Since I looked at housing policy in 2015, during my post-grad policy paper, I’ve has a lot of conflicting thoughts.
The current housing deficit has its roots in the sell-off of State-owned rental housing, which began under Jim Bolger’s Government in the 1990’s. Not only did we quit building homes for low income families, but we also sold off those homes that were in the best condition.
Leaving the provision of housing solely to ‘the market’ allowed for perverse incentives, and property bubbles. We had a property crash in 1992, off the back of Marac Building Society over-extending their lending capacity, as speculators leveraged equity in one property over a portfolio of 10-20 properties.
(I recall at the time that Real Estate agents were running seminars for middle-class homeowners, explaining how easy it was to leverage equity & build an investment. Exactly as they are doing in 2020/21. People who got into that in 1990, had mortgagee sales forced on them in 1992; as the market rate dropped, many sold their portfolios for less than the mortgage value, ‘negative equity’ becoming the new thing.)
Banks, insurance agents, mortgage brokers & real estate agents all walked away from that crash unharmed – the risk was borne by the failed speculators.
The property bubble we’re experiencing now has been driven by exactly the same forces.
Those making percentage commissions on sales are not going to be putting any brakes on rampant profiteering in house prices; banks in general are still very keen to bring in new mortgages, despite current market values for properties being sold exceeding the average income by a factor of up to 10 times. Affordability is not being questioned, nor the sustainability of making payments on these valuations – which cannot hold, as there is no reason of substance for the inflated prices being asked.
This is the true failure of the ‘market economy’ – whose theory of demand increasing supply of high-demand goods has been subverted by artificial scarcity in the housing market, creating anxious buyers and ever-inflating house prices.
My initial response to my policy research in this area was that NZ needed to bring back State-owned housing, building properties to be rented by those on low incomes who will never be able to own their own home – just as Savage & later Fraser did, during the first Labour Government, developing the State Housing Policy that ran from the 1940’s until it was demolished at the end of the 1980’s.
The policy was very pragmatic about the existence of class barriers to home ownership; the difference today is that we pretend to be a classless society, but many categories of basic work pay the minimum wage (or worse), from which no household can expect to save a deposit enough to buy in these inflated prices.
The slums of the Great Depression brought about the first comprehensive Housing Policy; post-GFC, we need to revisit the ideals of compassion for low income households, to allow a life with some dignity.
The biggest difference between 1935 & 2020 is that our poorest households are now female-headed, whether with children to bring up or as disabled or elderly women. Poverty has become gendered.
I watched in dismay as Kiwibuild was rolled out as a way to ballot houses to first-home buyers, pre-approved and (seemingly) mostly teachers, nurses, police, & so on, who were being priced out of the Auckland housing market. This neither addressed Homelessness, nor took any appreciable heat out of the Auckland property speculation bubble.
At some point, the Minister for Housing and Urban Development is going to need to recognise that ONLY by building housing expressly for the homeless, will that problem be solved; getting our homeless off the streets by hiding them in motels was a shabby answer, dreamt up by National’s cabinet in a moment of delusional rhetoric that assumed a short-term crisis & that there were enough private sector rentals to go around.
One response to this phenomenon has been a move to smaller living – tiny houses that not only cost less to build, but are better insulated, use less energy for running appliances, lighting & heating, and can be obtained without a million-dollar mortgage.
Stepping off the debt treadmill became more attractive during the 2020 Covid Lockdowns, when people saw work vanish or become more precarious, and in extreme cases, entire businesses were put at risk. Re-evaluating one’s debt exposure became the new ‘mindfulness’.
When I first started looking into Tiny Houses seriously in 2020, I found (as I has expected) a lot of hippy, alternative lifestyle types with DIY fitouts they’d done for themselves – You-tube is full of earnest young couples describing their tiny house journeys. There’s a lot of off-the-grid cabins in out of the way places, and not a few farmers who have parked a tiny house near their driveway, as a little side gig on Air B’nB.
What I didn’t expect was the new build out at Hobsonville Point in Auckland – a two-bedroom family home on a small section, built by a couple with two children who decided to become mortgage-free by scaling down their building plans. (The article about this seems to have vanished, annoyingly – probably offensive to property developers!) That was about the most suburban, middle-class setting I found a tiny house in, although I had seen footage of others dotted in locations around Auckland’s Western suburbs, in native bush settings.
When I approached a couple of builders to get quotes, it became apparent that ‘ground leasing’ was a common strategy among tiny home owners. A little more research in my own time led me to a community of long-term ground leasing residents in ‘holiday parks’, or campgrounds.
This is still ‘alternative lifestyle’ by most comparisons, and it obviously wouldn’t suit every household currently renting or in transitional housing. But there is certainly a percentage of people who would rather own a small unit, and be their own landlord, without having the strain of a huge mortgage.
But for those who choose it, this is a viable alternative to the dwindling supply of Council flats available for pensioners; many provincial councils have sold off their social housing, leaving professionals to manage that sector. Retirement Villiages are now big business.
At the very time that demographers have been pointing to the tidal wave of Baby Boomers about to sweep down from big City suburban areas, intending to cash up & move to a small town, the small towns are running out of pensioner-type housing to be bought.
Why is it so difficult?
Our modern housing market runs on a few basic principles which we laughingly call ‘capitalism’, but we should properly name ‘indebtism’ – the banks gate who can acquire housing indebtedness, while at the same time ensuring that ‘property values’ are maintained so that their return on mortgage financing keeps well in the black.
The ancillary industries of real estate & advertising ballast the banks, while also making their own profit margins on every transaction.
There are just too many vested interests involved, for ‘the market’ to self-regulate in any ethical manner; gamblers at least acknowledge that ‘the House always wins’, but our real estate industry is sadly lacking in any insight into the reckless risk that the current property speculation bubble poses to those trying to scrape up sufficient deposit to buy their first home.
If we look back to the 1990’s, a drive around any suburb built in those years is very informative. Left to themselves, builders aimed squarely at mid-life homeowners with equity & built ‘McMansions’ that filled up suburban sections.
Extrapolate that through to 2020, and what we have is suburbs full of large middle-class family homes, but very little that could be sold to a young couple or young family, looking for their first home.
Those big houses are still selling, of course – to mid-life families returning to NZ after decades overseas, or to economic migrants coming here from overseas, who have cashed up & can afford Auckland prices. And property investors are buying the former family homes, because they know that families are renting for longer now (… because they can’t buy into the inflated market….)
For under $100.000, a one bedroom unit, with a full kitchen, bathroom, & small living/dining space, can be built as a Tiny House. A fancy one for $150,000, with a few extras – and these variables can be seen on the websites of Tiny House builders.
Some offer modular units that can be combined to give more space (say, for a larger family).
I didn’t see any on offer that came up to $500, 000, which is a ‘modest budget’ according to Craig Moller, the Wellington architect who shows off extravagant house building in the Grand Designs NZ TV show.
These truly modest units could be built quickly (about five months per unit), and grouped on SHA’s that already exist in most municipal areas – except for that shibboleth, ‘market values’, or ‘rateable values’ – because local government also has a vested interest in higher house prices – residents pay rates based not on the cost of services, but on the perceived valuation of their property.
The solution to building clusters of small units for single person households (as most of the homeless who currently sleep in night shelters would be) devolves down to whether such housing would be permitted by Councils, many of whom dislike pensioner flats already in existence.
My contention is that central Government legislation needs to lead local government to the provision of such housing – my investigation into where one might build a ‘tiny house’ unit with a full Building Consent granted by Council surprised me with the fact that such consents are not easily obtained in urban locations.
Some Councils are more forward-looking than others – HBRC sets the ‘gold standard’, & the Hawkes’ Bay region boasts many tiny houses, some in permanent habitation, some as holiday homes or weekend-getaway b’n’b rentals.
I’ve mentioned building consents, and I understand that the RMA is about to be severely pruned & overhauled, so my gripes about how much this slows down conventional property developers are probably redundant (& I expect they are completely capable of representing themselves in that argument, too.)
I do want to note that where I looked at building a tiny house, the relevant District Council was accepting an ‘exemption from Building Consent’ certificate, which took about six weeks to acquire; last I heard, a full Building Consent can take up to a year (in Hamilton; may vary in other centres). Many tiny houses are built with an obvious trailer deck, and as such are defined as ‘vehicles’ rather than ‘dwellings’, although some councils still dispute this.
There has been collaboration on a piece of draft legislation around tiny house regulations, which began under Gareth Hughes’ oversight. He informed me that the work was returned to the Tiny House Association when he left Parliament, and is still being considered by their members.
Sorting out one set of regulations to guide all Councils would be useful to forestall the amount of time being wasted in Court proceedings against tiny home owners, some examples are included in the resources section.
Nelson woman builds her own tiny house for $25,000 using recycled building supplies.
Riverhead, Auckland Tiny House DIY build https://www.stuff.co.nz/life-style/homed/latest/123042012/couple-build-their-own-tiny-house-helped-by-friends-strangers-and-youtube
Tiny house cluster in Pt England, Auckland, being used for housing homeless https://www.stuff.co.nz/life-style/homed/latest/122999865/tiny-house-village-gives-hope-to-homeless-when-they-need-it-most
Sleepout cabins as described in Pt England article https://www.tinylifestyle.co.nz/
NZ Tiny House Association – advocating for builders & owners of tiny houses. https://www.nztha.org/
Example of District Council requirements for tiny house builders/owners https://www.waimakariri.govt.nz/building-services/i-want-to-build-a-…/tiny-house
Example of exemption criteria, for building consents, which many tiny houses fit https://www.hastingsdc.govt.nz/services/building-consents-information/building-consents/exemptions/
Developer in South Wairarapa changed plan to build 120 tiny houses after consent denied. Featherston tiny homes developer wants red tape cut
Vehicle or building? Tiny house on wheels faces big legal test
Canterbury man proves in court his tiny house is a vehicle, not building
Tiny home at centre of complex court dispute in Marlborough