Labour poised to resolve housing supply crisis

Written By: - Date published: 12:25 pm, August 25th, 2022 - 89 comments
Categories: Economy, housing, labour, poverty - Tags:

It is possible that within the next year New Zealand’s housing supply crisis will be resolved.

In 2017 when Labour gained power it was estimated that there was a national shortfall of 71,000 houses and Phil Twyford said that the Government had inherited a disaster.

Next year the disaster may be resolved.

From Liam Dann at the Herald:

The ongoing construction boom and the net loss of population as borders open will likely mean New Zealand will finally be rid of its long-running housing shortage in about a year, Kiwibank says.

In its annual look at the state of the housing market, Kiwibank senior economist Jeremy Couchman the country will “start accumulating a surplus of housing” over the coming years as projected building activity outstrips rising demand.

“Despite all the disruption from Covid, despite the lack of materials, and despite the difficulty finding staff, StatsNZ estimates a total of over 41,000 homes were built in the year to June 2022,” he says.

“That is by far the largest addition to Aotearoa’s housing stock in the data going back to 1991.”

To put the gain in homes in context, the peak in construction during the mid-2000s only managed to produce a net 30,000 homes, Couchman says.

“Looking at the 2018 census data 41,700 dwellings is roughly the same as the number in the whole Southland region.”

As a recent trip through Auckland will show there are huge numbers of new houses coming onto the market and house prices are reducing and rentals in real terms are also reducing.  As I previously commented the QV House Price Index has dropped 7% since December last year.  Median rentals have increased from $520 to $545 since October last year which given current inflation rates is a decrease in real terms.  And recent anecdotal evidence is that rentals are dropping as housing supply improves.

If and when we reach balance this will be a cause for celebration.  And then work needs to continue on repairing the damage caused by inflated house prices and too expensive rents.

89 comments on “Labour poised to resolve housing supply crisis ”

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  1. Visubversa 1
    25 August 2022 at 12:37 pm

    Anyone wanting to see this in action should have a drive around the Hendon Ave area in Owairaka. Apartment blocks going up on New North Road, a mix of apartments/ townhouses and flats on Hendon Ave and the surrounding streets. Whole HNZ areas that used to have 1 drafty and cold 2br house on 600m2 sites are have had them replaces with warm and dry dwellings that meet 21stC building standards. Similar in Waterview and Northcote as well, These areas are all well served with public transport.

  2. Poission 2
    25 August 2022 at 1:05 pm

    “Despite all the disruption from Covid, despite the lack of materials, and despite the difficulty finding staff, StatsNZ estimates a total of over 41,000 homes were built in the year to June 2022,” he says.

    Using RBNZ methodology (which uses new electrical connections to allow for demolition and substitution) there were 33365 new completions,which is 10% higher then the mid 2000's quoted and when the NZ population was 15% less,so a lot of used car salesmanship here.

    As most countries have had building booms,funded by low interest rates,high building rates caused by global demand for construction materials and high profits,there is now globally a decrease in house prices accompanying high interest rates,increases in inventory etc.

    The real fact is they are still too expensive and the 20% decrease in house prices (rbnz forecast) may not be enough, to sustain 8-10% mortgages.

    • Ad 2.1
      25 August 2022 at 1:31 pm

      Whether the 2022 price decrease is 15 or 20%, it's blowing the froth off the last two years. From the current bankruptcy rate, most are coping.

      The best response to the market power of Fletcher Building materials is a state housing builder that gets to 20% build market share. The Kainga Ora ambition hasn't abated, thankfully.

      Also helpful is NZs immigration collapse, and little sign of a post-lockdown baby boomlet.

      We are still a long, long way from the demolition of the FIRE economy, but this is a good start.

      • Poission 2.1.1
        25 August 2022 at 2:14 pm

        The Kainga Ora ambition hasn't abated, thankfully.

        Housing corp debt has blown out to 7.8 billion,and increasing.When they start some renewals of loans the interest servicing costs will be greater then 20% of revenue,which is already struggling with increased council taxes.

        • Ad 2.1.1.1
          25 August 2022 at 2:28 pm

          Only shows that trying to right much of the housing market using SOE Act disciplines is fundamentally wrong.

          Kiwirail and NZTA get regular shovel-loads of fresh taxpayer cash. As does the health system.

  3. DB Brown 3
    25 August 2022 at 1:26 pm

    Building all these homes is good and well but Kainga Ora has a massive antisocial tenant problem. So they house people but the housing is often not so safe or suitable.

    They call them people with "complex needs" as if the rest of their clients wound up on their door after a sweet deal and a sweet life. They re-traumatise the already downtrodden by doing nothing to protect clientele from sociopaths and gangs.

    People have sold houses to get away from such clients. Tenants have no such option. Assault, rubbish tipping, vandalism, intimidation… living in fear is not living.

    It might be complex, it's certainly not cricket.

    • Leighton 3.1
      25 August 2022 at 2:02 pm

      Completely agree. Last year we sold our house which was next door to three brand new Kainga Ora family homes which had been occupied for about a year when we left.

      All three families had plainly come from difficult circumstances and had some complex needs. Two families excellent neighbours and we were perfectly happy living next to them – no problem at all. The third family (thankfully the furthered away from us) were loud (music blasting at all hours), hostile, gang-affiliated, had people sitting outside in cars at all hours (we suspect small-time drug dealing), threw cigarette butts over the fence onto our property etc – a general lack of respect for the community.

      Kainga Ora passes the buck by saying that they can't evict antisocial tenants because then those people will have nowhere to go so it is just "moving the problem". That is true, but it is also true that there's tens of thousands of people waiting for a state house right now who already have nowhere to go and I'd bet the majority of them are more like the first two families than the third. If an existing tenant repeatedly proves incapable of meeting the most fundamental social expectations, maybe give someone else a go?

      Our experience was by no means as bad as some of the horror stories you hear. We didn't sell specifically to get away from the antisocial KO tenants (we were going anyway) but we were certainly glad to be rid of them when we moved.

      • Foreign waka 3.1.1
        28 August 2022 at 11:14 am

        It will come to a head as the prisons are emptied and those people are housed in the community. I see this organically. Its like a cancer, instead of retaining the social illness is now let out and infects everybody one way or another. There is no such thing as rehabilitation in a normal functioning community, the criminal just recruits more youngsters to their lifestyle and thus the problem (cancer) grows. Its pie in the sky, like tomorrows schools that is now leaving 30% functionally illiterate.

    • Patricia Bremner 3.2
      25 August 2022 at 2:07 pm

      So DB what are the solutions to the social problems you outline?

      • DB Brown 3.2.1
        25 August 2022 at 2:19 pm

        I don't know Patricia it's not my responsibility it is Kainga Ora's. And from where I'm sitting they've failed a lot of people.

        If one bad apple's spoiling the bunch the bunch should not be discarded.

        • DB Brown 3.2.1.1
          25 August 2022 at 3:12 pm

          I'm probably going to need a few weeks to answer this properly, if at all.

          The concept of mixed housing seems sound. Place people mixed into the community. Integrate not separate. The problem lies in the sociopaths, not the bulk of KO clientele.

          While basic human needs above and beyond food clothing and shelter are to belong and to contribute, some people simply don't want to belong or contribute, at all.

          There might be a special place in hell for such people, but while they're still on earth???

          Prison doesn't rehabilitate. But it also houses those who've refused rehabilitation.

          Rehabilitation, integration… we try. We need more mental health services, wrap around services etc. But some people refuse all help except handouts.

          There's only so many cheeks one can turn.

          • Anker 3.2.1.1.1
            25 August 2022 at 4:43 pm

            TBH I don't really give a dam about the anti social types. Offer them something remote. Leave them to it. They make life hell for decent people around them (very often other social housing tennants). The contract should be clear. Move in and if you cause problems you are out. A confidential 0800 number to dobe them in, although I suspect the powers that be know these people are anti social before they move in.

            • DB Brown 3.2.1.1.1.1
              25 August 2022 at 5:03 pm

              It would suck to have anyone's tenancy at the whim of other tenants feelings. There's some nasty busybodies out there too who'd love a hotline to hurt their neighbor for slights as large as parking outside or using empty space in the bins. And we've all had moments we'd rather forget.

              But a tenancy manager should be aware of repetitive antisocial behavior and that is what's required to take action. Out of respect for the rights of everyone else.

              IMO.

        • Visubversa 3.2.1.2
          25 August 2022 at 5:24 pm

          KO, like HNZ before it seems to be rubbish with bad tenants. And with WINZ now in charge of putting people into the houses it is even worse. I have several friends in KO housing, both long term tenants. One friend is an elderly African woman who came here as a refugee over 20 years ago, She lives in a duplex house. HNZ put a violent, racist drunk into the other half of the duplex and then did nothing about a number of complaints including letters to the Minister. Finally, the problem was solved by one of his drunken mates who hit him with a shovel and then set fire to his body on the front lawn.

          Another case was living in the same block as a friend – he also terrorised the neighbourhood, and the social worker who was supposed to be providing support to him was also supplying him with alcohol and the occasional use of her body. Fortunately KO managed to find a family member who would take him in and he was moved on.

          The main problem is not the accommodation, but the lack of the wrap around services that support people and protect the neighbours. Also, the lack of more supervised accommodation options.

      • Foreign waka 3.2.2
        28 August 2022 at 11:21 am

        You mean supporting the victims not the perpetrator? It would certainly send the right signal. Right now judges shake hands with people killing someone. What does that say?

        Where to start? With the kids. But we cant use discipline to tasks, (no you cannot attack a teacher with a knife etc.. old concept this, cause and effect) its soooo politically incorrect. You reap what you sow.

    • swordfish 3.3
      25 August 2022 at 4:56 pm

      .

      Pretty much describes my elderly parents' situation for the last 4 and a half years … slightly different in that they own their house, have lived there for almost 60 years, nice, leafy community-minded street with beautiful sea-views, very socially-mixed (tending mildly toward lower income but not exactly "downtrodden") …

      … but largely the same as you broadly outline in that their social housing neighbour's extremely violent intimidation & all-night in-your-face noise (essentially a kind of on-going domestic terrorism) has come close to killing each of my parents more than once (esp my mother), including in recent months (heart attacks, strokes immediately following violent multi-hour explosions, usually through the early hours of the morning – both inside on the other side of their dividing-wall and outside including running onto their property at 1, 2 or 3am & shouting a mix of threats & swearing, interspersed with a lot of gibberish).

      Police have been rung multiple, multiple times over last 4 years, by concerned neighbours, by my parents & by me. Raised with a number of authorities … nothing gets done … he faces zero consequences for his behaviour so why the hell should he stop.

      Basically, the Govt has destroyed the social contract with its tacit 'No Eviction' policy … fundamental break down of law and order (so often ridiculed by cowardly, self-regarding luvvies on this site intent on establishing their "unsually refined sensibilities" and "radical" credentials while courageously ensuring they're living as far away from the violence & mayhem they're enabling as possible) … the terrorization of people in their early 90s is apparently just fine.

      Local Iwi now managing social housing in the area & have done precisely zero to help.

      https://sub-zero-politics.blogspot.com/2021/11/kianga-ora-scandal-my-parents-situation.html

      Brave New Woke World.

      • DB Brown 3.3.1
        25 August 2022 at 5:26 pm

        I'm so sorry they've been through all that.

        I'm meeting with a KO tenancy manager and his manager tomorrow with regards to another difficult KO client. I'll be discussing that meeting with a lawyer.

        If they can't help I'll certainly be sharing the story, and may be looking to start some form of class action if they continue to gaslight me. I've realised like you have, it's not just about me, how many others lives and homes are unsafe/insecure thanks to Kainga Ora's immutable tenant policy.

      • pat 3.3.2
        25 August 2022 at 6:29 pm

        Question Swordfish….what would you like done about your parents situation?

        • swordfish 3.3.2.1
          27 August 2022 at 11:28 am

          Thanks for asking, Pat. Deserves a considered response … have a few major things to deal with at moment … but I'll respond here in next few days.

      • Foreign waka 3.3.3
        28 August 2022 at 11:29 am

        It seems that the experiment is to have an open prison amongst the population and perhaps some will rehabilitate. The price the general population pays is huge. Someone please get those wanna be sociologist off the government payroll.

    • Belladonna 3.4
      27 August 2022 at 11:58 am

      The KO tenancy model is to pepper-pot KO homes interspersed with 'affordable' and 'market' homes, in new developments.

      Which is a nice theory.

      The problem with it, is, that owner-occupiers are (legitimately) wary of purchasing an apartment or terrace house next to a KO-owned home – with the possibility of an anti-social tenant as a neighbour – and the virtual certainty that, if this happens, KO will do nothing about it.

      So, what actually happens is that the majority of these non-KO dwellings are sold to various social housing trusts – and you end up with what is effectively a social housing estate under another name.

      • DB Brown 3.4.1
        27 August 2022 at 12:23 pm

        Interesting. So the whole social experiment is laudable till we come once again to the problem of immutable tenants.

        Law needs to change. As I said above:

        If you have one bad apple, you don't discard the bunch.

        My landlord and his supervisor arrived. The first thing she said was a lie. She had no mask, she was pushy, and she tried stare me down when I said I'll probably go to the courts anyway as I'm not the only person affected by this.

        My anti-social problem had another KO house before the one next door. They moved him on when former neighbours were about to lynch him. Now, they're planning the same tactic, and will foist him upon another unsuspecting community. It's ridiculous, and criminal.

        According to the residential tenancies act I have rights to quiet enjoyment without repetitive antisocial behaviour from others. They moved him here knowing exactly who/what he was. Now they're set to do it again.

        We've seen some real estate adverts get slammed recently as prejudice ("No Kainga Ora Tenants in sight"). The antisocial clown ruining the peace on my street is white.

        It takes all sorts to make a community, except those who refuse to be part of it.

  4. Adrian Thornton 4
    25 August 2022 at 2:18 pm

    "It is possible that within the next year New Zealand’s housing supply crisis will be resolved"…well I guess locally, we will know, if there isn't the constant flow of people (including lots of whole families) living in their cars/vans on Napier's waterfront this time next year won't we…however with Labours track record on these matters over the past couple of decades, I won't be holding my breath….but do I really really hope that I will have to eat my words on this one.

  5. Mike the Lefty 5
    25 August 2022 at 3:21 pm

    But I wonder how many more prime agricultural areas will be sold, subdivided and turned into housing estates whilst the price of fruit and veges steadily increases and the number of growers/suppliers steadily decreases?

    • Poission 5.1
      25 August 2022 at 3:38 pm

      Get with the program,they are building high rise apartments in an earthquake zone,at a million dollars a unit (excluding land leased from WCC)

      https://www.beehive.govt.nz/release/wellington-gets-300-new-public-homes-transformational-urban-regeneration-project

      All funded on debt.

      • Patricia Bremner 5.1.1
        28 August 2022 at 10:31 am

        As a home is supposed to provide shelter for 50 years plus, there is always debt.

        Build anywhere in New Zealand you build on shaky ground.

        At least they are trying to provide amenities and the community framework.

    • Ad 5.2
      25 August 2022 at 4:55 pm

      The Auckland Unitary Plan debated that at length.

      What we will see is a lot more Northland farms convert to horticulture just to support Auckland and its export markets.

      North of Kaitaia you can see ridgeline after ridgeline of Avocados. And right now they are cheap as chips. We'll see further expansion from Whangarei to Kaikohe as well.

    • Descendant Of Smith 5.3
      27 August 2022 at 8:06 am

      The number of growers is decreasing mainly through the agglomeration into fewer and larger scale businesses.

      Orchardists and vineyards seem happy to keep planting more vines and trees.

      There's plenty of fruit – the price is kept high by the growers themselves – not a true supply and demand model at all.

      https://www.stuff.co.nz/business/farming/128700421/tenth-of-apple-harvest-left-on-trees-with-noone-to-pick-it

      Taylor said if he redirected his export apples to the local market it would be flooded. This would drive down price and destroy the businesses of growers who serviced only Kiwis.

      And contrary to AD'S assertion the other day shipping was a problem. Other orchardists have said the same.

      Ships bypassing Napier port because of the impact that Covid-19 had on labour in the shipping industry, and a lack of export containers, also affected profits of growers because a lot of apples could not be sent to market on time and had to be discarded, Taylor said.

  6. bwaghorn 6
    25 August 2022 at 4:06 pm

    Ha ha calling a $25 a wek rent raise a lowering in "real terms" is some of the most fantastic spin I've ever heard almost makes me wonder if the rest is bs as well.

  7. PB 7
    25 August 2022 at 5:29 pm

    New Zealand includes the smaller centres, cities and towns. These areas have not been addressed. They are invisible to all governments.

    • Ad 7.1
      25 August 2022 at 6:31 pm

      You mean like:

      Nelson. Blenheim. Ashburton. Westport. Kaitaia. Whangarei. New Plymouth. Queenstown. Wanaka. Invercargill. Napier. So much CAPEX, so little time. Hmmm.

      • PB 7.1.1
        25 August 2022 at 9:58 pm

        I mean like Kerikeri or Kawakawa or Kaikohe or even Kaeo. Where housing is substandard by any measure and the state sees no obligation to improve the lot of people living 14 to an old state house because there are no other options.

        • DB Brown 7.1.1.1
          26 August 2022 at 9:09 pm

          Absolutely. Up North is the first place in NZ I met people who lived in sheds, caravans…

          They were amazing hosts considering they had no money or infrastructure. Such a gorgeous summer holiday.

          The fact some of the elders lived in caravans didn't really sink in till that Winter. Not bloody good enough.

  9. pat 9
    25 August 2022 at 7:22 pm

    The shortage was never a physical shortage. While Labour have made some changes that have impacted at the margins they continue to refuse to address the driver (perhaps understandably)…it is worth noting the actions of the Gov that continue to support house prices at north of 8 times median incomes

    • Blazer 9.1
      25 August 2022 at 8:11 pm

      Yes median incomes are TWO household incomes.

      The old measure of house prices=3-4x median income was based on 1 income.

      The ramping up of property prices has long term,enduring social consequences and Labour have not done ..enough.

      God knows what property investor Cluxon has in store…for NZ if he becomes P.M.

      • pat 9.1.1
        25 August 2022 at 8:17 pm

        Depends upon the slant the commenter wishes to place on it…the original affordability measure was single income but some use household income which is (obviously) more than single income.

  10. Stuart Munro 10
    26 August 2022 at 4:50 pm

    It took thirty years of unrelenting neoliberal failure to create our housing crisis – I hardly think it will be resolved in the space of a year or two, however great the progress that may have been made in some areas.

    41 000 houses would seem to be a solid start – but if we are going to use crude numbers, then they begin to turn positive when there is an appreciable rise in owner/occupiers, or a fall in rents of at least, say, $50 per week. In the absence of such indicators there is every reason to suppose that the crisis continues unabated.

  11. Mat Simpson 11
    26 August 2022 at 7:40 pm

    " "If and when we reach balance this will be a cause for celebration. And then work needs to continue on repairing the damage caused by inflated house prices and too expensive rents "

    This from Stephen Minto.

    " Labour/Greens actions of supporting private enterprise with huge subsidies (tax breaks on interest) for ‘build to rent’ companies, and granting property developers power to bully build and override community democractic rights, shows the lack of courage and intellectual/economic insight in the centrist political pragmatism that dominates both these parties "

    https://thedailyblog.co.nz/2022/08/26/affordable-housing-for-dummies/

    " The problem is; there are too many housing markets in New Zealand and they are all more profitable than building affordable housing "

    https://thedailyblog.co.nz/2022/08/23/economic-misdirection-from-labour-and-national-with-long-term-damage-to-our-economy/

  12. Mat Simpson 12
    26 August 2022 at 7:59 pm

    " Prime Minister plays with red herrings while children sleep in cars "

    This from John Minto.

    The housing catastrophe (Salvation Army description) for tenants and families on low incomes has been thrown into sharp relief by the appalling statistics that more than 200 children are now living in cars because there are not enough state houses.

    Under the Labour government this number has gone from 51 at the end of 2017, to 228 in June this year. Similarly, the number of people living in tents has also climbed from 21 at the end of 2017 to 84 in June this year.

    https://thedailyblog.co.nz/2022/08/19/prime-minister-plays-with-red-herrings-while-children-sleep-in-cars/

  13. Jenny are we there yet 13
    27 August 2022 at 10:51 am

    Are we there yet?

    The danger of an over supply of houses.

    "If and when we reach balance this will be a cause for celebration….." MICKYSAVAGE

    Hardly, more likely it will be this administration's biggest neo-liberal disaster yet.

    ….It's all happened before

    America

    Developers opt to raze homes that go unsold | The Seattle Times

    9/05/2009 — Banks that financed new homes are deciding to demolish the partially … the latest fallout from Southern California's real-estate crash.

    China
    https://www.scmp.com/news/china/society/article/1931741/ghost-town-developer-demolishes-over-100-houses-unsold-nearly

    Spain

    Time to swing the wrecking ball on Spain's vacant homes?

    4/11/2013 — In the wake of the crisis, the country has been left with 800000 unsold properties Demolishing unfinished buildings might be the only …

    Ireland

    news › article-2531852

    1/01/2014 — Abandoned: Unsold houses lie next to land bought for development at the … with some finally being completed but many being torn down.

    .https://thestandard.org.nz/open-mike-12-03-2022/#comment-1874351

    • Jenny are we there yet 13.1
      27 August 2022 at 11:02 am

      Make no mistake about it.

      If the question of unaffordability, resulting in unsold homes is not addressed the demolitions will start.

      Ideally the government should enact legislation preventing the demolition of newly built or uncompleted new homes, on pain of confiscation.

      At the very least the government needs to pass legislation to prevent Kiwibuild homes being demolished, as a condition of their sale.

      KiwiBuild tweaked to allow up to a quarter of unsold homes into the open market

      Zane Small – Newshub, 07/08/2020

      …..Housing Minister Megan Woods is making further refinements to the KiwiBuild programme, so that up to 25 percent – up from 15 percent – of KiwiBuild homes that don't sell to people who fit the criteria, can be sold on the open market.

      https://www.newshub.co.nz/home/politics/2020/08/kiwibuild-tweaked-to-allow-up-to-a-quarter-of-unsold-homes-into-the-open-market.html

  14. Jenny are we there yet 14
    27 August 2022 at 1:08 pm

    '

    Build it and they will come

    Could we be building too many houses?

    Miriam Bell 09:30, Dec 12 2021

    New Zealand’s housing supply shortage is finally being addressed with a huge residential building boom, but experts say there may now be too many homes being built…..

    …..Economist Tony Alexander cautions against putting too much emphasis on the role of supply in the house price equation.

    “This is a red herring. Extra supply of a thing will constrain prices, but that’s not the same as saying there are not enough houses for people to occupy.

    “Housing construction is now running at extremely high levels and these levels cannot be sustained without a large and sharp recovery in net migration over 2022 and 2023.”

    But once the borders open again, migrants will be attracted back to New Zealand, particularly Auckland, as it is a good place to live, and that will help to prevent huge oversupplies developing, he says.

    https://www.stuff.co.nz/life-style/homed/real-estate/127201554/could-we-be-building-too-many-houses#:~:text=Areas%20on%20the%20far%20south%20fringes%20of%20Auckland%2C,times%20and%20limited%20amenities%20make%20them%20less%20attractive.

  15. Patricia Bremner 15
    27 August 2022 at 2:06 pm

    I know for many the things this Government have done are deemed to be insufficient.

    They should be recognised as trying to help right the housing problem.

    What they did not see coming was the Pandemic of covid, the meth crisis and a war.

    Yet strides have been made in spite of that.

    Some Councils have provided poor support for their citizens. imo.

  16. RosieLee 16
    27 August 2022 at 4:34 pm

    "Poised" for the last five years.