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Can we even afford to be tenants in our own country?

Written By: - Date published: 9:29 am, February 25th, 2017 - 93 comments
Categories: capitalism, housing, quality of life - Tags: , , , ,

John Key famously said that he didn’t want Kiwis to become tenants in their own country. He then went on to merrily allow the sell-off of vast amounts of land and an unknown number of houses to overseas buyers.

But being tenants in our own country is starting to look like the good old days. Who can afford the rent? The latest figures are startling:

Queenstown rents up 26.7% compared to a year ago with increases in parts of Wellington also in double digits, Auckland not far behind, Christchurch rents declining

With a title that long you know it has to be the good people at interest.co.nz.

… Interest.co.nz has begun collating the median rents in 19 major urban areas throughout the country, based on bonds received each month by the Tenancy Services division of the Ministry of Business, Innovation and Employment.

Nationally, the median rent from bonds received in January this year was $390 a week, up $20 (5.4%) compared to January last year.

In Auckland Central, which includes all of the suburbs within the old boundaries of the former Auckland City Council, the median rent was also up by $20 a week over the same period, rising from $475 a week in January last year to $495 a week in January this year, (+4.2%).

But in the rest of the Auckland region the median rents in January were up by between $30 and $50 a week compared to a year earlier giving increases that ranged from from 6.7% in Manukau to 11.1% in Rodney.

Those are significant amounts of money to come out of household budgets each week, particularly for those people on lower incomes and the increases are at a level where they are likely to be be putting some families under financial stress.

However it’s not just Aucklanders that are paying more to rent a home, the table shows that rents are also up substantially in most other parts of the country.

In Whakatane the median rent in January was up $40 a week (14.3%) compared to a year earlier. In Porirua and Upper Hutt it was up $45 a week, (12.9% and 15.3% respectively) compared to a year earlier.

The most expensive rental area monitored by interest.co.nz is the Queenstown-Lakes District, where the median rent in January was $570 a week, up a whopping $120 (26.7%) compared to January last year.

The only area that recorded a decline was Christchurch, where the January median has fallen for two years in a row, from $405 a week in January 2015, to $390 in January 2016 and $370 in January this year.

According to the 2013 census, 512,000 households were renting and interest.co.nz estimates that number is likely to have increased to around 550,000 now.

That means that every $20 increase in average rent sucks up an extra $11 million a week, or $572 million a year that is not being spent in other parts of the economy. …

Great work – well worth reading the full piece.

What happens to cities when ordinary people cannot afford to live in them any more?

93 comments on “Can we even afford to be tenants in our own country?”

  1. Jenny Kirk 1

    And speculators coming into other provincial towns – like Whangarei – buying and selling houses at inflated prices, and people who were renting now find themselves in tents and caravans (or cars) because they cannot afford the new high rentals.
    Disgraceful state of affairs !

    • Keith 1.1

      Yes speculators are a disease on housing that needs to be eradicated.

      • Molly 1.1.1

        The problem is not speculators themselves.

        It is the raft of policies and incentives created by national and local governments that reward speculative behaviours in housing.

        Although I have little regard for speculators – they are only acting in an environment that actively encourages their behaviour and rewards them financially for it.

        • Keith

          Nevertheless they are a major problem. All those properties being used like chips on a roulette table in so few hands and we wonder why we have got to the point we have now.

        • AsleepWhileWalking

          Exactly. It’s frustrating to be on the front lines hearing people’s stories and having a close up view to watching the social and financial carnage.

        • mikesh

          Agreed. Speculators can perform a useful function if they are willing to purchase, and hold, assets that nobody wants at the time, on the assumption that those assets may be wanted in the future. It is demand, and limited supply, that is driving up prices in Auckland’s housing market, and speculation is only a part, and probably a small part, of that demand.

        • Draco T Bastard

          The problem is not speculators themselves.

          Yes it is – that’s why we used to hang the bastards.

          It is the raft of policies and incentives created by national and local governments that reward speculative behaviours in housing.

          And who do you think wrote the laws that allows speculation?

          Yes, there’s going to be some cut out through lobbyists etcetera as not all of the politicians that put their name to those laws were/are speculators but it would still have been the speculators that wrote them.

          It’s what happens once the political system has been captured by the rich and ours got captured 30+ years ago.

          • AB

            We’re now reaching the point where Capital gains taxes on residential properties will not only need to be introduced, they will also need to be applied retrospectively as redress for past bad/amoral behaviour.
            i.e. we are past the point of saying that speculators are not responsible for their actions because they are just responding to what the tax system encourages

          • Molly

            I agree that without such rampant speculation our housing crisis would not be in play.

            But I would rather direct any anger towards the planners, ministers, MPs and others who directly create the situation by creating policies that reward such bad behaviour.

            For those who don’t consider the housing of all NZers to be a fundamental need, the use of housing as a financial endeavour is actively encouraged. This needs to change, and people should be made to feel embarassed that they avoid capital gains taxes by living in properties while sequentially “flipping”, or that they purchase houses and leave them empty in Auckland while other families live in cars. We have to have difficult conversations with those who are only now worried about “their children” being able to afford a house, while many thousands have been undergoing housing difficulties for years now.

            Like savenz above, I watched the Unitary Plan from fairly closely on the sidelines for a few years and saw how the usual benefactors got any mention of affordability and sustainability removed from the plan.

            Our conversations with others at grass level have to be about the societal impact of personal actions, our criticisms for the climate that creates those opportunities remains with our policy makers.

            • Draco T Bastard

              Like savenz above, I watched the Unitary Plan from fairly closely on the sidelines for a few years and saw how the usual benefactors got any mention of affordability and sustainability removed from the plan.

              As I said – the speculators are the problem as they own the politicians.

              So, how do we get the politicians listening to reason rather than the speculators?

              Especially when you consider that many of the politicians are themselves speculators and rentiers who like their tax dodges.

              • johnm

                DTB !00% right.

                This once decent country is totally buggered beyond redemption except a revolution. But the dumbing down media insure will never happen! NZ is now a waste of space and effort except for the dogs of greed!

              • Molly

                “As I said – the speculators are the problem as they own the politicians.

                So, how do we get the politicians listening to reason rather than the speculators?”

                I don’t know the answer to that.

                From where I sat, quite a few of the decision makers were speculators themselves.

                A big part of the problem is getting someone to see that although there “is money to be made” there are also high costs to community and those around them if they take that choice. This is not helped by the moral excusing of “If I don’t do it – someone else will” as if all choices are only opportunistic, and leave no room for considered value decision-making.

                If I knew the answer to change this, I would. But the pressure needs to be put on the politicians by those who are feeling the impact of bad policies, and they are a majority and feeling the negative effects more and more. They should not be reassured with platitudes and ineffective projections or changes.

        • Korero Pono

          “The problem is not speculators themselves.

          It is the raft of policies and incentives created by national and local governments that reward speculative behaviours in housing.

          Although I have little regard for speculators – they are only acting in an environment that actively encourages their behaviour and rewards them financially for it.”

          Surely that is a bit like saying (and here’s the really controversial bit) “The problem is not child pornography viewers themselves…it is the raft of child porn available and the incentive created by the dark web that rewards the perverted viewer with more and more material. Although l have little regard for pedophiles – they are only acting in an enviornment that actively encourages their behaviour and rewards them for it.

          Yeah yeah I know this is extreme but the point I am making is that just because the mechanisms are there (and we are quickly learning that these mechanisms do not necessarily contribute to the greater good of society), does not mean that speculators have to take advantage of others to reap their rewards. Meanwhile the people living in cars, under bridges or on the streets are denigrated and blamed by the speculators for their homelessness.

          • Molly

            “Surely that is a bit like saying (and here’s the really controversial bit) “The problem is not child pornography viewers themselves…it is the raft of child porn available and the incentive created by the dark web that rewards the perverted viewer with more and more material. Although l have little regard for pedophiles – they are only acting in an enviornment that actively encourages their behaviour and rewards them for it. “

            No. Because child pornography is illegal and always will be. It is a criminal act, and so you have provided a false equality.

            A more appropriate analogy would be immigrants and immigration. Or – more relevant perhaps – overseas investors in residential housing.

            We have policy that allows our housing (in the middle of a crisis) to be advertised as a speculative financial tool for overseas investors.

            People with no connection to NZ, no personal investment in building community or providing shelter but who can see the great financial returns on offer. It would be pointless to condemn those investors, we should quite rightly condemn the failure of politicians to cut off that aspect that provides further heat to an already overheated market.

            “Meanwhile the people living in cars, under bridges or on the streets are denigrated and blamed by the speculators for their homelessness.”
            That might be true. But why would you pay any attention to what they say in this regard?

      • Siobhan 1.1.2

        As a life time renter the biggest problem I’ve faced personally isn’t people who we would call ‘speculators’. Its been god old Ma an Pa landlords, who cash up everytime there’s a lift in the market.
        So, in the broader sence they are part of the endless drive to increase house prices, but for the tenant it means moving. Yet again.
        The landlord doesn’t see that as a problem.
        For them it may be a one off. They had a rental for a few years…then they sold it. No hard feelings.
        Unfortunately for the tenant its probably not the first time it happened. And it won’t be the last.
        In the last 15 years, my family of 2 adults, 3 children, have been through that twice. Add to that the landlord who wouldn’t fix the hole in the roof, the 2 unsuitable flats we moved into out of shear desperation…and so on. It just never ends.

        Basically everyone who owns either a rental or even their own home has been turned into a ‘Speculator’.

        • Sacha

          Ae, houses have been transformed from homes into ‘investments’. Yet how many people have we heard proposing to tackle that foundation of the problem?

      • michelle 1.1.3

        not just housing speculators unskilled immigrants have been brought in , in droves to ensure the business owners have a cheap pool of labour and keep wages low

    • JanM 1.2

      In Whangarei local people are just being given notice because rather than up the rent landlords find it easier to rent anew at higher rentals to incomers, mainly from Auckland , of course. Then the local people can’t find new houses to rent – the queues are a mile long! As well as tents, etc, there is serious overcrowding as people move in with family members. Dreadful business!

      • AsleepWhileWalking 1.2.1

        That is awful and I can see why landlords would do this.

        I’m wondering how widespread this practice is outside of your area, say down in Christchurch or Wellington.

      • Sabine 1.2.2

        this has been going on in AKL now for at least 6 years.
        Lease for 6 month, let go of the tenant, increase rent, lease for 6 month, let go of the tenant, increase rent for 6 month, put house on the market, sell house, let go of tenant, increase rent, lease for 6 month rinse repeat rinse repeat.

        at least now people have stopped telling people to ‘just move’ to the country side for cheap property. cause clearly, there ain’t no cheap properties anymore.

      • Macro 1.2.3

        And it is not just Whangarei.
        The same effect is happening to towns south of Auckland too. There is not a house for rent in Thames at the moment, even if you were able to pay the rent!
        Some older folks I know are down sizing and moving to live closer to family. But you don’t put your house on the market, until you have identified someplace else to live, housing is that tight. Sale times of 1 – 2 weeks is now common.
        The result is that we now have increasing homelessness with people sleeping whereever they can find someplace safe eg the back of a church, or similar. And that in a town of 7500.

    • The Chairman 1.3

      Speculators, thus the resulting higher cost of housing are not the only thing driving up rents.

      Council rate increases, insurance increases, tax changes, demand (growing population) and meeting the new costs of compliance (insulation, smoke alarms etc) are all adding to higher rents.

  2. saveNZ 2

    We have the same amount of houses (according to National even more houses) but there is a housing shortage. That is because we have the 3rd highest artificial immigration per capita in the world after Israel and Litchensutein.

    This is not an ‘accident’ but by government policy and design.

    The right win twice. First they bring in more workers who will work for lower wages and conditions which is important for neoliberal ‘growth’. Then locals start to have less and less money to pay essential services such as rent and utilities which keep going up.

    Then when people start to feel the pinch and get angry as they find them selves with less and less – they attract the far right who blame the immigrants themselves not the right’s own failed neoliberal policy and they get in again.

    NZ has had high home ownership and this has keep people’s wages afloat as people can cash in their house or borrow against it to make ends meet. At the same time there is massive new demand each week for housing as more people come in, or ‘invest’ in property here without even being a citizen.

    As people’s wages get less and less and government benefits dwindle or are proposed to dwindle, then people start to trust government less, have less money to willingly pay more taxes and again it helps the right who message supports that, less government, more money to you!

    All I can say is that the left are failing mostly because they seem to not understand the right’s strategy or they fight amongst themselves on the remedy which would need to be carefully tailored.

    When the lefts starts attacking the middle for more taxes it helps the right who did it in the first place, get more votes.

    • saveNZ 2.1

      The other ‘secret’ of the right strategy seems to keep pitching voter groups against each other.

      At present it is Boomers against Millennials.
      Renters against Homeowners.
      Rich against Middle class against working class against beneficiaries .
      Working against non working citizens.
      2 parent families against single parents.

      That division takes the ‘blame’ off government for all the problems that are occurring in society due to their policies and instead turns voter groups against each other.

    • Draco T Bastard 2.2

      A great explanation of how the rich destroy society. They do it by simply taking more and more and blaming other people for it.

  3. Antoine 3

    I guess one saving grace is that the rent increases are much less than the house price increases (in % terms). Otherwise it would be pretty grim for renters…


    • One Anonymous Bloke 3.1

      You’re going to vote to make things even grimmer. Cry some crocodile tears.

    • Molly 3.2

      If you can hold more than one thought in your mind at a time – the fact that median wages are not rising at the same level as rents should indicate to you that it is already pretty grim for renters.

      (PS. What is with the A. ? Multichoice testing standards for the singular thought holders amongst us? 🙂 )

    • AsleepWhileWalking 3.3

      I’m sick of the sense of entitlement landlords have – this snivel, snivel, we have it sooo hard because mortgages bullshit

    • Sabine 3.4

      nah, the one thing Landlords are lucky to have is the government subsidizing their outrageous rent demands for their shit hovels via the Accommodation Subsidy or ‘pleat the landlords arse golden benefit”.

      cause frankly if that ‘benefit for Landlord’ would be scrapped non of these fuckwits would have tenants left.

      • weka 3.4.1

        The problem is how to remove the AS without creating hardship for beneficiaries.

        • Sabine

          build state houses, and have rent paid to the state instead of private suppliers that can’t supply houses without bankrupting the tenant.

          Fact is that anyone on minimum wage does not earn enough to pay the median rent anywhere in this country, and that the only reason they ‘can pay’ the rent is because of benefits.

          So at some stage something has to be done. Full stop. Either put a limit on the benefit, or set rent controls, or build state houses. At the moment what is done is nothing more a permission slip for Landlords to increase rent willy nilly, while never ever maintaining the property to start with. So the only who benefits is the private landlord who gets a golden behind courtesy of the tax payer.

          We need to change our thinking and realize that we are being black mailed by very scrupulous land lords and their enablers in parliament. And the Tax payer that is not a rich person – and has to pay their taxes in full – is the one footing the bill. We are being held hostage.

          • weka

            Obviously AS is a huge problem and many things need to be done. That’s a given.

            Unfortunately no-one seems to have figured out how to do away with AS without creating hardship for beneficiaries. Building state houses and expecting beneficiaries to live in them won’t solve the issue (we should be building state houses of course) unless you build far more of them than anyone is proposing. Neither will capping the AS (it has a de facto cap on it already). Rent controls sound good to me, but there’s still the issue of current rents vs current benefit rates.

            “So the only who benefits is the private landlord who gets a golden behind courtesy of the tax payer.”

            I think you will find that many beneficiaries would be homeless without AS. Landlords aren’t the only ones who benefit, despite the system being hugely unfair and creating more problems.

            The reason AS exists is because benefits are deliberately set below a survivable rate. The system has supplementary benefits to allow people to survive and prefers to apply this based on need (kind of) rather than just paying a decent rate.

            • Sabine

              Weka, i don’t argue against your points.

              however, i think we also need to accept the fact taht as long as we are having the AS, Landlords can charge what ever they want, knowing that the AS is going to be doled out if the need be.

              so essentially we need to do a few things.

              start building state houses
              start implementing rent caps
              pay beneficiaries a housing allowance that is separate from the AS.

              that last point is important as people in work are also receiving the AS, so the supplement should go to people that have an income but can’t afford rent, while beneficiaries like unemployed, sick, single parent, etc should get a housing allowance that completly covers rent that is applied within the benefits. Sorry if that sounds confused, i am sure you can word this better.

              • weka

                Sorry, not following that. What’s the difference between AS and a housing allowance?

                • Sabine

                  you seperate the two needs.

                  a. a person how has no income at all and needs the full amount paid.
                  b. a person who has a job and income but can still not meet the rent costs.

                  a. is a benefit
                  b. is a supplement.

                  and as i was told by one Winz Drone customer of mine, the AS is NOT a benefit.

                  I think that when we seperate these two groups of people with very distinctive needs we get a proper picture of just how many people in work and even decent paying jobs still need the AS to actually live in a house rather then a tent.

                  Consider how beneficiaries are treated in this country i think it is important to show just how many of us are depended on this supplement just to pay rent despite working.

                  • weka

                    Ok, I see what you mean now. Yes, that might be a useful thing to do. I don’t see how it would solve the issue of landlords creaming the system though. Paying total rent for beneficiaries will lead to rent hikes. Probably the de facto cap on AS is some kind of temper on that.

                    “and as i was told by one Winz Drone customer of mine, the AS is NOT a benefit.”

                    Not getting the distinction there. The main difference is that main benefits are taxable income and supplementary benefits aren’t. For the purposes of our discussion AS and HA would both be non-taxable, and still a problem re the landlords.

                    • Sabine

                      I could not understand the Winz Drone either, but as it stands it is a supplement to existing income and not a benefit. I guess it goes in that whitewashing of how much we pay in benefits each years.

                      Now i heard a number of 2.2 billion in AS floating around. I bet you a dollar to your dime that these 2.2 billions are not in the ‘cost of beneficiaries’ column.

                      as for Landlords, the only thing you can do is install rent caps, create a rental mirror i.e. the rent mirrors not only the quality of the flat but also of the area and its amenities. I.e. centre town, easy access public transport, public utilities like parks/swimmingpools, schools, univeristy, libraries, doctors, supermarkets will result in a higher rent. Living in a low income area, with few supermarkets, few parks, libraries, swimming pools, little access to public transport, small police presence and such will result in a lower rent.
                      The same with the flats, new modern, insulated, integrated heating, fully fenced, kid friendly, animal friendly will result in a higher rent then a rundown flat with indoor rain, no insulation, no heating etc.

                      that is what we currently don’t have. Any one charges rent to cover mortgage which should not be done, as the rent only covers the use of the flat, while the mortgage covers the cost of owning the flat. And if poor people can’t afford the mortgage how should they be able to afford a rent that is set to cover a mortgage on an inflated house price?

              • Red

                Start building state houses = public slums
                Implement rent caps = private slums and with above little new private investment in housing
                AS etc no problem for needy
                The reason we have a housing shortage is the result of interference and regulation in many area, you won’t fix it long term with more interference and regulation

                • weka

                  If you don’t know how to build state housing without building slums you probably shouldn’t be expressing an opinion.

                • Sabine

                  you think we have had to much interference in the housing market over the last 9 years?

                  care to elaborate on that?

                  and what would you call the stately tent cities that would do away with our housing crisis if we could just get the current national government to legislate these into existance? Blinglish Town? Ayan Rand Square? KeyVille?

                • JanM

                  State houses were built to a very high standard, actually, and are now highly sought after

        • saveNZ

          UBI – if people had a real safety net then things would change. For example if people did not have to work some crappy service job subsidised by working for families and many other schemes from government to ‘create’ minimum wage jobs then the employers would have to change. Businesses would have to change.

          Likewise rents, if you could survive anywhere, maybe people would go to other areas outside the main cities. They could set up on line businesses from the middle of nowhere and not need to pay the high rents in cities.

          Gangs and criminals might try other careers, and the towns and people they terrorise might have other options and areas would become safer to live.

          In short a new type of society.

          Government are already subsiding so many businesses, employees, working families and landlords. Why not just give the money to the citizens themselves to make their own decision on how to spend it.

          One of my relatives with 2 kids needs to have their minimum wages subsidised approx 30% by working for families.

          Currently Kiwis put money into housing as investments as they can not rely on their wages for retirement, or the government retirement schemes that are not guaranteed or the banks who’s savings are also not guaranteed. It’s obvious why people put their money into housing.

          But the reason there is a shortage of housing and abnormal spike in prices is that there is too much demand. And that is created by National’s immigration policy to lower wages in this country.

          And the reason people can not afford rents is that their income has not kept up with the cost of essential services, whether working or unemployed.

          • weka

            UBI, maybe, but most UBIs don’t take into account housing costs and the implication is that there would still need to be state assistance for that. Unless the UBI is paid at a high rate, but I haven’t seen any serious UBI proposals that would do that.

            • saveNZ

              It would be good to see a serious debate on UBI at the very least.

              I’d like to see figures on everyone getting the superannuation rate.

              Jobs are going. So we need a way in society to protect people or else we will turn into a 3rd world country.

              And there are now huge transnational companies coming around who can buy local businesses immediately and then terminate all the local contracts and eliminate businesses overnight, and put a lot of people out of work. This is happening in the US now, only a matter of time before they discover NZ.

              Generally as companies get larger, jobs, benefits and taxation seem to get fewer!

              Sorta huge corporate raiders, from Asia, US and EU.

              The world used to have anti trust laws, competition, taxation and so forth for big business – but it all seems to have gone out of the window in modern times – they are the ones who have successfully lobbied governments to get the sweet deals.

              • weka

                A UBI at the Super rate we would still need extra for housing at current rate and house prices.

                • saveNZ

                  Well that is why someone needs to stop the demand side!

                  And no point having so many ‘strategies to build new houses’ from Labour and National and Greens and everyone else, if it is to subsidise even more people coming into the country to take up those houses or pushing up rents and house prices.

                  I can practically guarantee in Auckland that every new house costs more than the equivalent old one.

                  Nothing that has been suggested looks like a shift from that – in fact everyone is going out of their way to reward and underwrite developers with taxpayer money (look at Westfield mall and our rates).

                  They even have their own groupies now, The Spinoff, Generation Zero, Transport Blog and god knows who else championing more rights to developers, more money and less questions about transport, more corporate welfare from the government and council and deregulation, less rights for individuals and communities and more rights for corporations and those who can work the system, less democracy about the way our cities are run, all under the disguise of affordability to ‘solve’ the housing crisis that did not use to exist before National came to power.

                  • weka

                    Sure, I was just pointing out that while getting rid of AS seems like a good idea no-one has come up with how to do that fairly yet.

                    • saveNZ

                      Meanwhile Auckland Transport workers are being jailed for corruption.

                      Cost ratepayers $2.5 million for lawyers and consultants to prosecute them!

                      Plus the millions in false invoices.

                      And more again for taxpayers to pay for the SFO case.

                      It just goes on and on.

                      Apparently Bill English is blaming the environment for the housing crisis now!

                    • saveNZ

                      A UBI would liberate people to do what they want to do.

                      The government benefit system disempowers people.

                      It actively stop’s people working. If you take a job and it does not work out, you lose your benefit. If you work part time you lose significant part of your benefit.

                      If your circumstances change you lose your benefit.

                      The jobs are poor quality being offered in many cases.

                      Think how many people are already receiving government assistance, unemployed, sick, low income families, people who can’t afford rent, landlords, old people, redundant people, students, people in prison, people in rehab, low income businesses, big businesses, etc etc

                      I’m just saying get rid of it all, and give everyone a set amount – I just think it will grow our economy through creativity of people being able to do what they want to do, as well as get rid of a lot of social disfunction.

                      This is a great article.
                      Why we should give free money to everyone


                    • Macro

                      We need to go back to the origin of the AS which, as you might guess, was originated by the Natz. The reason they had to implement an the AS was because they insisted on introducing market rates for rentals for state housing. This would have been all fine and dandy –
                      a. Had there been an adequate supply of state houses and
                      b. Had everyone been in employment earning a living wage.
                      Of course neither of these conditions applied as:
                      a. Every Nat Government that has ever been, has seen it as their number one job to reduce the number of state houses, and
                      b. Full employment has never been achieved by any Government. Even in the halcyon days of the 50’s unemployment was around 3%. So there will always be a need to provide social housing – despite the ideology of a free market economy.
                      Prior to the AS State houses were provided on the basis of an individuals ability to pay. And this meant that rentals were set at a level within the total benefit provided by state.
                      Now, the problem was that when some moved off a benefit and into employment their income levels may have risen substantially and paying only a small rental they were “creaming it” – to the chagrin of those who had bought their own house. The incentive for those in state housing to “rent to buy” was a very popular one and lead to many NZ’s own their own home. But the Nats “solution ” to the problem of those who were long term tenants of state houses who were earning good wages and paying small rentals was to then change the rules that rentals were all to be set at market rates.
                      Initially this did not cause too much disruption as because state houses set the level private rentals – while higher – had to be competitive. Now the shoe is on the other foot, and private rent sets the pace for state house rent.
                      The AS was the solution for the obvious disparity between the income from a benefit and the new cost of market rents.
                      If we are to move away from the AS (and I think we should) we need to return to the original concept of the state home as conceived by Mickey Savage in 1935. That is the provision of a home for everyone no matter who they are, and the provision of a benefit, which pays for their needs. So the cost of the state home would be reduced to a charge which would be contained within the benefit the people received, and also provided for their day to day living requirements.
                      As for those who move from a benefit to a living wage, then the rental for the state home should be adjusted according to the individuals ability to pay so that they are not seen as “Gaming” the system nor are disadvantaged by being in employment.

                  • Sacha

                    “The Spinoff, Generation Zero, Transport Blog and god knows who else championing more rights to developers, more money and less questions about transport”

                    I have absolutely no idea what you are basing that on. GenZero and Transportblog in particular have done more to progress the transport discourse than any of the political parties. Their joint Congestion Free Network plan has effectively been adopted by the Auckland region’s transport authorities.

                    • saveNZ

                      I rest my case! With these self imposed guys working on “our” behalf that’s why we have such an amazing transport system of world class envy (sarc)!

                      Dialogue, dialogue. That’s called lobbying for the system they want.

                      Just like the unitary plan. Wall to wall lawyers in there, on behalf of their backers to make it as profitable as possible for those that wanted to mould it to their wishes. The actual resident public were ridiculed for their views.

                      Haven’t seem anyone ask the actual residents what they want about transport and even better get to vote on it!

                      According to our mayor after being advised, the answer is less democratically elected council representation on AT board.

                      It’s group think – through and through.

                      Maybe the original people in those groups believe in better transport or what have you, but now their groups seem to be being infiltrated or used by National types to pretend to ‘consult’ and put forward the same right wing arguments.

                      Seriously think about a congestion tax. Who do you think it will effect? Those in Grey Lynn and the CBD from the transport blog, who don’t commute and have their cycle way, or those who are poor and live in Wellsford and have been forced to commute into work by rising house prices and rents.

                    • Sacha

                      I share your concern about the regressive nature of transport pricing systems like congestion tax (and I’ve said so on Transportblog). However I really can’t relate the rest of what you say to my experience of interacting with those organisations.

                    • Molly

                      Followed both GenZero and Transportblog for a while, and tend to agree with savenz. They seem to have become supporters of the status quo, with a dash of me, me in there.

                      The premise of GenZero seemed to be good, the reality is a group that works within current establishment guidelines to achieve very little change.

                      Transportblog is well written, informative and persuasive but only on their own pet issues. Very little concern about areas that they do not live in or work in, and thinly veiled support for current government. The post they did after John Key resigned is a good example of how much leeway they gave him.

                      Both organisation leave a lot to be desired, and are dismissive of real change.

                • UBI paid at super rates would allow for those who are careful with their finances to afford to live in many of the more expensive areas of NZ, but not EVERYWHERE.

                  Super is actually a pretty generous rate at 25k p/a, the issue is that rent costs are going up and nobody has proposed COL adjustments for a generous UBI yet.

                  I have run the numbers and you could definitely fund a generous UBI (I assumed one with $20k per annum, but I also assumed that you’d want to start a little lower than you planned to finish while you wait for the long-term savings on f.ex health to kick in) with the savings from related benefits and entitlements such as Jobseeker Support and Super, if you instituted a CGT and actually charged reasonable rates on the ETS or instituted a carbon tax instead, and this is WITH the generous simplification of income tax that most right-wingers want as a compromise on a UBI.

                  • weka

                    Single rate, after tax is $19,200. Take out $250/wk for rent, that leaves you with $6,200 to live on for the year.

                    That’s a Dunedin low average rent. I grabbed a cost of living rate from the university site of $5,000/yr but that’s shared and only covers food, power, ph, internet and insurance.


                    Afaik Super was designed to be supplemented for those that hadn’t paid off a mortgage.

                    Which isn’t to say it’s not solvable, but the original point was to remove AS and I’m saying there is no easy solution to that that I’ve seen. Multiple, interlocking solutions, yes.

                    What was the highest UBI rate you costed?

                    • I had some very pessimistic assumptions, (eg. that some people would quit their jobs or work less hours on implementation, that there would be a limited amount of wealthy flight, that there would be no immediate savings from non-redundant areas of government policy such as in health, etc…) so I initially only balanced it out with a $20k p/a payment.

                      My assumptions were a CGT revenue of about $16.7 billion, (per the VUW proposal) savings from benefits of $8.1 billion, (I was lowballing this one by looking specifically at jobseeker support, the savings would probably be more here) a saving of $12.3 from rolling in NZ Super to the UBI, (this one is actually completely accurate- if the UBI is high enough to cancel the NZ Super program, that nets back $12.3 billion annually as soon as you can cancel Super) and an extra $7.1 billion from a transition to a proper carbon tax, although you could potentially maybe squeeze that out of the existing ETS system if you were very careful.

                      This actually netted an extra $0.78 billion altogether with my rather pessimistic assumptions, assuming a 45% tax on incomes up to $80k p/a, and a 55% tax on incomes above that, so not quite a flat tax, but VERY close.

                      If you wanted to start off with a UBI at super levels, you’d need to find another $15.2 billion in savings or revenue. It’s possibly out there, but that’s half again the current governmental revenue at the time I ran the numbers based off the 2015 budget. It’s possible my various pessimistic assumptions wouldn’t be true and would make a $25k UBI manageable right from the start, but that’s difficult.

                      To make my quick UBI modelling spreadsheet balance out at $25k p/a, I had to spike the upper tax rate (ie. for income above $80k) all the way up to 90%, which is literally the kind of upper tax rate the US had back when they were trying to get rid of robber barons, and $80k is not exactly a huge amount of income for families.

                      I agree that even this generous UBI wouldn’t solve the housing crisis, however it would likely be a good starting point for rationalising the benefit system. You’d need to run it in paralell with policies that address too-high rents and other costs of living in order to make it livable for everyone everywhere, but it is enough that people without any extra physical needs and able to cut costs could live entirely off the UBI indefinitely. That’s not the same as saying it would work for everyone, which is why I only assumed limited savings from WINZ rather than slicing out most of their budget.

                    • weka

                      Nice. The models I’ve looked at are all around the dole/$10,000 rate.

                      Have you written that up anywhere? KJT and I were throwing round the idea of having a week of UBI posts on TS. Maybe reposting some of the old ones and inviting in new ones and facilitating some discussion. Would you be interested?

                      I’d like to see some serious work done on the supplementary benefits (accommodation, disability, hardship grants etc). No-one seems to have touched that yet.

                  • saveNZ

                    I’d prefer to see a financial tax of 1% on everything. And maybe a stamp duty on property – as soon as you change the title you have to pay. Stamp duty is very difficult to evade.

                    Capital gains rely on people actually paying tax and declaring tax! As we know that 50% of the super rich and most corporations pay little to no tax then capital gains will be a mockery as they will find some loophole to not pay it, keep IRD in litigation for years and get a ‘sweet’ deal that the middle class do not get. It will increase inequality. Those overseas will just pay nothing and not declare anything. There are so many ways to avoid capital gains taxes.

                    But a stamp duty means as you buy the 10 million mansion you have to pay, you ‘gift’ the asset to someone you have to pay, you moneylaunder though property you have to pay etc.

                    It will stop people constantly selling rentals as they will have to pay tax each time.

                    As newcomers buy up NZ they will have to pay tax straight away not years later if at all.

                    A financial tax means when company directors ‘transfer’ millions in money around the world and it comes into NZ they will have to pay tax on it.

                    If NZ is going to a a chip on the roulette wheel then the government needs to get a bit better at taxing it, because at present their taxation ideas only tax middle class locals and make them poorer, lower services and the newcomers seem to get the benefits of every government idea tax free.

                    • saveNZ

                      I also do not advocate Labour running with any ideas of additional taxation or they will blow their chances at the election.

                      But theoretically I support stamp duty and financial transaction taxes IF it is used for a UBI and goes back to keep every person in this country out of poverty.

                    • Tony Veitch (not the partner-bashing 3rd rate broadcaster

                      A Wikipedia entry suggests that a UBI is easily manageable – in terms of paying for it.
                      • Welfare substitution: Basic income would substitute to a wide range of existing social welfare programmes, tax rebates, state subsidies and work activation spendings. All those budgets (including administrative costs) would be reallocated to finance basic income
                      • Auto-financing of basic income: although basic income is paid to everyone universally, most people whose earnings are above the median income are in fact net contributors to the basic income scheme, mainly through an income tax. In practice this means that the net cost of basic income is much lower than the raw cost calculated as a sum of monthly payments to the whole population.
                      • More fiscal redistribution: in addition to reforming and optimizing the existing tax systems, additional taxations can be implemented to fully finance a basic income scheme. Some proposals frequently mention to this effect the need for a tax on capital, carbon tax, financial transaction tax etc. which do not currently exist in most jurisdictions.
                      • Money creation: In addition to tax reforms, the power of central banks to create money could be used as one funding channel for basic income.

                    • Transaction taxes aren’t huge revenue draws. They’re actually much better at discouraging certain types of speculation than they are at generating revenue. The people discussing such transaction taxes in NZ estimated they would probably generate $1-$2 billion when I looked into it for my UBI model.

                      That is chump change compared to estimated revenues for CGTs, even with the evasion problem- as I said in reply to Weka, the estimate I took for CGTs was of $27.3 billion in revenue. That’s almost as much as much as from direct income tax right now. Even if there are evasion problems to be solved with it, it’s a great way to fund much of the cost of a UBI.

                      I agree a financial transaction tax is probably a good thing, and it might even be worth imposing one unilaterally and seeing how it works out. But I don’t expect it to actually generate revenue significant enough to even dent the $70-90 billion in UBI transfer or income tax offsets, because the point of it is to actually encourage long-term investments rather than short-term speculations by encouraging investors to perform as few transactions as possible.

                      As for new taxes- I think New Zealanders don’t mind taxes if they actually fund programs they want. For a UBI, I think we would support a CGT and a Carbon Tax, which seemed the two most practical options to fund it.

  4. Keith 4

    How will Queenstown balance Nationals low wage economy with first world + rents. By any logical reckoning they won’t so therefore who will staff their businesses?

    I believe there is an awful lot of overcrowding in substandard rooms so people can afford to live and work there but even then it must reach a breaking point.

    • saveNZ 4.1

      My guess is that they use people on temporary work permits, back packers etc for service jobs and maybe older teachers/police who bought a house years ago and don’t need to rent???

      • weka 4.1.1

        pretty much. Itinerant labour suits the fluctuations over the seasons each year, and even better that you have a pool of willing workers who are essentially there on holiday or to party/adventure, especially given they don’t need stable job conditions or rates high enough to afford accommodation year round.

    • Gabby 4.2

      That’s how. Overcrowding in substandard accommodation.

  5. Ch-ch Chiquita 5

    Christchurch rents are in decline because demand is lower and there are around the 2000 houses advertised for rent.
    House prices increase is also slowing down due to the new 40% equity requirement (though vendors and real estate agents are slow to understand this). Where in the past houses used to be snapped at auctions, a lot of them now aren’t sold at auction and vendors are forced to start naming their price and come back to reality if they want to sell.
    The housing crisis needs to be addressed not only from the supply side but also from the demand side.

  6. Keith 6

    Lets wait for the National Party “raft of packages” aspirational policy announcement of lowering rents to affordable levels by 2075.

    Oh and resetting what constitutes unaffordable to a much higher level and including Honda Odyssey’s as housing!

  7. AsleepWhileWalking 7

    The only reason 60% of rents are paid in this country is because of government subsidies.

    Would I be correct in assuming we are borrowing money to pay this rent?

    In my suburb the price of an average home has increased by 100,000 in the last year. I’m dreading what our property manager will increase our rent to this time around. Last year it only jumped by $60/week. We’ve lived here 8 years and honestly even thought the mortgage would kill us we would buy if we could just to escape the ever tightening noose of rent increases.

    • saveNZ 7.1

      Yes, you are right. The whole system is completely messed up. But if you build a house even if you get the land for free, it is so expensive in NZ that we need a complete rethink on why it cost so much to build here. It’s not just the council fees which in Auckland went up 50% a few years ago, along with everything else, it is the actual building materials and the constant screw ups by the companies and faulty materials. For example concrete faults.

      Another issue in Auckland, is that the unitary plan reduced all the regulation and the council gets 99% of consents through. This encourages people to build bigger and be more greedy on resources. The houses cost more and then ultimately developers have removed a cheaper existing house for a more expensive one, that costs more to own, rent, or run.

      Unitary plan was sold as some sort of affordable housing, and lefties and charities were fooled into supporting it and helping National run it through and attacking any one who questioned it.. it never had any affordability in there. Quite the opposite! As for sustainability – zero. It is going to be a disaster for the future. We are going Los Angeles crossed with Bangkok. i.e. Flash ghettos, big USA style housing ghettos, and leaky slums and people living in cars, camp sites and homeless.

      We could be building houses that can make their own power and collect their own water, but as we can see by the ‘solar’ tax from electricity companies – there is a strategy to keep people reliant on company power and the councils water supply.

      All of which costs more for someone in their day to day expenses, whether they rent or own the house.

  8. rob 8

    How long before we start to see riots etc like overseas? it seems like it will come as desperation sets in like we’ve never seen before in this once great country.
    And the emergence of bigger greater gangs? recruitment thru putting roofs and food into people.

  9. rob 9

    The seeds have been planted for riots and civil unrest. it is just a matter of time under these rwnj.
    this once great country is being destroyed and socially being disected. Great tool for gang recruitment

    • Red 9.1

      Hyperbole rubbish travelling around Auckland far and wide today I did not see any great sense of unhappiness or revolution fermenting

      • rob 9.1.1

        It is brewing dimwit

        • saveNZ

          I agree with Red. Zero revolution is brewing in Auckland. Only coffee. People have got tired of the constant fight of upward mobility, the constant lies and deceit by council and government and enjoying smashed avocados on toast for $18, whether renter or home owner.

          Those not being able to afford their rent, have already left the city or too confused/tired/without funds/depressed to be a foot soldier in the revolution.

          In short we are all worn down by National.

          Confusion works.

  10. Draco T Bastard 10

    What happens to cities when ordinary people cannot afford to live in them any more?

    Well, some people would shift but there’s always going to be the majority that can’t actually afford to.

    John Key famously said that he didn’t want Kiwis to become tenants in their own country.

    He was lying. John Key and National most definitely want us to be tenants both in the houses and the country we live in. With serfs tenants the rentiers get to live the high life on the work of the serfs tenants while complaining about the work ethic of the serfs tenants.

  11. saveNZ 11

    Don’t forget as well that some of the biggest beneficiaries of soaring house prices and speculation is the government and real estate agencies.

    Each time a house is sold 2-3% of that house’s price goes to the real estate industry.

    And the government gets 12.5% GST on the 2-3% of that house sale.

    And 12.5% GST on the council consents and the power increases and so forth.

    So I’m not sure how much help the real estate industry or the government or the council is going to be, considering how much they profit from soaring prices, houses being bought and sold and new consents.

    And 12.5% GST on a weeks rent through agencies each time a new tenancy is signed through an agency.

    • NewsFlash 11.1

      But isn’t GST now 15%?

      NZ has the highest rent to house valuation ratio of any western country, WHY?

      NZ has the highest level of GST(charged on 98% of all goods and services) of any country in the world, WHY?

    • Craig H 11.2

      15% GST since October 2010.

  12. Adrian Thornton 12

    Labours economic ideology is rooted in free market neoliberalism as instituted into the Party by Roger Douglas, this is a fact.

    Until Labour is captured back from being a prisoner to this destructive and debunked ideology, this conversation is a complete waste of time…of course houses are expensive and renters are being exploited, that is this economic system operating as it’s designed too…commodify everything, extract wealth at what ever cost, create consumers not citizens.

    Without changing the economic ideology underpinning Labour…nothing will ever change in the long game, and anyone who thinks otherwise are dreaming.

    • Ch_ch chiquita 12.1

      But we don’t have a real free market economy. If there is an AS, so the landlords are not charging what the market wants to pay; they lobby the government to give them that part that the free market doesn’t want to pay. We don’t have a real free market economy when there is 5% unemployemnt and yet the government allows employers to import workers to lower wages. If we had a real free market, employers would have to adjust the wages they pay to what the market is demanding.

  13. millsy 13

    In regards to the discussion about Accomodation Supplement.

    People (on both sides of the argument) need to realise that it is completely inadequate to be able to manage rent payments. It is NOT a princely sum. The only way it could work out is if your rent was only about $100 per week, if on JS and $120 if on SPS.

    In the UK with housing benefit, before Boy George decided to send the poor the bill for bailing out the banks, 100% of the rent is paid for in a lot of cases.

  14. greywarshark 14

    Going back into the foggy past. In 1993 accommodation supplements were introduced as a major player in rented housing in NZ.

    I think that is the start of this debacle. The government has consistently propped up the market with subsidies that go to private landlords, and at the same time removed the low cost base of tenancies at income related rent for people in need, thus fuelling rentals inflation. Housing inflation has been added to because of National government’s need for moneyed immigrants to come with some cash to boost our current account (It is defined as the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers) which otherwise would look as if we were a shagged-out economy, and there wouldn’t be enough players at the casino to buy the chips.

    (which includes a great comparison of unemployment rates that is I think a marvel of apples and oranges, otherwise how to explain it.
    “unemployment rate change from around 10 percent in 1993 to around 4 percent in 2004 ”

    More background including anecdote of a 58 year old woman with a one-bedroom state flat who had received in 1992 a 300% rise because of government change to the housing welfare provisions.

  15. Greg 15

    The answer is simple riots

  16. Whispering Kate 16

    Just today some nice guys over the way from us were moving out. Lovely home, and four of them – rent $750 a week with bond. They had a year long lease and were then told time to move out. Fortunately they got drift of this and started looking early for a new home. This time they have a home – six bedrooms and its a $1,000 a week with a $1000 bond. They will be looking for a couple of flatmates.

    This will be a lovely home as I know the area – who in AK can afford to buy a home of that size with the complimenting bathrooms/toilets – two at least – not many kiwis I know so I can only presume it is wealthy new immigrants who own it and are making huge money out of it by renting it out. The home they are leaving is a new immigrant owner and it seems he is now moving his elderly parents in.

    These guys are all employed with good jobs and despair of ever getting a home and I think they may well give up on home ownership. One of them has a friend on $100,00 and he said they have got $40,000 saved up and its not enough for the bank to give them a mortgage on. Don’t anybody try and say our young neighbours should find a dump to live it, why should they and anyway there wouldn’t be a dump available as rentals are so far and few between.

  17. happynz 17

    What happens to cities when ordinary people cannot afford to live in them any more?

    I dunno what happens to those cities, but I had to move overseas ‘cos I couldn’t afford to live anywhere in New Zealand (and I’m frugal as fuck). I’d love to return to New Zealand, but with no property or job prospects it looks like an impossible task.

    • indiana 17.1

      Just out of interest where did you move to? London, Sydney, New York, Tokyo, Seoul, Beijing…you know all those places that equally the same issue of housing affordability that Auckland has…

      • happynz 17.1.1

        I’m in Saudi, so rent isn’t an issue as Saudi employers are obligated to provide housing for expatriate workers.

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