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Housing NZ to build to sell

Written By: - Date published: 12:30 pm, October 31st, 2012 - 22 comments
Categories: housing - Tags:

Housing New Zealand is going to build some affordable houses in Christchurch and then sell them. It’s not a bad idea. In fact, if it were done right and en masse, it should have been a centrepiece of National’s empty ‘affordable housing’ announcment. But I fear it won’t be done right. It’s not enough just to build affordable homes: you need to make sure landlords don’t snap them up.

First, you need a capital gains tax to get the speculative money out of housing, which drives up prices in a giant ponzi scheme. That would give first homeowners a real crack at buying these houses.

Second, you could go beyond neoliberalism and determine the outcome, rather than leaving it to the market at all. Put a lien on the properties that they can’t be leased by the owners (with exceptions permitted by HNZ etc etc). By cutting the landlords out altogether, you would again make the homes more affordable for ordinary people.

Third, if you really wanted to make this work you would let Housing NZ tenants rent to own their properties with soft loans, which would be recycled into building more affordable, modern housing.

But, will any of these things happen? No. Not under National. These ‘affordable houses’ will turn out to be unaffordable as speculators, who are always going to be able to outbid a young family, swoop in and buy them up – then profit by renting them to those young families that they were built for.

22 comments on “Housing NZ to build to sell ”

  1. vto 1

    I see this and I wonder how Housing NZ will be able to do it any cheaper than those out there doing it now……

    The scale they are talking about suggests no economies of scale. They are looking at doing it together with developers so all the usual margins will be in there. Unless they are effectively doing it on a non-commercial return basis. i.e. out of the goodness of their hearts. But given the lack of heart in this government I simply don’t believe that.

    • onsos 1.1

      Nobody is bothering to build low cost housing. There is a lot more money for property developers in building more expensive houses. The government is not bringing down the cost of housing through its competitiveness, it is bringing down the cost of housing by doing something that property developers aren’t.

      • vto 1.1.1

        mr onsos, if you look around you will find housing options from under $40,000 (small and kitset) right up to $mullions. There is low cost housing, although (subtlety here…) it is expensive relative to what it should be. Compared to Oz house costs it is expensive on a square metre basis.

        The issue seems to arise in getting similar low cost land and then putting a low cost house on it. There is a missing match-up.

        The problem is multi-pronged.

        • onsos 1.1.1.1

          Not so much. Low cost land is low cost because it is undesirable. It is undesirable for solid reasons–it is expensive to live a long way from work and public transport, especially in a city with expensive public transport. This is why people pay high rents for substandard accommodation near the city.

          The answer is to increase housing density near city centres, and along transport corridors. This requires low and medium rise buildings. Answers that involve maintaining lower densities increase transport and infrastructure costs. That is, they are not low cost–and buyers and renters know this.

          Individuals and families cannot develop genuinely low-cost, medium density, low and medium rise housing. That is the domain of property developers. Property developers are not doing this because there is plenty of lower hanging fruit. It’s quite straightforward for government to do, however.

    • karol 1.2

      Rod Oram quoted some interesting stats on Nine-to-Noon yesterday.  They showed how much things had changed in recent decades.  Originally affordable housing was quite a high percentage of NZ new housing stock.  Now it is very low.  So what changed? 
       
      Oram rated the plans in Melbourne for affordable housing.  He said they are not extending the area in the city for building.  But they are doing things like building low level apartment blockss along transport routes, and integrated with shops etc.  It means it’s medium density, good for getting about, and still has a bit of a community feel.
       
      I couldn’t find anything directly with that plan online, but did find this 9 point plan:
       
       

      • insider 1.2.1

        WHat changed? A Labour government came in. Much of the acceleration according to Oram was under their watch.

        Ironically Rod spent much time admiring Melbourne as a city ignoring it is one of the most expensive home markets in the world – far more than any NZ city

    • Draco T Bastard 1.3

      It’s not about making them cheaper but about increasing profits, i.e, rewarding Nationals supporters.

  2. Draco T Bastard 2

    Housing New Zealand is going to build some affordable houses in Christchurch and then sell them. It’s not a bad idea.

    Yes it is as all it will end up doing is rewarding the banks.

  3. insider 3

    So are you saying you want a CGT on people’s homes to stop them selling them? Are you talking about all of them? And you also want to nationalise housing? Why not chuck in reindoctrination of the intelligentsia too.

    • vto 3.1

      Tell me oh great wise insider, in how many of mankind’s communities and societies and nations throughout history has there been individual dwelling ownership compared to communal dwelling ownership?

      It sounds from the tone of your comment that you are well clued up on this sort of thing and I would be curious to know…

      • insider 3.1.1

        Well in the English cultural heritage, the concept of individual ownership by other than the nobility runs back well over 1000 years. That is probably most relevant for our purposes when considering whether a groundshifting policy would be politically acceptable.

  4. Dv 4

    It is interesting that this was NOT announced by Bill yesterday?
    Dont the Nats talk to each other?

  5. Another doomed to fail scheme, and an attempt by the government to try and not live up to their responsibilities to the poor, working and middle class New Zealanders to provide state housing.

  6. millsy 6

    Sell the homes, but have the land as a 99 year lease…

    National policy to allow HNZ tenants to buy their home was a a step in the right direction (I was talking to a long-term state house tenant a few years ago who couldnt wait to be able to buy her home and do it up the way she wanted it), but where it fell over was providing no subsidy for tenants — they had to get a loan from the bank on their own.

    • PlanetOrphan 6.1

      One of the best Ideas I’ve heard M8!

      Would make ownership much more approachable.

    • fatty 6.2

      How about they just build them and give them away to people who have had a history of struggling to pay rent. But put them in with tight conditions for 10 years regarding the upkeep of the houses. If they get to 10 years and the house is in good condition, then they get to keep it.
      First in line can be people with children

      • Lanthanide 6.2.1

        Reward people who aren’t able to pay rent, while those who regularly pay rent get left out? Yeah, that’s fair.

        I also seriously doubt that someone who wasn’t able to pay rent for a state house would be able to do proper home maintenance over the course of 10 years.

        • fatty 6.2.1.1

          Nah…we could also help those who have managed to keep their heads above the water. We could do both. Don’t think of it as rewarding failure, think of it as not being a cunt.

          “I also seriously doubt that someone who wasn’t able to pay rent for a state house would be able to do proper home maintenance over the course of 10 years.”

          Really? …and why would poor people be incapable of keeping a house up to standard?
          If they do have a record of ruining a house, that’s probably cause they have nothing to lose, rather than an in-built tendency to wreck stuff.
          The big stick technique doesn’t really work with marginalised people…maybe we could try the big carrot instead?

  7. fatty 7

    Typical third way bullshit…the Government assists business and fills the pockets of the rich. Redistribution for the privileged.

  8. tracey 8

    Why dont we rezone inner city areas, like sandringham and dominion roads to allow maximum of 4-6 floor apartment blocks. All sitting on bus rputes and very close to rail.

    Use this as a model along main, non motorway, arterialnroutes

  9. SPC 9

    It’s a policy I advocated for Auckland a few years back – to create jobs and ease supply concerns. So I can only support this.

    But on the wider housing policy.

    It’s a tragedy that Bill English cites as a reason for inaction on the rise of values in Auckland – the prospect of homeowners having negative equity. Yet he will do nothing about the cause, people being loaned up to 100% loan finance. Is he saying the government will never allow property values to fall because they are continuing to allow 100% loan finance? Talk about a useless apologist for how things are, yet who is making no attempt to change anything. This speaks to his lack of credibility, or is it simply base self interest – a pro CG disposition.

    One could have lower deposit (on value of the home) requirement for first home buyers (they can be saving via Kiwi Saver), and a higher one for “investors”. Say 10% and 25%.

    Though I would allow a lower deposit level for investors building new homes.

    The alternative idea of a ratio between income and value to lending would of course diminish capacity to borrow against existing property – but this impacts on those borrowing against their home for business purposes. I’d rather just require a higher deposit level for second home purchase (and then set a maximum amount that could later be borrowed against such investment property – say 75% of the original purchase price and also 50% of current value so as to prevent property swaps).

  10. MrSmith 10

    The problem is with the banks and the absolutely stupid reserve bank policy of rising interest rates to check inflation.

    Rents put simply are just the interest on the money that was borrowed to build the house in the first place, interest rates rise, rents rise, inflation increases, the reserve bank rises interest rates, so rents rise, so less money in circulation and spending drops checking inflation.

    The Banks can’t lose whatever happens, the speculators like our dear PM clean up speculating and the man/women in the street gets screwed. At-least the Greens are talking about changing this rigged game, but watch the people who come out swinging against any change they are the criminals.

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