The effect of introducing the accommodation supplement on market rents in New Zealand: A dissertation submitted in partial fulfilment of the requirements for the degree of Master of Property Studies at Lincoln University

Abstract

This dissertation provides a review of the literature in the public domain commenting on the effects of the AS. The commentators presented divergent opinions with many favouring the introduction of market rents and the AS. Others challenged the economic ideals of the market rent philosophy and suggested the end product did not allow fair and equitable access to housing for those in need but a direct hand out to private sector landlords. There is debate in residential rental property circles concerning the possible impact on rental levels for accommodation when the Labour Coalition Government introduces income related rents for all Housing New Zealand tenants on the 1st December 2000. A brief review of state housing indicated the philosophical differences between the two main political parties in New Zealand with Labour having a policy of direct housing assistance and National either retaining the status quo or reducing the stock of state houses by providing assistance in alternative ways e.g. the AS. An insight to managing direct housing assistance and rent rebates was provided by way of a questionnaire that Anthony McBride, an ex Housing Corporation Housing Manager, completed. Christchurch was selected as the sample city for the research. Information detailing the major influences on the residential accommodation market was researched and discussed for the period June 1990 to December 1999. A data series for each factor identified was included as a variable within a multiple regression model with market rent as the dependent variable. Analysis of the multiple regression models provided information on the sensitivity of market rent to each variable and the performance of the model as a predictive tool. The results suggest that for the period June 1990 to December 1999 the variables recording statistical significance within the model were resident population, number of dwellings, average wage and the AS. For those interested in the residential property market the relationship between the resident population and the number of dwellings is a significant factor that influences the market rent level. The current and future oversupply of housing in Christchurch is an issue for further study and beyond the scope of this dissertation. It is recommended that those with interest in the residential property market consider the impacts of the over supply and position themselves for the potential adjustment in capital value and achievable rental returns.