Tiny homes are no answer to housing crisis

On Friday, the Real Estate Institute of New Zealand (REINZ) delivered the sobering news that New Zealand house prices have surged to another all-time high following 18.4% growth year-on-year:

It was also reported last week that New Zealand’s home ownership rate has fallen to its lowest level in around 70 years.

The unfolding disaster has prompted calls for ‘tiny homes’ to be used as a solution to New Zealand’s housing affordability crisis:

[The] tiny home on wheels – or THOW, as they are known in online communities – cost her a total of $25,000, which includes all the tools she needed, and a good-quality $12,500 trailer for it to sit on…

The completed home is 6.2m by 2.4m and is fully self-contained with a composting toilet. It has two mezzanine floors.

Pomeroy says the current legislative environment around housing is wrong.

“They should be pushing for small houses. Instead of building in new subdivisions and having covenants specifying that a house should be a minimum size”…

“Why don’t we set aside land for people with tiny houses, with a big shared outdoor area?

“It’s a really obvious answer to the housing crisis.”

Both Australia and New Zealand for generations have had land “set aside… for people with tiny houses”, only this was previously called the less sexy name of “caravan parks” or “trailer parks”.

Travel throughout either country and you will find such parks providing long-term leases to the poorest and most marginalised in society. You won’t find any actual home ownership, since there is no land and no title.

If tiny homes represented a genuine housing solution, we would have witnessed a stampede of people seeking to live in caravan parks.

The fact that such parks are reserved for poor people speaks volumes as to the true merits of tiny home living.

The long-term solution to New Zealand’s (and Australia’s) housing affordability crisis does not involve stuffing the population into caravans “tiny homes”. No, it requires addressing the underlying drivers causing the problem in the first place, including:

  • Reforming property tax rorts;
  • Banning foreign buying of local real estate;
  • Freeing-up fringe land supply;
  • Increasing investment into public housing;
  • Making tenancy rules more secure; and
  • Stabilising population growth (via lower immigration).

Policy makers must address these underlying distortions instead of cramming the citizenry into retrograde battery-style living.

Unconventional Economist
Latest posts by Unconventional Economist (see all)

Comments

  1. And none of those suggested reforms will take place because the LNP will weaponise housing as it always has done to win elections. So that means vast majority of Australians, LNP and ALP voters, simply don’t care. Voters live in a fantasy world where house prices go up every year. Since this is mathematically impossible, eventually it will explode. However, political class will step in and then it starts all over again.

    • Yes, everyone here at MB agrees with you.
      Logic says the bubble must burst at some point – but we have been saying 12-18 months for the 8 years I’ve been a member of Macro biz. 12-18 months has become a bit of an insiders cynical joke now.

      The fundamentals of the Australian housing market are so broken that it’s going end up in a depression, not a recession to reset it.

      What started as a pimple, has grown into a septic cyst that is likely to poison the whole economy.

      Basically, we’re stuffed. Enjoy it until it bursts.

  2. pfh007.comMEMBER

    “.. The long-term solution to New Zealand’s (and Australia’s) housing affordability crisis does not involve stuffing the population into caravans “tiny homes”. No, it requires addressing the underlying drivers causing the problem in the first place, including:..’

    You missed the biggest driver of the lot.

    The private bank monopoly on electronic central bank liabilities.

    End that archaic relic of the early 20th century and a smogasboard of options become available. Including a much transparent and competitive approach to capital allocation.

    https://theglass-pyramid.com/2020/08/20/investment-manager-special-edition-myrba-superior-for-productive-capital-allocation/

    Most sensible folk now accept that free trade is a myth and has always been political trade.

    The next step is to accept that allowing a central bank / private bank cartel to run public money has been a monumental disaster.

    Time for a democratic RBA balance sheet where everyone is free to operate an account and transact directly in central bank liabilities.

  3. Everythings being rented. From the day your born, you own nothing and rent everything. Your life is one great big rental. Its ridiculous. It shouldnt be this hard just to live life. In a country that has as much land as Australia does, its bloody stupid.

    • pfh007.comMEMBER

      +100

      Suffice to note that this an expected outcome of baking usury into the foundations of the public monetary system.

      Everything is financialised.

    • Stop having children people. You give a horrible and worsening existence when you knowingly bring a child into the world these days.

    • Jumping jack flash

      You’ve just described feudalism. Everything belongs to the state, and they give you titles to a portion of it, but it still belongs to the state and they can repossess it at any time. These days they are really cool about it if they ever need to, but once upon a time they weren’t.

      It wouldn’t be inaccurate to suppose that the system we are currently living in, (and it is becoming more apparent every day), is the New Feudalism where the bank is quickly moving into the role of the state…

    • Australia’s land ‘supply’ is an illusion.

      As far as habitability goes it is mostly desert or scrub, with the driest, most ancient and infertile soils of any inhabited continent. That’s why it’s also one of the most urbanised countries of the world – more akin to the Middle East than the US. In fact, Australia’s arable land fits into just two US states – Idaho and Iowa.

      Way back in the 90’s the CSIRO and the likes of Tim Flannery opined that long-term Straya could support 8-10 million, with a capat 23 million. Ha ha

  4. Poochie the Rockin DogMEMBER

    Tiny homes don’t make sense because it’s the land that’s expensive, not the housing itself. The only way I can see them working is like in ready player One where the Caravans/tiny homes are stacked on metal platforms. Next generation caravan parks!

    • Jumping jack flash

      THIS!

      Tiny homes ARE actually the answer, but not the “caravan” that some may be pushing to try and discredit it. The solution is tiny homes on tiny blocks that would be titled and bought with a pile of debt, just like today.

      The people with a 300sq block today are the property developers of the future! Subdivide that luxurious 300sq into 4 tiny blocks, and place 4 tiny homes on there. This is living. Sustainable, and with a renewed sense of community.

      Sell each tiny block for the same price as the original 300sq block, and you’ve just quadrupled your money. (minus demolition costs I suppose)

      Economic growth! Debt growth! And that’s what matters.

  5. Calling them Tiny homes turns my head into a flaming skull.

    If its got wheels and is not fixed to the ground, it’s a caravan. Or a Trailer park home.

    Its simply creating the slums of the future.

  6. I prefer the term “Trailer trash” myself.
    But I can see the how a tiny home build with recycled materials to create a sustainable living space sounds much more……..how would you put it?

  7. Locus of ControlMEMBER

    I’m in two minds about tiny houses. As a minimalist (I hate owning “stuff”, blergh) I can make do with a small space & I appreciate they’re more environmentally friendly than a big house with all the trimmings, but and it’s a big but, they’re not the solution for everyone. It is a benefit to have security of tenure (I.e. own the underlying land), the places should be large enough that the average person can feel comfortable not cramped (some of these tiny houses really are too small), & they need to be practical (how’s anyone going to get into that loft bed when they’re 80??)