled because the numbers simply don’t stack up for them to move to the district. That affects their children's learning. And it also affects the schools themselves: Arrowtown recently became the country’s most expensive postcode and, in part due to unsustainable price rises, the school roll is now dropping. 

The same principle applies to nurses, police officers, tradies, hospo or tourism workers or any number of essential jobs that keep our society and local economy running.

Much ink has been spilled on this topic over the years but, like many things, she says fixing it comes down to a combination of supply and demand (and carrots and sticks). 

About one quarter of the homes in Queenstown Lakes during the last census in 2023 were unoccupied. The average across the country was around 10%. It’s impossible to force people to rent out their homes and, in many cases, the economics and flexibility of short-term rentals have made it more compelling than offering it to the long-term market. But councils around the country are now coming down harder on short-term rentals, in part to help address infrastructure deficits. 

Increasingly, larger businesses in the region are also investing in worker accommodation to ensure they can keep operating and Scott says this helps to reduce the pressure on the rental market and gives families more options. 

These things might change the context gradually, but she says ‘inclusionary housing’ will make the biggest difference. 

Developers benefit from zoning changes through value uplift, so the idea is that they share some of that benefit with the community and, in addition to developer contributions, offer a percentage of the new sections created to the trust. It’s voluntary right now and has never been mandated in the District Plan, but she says Jack’s Point was the first to do it in 2003 and the more civic-minded developers understand that it offers wider benefits to the region. 

Scott says the fast-track process has also increased interest in the idea and committing to inclusionary housing can add strength to the submissions of developers. 

The council has also gifted significant tracts of land to the trust, as seen with the Tewa Banks development in Arrowtown. It is made up of 68 new homes, ranging in size from one to four-bedrooms. 

She says Aspen and Whistler are often cited as examples of resort towns that have been hollowed out by excessively high property prices. Many homes were unoccupied and workers often had to be transported an hour each way every day, but in recent years, the authorities have imposed a whole heap of taxes on developers, which go back into the civic coffers and are then used to build more affordable housing for workers. 

Commuting between towns in Central Otago for work is common but, as we have seen recently, when there are no public transport options and fuel prices spike, that’s not always sustainable. 

The trust is in favour of high density construction in the right places and it purchased 50 units in the Toru Apartments in Remarkables Park off a private developer because it wasn’t building those kinds of homes and saw value in them for the community. 

Scott also points to Abbeyfield House in Frankton as a good model. It offers pensioners one room rentals with ensuites alongside shared communal areas and, if the committee has its way, a new home will soon be built in Wānaka. 

The quarter acre dream that a lot of Kiwis have had in the past is simply not possible for those on a moderate or low income in Queenstown or many of the surrounding areas anymore. But that doesn’t mean they should give up on the dream of putting down roots here. 

Like Forsyth Barr, the Trust is focused on creating a better local community and we are huge supporters of all the wonderful work they are doing right across Central Otago. This region will always be a popular place to live. But we need the right kind of housing to keep it going - and to keep it growing.

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.