Toll roads: how could they affect the housing market?

FUZO Property, Property investors, Auckland, Propert investment

 

Aucklanders could be charged between 3c and 40c per kilometre to drive around the city, if the Government’s new ideas for battling congestion are implemented. Whatever you think about paying tolls for driving – and it’s certainly controversial – if this goes ahead it will have an impact on Auckland’s housing market, too.

Road tolls will have the biggest affect on those who commute long distances to work each day, because truckies and other transport professionals can pass on higher costs to their customers. But you’ll be very lucky to talk your boss into increasing your salary if it suddenly costs you an extra $60 each week ($2,880 each year) to drive 30km to the city.

Individuals will need to add this cost into their equations when they buy a house or choose a rental. This means toll roads will make it more expensive to live further out of the city. The likely result? High central city property values will be more firmly entrenched; CBD apartments are likely to see continuing capital gains; outer suburbs will be slightly less desirable, but not hugely – many people who live in outer regions of Auckland work near their homes and a few thousand dollars a year won’t have a massive impact on the average mortgage approval.

This will encourage more medium-density living in the city and ties in with the proposed Unitary Plan. The Treasury Secretary spoke recently about Auckland NIMBYism harming the rest of the country, but no politician wants to enrage a massive and important voting cohort by running roughshod over its objections. That’s why the Auckland Council backtracked on its efforts earlier in the year to intensify the eastern suburbs.

Where to from here? Auckland is New Zealand’s powerhouse but its housing problem has been described as a Gordian knot. There’s no simple solution. However, there are some definite facts that we like to hold onto:

  1. Auckland needs more houses.
  2. The Auckland Council wants more houses.
  3. The Government wants more houses.
  4. House buyers want more houses.

As investors and developers, we have plenty of work ahead of us!