OPINION: Role of private sector critical to housing

OPINION: The critical role the private sector plays in housing people has been highlighted by the publication of a recent report by Cotality about just who is currently buying houses.

The Cotality Westpac First Home Buyer Report* highlights that over a recent 12-month period first-time buyers were the largest ‘group’ buying houses, accounting for some 28% of purchases.

Analysing other recent Cotality reports, the descending order of buyers after first-time buyers is

-          Movers                                                                         26%

-          Mortgaged, multiple property owners                 23%

-          Cash, multiple property owners                           11%

-          Others                                                                         12%

The majority of the multi property owners are likely to be investors, but not all would be. A reasonable estimate might be around 30%.

There are few who would disagree with the view that it’s good (socially just, equitable and economically sound) that first-time buyers have become so prominent in the ‘buyers’ table.  

As well as demonstrating that current market conditions have tilted the market back to a balanced position in terms of all buying groups, there are two other outtakes for me in the report.

The first is the significant role the private sector continues to play in ensuring the property market remains healthy and continues to tick over.

According to the Property Council there are in excess of 230,000 people whose employment is associated with property-related activities. Undermine any segment of the sector and the impact will inevitably flow through into employment of all those related activities.

Then there is the role investors play in accommodating the community at large.

According to the latest Stats NZ census data most of the country’s rental housing is supplied by private investors, some 85% or close to 480,000 homes.

Historically, this country has relied on the private sector to provide rental housing and this country’s figure of 85% of all rental homes being owned by the private sector sits alongside that for Australia, Canada and the US. In these countries around 90% of rentals are supplied by the private sector**.

In simple terms, if as a country we wish to reduce the current reliance on the private sector in housing people, then someone else must supply the market with a vast number of rental homes.

It is too simplistic to say without investors homes would be cheaper and people would buy their own home.

The second important outtake is that if we are looking for the reason why the housing market is so inactive it is because of the modest showing of ‘movers’ in the buyers’ table.

Traditionally, movers make up 28% of the market, and while a 2% decline does not sound like a lot, extrapolate that out over the number of homes being sold yearly across the country and it represents a lot of homes.

Movers are currently less active because of uncertainty - created by multi factors such as the stuttering economy, employment prospects, mortgage interest rate rises, lower equity in their existing property, cost increases and the costs associated with selling and buying.

For the past few years, a ‘wait and see what happens before we make that decision’ attitude has prevailed.

It is an attitude that has become so entrenched it has become a roadblock.

Economic activity needs to improve, and confidence needs return before that roadblock is cleared. Once it is, we can expect to see the re-emergence of movers as a strong buying group.

Until then, the market is likely to remain static.

*May, 2026, **OECD data

Peter Thompson, Managing Director, Barfoot & Thompson