Wellington’s housing crisis is the biggest brake on the region’s growth, according to tech industry leaders, with even highly-paid engineers unable to find affordable and accessible places to live in the capital area.
These challenges, compounded by the region’s inefficient transport network, are exacerbating the national competition for a relatively small pool of skilled staff during a time of closed borders.
Together, they could stymie a billion-dollar sector that has become a shining light in the Wellington region’s economy.
“We really love Wellington. Wellington is our home as a business,” said Tyrone McAuley, chief operating officer at PikPok, which started in a flat in Lower Hutt and has now become a global phenomenon. Its games have been downloaded half a billion times.
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“We’re doing what we can to help our staff and to grow our industry in Wellington but some of these factors are making it tough,” McAuley said, adding that more than two-thirds of PikPok’s staff said in a recent survey that housing affordability was their biggest concern.
It’s the same story at Optimal Workshop, a software company whose clients include Uber, IBM, Capital One and General Electric. It has been holding lunchtime sessions where staff can swap tips on how to buy a house.
Where people would once follow their professional hearts, money has now become much more important, said Julie Reddish, people experience officer at Optimal Workshop.
Software development company Optimal Workshop is based at the old Paramount Theatre in Wellington.
“People used to be really okay with just loving the work they did,” she said. “But now they really have to go for the highest salary because they have enormous mortgages.”
Young tech industry workers are asking for big pay-rises in this competitive market, with Optimal saying salaries have increased by 30 per cent in the last six months.
“Well-funded software companies have the ability to give someone a 20 per cent pay rise, but there’s a whole lot of marginal businesses who can’t,” said Serge van Dam, a tech investor. “The Xeros of tomorrow require affordable people to try and get liftoff.”
The average property value in Wellington city has risen 30 per cent over the past year to north of $1.1 million, while the median weekly rent sits above $600.
This comes at a time of immense infrastructure challenges in the region, home to more than half a million people.
These tribulations – and how to breathe new life into the region and create a more affordable, liveable environment – are the subject of a major new series starting in The Dominion Post today.
Ralph Highnam, chief executive officer and chief scientist of Volpara Health Technologies.
The housing crisis, and its knock-on effects, is clearly shaping up to be the biggest threat to growth.
“People do love being in Wellington, but the house prices – not just for sale, but for rent – are becoming near impossible,” said Ralph Highnam, chief executive and founder of Volpara Health, whose AI-powered breast cancer technology screens 39 million American women a year.
“But in our minds, it’s not just housing,” Highnam said. “You need good public transport, and good quality housing.”
Companies like DataTorque, which makes tax collection software for countries around the world, have lost people because they can’t find a quality rental property that’s central or has good transport links.
“It comes back to the Resource Management Act and investment in infrastructure to create more housing stock,” said Bill Chatwin, managing director of DataTorque. “There’s been a well-publicised under-investment in our infrastructure and maintaining it, let alone building new stuff.”
There has been an increase in anti-social behaviour at Te Aro Park and in the Courtenay Place area.
Then there are the other victims of the housing crisis: The people who have been made homeless and sleep on the streets.
“Early morning, late at night, we have people sleeping rough in the doorways, and there is just a real angst on Courtenay Place at the moment,” said Tarik Mallett, founder and CEO of Mobi, which makes food delivery software systems.
Several tech companies, including Mobi, are based on Courtenay Place.
“These people have needs as well. How do you support them, but also make the place safe as well?” Mallett asked, talking about the need to look after employees.
The increasing cost of living in the Wellington region is leading to a sharp spike in salary demands.
The future of the region depends on its ability to house the people who power it.
“The growth of the Wellington tech scene is there,” said Highnam of Volpara, “but we need help to grow – better public transport, safety, and higher quality homes.”