Unlike Australia, NZ Budget tackles housing affordability

ScreenHunter_02 Apr. 21 18.01

By Leith van Onselen

While the major political parties continue to ignore Australia’s highly unaffordable housing, the 2013 New Zealand Budget, released earlier today, announced a variety of measures aimed at boosting supply and improving overall housing affordability. Measures announced included:

    1. Introduction of the Housing Accords and Special Housing Areas Bill, which will enable the Government to work urgently with councils on streamlining resource consents for new housing developments in areas of poor housing affordability; and

    2. A record $2.9 billion investment by Housing NZ over three years, including $1.6 billion on new housing developments and repairs to Canterbury properties, building 2000 extra bedrooms on existing houses as part of Project 324, the creation of 500 new infill two-bedroom homes on existing land and the completion of around 46,000 home insulations. The investment will also contribute to the repair of 5000 quake-damaged state homes in Canterbury and the construction of 700 new ones.

According to the Government:

“High housing costs contribute to New Zealand’s indebtedness and create growing demand for state housing assistance”.

“In addition, rising house prices affect financial stability and put pressure on interest rates and the exchange rate”…

“The Government will work with councils to create accords aimed at improving housing affordability by increasing land supply and streamlining planning and consent processes”…

“These steps address concerns around land supply raised by the Productivity Commission in its 2012 report into housing affordability”…

“[The changes] will deliver better results, greater fairness and better social outcomes from the Government’s significant investment in social housing”.

The Housing Accords and Special Housing Areas Bill looks especially interesting, as it gives the central Government powers to intervene in the planning process by establishing special housing areas and issuing development consents, thus reducing the scope for councils to lock-up supply. According to Housing Minister, Nick Smith, such measures will buy the Government some time while it works on more substantive policies to free-up supply:

“This legislation is an immediate and short-term response to housing pressures in areas facing severe housing affordability problems”…

“This provides time for the Government’s substantive changes to resource management reforms and the subsequent council planning processes to bear fruit and address these land and housing supply issues in the longer term”.

At least the New Zealand Government is actively seeking to address problems around housing affordability, which is more than I can say for Australia’s tweedle dum and tweedle dee politicians.

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Unconventional Economist
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  1. ceteris paribus

    Good article.

    The ongoing unwillingness of either Australian Party to give the issue of affordable housing the attention it deserves is derelict and an insult to younger generations.

    • Not a single politician dares touch the issue.

      Heavily indebted people with $50K+ to lose care a lot more than the disaffected, until this changes don’t expect much from politicians.

      • and that in a nutshell is the issue. The major parties wont touch it. Even the minor parties dont seem interested.

        Basically it is time to try and get some independents up on a policy of

        Remove Negative Gearing – Bring in Land Tax

  2. It’s enlightening. Australian politicians haven’t had their attitudinal readjustment yet. Our politicians still see higher house prices as part of the solution, not part of the problem. Therefore, their job is to help the ‘less fortunate’ Aussies to participate in the game of higher house prices, not to seriously undertake steps that might jeopardise that. Therefore, FHOGs are great policy as it helps everyone play the game.

    Maybe the difference is that the rating agencies are actively warning NZ about their high house prices. If Australia was receiving official warnings like that, perhaps there would be some motivation to change.

  3. I would say that the politicians in NZ (in fact I as good as “know” this) are hoping that the problem will fix itself before they even enact stiffer measures, because they are indicating their intentions so loudly that the land bankers and specufestors will take fright.

  4. I wonder how much influence Banks and other credit providers have had in NZ housing policy?
    If Australians are less interested in credit and the housing industry is flat lining here our Australian Banks will be wanting to expand their markets elsewhere.

  5. I have said myself many times, it’s the tax payer who gets hit a lot with affordable housing because it’s their taxes that have to pay for the unemployed to live in such places. Many unemployed are victims of lost jobs, not lazy assholes though there are a few of those.

    At least half of the unemployment benefit gets eaten up with rental costs. Basically the tax payers are paying landlords. IT SUCKS.

    • The NZ Govt is very concerned about the sustainability of a welfare assistance program called “accommodation supplement”, which is paid out according to a formula, to assist people who are struggling with rent costs. The higher rents go relative to incomes, the more “accommodation supplement” government has to pay out.

      Rents have not increased anywhere near as much as house prices, but they are rising and the government is worried about the implications should they close up on house prices.

      One of the extraordinary things about Blighty, is the sheer cost that the taxpayers have stood, for “social” housing; this is due to their urban planning system. Thatcher sold off a lot of public housing to its tenants, which was a relief for the taxpayer for a while, but Thatcher’s one major omission was not reforming the urban planning system. The critics of the sell-off of public housing have been claiming they were right; the most needy people in society, 20 years later, have ended up still deprived of housing, but the fact that this is because the shortages overall are so dire and the UK needs to build a few hundred thousand more on greenfields, is a taboo subject.