The housing policy

Written By: - Date published: 7:41 am, November 16th, 2012 - 60 comments
Categories: Economy - Tags:

Labour is due to release its big housing policy at conference and I suspect it’ll be either a Kirk style subsidised mortgage scheme for first home buyers or a substantial increase in state housing stocks.

If it’s the former then it needs to ensure that there are tight parameters on what kind of home can be bought. The Kirk era scheme required houses to be new build which helped housing stock and created jobs but is also responsible for some of our sprawl suburbs and sprawl is unproductive and expensive. I’d like to see a similar scheme focus on medium density urban homes.

If it’s the latter then there’s a whole spectrum of ways it could be rolled out from PPP through to more interventionist build. I suspect this opposition would look to tender out a build which comes with its own dangers in terms of risk to taxpayer and creation of monopoly providers among other things. There’s also a risk of creating ghettos and/or sprawl if a lot of thought isn’t given to how they are placed. Which isn’t to say I’m against such a policy but the devil is very much in the detail – these policies can be “left” but done badly, they can also be very much crony-capitalist.

Of course Labour’s policy may involve a third option but I’m betting it’s one of these two. There’s a rumour National has its own housing policy announcement planned for tomorrow at Hobsonville to take some of the gloss off Labour’s. I reckon they’ll be throwing a lot of money into a PPP of some kind. I guess we’ll just wait and see.

Update: National’s announcement was today not tomorrow and it’s basically adding 600 new “affordable” hoses to the Hobsonville development. Word is Labour’s policy is likely to be big. Like ten figure big.

60 comments on “The housing policy ”

  1. I have trouble with the first option. We clearly have a bubble, and I don’t see giving people money to buy into the bubble turning out well. Not to mention that part of our housing crisis is for people who are too poor to save even for a modest house, or to rent suitable accomodation. Building public housing to provide housing directly and indirectly reduce the demand side seems better to me.

    • IrishBill 1.1

      I’d agree with that. Kirk’s policy was suited to its time.

      • Rob 1.1.1

        so your assuming we are going to presented with flawed ideas and plans, dosn’t sound greatly inspiring does it.

    • Tom Gould 1.2

      Not sure you can charaterise the Auckland market as a bubble. Auckland needs around 13,000 new dwellings each year just to keep up now. With the population heading towards 2 million in 20 years, that’s another 400,000 houses, maybe more. Sprawl won’t work. Auckland is already the largest territorial authority in Australasia. It is imperative that the housing policy be connected to the transport policy, for Auckland anyway. Let’s see if Labour are smart enough to make the connection?

      • Bill 1.2.1

        So Auckland needs 13 000 new homes per year. Why? There are countless smaller towns throughout NZ that would probably welcome a bit of influx. (Spread the 13 000 amongst them and we’re looking at not too much of an impact at all.)

        But the problem would appear to be (correct me if I’m wrong) that the need to have a job and potentially earn a livelihood dictates that people will gravitate to the few conurbations in NZ where careers and jobs exist.

        So, is it really a housing problem?Or is more a problem with the spacial orientation of business?

        At the risk of sounding ever so briefly naive or romantic – it wasn’t so long ago that small towns had multiple job opportunities. And it’s a fairly recent phenomena whereby ‘everything’ is brought in from outside due to the centralisation of businesses and the economies of scale that go with that process.

        I’m not advocating a return to some notion of a quaint past, but just wanting to signpost that the large scale centralisation of business and the idea that everyone has a job or whatever and lives within a market framework simply isn’t sustainable. (And I don’t care how ‘green’ any attempts to sustain it might be. Ain’t going to work out)

        So the problem goes way beyond housing and urbanisation. The problem is climate collapse and peak resources (oil or whatever else) and (basically) living by a theoretical model that’s on the cusp of not relating to the real world situations it’s creating, and so by extention, living by a theoretical model that simply won’t be able to serve us at all in the not too distant future.

        Elephants. Room. Ostrich. Sand. Choose the metaphor of your liking.

        • Draco T Bastard 1.2.1.1

          and (basically) living by a theoretical model that’s on the cusp of not relating to the real world

          What do you mean “on the cusp”? It hasn’t related to the real world at any time.

        • Macro 1.2.1.2

          Bill most people immigrating to NZ want -for what ever reason – to stay in Auckland. I’ve worked in the civil engineering side of urban development and what Tom say is perfectly true. In the 2008-2009 construction seasons developers stopped almost all new projects – the pressure on house prices in the Auckland area now is a direct result of that slowdown. I don’t agree with urban sprawl anymore than most other commentators here, But the simple fact is that Auckland will need around 400,000 new dwellings in 20 years.

      • mike e 1.2.2

        tom labour had a policy of electrifying Auckland commuter rail as well as expanding the network national canned it and put in a piece meal short term solution in ,as right wing-nuts do!
        A wide spread capital gains tax is neaded, the money raised could be put towards increasing the house supply and keeping inflation down with out hurting the productive sector ie the cause of the high dollar! .
        The right wing nutters don’t care won’t care so log as they don’t upset their speculator mates and donors to their party .While destroying the productive sector and the battler young families trying to get ahead can miss out! and go to Australia where housing is cheaper better as well as job prospects !
        National full of B?S promises such as the brighter future where the hell is its not in NZ:
        National are short sighted F wits Power and Ponce over substance!
        All promise and no delivery just like a bunch of Con artists and ponzi schemers.
        Blame every thing else and every one else for their mistakes!

        • TightyRighty 1.2.2.1

          Oh the irony of your last sentence after another one your incoherent rants. Lay off the breakfast rheinecks for the good of society. Please.

          • PlanetOrphan 1.2.2.1.1

            Ironic for a separatist, observational critisism for everyone else M8!

            • TightyRighty 1.2.2.1.1.1

              I am not your mate. Anyone who considers the spittle laced rants of mike e to be observational criticism would founder at the kiddie tables of normal society. it’s telling the kind of rambling diatribe mike e delivers is considered an academic post here, but gets sites like kiwiblog and whaleoil named as sewers by the delivery monikers of said ramblers.

              • ” … considered an academic post here …” , what r u on about TR?

              • mike e

                Tigh arse almightyFunny that, One of new zealands fore most economists was agreeing with my observations on Jim Moras show this afternoon.
                You having your education paid for by me is ironic but even more ironic is that all you have learned to be is a tight arse “ignoranting”prick who has a degree in economics but doesn’t know anything about economics except how to repeat the failed mantra of the Chicago School Cult !
                Sorry my last rant was so accurate even if the diction wasn’t up to your Standard but my diction has got nothing on your economic naivity!
                Besides i’m just getting used to my new samsung galaxy s3 notebook!
                I’m also paying more tax than you as you pointed out last year in an argument where you accused me of being a benefit bludger!
                Sorry I don’t fit your mould!
                The English language is changing all the time idiot maybe a couple of my words will become common.But with your lack of foresight you would not understand as you are a follower and not a leader hows that for a rant!

          • mike e 1.2.2.1.2

            I see the Greens are getting stuck into National about the so-cold cheap housing project in Auckland!
            Maybe on planet key they are cheap but $400’000 for the average person its well out of reach !
            I hope these houses have toilets!

        • Johnm 1.2.2.2

          Hi Mike E

          “A wide spread capital gains tax is neaded, the money raised could be put towards increasing the house supply ” I agree A Capital Gains tax on investment properties of 80% backdated for 12 years would bring down the price of buying a house smartly so our young working kiwis could get a stake in this country and buy their own place. Probably knock 40% of the price of every house.
          We have a property speculation plutocracy here in NZ which has shut out our own young people. Shameful, selfish, greedy, part of the money grubbing malaise of this land.

          100% right. was a time when money grubbing stank of filthy lucre now the same has the scent of saintliness as in Goldman Sachs John and the grovelling to Prince Charlie.

          • johnm 1.2.2.2.1

            100% right 🙂 “Houses are now investments instead of just being places to live. The more that people rent the more this will be exacerbated.

            We’ve all (well not quite all of us) been sucked into thinking that absolutely everything is a commodity, even the essentials; housing, food, electricity etc, which should be bought and sold like fucking shares or currency.

            I’d like to see the next left government create some kind of ‘walled garden’ in the economy, inside of which are all the essentials. They can then say to the sharks “There you go, you can have that free market bollocks for your high-fructose reeboks etc but you’ll be keeping your grubby little mitts off this stuff”

    • George D 1.3

      The first option is simple madness. What happened with Australian first home buyer grants is that it simply pushed prices up at the bottom – an effective grant given straight to existing owners, developers and speculators. That in turn pushed everything up by the same amount.

      We can expect the same here.

  2. James Henderson 2

    the problem is no-one is building affordable housing, there is a real shortage of those – and a speculative bubble on top of it. Any government policy that gets those houses built without more sprawl- state housing or cheap loans for homes that fit those parameters is a good thing.

    • Colonial Viper 2.1

      cheap loans for homes will push up prices.

    • King Kong 2.2

      For single dwelling sections it is impossible to build low cost housing. The value of the land makes it insane to build cheap houses on it.

      If you want affordability in a growing Auckland, you either spread out, or go small and on top of each other like they do in every other large city in the world.

      • mike e 2.2.1

        Hey primitive primate the most sensible thing you’ve ever said on this website! Hooray!
        KK You should read more of what Rod Oram has to say!
        I’m starting to believe in Leaky’s theory of evolution again!

      • David C 2.2.2

        KK, I agree (mostly) with your comment.
        The problem is this; if you want to go up the district plan needs to be changed and that takes time, a lot of it. Then there is NIMBYism.
        People are rightly worried that a 8 storey slum block is going to be built next to them.

        If Looney Len and his cohorts were to start to designate areas for medium density now it would probably be 7 to 10 years before the first person were to take ownership.

        • mike e 2.2.2.1

          DC Maribyrnong st in Melbourne and the surrounding areas are what Rod Oram has pointed to as the way to go 2 to 3 story inner-city apartments they look good a lot better than John Banks shoe boxes and Melbourne’s designers are making beautiful open spaces to break up these beautiful apartments.
          Native birds are flocking back to these green spaces its the way forward I’ve just come back from Melbourne and have seen this inner city renewal project!

  3. pete 3

    Or encourage businesses, and/or new immigrants, to locate to the regions by making it worth their while.

    As always, dullard politicians from both sides asking the wrong questions. Perhaps many have holdings in the Auckland property market.

  4. Bill 4

    Crazy, I know.

    But what about compulsory purchases of land and buildings that are being left vacant for purposes of speculation? And then convert suitable properties to residential buildings? I know of a few large city center properties in this city that would fit the above category.

    And then there is, of course, squatters rights. Put simply – allow people to occupy and renovate abandoned buildings.

    And with specific reference to Christchurch, why didn’t…or why won’t…the government make compulsory purchase orders out to the west of the city and then, essentially, rebuild the eastern suburbs there? (And pass legislation to transfer insurance obligations to the new parcels of land too.)

    And for those who wish to continue to live in the ‘red zones’ or wherever, in the absence of a rebuild of infrastucture due to non-insurability, supply every person who wishes to take that option with a septic tank and a water tank and be sure they understand the situation viz-a-viz their insurance situation.

    And break any and all of the building industry’s monopolies on supplies. As I understand it, there is, for example, one company that controls the supply (and therefor the price) of bricks in this country.

    And while we’re at it, introduce a two tier building code. One for commercial building firms (make them far more stringent than at present) and one for ‘self build’ projects where the idea is to basically live in your house and not speculate. The latter proposition could become a hothouse for innovative design and construction – would be ‘governed’ by basic engineering prerequisites only – and embrace an ‘at your own risk’ philosophy. Okay, I can hear the squeals about insurance and so on. But if I can construct a home for about $10 000, (and that really is very do-able)then is insurance really such a big deal?

    And still there would be a housing shortage. But it would be a much, much smaller problem hedged around by multiple solutions.

    • David C 4.1

      What do you get for your $10K house? a tent, a portaloo and an extension cord to charge your laptop?

      What a fucktard.

      • mike e 4.1.1

        david c a dwelling could be built for $10’000 it wouldn’t look pretty but it would be better than sleeping rough! Mass production would be the way existing home owners would put up the nimby argument but $50’000 would get a whole lot more but still throw up the nimby problem!

    • KJT 4.2

      You obviously havn’t worked as a builder. On fixing owner built baches and farm buildings.
      Most are hazardous to the occupiers health and safety.
      New Zealander’s have way to high an opinion, of their own DIY skills.

      The problem is both high building material prices, and high land prices making it more profitable to build expensive houses.

      The developer that has the size and finance to build affordable housing is the Government.

      Heck. With rent to own it could even be revenue neutral.

      Quality 90 to 120 m sq houses are doable under 100 k. See the houses built by Auckland’s Unitec.

      One way to cut land prices and still have suitable living for young families is the village green style.

      And make it easier for businesses to locate away from Auckland.

      The last thing we need is UK style high rise slums.

    • Bill 4.3

      @ KJT and David C. If you have the time…watch this http://www.youtube.com/watch?v=FXj7antqNn4

      Maybe google Michael Reynolds or on the question of what you can build for $10 000….try this http://www.envisioneer.net/howto.php

      • KJT 4.3.1

        Yep. Seen those.

        Unfortunately long term houses with a small ecological footprint often need better materials.

        • Bill 4.3.1.1

          You say you’ve seen those documentaries and links before. And so you’ll know the materials used are often unorthodox and cheap ones that nevertheless satisfy basic engineering specs for construction materials. Yet you appear to be claiming something to the contrary.

  5. pete 5

    “and embrace an ‘at your own risk’ philosophy. Okay, I can hear the squeals about insurance and so on. But if I can construct a home for about $10 000, (and that really is very do-able)”

    Very libertarian of you, Sir. I agree with this – get the government/council parasites out of the process.

    • Bill 5.1

      Very libertarian of you, Sir.

      Aye well, us left libertarians have no more love for remote authoritarian bureaucracy than anyone else. But do recognise the absolute need for forms of social governance….just we’d rather that governance was empowering and direct as opposed to disempowering and remote. But I guess that’s not quite what you were saying. I imagine you were taken by a wrong-headed notion of some individualistic ‘free for all’ that would be governed by ‘the laws’ of the market?

      • pete 5.1.1

        End result is the same. You and I would both like to build a house without (much) interference.

        The real problem is, of course, land. We have a lot of it, but it’s tied up by all manner of vested interests. Councils, especially.

        • Bill 5.1.1.1

          So put an end to any and all notions of private land ownership and return the land and any resources it might hold back to the commons. Then there can be no destructive vested interests – council, private or otherwise.

          • pete 5.1.1.1.1

            I think we part ways at that point.

            • quartz 5.1.1.1.1.1

              lolz

            • AAMC 5.1.1.1.1.2

              I’m always intrigued by the (Right) Libertarian desire for the State’s only role to be the protection of private property, given it was the State that stole it. Shouldn’t Libertarians be fighting to hand land back to the Maori?

              • pete

                Maori never owned it.

                They occupied some of it, whilst they could defend it. Which explains why Auckland was mostly empty. Too hard to defend.

              • KJT

                If they were really libertarian they would be consistent in keeping the state out of everything, including property rights.

                In actual fact fact libertarians are only against the part of the State that prevents THEM from stealing..

                Once they have stolen OUR wealth they then want us to pay to help them protect it.

                Of course libertarian states do not succeed.
                It just changes subservience to Government to subservience to robber barons.
                No wonder that neo-liberalism grew from libertarianism.

  6. jason 6

    If the govt wants to bring down the value of land, they should tax ownership of it.

  7. Blue 7

    It is taxed, its called Local Authortity Rates

    • fatty 7.1

      true…but we should be taxing property exponentially. If someone owns 4+ houses, then they are leeches and a burden on society, so tax them more.
      I hope the plan is to build a lot of government houses…none of that PPP bullshit, just build them and rent them as cheap as possible.
      And increase the tax on people with multiple houses, and offer assistance to those paying off their mortgage via Kiwibank, but only on their first house.
      Basically, I hope Labour moves in this direction: we need cheap Government owned and run rental properties, make it easy to buy your first house, and make it a struggle to buy a second house…and make it damn near impossible to get over 4 houses.

  8. AAMC 8

    When are they going to attack the root causes of these issues rather than Governmental band-aids.

    Stop land banking with a LVT and place controls on the Banksters that are inflating our bubble with all that FED, ECB, BoJ, BoE money running scared of Europe and profiting off our interest rates and currency.

  9. Tiger Mountain 9

    Labour should stand with Mana and the Greens and say “not one more house” to be taken from GI on scabby Owner Driver trucks under state forces protection in the dark. Labour should call for hundreds of people to turn out each night with Shearer and Cunliffe at the front. Hone might even let them sit in his vehicle!

    This is unlikely obviously. Policy wankery is much more important. That is the difference between a neo liberal “social democratic” party rather than a party of principle that built the first kiwi state houses (albeit in league with some of the major capitalists in the land).

  10. geoff 10

    Houses are now investments instead of just being places to live. The more that people rent the more this will be exacerbated.

    We’ve all (well not quite all of us) been sucked into thinking that absolutely everything is a commodity, even the essentials; housing, food, electricity etc, which should be bought and sold like fucking shares or currency.

    I’d like to see the next left government create some kind of ‘walled garden’ in the economy, inside of which are all the essentials. They can then say to the sharks “There you go, you can have that free market bollocks for your high-fructose reeboks etc but you’ll be keeping your grubby little mitts off this stuff”

    /rant

    • rosy 10.1

      “Houses are now investments instead of just being places to live. The more that people rent the more this will be exacerbated.”

      Houses should be an investment in the city and in people’s lives. Renting doesn’t need to exacerbate making money off housing. I hope the Labour Party has been looking at some European cities that are still building large developments that contain affordable housing. In Vienna for example there are rebuilds of large apartments into smaller ones – whole buildings of them, not just one or two – near where I live in the central city because the City recognises that there is a lack of affordable units for young city workers. This is on top of massive City-driven developments (e.g. the Aspern project that will deliver 8,500 units). Rent controls and affordable housing requirements keeps the private housing market muted but there is still enough in it for private developers to come on board with the City-driven plans.

      Research into housing needs and the high and medium-density plans driven by the City of Vienna along with rent controls, while not without problems, seems to work a lot better than the completely private model. It has the added bonus of providing jobs during economic downturns – meeting another state-driven imperative of jobs first in economic policy.

      • geoff 10.1.1

        “Houses should be an investment in the city and in people’s lives. Renting doesn’t need to exacerbate making money off housing”

        Ok, my intention was to use the word investment in the financial sense of something that can be speculated on for short term profit.

        Rent controls, yeah great idea but I have never heard of rent control in NZ and the rights of tenants are few in comparison to landlords.

  11. Binders full of women 11

    I don’t mind either capitalisation of benefit or WFF for deposit. I don’t mind an increase in the State Housing stock.. esp along the lines of the Glenn Innes model. I do mind any talk of house affordability crisis or boo-hoo-Jacinda-can’t-slum-it-in a 2 bedroom unit in Grey Lynn. There are 90k perfect boned State house beauties on the market down the road from me. I also really like the idea of higher density city/suburb living (but not through leaky apartments or leaky cross leases).

  12. Adrian 12

    But the problem is that we need rental properties. Very few young people want to buy a house until their job situation is stabilised and in the future that may never happen as occupations are becoming more transient. You be nuts to buy a house and then have to sell to move with your calling.

    • lprent 12.1

      Most of the time people buy in a place and use it as a base. They rent when they move for work unless they know they are resettling.

      • pete 12.1.1

        Now why would they do that?

        Perhaps they see it as….. *an investment* (que: satanic music)

        Being a landlord isn’t for everyone, of course.

  13. pete 13

    If you want labour mobility, you need rental houses.

    Not everyone wants to own their own house. I certainly didn’t until I was in my 30s. Why? Never knew which country I’d be in six months in advance, let alone city. Also, didn’t want the capital risk, or the maintenance headaches.

    Landlords are great – they do all that stuff.

    • geoff 13.1

      I don’t want ‘Labour Mobility’. That’s just a right wing term which translates to the destruction of
      communities in the real world.

      • fatty 13.1.1

        well said..the neolibs can shove their ‘flexibility’ too…we all know what these terms really mean

        • pete 13.1.1.1

          Set up a Kibbutz, then. You’ll never have to move, and you won’t “destroy” your community. Everyone can share in the “wealth”.

      • pete 13.1.2

        You can choose not to be mobile. Live in a town, work in a needed industry, never move. Work for fisheries in Nelson, for example.

        Meanwhile, NZ benefits from having people work overseas and return with skills that can’t be attained here. People who live in regions where the work doesn’t match their skills may benefit if they move to a larger centre.

  14. Poission 14

    There is a rather scathing commentary from the CEO of the BNZ on housing investment and John Keys limitation of the retirement age.eg

    BNZ’s Andrew Thorburn hits out at ‘fundamental anomalies’ of tax system that favour residential property and says lack of leadership is main problem in housing affordability ‘crisis’

    http://www.interest.co.nz/kiwisaver/62066/bnzs-andrew-thorburn-hits-out-fundamental-anomalies-tax-system-favour-residential-pr

    The obvious problem is that the system is biased to favour property investment ie it rewards borrowers and penalizes savers.

    The second problem’s that the absence of tax mitigation on residential property investment,is the ability of overseas investors ( non resident)to purchase property without any captital gain which is a rare investment opportunity globally.Here I see no benefit for NZ ,this is actually a large component of the AK market.

    Another area for debate is the use of building covenants on sections by developers,which is used to “protect their investments”,which if it is an investment and not merely a home the suggestion of an asset tax on covenant land would see the clause come off large development blocks (at the end of the day the covenants are a from of economic apartheid and discrimination).

  15. AmaKiwi 15

    Is there an Auckland housing bubble? Yes and No.

    Yes, there is a shortage of housing but the prices have reach speculative bubble (and burst) proportions.

    The formula for housing affordability is your total housing costs should be no more than one third of your after tax income. The average NZ income is $33,000 (x 2 for a couple) = $66,000. Let’s say after tax is $49,000. One third of that is $16,333 or $314 per week (including rates, water, power, maintenance).

    Financially, it is a bubble. It is going to burst very soon. It will be ugly.

    When it does, where will people live? With each other, even more tightly packed together than they are now. Like it or not, this is REALITY.

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