NZ POLITICS DAILY: Housing affordability - everybody's got a plan, no one's in touch with reality

Feb Farmers president Conor English: critical of brother's plan for urban sprawl

It seems every party has a solution to the issue of housing affordability.

The problem is that the solutions seem to be built to specifications set by polls and focus groups, and bear little relation to what is actually possible.

Labour’s KiwiBuild policy certainly reflects that tension, as Claire Trevett strongly critiques in Boomfa — Shearer forced to face home truths. She points out that ‘having scoffed at National’s idea of $485,000 “affordable homes” at Hobsonville as unaffordable, Labour’s own figures were getting perilously close to the same price’.

The reality of Labour’s ‘affordable’ homes is that they will be apartments, ‘compact’ terraced housing or a ‘prefab in Mangere’.

If your family is living in a garage in Papakura, of course, a chance to own a new prefab in Mangere probably sounds good – but less so to the swinging voters whose home ownership dreams (for themselves or their children) Labour are trying to plug into.

The Greens are trying to be both helpful and realistic by offering solutions that fit a $300,000 Auckland budget, but, as Patrick Gower reports, their concrete examples are considered ‘an embarrassment’ by Labour – see: Parliament debates the 'True Blue', affordable house.
 
But leftwing social policy analyst Charles Waldegrave has today criticised Labour and championed the Greens’ policy as more relevant to those who actually need help – see: Finding a real answer to the housing affordability crisis.
 
The firepower being directed at Labour’s housing policy by the government - including a new minister and sustained attacks by John Key and Bill English – is clear evidence that it is working for Labour on a political level writes Vernon Small in National ahead in setting tone for 2013. Labour activists should be celebrating rather than fighting amongst themselves says Brian Rudman: ‘When was the last time, two years out from an election, an Opposition party policy pledge got a minister sacked?’ – see: Labour needs to build on its housing policy
 
Rudman quotes the Finance Minister’s own brother, Conor English, who is critical of the government push for more urban sprawl, and questions why the obvious solution of building up instead of out is so resisted.
 
Rudman adds, ‘It's as though Prime Minister John Key is terrified that Auckland Mayor Len Brown is going to force him out of his Parnell palace, into the servants' quarters above the garage, while the rest of his property gets divided up for poor unfortunate terrace house dwellers’.
 
Ex-National minister Wyatt Creech argues that politics (in the form of a huge voting population in Auckland) is trumping an obvious solution to encourage population and economic growth outside of the city, where housing costs are already much lower. Can't afford a house in Auckland? There's a whole country out there.
 
A further sign of how seriously National is feeling the pinch on housing might be seen in today’s news report by Lois Cairns: Brownlee slams council 'inaction' on housing. The earthquake minister points out that the Christchurch City Council – ‘the second-biggest landlord in the country’ – has received $21m to immediately start fixing its social housing, but since April last year has only repaired five units. 
 
Continuing to blame local councils is unlikely to provide an adequate political response. Colin James says that Labour’s housing policy nicely illustrates to voters the party’s new ‘active’ ideology, and as with Labour’s noises about the exchange rate, it will resonate with many because it sounds more forceful than National’s approach – see: "Active" versus "results": this year's contest
 
Apart from the political gaming over what an affordable house will look like or which suburb it will be in, there are some commentators looking at the wider reasons why home ownership has become out of reach for so many. Bryan Gould identifies a fundamental shift in our economic and political culture from when adequate housing was seen as a collective responsibility to a reliance on market forces, even when they are clearly failing to deliver – see: Blame ideology for housing crisis
 
Is the problem with housing costs at all? Dita De Boni suggests that ‘It's not that housing is unaffordable, it's that wages are too low and that surviving on them, which many in the community do while raising a family, is an almost impossible ask’ – see: Homing in on the real Kiwi crisis. She concludes that, ‘as the political year kicks off, we have the Band-Aid answers to problems that require radical, bold solutions; an overhaul of the game-changing kind our economy hasn't had for a good 30 years.  Vague promises to house the poor and kick local authorities into action seem anaemic by comparison’.
 
In other recent articles of interest:
 
The Labour leader needs to stop trying to be someone he isn’t says Brian Edwards in Why David Shearer should give up acting: He’s just no good at it. Edwards thinks Shearer needs to walk the walk: ‘This week John Key gave him  a lesson in strength. He sacked two under-performing ministers, in all probability ending their parliamentary careers. Yet he’s taken little or no flack for what seems like a pretty brutal thing to do. Maybe that’s because he didn’t act the strong leader, didn’t say much about it at all, was matter-of-fact about a necessary decision.  Maybe that’s the lesson.’
 
Shearer may be preparing to take that advice according to a post at The Standard entitled A new broom? Tipped for demotion are Maryan Street, Su’a William Sio, and Nanaia Mahuta while Chris Hipkins, Shane Jones and, maybe, even David Cunliffe could get promoted.  
 
Are there still simmering tensions in the Labour leader’s office? See Pete George’s Does Shearer have a problem with Mold?
 
Brian Easton looks to slay a few conventional economic wisdoms in Economics for New Zealand social democrats. He argues there is no evidence governments can accelerate sustainable economic growth or that economic growth itself increases wellbeing generally.
 
For a better idea of where Shearer gets his speech ideas, watch 'David Shearer vs Ed Milliband', a video mashup by Cameron Slater. 
 
A different take on current Maori politics, and a defence of the Maori Party is put by Rawiri Taonui in Sharples key to Maori Party's run.
 
Does ‘boring’ capture the zeitgeist of contemporary NZ politics? – see John Armstrong’s Boredom high and blows low – welcome back to Parliament
 
The Dominion Post takes a strong line against bailing out private schools in Is a school worth more than education? David Farrar’s attempt to defend the policy (Editorial misses the alternate costs) comes in for criticism by Will de Cleene in Charter House Rules, and also by a number of critical comments on Kiwiblog from free market proponents disturbed at the $3 million subsidy for a financially failing private school.
 
Meanwhile in the ‘free’ public system, Jody O’Callaghan looks at the increasingly desperate measures schools use to extract funding from parents:  Ploys to get voluntary school fees. Such payments have long since ceased being for ‘nice to have’ items: ‘25 schools in the lower North Island yielded an overwhelming consensus that government funding was not enough to provide even the basics, and fell far short of paying for increasingly essential computer technology’.
 
It’s generally agreed that the New Zealand dollar is currently strongly over-valued. But is it really? Looking at the latest Economist magazine, Michael Field reports Big Mac index says kiwi dollar rate perfect
 
The Government’s work for prisoner scheme is supported by the Labour Party, according to today’s Press editorial Get prisoners working, which also strongly supports the new policy. But today’s Herald editorial suggest the scheme is just a populist gimmick with too many problems – see: Work in jail scheme will do more harm than good.
 
Could taxpayers be liable for billions more to fix Christchurch’s earthquake damaged roads and underground services? A report in the Star Canterbury by Shelley Robinson says a secret meeting with the city council was held by Gerry Brownlee because ‘the Government is now worried that figure could balloon several times over because of the extent of the unknown damage’ – see: Christchurch rebuild cost warning
 
The latest Roy-Morgan opinion poll has support for the two main parties relatively unchanged. This is incredibly disappointing according to a post at
The Standard: Another flatlining Roy Morgan. The blogger complains, ‘I’m sick of hearing from Labour “just wait, it’ll get better”. Well it’s not. You’ve been stuck in the early 30s now for 4 years. So stop making excuses’. It is also pointed out that ‘the government confidence rating’ is sharply improving again. Also, on the Standard there is a complaint about Labour’s Foolish games yesterday in trying to install Trevor Mallard as Speaker.
 
Being a second term government means having to face up to the consequences of your own decisions says Tim Watkin in Why karma will keep on koming for National
 
Tributes are flowing for departing Speaker of the House Lockwood Smith. See, for example, John Armstrong’s Too much referee's whistle but Smith will be missed and Toby Manhire’s A Lockwood house: six of Smith’s best.
 
John Ansell says he doesn't object to Aotearoa-New Zealand being adopted as the coutnry’s official name, but asks when and how this was decided – see: When did we vote to change our name to Aotearoa New Zealand?
 
Finally, Toby Manhire is establishing himself as New Zealand’s top political satirist. His latest is brilliant: Yeah, nah: It’s a nation of cringeing clichés
 
Bryce Edwards
 
Today's content:
 
Housing
Peter Wilson (Newswire): Labour's housing policy under scrutiny
Duncan Garner (RadioLive): Our housing hot-house
Dita De Boni (Herald): Homing in on the real Kiwi crisis
Charles Waldegrave (Herald): Find a real answer on housing affordability
Claire Trevett (Herald): 4-bed home claim fails to add up
Claire Trevett (Herald): Labour runs tape over house plan
Bryan Gould (Herald): Blame ideology for housing crisis
Alanah Eriksen (Herald):Foreign buyers snap up Auckland flats
Oliver Hartwich (Listener): A house is a home
 
National Government 
Corin Dann (TVNZ): 2013 is do or die for National
Audrey Young (Herald): 'You've just got to make the calls'
Scott Yorke (Imperator Fish): A Day In The Life Of Steven Joyce
Kate Chapman (Stuff): Key keeps eyes on Government books
Isaac Davison (Herald): Chief whip role misunderstood
David Farrar (Kiwiblog): National’s new whips
Guyon Espiner (Listener): Interview: Amy Adams
 
Labour Party
Cameron Slater (Whaleoil): Ed called, he wants his speech notes back
Ideologically impure: The problem
The Standard: A new broom?
 
Parliament, first speeches and fights
Audrey Young (Herald): Insults fly as battle lines set
Mathew Grocott (Manawatu Standard): Editorial – Game on for next election
Will de Cleene (Gonzo): What a day that was
 
Parliamentary Speaker
Isaac Davison (Herald): Spectre of Smith looms over chair
The Standard: Foolish games
Jane Clifton (Listener): Words fail him
Toby Manhire (Listener): A Lockwood house: six of Smith’s best
Isaac Davison (Herald): David Carter voted in as Speaker
 
Education
Patrick Gower (TV3): Mr Fix-It has Novopay plan
Kate Chapman and Andrea Vance (Stuff): Error-ridden system 'cannot go on'
David Farrar (Kiwiblog): Editorial misses the alternate costs
Will de Cleene (Gonzo): Charter House Rules
Kate Shuttleworth (APNZ): Parata blasted over 'karma' quip
Jody O’Callaghan (Stuff): Ministry pay glitch is karma, quips Parata
David Kennedy (Local bodies): Who is Hekia's Secret Education Advisor?
Jody O’Callaghan (Stuff): Ploys to get voluntary school fees
 
Prison work
Audrey Young (Herald): PM: More working prisons on the way
Robert Winter (Idle thoughts): Compulsory Prison Labour is Wrong.
 
Defence Force report
Gordon Campbell (Scoop): On Jonathan Coleman’s defence debacle
Robert Winter (Idle thoughts): Mr Coleman doth protest too much
Tracy Watkins (Stuff): Defence force cuts heavily criticised
Isaac Davison (Herald): We've moved on, Defence Minister says
Michael Cummings (Manawatu Standard): Editorial – Defence Force plan unravels
 
Maori politics
Rawiri Taonui (Herald): Sharples key to Maori Party's run
Morgan Godfery (Maui St): Fisking Elizabeth Rata
 
Media
Amelia Wade (Herald): Ready, aim, fire: War at 7pm
Colin Espiner (Stuff): Give Seven Sharp a go
John Drinnan (Herald): Hosking plugs car and Key
 
Asset sales
Adam Bennett (Herald): Crown pressed over redress for Maori
Hamish Rutherford (Stuff): Supreme Court takes on water rights
 
David Bain
Scott Yorke (Imperator Fish): Another Review Of Bain's Compensation Bid
 
Christchurch rebuild
Shelley Robinson (Star Canterbury): Christchurch rebuild cost warning
Steven Cowan (Against the current): Misery and hardship in the Eastside
 
Greens
 
NZ Post changes
 
WOF changes
James Ihaka (Herald): Dire stats fuel WoF debate
 
Welfare, unemployment, inequality
 
Monetary policy and currency value
Brian Fallow (Herald): Looser policy opens can of worms
Mike Smith (The Standard): Reserve Bank admits problem, sits on hands
 
Sexual politics
Claire Trevett (Herald): Few takers for birth control offer
Isaac Davison (Herald): Asian Kiwi speaks for 'trapped' gays
Uri Khein (Stuff): Same-sex bill is about evolving
Laura McQuillan (Newswire): 'Sarriage' solution to gay marriage debate
 
Other
Katie Bradford-Crozier (Newstalk ZB): National, Labour hold steady in latest poll
Felix Marwick (Newstalk ZB): PM backing future online voting
Guyon Espiner (Listener):Interview: Simon Power
Linda Sanders (Listener): Lowering the anti
William Mace (Stuff): Port dispute end in sight, but when?
Kate Chapman and Andrea Vance (Stuff): Greens slate Key over jobs
Kate Shuttleworth (APNZ): Mystery driver tracks luggage
Stuff: Today in politics: Wednesday, January 30
Fran O'Sullivan (Herald): Battle plan lacking for dairy trade risk
Rosemary Mcleod (Stuff): National museum will never be our place
Cherie Taylor (Herald): Govt acts on cyber bullies

This article is tagged with the following keywords. Find out more about My Tags

Post Comment

13 Comments & Questions

Commenter icon key: Subscriber Verified

We need some mechanisms in the financial markets to be able to go short on the housing bubble. If speculators were able to bet on and profit from a housing downswing it would take the heat out of the over-valued house prices, making them more affordable.

We need short selling of housing to keep things in check. At present, there is only long side action ... and massively leveraged to boot, with 90% mortgages etc.

Affordable is a BS buzzword anyway ... it basically means people aren't get paid enough to buy the houses they think they want. Tin shacks in Kawhia are affordable but who wants to live in one of those?

Reply
Share

No, or restrict foreign buyers. Wwill take a lot of pressure off genuine Kiwi buyers. But John Key just doesn't like this idea?

Reply
Share

It's not up to John Key... Or even any government of any colour... Because we can't elect to pick and choose what aspects of a FTA we want with various countries or not.

All or nothing... And remember it was comrad, auntie Helen that sold out our manufacturing base to the Chinese in return for their "vote" with her appointment to the UN.

So Shearer's and Norman's crocodile tears are little more than pantomime along with their fairy tales of printing money to get NZ Inc out of debt... And building 10'000 houses a year in Auckland for less than $300K.

Reply
Share

#1 comment "Affordable is a BS buzzword" is correct.
Worse still, the calculation of affordability has to be incorrect.
A generation ago many families looking to buy a house had only one income and the affordability was calculated on that.
Today many couples looking for a house have two incomes and the "affordability" calculations should be worked out on that. But are not.
Even if it were the answer would be still BS.
Leave it alone.

Reply
Share

The govt has to be seen to be doing something proactive about the housing market but in reality does not give two hoots about the struggling locals - it has millions of glossy brochures all paid for by taxpayers sent over to Asia, begging the wealthy to buy as much of NZ as they can handle.

Reply
Share

They should rezone and release enough land this year to satisfy demand for the next 50 years. The flood of new land will push down the price of a sections below $100k in Auckland and make building affordable housing realistic. Anything over $300K is not afordable on a single medium salary of $55k and if you have kids anything over $200K is going to be hard to afford. Section $100k, cheap prefab $100K.
This will ceate a whole new poor area in Auckland, most likely in the soulh. Will also drive down more central sections pricings so the middle class can build infill housing.
Yes, some land bankers will lose their shirts, but only a small number, and most of them will have their personal property in trusts so will survive in the long run.

Reply
Share

The solution is simple: Everyone in NZ admit to themselves that the existing residential property stock should be for living in, not making money off (this is opposed to the creation of new residential property). Once everyone realises that, controls are put in place to disincentivise people from making money off existing residential property.

These controls could include (but not limited to): 1. Limiting the number of properties any one person can own without being subject to a significant, one-off, upfront tax on purchase prices (say 50%). 2. That existing residential properties should only be available for purchase by existing NZ residents.

These changes will force people who insist on being property investors to either: 1. Invest in commercial property, or 2. Add to the housing stock.

Reply
Share

I wonder if the three people who dislike my comment are property investors? Seriously, why not put your money into something else? Investing in other sectors is likely to help lift New Zealand's productivity and allow more young people and young families afford their first home. The family home should be viewed as a basic need (thinking back to my first economics lesson here) and not a commodity to be traded by those with capital at the expense of future generations.

Reply
Share

A loan of $475,000 ($500,000 for the home less $25,000 deposit) over 30 years at today's interest rate of 5.75% requires a forthnightly payments of $1274 (as per Wesptpac's loan caluclator). This equates to $66,248 after tax earnings per year.

No wonder no one can afford a home. The solution is to drop prices or increase wages, both of which the Government can do nothing about.

Reply
Share

The solution in your example is for people to save a larger deposit before rushing in to buy a house. Just because you have the minimum deposit that some lenders may require doesn't mean its the right time to buy.

My wife and I scrimped and saved a 15% deposit for our house and it’s left us in good stead for life, and made the mortgage more affordable!

Reply
Share

Agree with your comments. However, not all are blessed with a combined annual income of over $100,000. Also, while some may get there over time (and save a bigger deposit), will house prices stay the same?

Reply
Share

"The reality of Labour’s ‘affordable’ homes is that they will be apartments, ‘compact’ terraced housing or a ‘prefab in Mangere’."

And the people being trotted out in the main stream media are whinging about not being able to buy a house are exactly those people that are not interested in these types of housing.
This housing "crisis" is politically manufactured by Labour and the Green Taliban. There are plenty of places to buy at reasonable prices in Auckland - try Otara and Papakura for starters. Oh, thats right, the Labour supporters who have been in the paper whinging about prices wouldn't dare live in those places.

Reply
Share

I wonder if there's any truth in the rumour that Labour will also promise families with young kids a unicorn in each backyard if they sign up?

Reply
Share

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7740 -0.0003 -0.04%
AUD 0.9511 0.0005 0.05%
EUR 0.6324 -0.0002 -0.03%
GBP 0.4954 0.0001 0.02%
HKD 6.0039 0.0001 0.00%
JPY 92.5100 -0.0050 -0.01%

Commods

Commodity Price Change Time
Gold Index 1195.4 -2.890 2014-12-19T00:
Oil Brent 61.4 1.580 2014-12-19T00:
Oil Nymex 57.1 2.910 2014-12-19T00:
Silver Index 16.0 0.096 2014-12-19T00:

Indices

Symbol Open High Last %
NZX 50 5518.5 5545.0 5539.3 -0.21%
NASDAQ 4752.6 4782.1 4748.4 0.36%
DAX 9901.3 9901.3 9811.1 -0.25%
DJI 17778.0 17874.0 17778.2 0.15%
FTSE 6466.0 6566.9 6466.0 1.23%
HKSE 23158.3 23189.6 22832.2 1.25%
NI225 17511.0 17621.4 17210.0 2.39%