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Clark targets housing affordability

Written By: - Date published: 3:57 pm, February 12th, 2008 - 23 comments
Categories: housing, labour - Tags: ,

In her speech today, the Prime Minister announced a slate of government plans on housing affordability. New land will be freed up for housing but it will not a National-style free-for-all where land would be gobbled up by wealthy individuals and private developers for over-priced, up-scale housing that will exclude most people. Rather, areas will be found that are suitable for large-scale developments and the government will work with local government and not-for-profit groups to build communities with affordable housing.

A shared equity scheme in which the government puts up part of the purchase cost and gets partial equity in a house will assist people who have never owned a home buying a newly built house, such as one built in the developments. Low cost housing and more state houses will also open these new developments to ordinary New Zealanders.

Sustainability should be a priority for these new developments. Ecologically and economically-minded houses should be built around carefully planned public transport with park space and community resources designed to foster a sense of community, and commercial areas to provide employment. For too long, poorly planned sprawl has been permitted that creates soulless suburbs, congested roads, and denies too many the chance to own a house. It looks like this policy will confront the problem.

(Our mates at blogblog say: “Clark builds homes, Key supplies the vacuum“)

23 comments on “Clark targets housing affordability”

  1. Patrick 1

    This is really ambitious policy going into an election year. It isn’t reactionary “chuck em on a reality TV show” type stuff, but actually looking to improve the long-term outlook for our entire society.

    I really hope that this gets well publicised and continued support, it has so much potential.

  2. mike 2

    Brilliant idea, we’ll put this with other 11 shared equity announcements Labour have issued since 2004. http://www.scoop.co.nz/stories/PA0802/S00143.htm

  3. jay dawgg 3

    What happens if in order to build a sustainable house it actually places it beyond the ability of the average NZer on the average age.

    Shouldn’t we think this through properly before committing ourselves on the basis of slogans. Most ordinary people simply want a roof over their heads that they can call their own. They aren’t necessarily into sustainability.

  4. r0b 4

    It isn’t reactionary “chuck em on a reality TV show’ type stuff, but actually looking to improve the long-term outlook for our entire society.

    See also KiwiSaver, Cullen Fund, student loans, sustainability… Long term thinking about the big problems.

    There’s plenty of good stuff in the full transcript of the speech.

  5. Monty 5

    It certainly is good to free up land for housing development. Long overdue – but and it is a bit but…… the RMA needs an major overhaul to really progress this ambition along. And the plan does need to be ambitious – several thousand sections in all cities throughout NZ.

    Developers need to be encouraged to make land available for subdivisions – at present it is obstacle after obstacle. The RMA simply makes it too difficult to cover off the costs and the risks. On top of that the costs of construction need to be addressed as well and a good place to start will be the $15,000 it can cost for the consents to build a house.

    And Lastly – interference by the government beyond governance will simply mean that houses will continue to be unaffordable. The free market (I can hear the screams from the left as soon as free market is mentioned) is the best way of making houses affordable and increasing demand by shared equity or dollars added to deposits simply increases demand for that product.

    So Labour may do something about home affordability – but as usual with socialist policy is that it ends up having the opposite of the desired effect. Stupid economically illiterate socialists.

  6. BeShakey 6

    “Shouldn’t we think this through properly before committing ourselves on the basis of slogans. Most ordinary people simply want a roof over their heads that they can call their own. They aren’t necessarily into sustainability.”

    I don’t think that’s a sign it hasn’t been thought through properly, quite the opposite, the government is recognising the synergies between different policy areas. While you may be right about people simply wanting a roof over their heads, addressing sustainability is likely to reduce the whole of life costs of a house. In this respect the government can be seen to be leading a change in the way NZers think about their houses. I for one will be happy to see an end to the ‘build it as cheap as possible and leave the health/safety/long term financial issues for someone else’ culture. Also good to see the government leading, rather than simply following opinion polls.

  7. r0b 7

    The free market (I can hear the screams from the left as soon as free market is mentioned) is the best way of making houses affordable

    That’s an interesting claim Monty, and I wonder if you could elaborate. Because it seems to be that it was exactly the free market that has recently made houses unaffordable.

    Compared with say, the lefty big government “state house” programme that historically brought affordable housing to thousands.

  8. Phil 8

    “…areas will be found that are suitable for large-scale developments ”

    I can’t think of anywhere in Auckland or Wellington where that is even remotely practical.
    So Helen plans to solve a problem by ignoring the two geographical places where it’s most prevalent. Yep, great idea.

  9. Matthew Pilott 9

    Phil – Newlands will be touching on to Petone soon, the northern ‘burbs of Wellington would be about right if done properly. While you’re at it, Churton Park, meet Tawa! Can’t help with Auckland though :(

    WRT ‘sustainability’ being a mere slogan, let’s think that through, yeah?

    You install the most efficient heating methods for the house and water that are available. You insulate. You reduce water supply requirements. You give very good access to public transport. You have park areas and appropriate amenities.

    Then, five or ten years down the track, you have families that are better off because their house is warmer, cheaper to maintain, their area isn’t running dry (water wise 😉 ), they have access to public transport in the face of huge fuel costs, and have a vibrant community.

    Sure, sustainability is just some hippie eco-terrorist buzz-word right?

    I like the idea of land developed by N.F.P groups and local govt – the private sector wouldn’t be able to build cheap, sustainable and decent housing in heaven, let alone on earth.

  10. insider 10


    Jump in a plane and you will see large tracts of land around Wellington. There are also large amounts of land in Manukau earmarked for development south of Botany

  11. dave 11

    A couple of things, the PM didnt announce the policy in her speech. THe Herald announced it with a cojpy fo trhe speech.

    Sounds like this policy, like the “keep kids at school” policy, was borrowed in part from the UK.

    Doesnt Labour have any new ideas?

  12. Simeon 12

    No Labour does not have any new ideas.

    A lot of it is recycled. (At least they set a good example on recycling)

    [lprent: don’t web-whore unless it is in context]

  13. AncientGeek 13


    Brilliant idea, we’ll put this with other 11 shared equity announcements Labour have issued since 2004.

    I realize that the nats (who released that release you linked), have a habit of making policy without thinking.

    Labour does not. Of course they have looked at the idea, floated it around for comment, line up support across party lines, do pilot projects before committing large amounts of money, and generally act responsibly.

    Contrast this with the party that released that press release. In the absence of any clear policies, can we can expect this to be another dead rat that they will swallow in the months leading up to the election? They do not even have a housing policy on their website, and their Building and Construction policy area only features a photo of Nick Smith with a stupid grin… Just about sums up nationals policy making ability doesn’t it.

    cap: the GROSSGERG :)

  14. andy 14

    Otara, was supposed to be cheap housing. Did some stats today, cheapest house (3 bdrm) sold a few weeks ago 230K, ten per cent deposit is 23k. 25 years (2 year fixed) at 9.5% on $207,000 is 417.05 weekly. Otara is about as good as it gets for affordability in Auckland, and poorer families can’t carry that debt. This is the cheapest example i could find!

    I can’t see how this scheme is going to work, Aucland city council cancelled there cheap housing scheme. 9 million dollars to help under one hundred families. The numbers will never add up, the qualification means its a middle class subsidy, as they can only afford it.

    BeShakey I agree..

    Releasing land at the fringes is foolish as well, only the wealthy can afford the higher costs to commute, pay for infrastructure, transport for kids to schools…

    BTW: Ms Street was my high school english teacher..

  15. AncientGeek 15

    I’ve always been of the opinion that more efficient housing should not be that difficult or expensive to achieve. It is just that it is not a priority with housing developers.

    Think about it. Their standard operation is to build a house or apartment and sell it, preferably before they start or finish it. They seldom (if ever) retain an ownership stack. So there is no benefit to them in building it to a standard more than is required to pass the regulations. They don’t really consider the ongoing costs of maintenance or running costs beyond what is required to get a sucker to buy the place.

    But your average house or apartment is rated for 60 or more years. As every home owner knows, within 10-20 years the maintenance costs start getting substantial (painting, roofs, guttering, plumbing, etc). The running costs are there all of the time.

    I’d bet that you could make substantial improvements in both with a few minor and probably non-costly design modifications, if that was a priority. Suggestions? I have a few ideas – but you’d really want an architect, engineer, builder, or contractor to suggest them. I’ll bet they have more than a few easy suggestions.

    Labour is proposing taking an equity stake. That means that they’d get interested in the maintenance costs at least.

  16. slightlyrighty 16

    The simplest economic theory is the the concept of supply and demand setting the price.

    So what has affected demand in the housing market? Rampant growth in property values, coupled with easy access to credit have made investment properties stunningly attractive. The generous tax breaks available have made such investment easy, low risk and profitable. Labour could have addressed this but a middle class sitting on artificially high property values is a happy middle class.

    On the supply side, the RMA and government compliance costs have gone a long way to making low cost housing uneconomic to produce consigning the lower socio economic demographic to a position where home ownership is unavailable to them. As the middle and upper class avail themselves of the largesse to the Labour Government continual lack of action in allowing the taxpayer to subsidise property investment, the supply of housing is restricted, while the supply of the needed housing is dwindling.

    Of course this situation cannot continue. Headlines this morning point to the biggest housing slump in 20 years. We may see a self correction. How will supply and demand affect the market in the next few years? My predictions are for the Baby Boomers, as they hit retirement age, will wish to realise the cash. we will see aglut of housing supply causing a drop in pricing at the mid range in the market, which will drive all pricing down.

    Subsequently, banks will be unwilling to loan at the levels seen in the last 6 years as porperty values are falling, which may in turn restrict demand a bit further, tending prices down.

    and Labour will have nothing to do with the solution to housing affordability, but a band of homeowners will be left with a mortgage debt higher than the value of the security, and that will be labours fault.

  17. insider 17

    It’s a bit rich for HC to be all concerned about affordability when here building act takes a lot of the blame.

    Labour have increased costs significantly for new homes through such things as increased obligations on insulation and double glazing. Every new home in NZ will now cost 5-10k more as a result. Doesn;t matter whether you want it or need it, you will be forced to install it (also impacts major renovations I believe).

    I don’t mind regulation per se but was there any cut in other regs to compensate? I suspect not. It is too easy for a regulator to push unnecessary costs onto a whole population to cover either their butts or the small risks an issue hypothetically might cause down the line.

    The other thing I have heard hitting home costs is leaky buildings. COuncils are running scared and overcompensating on regs and I;ve heard similar for earthquake proofing, which is increasing the volume of steel required.

    Sure we have earthquakes, but we don’t have them that often and even when we have, most timber framed homes have survived.

    We seem to have moved to a highly prescriptive system rahter than an outcomes based one which is a shame.

  18. Tane 18

    such things as increased obligations on insulation and double glazing

    These are good things. They reduce energy bills, take pressure of energy generation and reduce New Zealand’s carbon footprint. And at a very low cost.

    Every new home in NZ will now cost 5-10k more as a result.

    That doesn’t account for the 80% increase in house prices in recent years. What’s $5-10k on a $500k house? 1%? 2%?

  19. insider 19

    Sorry Tane but that is on every house – ie the physical part not the total property value. So on a $250k property that is quite a significant impact given the building will perhaps be only 200k of that. Most $500k houses will have high land values (I live in one and the rating valuation was done in December and I think the land is valued at about $200k which is probably a bit low judging by section prices in the area).

    Also the numbers for the claimed savings just don’t stack up. The policy was justified on claimed savings that don’t exist in reality. Very similar to the govt criticism of the BRT report on emissions trading costs – fanciful scenarios that don’t match reality. It’s really just another carbon tax. The poorest get hit hardest.

    Heating is about 1/3 of your power bill. The measures claimed to save up to 1/3 of heating costs. An average bill according to the govt is 8000kwh/yr and it costs about 21c/kwh. So that equals $1680 a year. One third of one third is a bit less than $200 a year. So for an outlay of 5-10k you will ‘save’ up to $200 with a minimum payback of 25 years (I suspect many will have replaced their windows by then).

    The evidence from overseas is that they don’t reduce pressure on energy consumption. They either have no impact or people use more. This is a well recognised phenomenon in NZ and overseas.

  20. slightlyrighty 20


    Granted, insulation in homes is a good thing and do not increase the overall in and of itself to any great degree, but the ongoing increase in compliance costs had led to compliance becoming an industry in its own right adding a huge cost to building.

    Just to subdivide a section could cost you 50k before a sod of eath is even turned in some parts of NZ.

    And to your assertion of whats is 5-10 k on a 500 k house? The average NZer cannot afford a 500k house. We need more houses in the 250-350k range but these compliance costs are making these houses uneconomic to build. 5-10k for double glazing as a percentage of 350k is much higher.

    So lets add 5k to the 50k compliance cost. What is 55k as a percentage of 350k? Is 15.7% of a house cost taken up in compliance costs acceptable when property is sundivided? How bad is it getting?
    It is now getting to the point where a homeowner may need council consent to change the putty in the window.

  21. insider 21


    I heard the same putty story. I think it was a joke comment by a councillor in the Hutt rather than a realistic policy

  22. slightlyrighty 22


    I have contacts at BOINZ, The building officails institute on NZ, and I am of the understanding that that was a valid consequent of legislation considered.

  23. dave 23

    Do any of you guys own your own home? Nah ,thought not. Are you oin 70K? Then you may be in with a chance with Labours policy. You may yet own a house.

    A couple would need to earn more than the average $68,000 household income to meet the mortgage on an affordable home at the Government’s flagship Hobsonville housing development. ( $300k plus)

    Mortgage calculators show repayments on a 30-year 90 percent loan at a current two-year fixed interest rate of 9.35 percent would be $603 a week before rates and insurance. At a rate of 8 percent, repayments would be [$27.716 a year].

    What a joke. Affordable housing, yeah right.

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