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Shearer touts $1.5b govt bond issue to finance 100,000 homes

Labour leader David Shearer has proposed a $1.5 billion government bond issue that would finance the construction of 100,000 homes for first-time buyers.

Mr Shearer says the homes will include terrace housing and apartrments, and be aimed at those with a budget of $300,000 or less.

Two-thirds of the homes would be build in Auckland within five years.

The balance would be built in "affordable" centres including Tauranga, Nelson, Christchurch and Queenstown.

Mr Shearer says as homes are built, in partnership with the private sector and community housing groups, money will be paid back into the pool.

Bondholders would be repaid after 10 years.

National has predicted a cost blow-out. NBR economics editor Rob Hosking has multiple issues with the initiative.

Finance Minister Bill English recently took a white paper to cabinet, following a Productivity Commission report on housing affordability.

The white paper proposed a range of reforms centred on making more land available, and the resource consent process cheaper and easier.

Comments and questions

Labour's 100K new houses plan would be enough to swing my vote next election. I want my kids to live here, not Australia

Aye, and he's planning to issue enough bonds to ensure every home so built should have free toilet paper.
Have a nice day!

Of course it would. You along with everyone else will be queueing up for a free $100K capital gain the day you buy. I'll certainly be putting my kids into the ballot. Its beautiful raving lunacy, and could only have come from a party as financially inept and bereft of sensible, workable ideas as Labour. Though I suppose, they're not that far ahead of the Greens in the financial stupidity stakes.

If John Key and Bill English's "free market" cannot provide housing people can afford, then it is the duty of the state to provide shelter for people.
There are already plenty of houses to go around for familes, unfortunately, because of the tax system, some people own numerous rental properties, incuding our National MPs. This is why they want prices to be unaffordable for young Kiwis, and their rental properties to increase in value.

I voted National last time, but because of their disastrous housing policy, I will definetly vote Labour for the first time.

The free market cannot supply affordable housing because the state (local and central) won't get out of the damn road and allow it to happen. Laying the blame for that failing on the 'free market' is just dumb, and is firmly putting the cart before the horse. You should look to your buddies in Labour and the Greens first to clean up their regulatory no, no, no, you can't do that, you will do this, rather than looking to the tax payer to stump up more money to paper over their cracks.

Wow - what an obvious Labour Party post - out in force today huh? Trying to fake support by populating boards with key messages. What a joke. Anyway, Labourites should be happy...National has done more than the previous Labour government in closing rental tax loopholes with changes to LAQCs and depreciation. Helen Clark herself owns how many rental homes? Quite a few actually and what did she do when in power for 9 years? Nothing.

Is that not what National cronies do with their NZ version of Fox News, Whaleoil?

Putting that aside why do you insist on attacking a policy which is good, there may be improvements made to it but it would be great if there could be real cross party discussion on this as it does address to a part, Housing Affordability.

I don't consider I live in a wealthy area but when I see terrible housing around my area going for 350K and needing another 100K on top of that, it disgusts me, any where else that house would barely go for 200K because of its condition but because the market is messed up it goes for so much more than that it should be worth. I am happy to see a policy which will build affordable housing for those that need it.

It is really sad that when a good policy is made be any part the Government or the Opposition parties attack each other and trying to belittle an idea which will benefit the people.

"Is that not what National cronies do with their NZ version of Fox News, Whaleoil?"

You shouldn't be allowed to have an internet connection. Are you not aware that Whaleoil is a blog, a right wing blog, not a news site? Of course its loaded with right wing comments.

Putting that aside, I'd be more than happy to see it properly debated on its merits but when activits pose on news sites pumping up their new 'policy' with such absurd comments, it's off to the wrong start.

Helen Clark actually did a lot for New Zealanders and as far as I can say a lot more than John Key, you should research your facts before making a comment like this, shame on you and I would go as far to say you must have plenty of money. Helen Clark wasnt the only Prime Minister to let the rich escape though the loop holes. Rome wasnt built in a day, and the only good John Key has acheived is reducing New Zealands debt, while killing off the middle class.

Put Clare Curran's key message playbook down..."killing off the middle class"? Really? "Rome wasn't built in a day" is your excuse for Clark but Key has managed to kill off the middle class in less time. That's amazing. Stop drinking the Labour Kool's not good for anyone... except Labour that is.

The only thing Helen Clark did was make sure she sucked in and used the lower classes to ensure she achieved her goal of a prime job in the UN.

There are plenty of affordable houses out there anonymous. They're just a bit further out that the young people of today want to live. Not many people that live in Epsom, Remuera, Kohi, St Heliers, Ponsonby etc, got to live in that area as a first house! It actually has to be earned. And throwing out the old "rental properties cause house prices to go up" nonsense is straight from the labour Party handbook. Never lose sight of the fact that if there weren't people to rent these houses, there would be no reason to own them. The Government would then have to put their hand in their pocket even more to provide more state housing. Most stupid argument yet propounded.

If you want to see what happens when a Government decides everyone deserves to have a home of their own, when the free market wouldn't otherwise provide one. Look to the USA, the Govt relaxed all the lending rules so that those who don't earn enough could afford the home, and slowly the bubble formed, eventually it bursts, it always does.

If it looks too good to be true, it probably is too good to be true and the "free market" as you describe it fixes the disconnect. It always does.

Even if we had a communist state, heaven forbid, where everyone was guaranteed a wonderful home of good quality the money has to come from somewhere, take a look a few decades back at the ruble, that's not rubble (although their economy was).

A governments duty is to provide governance, a framework of policies and laws that allow people to live and work in safety perhaps even prosperity, it is not there to provide shelter, otherwise we would have Shelterments.

One hundred thousand houses worth $300k each - that is a $30 Billion investment with only a $1.5 billion fund. To afford that means only 5,000 houses under construction at any one time. Generally it is at least 6 months from start to finish so that allows only 10,000 houoses per year to be built. By my maths it will take 10 years to build, not the 5 years claimed.
Not a bad idea, but seems horribly over-optimistic.

Well the fund would only be the beginning, as the houses are being built and sold the money would simply go back into the pool which would go towards building another house. These houses will be basic but will be a lot better than a lot of the housing stock built in the late 90s and 2000s, they aren't being sold at a profit as that is not the agenda here, it is solely about building low cost housing.

It will be a welcomed sight in Christchurch as well where housing is not the cheapest.

6 months to build a house? There is a new subdivision being built by me and its 3 months max from start to finish, and with the potential for a boom in new apprenticeships which especially will be needed for the Christchurch rebuild which in itself will be a 10 year + rebuilding project.

I welcome a plausible solution to housing affordability, a shame the Government did not come up with this.

I get the financing - spend the 1.5 billion (5000 houses) sell them and then fund the next 5000, at the end the money goes back to bondholders, or could be amortised into the fund and more could be built.

Yes 3 months from start to finish - but that is once the machinery hits the building site. there are easily another 3 months of design and prep work - not to mention approvals, so my view is that at best we could have a 6 month rotation of the funds. That (in my simple view) would equate to a 10 year build program, not the 5 being suggested.

Yep, Labour and the Greens always have trouble with the detail, in this case the simple mathematics.

Yep - when spending someone else's money, you don't need to be able to count - you only need to insist for MORE...

$1.5B spread over 100K houses = $15K per house? Where does the rest come from?

But a $300K purchase price theoretically should be achievable assuming cheap land. $1500 psm x 150sqm (small family home, 3 bedroom 1 bathroom, single garange) = $225K, so the question becomes where can you get a section for $75K. And bear in mind $300K is supposed to be the top end.

The trouble with property is the scarcity. It tends to mean that even if the rest of the economy is experiencing modest, sustainable growth, house prices are bid up ever further with a growing proportion of our increased incomes absorbed in buying the roof over our head.

High house prices make it difficult for certain groups, particularly those on lower incomes, to realise aspirations for home ownership. They also make New Zealand a less attractive place to live and invest in. Increasing the supply of housing and the responsiveness of the housing market is the surest way of improving affordability in the medium to long term. It will also support a wealthier and fairer New Zealand

Plenty of land which is cheap in Taihape, Wyndham and Opotiki. Scarcity no issue there.

I see a problem coming - no land in the Labour stronghold seats, or where the so called housing crisis (which I dont think exists anyway, and is just that people want to live in Parnell and pay Papatoetoe prices) - so another empty promise - a promise that looks like it cant be delivered upon - but thats Politics for you.

Wow, State housing, what a concept ... there are so many govt. rules, laws and regulations around building houses now that only the govt. can build affordable houses ... well duh.

And in due course, they will be come to be seen as the cheap eyesores they always are ...

So 100k families will get subsidised housing while the 60% of the population which have a family home as their main investment will see their net worth decrease. Sounds like a winner.

Like all investments - there are risks. Invest smarter NZ

Self interested statement if ever there was one. See the bigger picture.

Now we are talking

Stinks of another round of typical Labour vote-buying to me...poison for taxpayers who have worked hard and bought their own home without a handout

So you are telling me a plausible solution towards housing affordability is just vote buying? So National Party Tax cuts for the wealthy and for business were not vote buying? And we have felt all the great economic investment going back into our country with more capital for business....oh wait that is not the case they have not done a thing, a gamble which absolutely failed.

Taking politics out of it, it is a great idea which will give Kiwis a chance to buy their first home, it is something I will want. You do not have to be a Labour fan to think that it is not a great idea, the Market has not provided houses to meet the need so a future Labour Government will build those houses, and why shouldn't they, they can work with Local Government across the country to free up land to allow for these housing constructions and can put other policy which can encourage the private sector to get confidence to re-enter the market and continue housing construction at the conclusion of this policy.

It is 1.5 Billion, they are not up-fronting the 30 Billion or so it will cost for these houses, it will not affect the books as it is a bond issue and that money in 10 years will be returned to those bondholders which will mean a great flood of capital at the end of it into the market which would be a good thing.

Of course National and its supports will try to tarnish this idea but it is a great idea and it is what Kiwis want, affordable housing. They just wish they had done the idea first.

If local government across the country - and particularly in Auckland - freed up land for housing this would not be necessary, and we would not have an "affordability" issue in the first place. Any "market failure" is because of (local) government interference and "planning" with land development restrictions under the RMA.

More rubbish ideas from Labour. The only worry is due to the stupidity of our other lefty party National there is a very real chance of a Labour Green coalition. Welcome to the future slums of NZ with cheap tic tac houses built where you don't want your kids schooled or should that be indoctrinated.

You compare nationals housing policy to labours, I think-nationals one is a joke, or should I say it's labours old policy rehashed by national.

A good move to meet real need and balance the market.
New Zealand has had to do this in a major way in 1905 and in the 1930s.

The history makes intresting reading at

The 1890 Liberal government initially thought urban slums would not continue as a problem as people moved to country jobs. It didn't happen.

The current government believes opening up more land will lower house prices. But what's the incentive to develop land and sell it for less?

Fewer listings are also driving higher prices in Auckland specially.
So if the market overall can't provide good quality housing in sufficient volume, then perhaps this move isn't a bad one: as in the early 1900s and 1930-49 the private sector will build the homes. These businesses and their supiers will be very pleased at the prospect of on-going contracts in large numbers. Thousands of jobs will flow - and maybe, on the way through, other downstream sectors like retail will also feel the benefits.
The media will enjoy the flush of advertising for home chatels.

Now Labor want to collapse the housing market by intruding again. So local councils will allow this? For years they have artificially inflated housing prices by not allowing sub-divisions on green belts or in rural areas so people think their houses are worth something.

Would it not be better to simply allow sub-divisions so land prices drop and people can build there own houses? This lets the market set prices and demand rather than causing a huge see-saw effect that government intervention causes.

Never happen, too many planners feathering their nests in the current RMA environment

Just released on the Internet Blogosphere, Labour will lower voting age to 16 and have offered all new voters the choice of saving and buying their own home, or the Government will provide a home at a subsidized price paid by a super tax on all those who earn more that $100,000 per annum, and UFB will be provided free to all homes, unlimited bandwidth, and yes there's more has accepted a place on the list to become the Minister of Technology and Innovation in the next cabinet.

I hope these ones dont leak...

They'll leak taxpayer funds like you wont believe.

Wasn't Fannie Mae Freddie Mac in the US established with the same objective? And then along came the credit crunch....

Great idea. Without increasing the supply, the housing crisis won't be solved.

Additionally some tough measures acting as deterrents against property speculation are necessary to prevent the market from overheating in the short term.

Im sick of what all the parties want! They are employed by us, the people of New Zealand, however even when we vote it seems they go off on their own ideas of what New Zealanders need and want. The people of New Zealand should be coming up with policies that should be voted on then employing the best person to get the job done true to their word. The government can't even carry out complete check when employing defence ministers, shame, shame, shame. My partner and I are middle income earners, we can't afford a home!, National took away the child care tax return! I work in the science sector as a lab tech and only earn $1200 a fortnight while a factory worker earns $30 an hour with no qualifacations, education does'nt pay off in New Zealand, feel like whats the point. So many people admitted thats why they didn't vote because there wasn't a policey that reflected them as a New Zealander. Bring on the houses before overseas investors buy them all up, save the New Zealanders leaving for Australia for this very reason. David Shearer seems a lot more in touch with reality.

Did you not check out what a laboratory technician's position pays before you embarked on this career choice? Most science jobs at this level pay very poorly, no doubt reflecting the very large surplus of science labour coming from the over 30,000 students studying science at any one time at tertiary level in New Zealand.

New Zealand needs a revolution in the scale, quality and funding of home building, if we are to have any hope of meeting the housing needs of our growing and changing population.

I think this is an innovative and creative plan to tackle the housing crisis. Well done.

Seems good to me. If it can help resolve the current housing crisis, lower unemployment and stem the outflow of young Kiwis to OZ.
Then why not?

Because it's too good to be true, Sarah.

Try to work out the arithmetics for the plan. They don't stack up. The left wing socialists are trying hard to buy your votes. Once you vote them into power, it would take a few years to sort out the land supply (after all, where are you gonna build those 67,000 Auckland homes? You need land. Lots of it. Who owns those land now? hint hint) and the bond details (let's assume for a moment that it's fiscally possible).

Before you know it, the next re-election comes and the socialist will dangle this carrot in front of you to bribe another term 'just to finish up the plan'.

This plan would have worked in communist China (where they own all the land in the country). Not New Zealand.

In Auckland home ownership is below 60%. It's trending down. Whoever wins Auckland in the election, wins the country. Labour is on track for a game-changer with this. It's a great economic move, and an even better political one for them. National is heading for trouble if it thinks all these people that are rent serfs are going to vote for them, when they have forced people into this position by doing nothing on housing affordability.

A well-meaning but dumb idea. If the houses are in worthwhile areas (ie. good neighbours, decent schools), people will very quickly bid the prices up to market levels. If there's some kind of price control to prevent this, then who's to say what kind of neighbours the buyers will end up living next to? Labour (and the left in general) seem to make the flawed assumption that those of lesser socio-economic standing are basically the same as themselves, and just need some temporary assistance to become the genteel champagne socialists they must be deep down. And yet simple observation gives up the lie. People will pay more for a house if it means their kids will go to a decent school, where their children aren’t the only ones who’s parents are married – or even simply have two parents – where the neighbours go to work in the morning and keep their house tidy and presentable and don’t have the cops called around every second weekend. Less expensive houses are a great idea – I’d love one, too – but the less expensive suburbs I see are not places I’d want my family growing up. You can’t guarantee who your neighbours will be, but I’d wager you’ve got a better shot at a quiet comfortable home life with neighbours of higher rather than lower means.

Exactly Miguel...

And a prime example of this is Jacinda Ahern. The Horrid paraded her around like the winner of the Melbourne Cup complaining about how unaffordable housing in Auckland is with her fretting where she'll get to live... Nek Minute - she buys a house in Ponsonby... but what else could one expect from the greedy 1%?

An old suberb of a former State Housing suberb no less.... Spot the irony...

Housing was once considered a necessity in which people of all levels of income lived. It has rapidly turned into an overpriced luxury in this country.

The government should act efficiently to increase the supply of land available for construction. Without increasing the supply, the housing crisis won't be solved. The housing market is a resounding government failure in the economics field. We're talking about a double failure, since the government actually identified the problem, and chosen to do nothing about it. This is a resounding failure.

The "failure" is almost entirely due to restrictive and expensive local government "planning" without regard to normal market forces. Auckland is classic example of this, and the Auckland Council's solution is more of the same, or even more restrictive land development policies.

He's a dreamer, no way he can build those houses for that price. Just what the construction industry needs, the government driving the price of building down..... Tradesman deserve a fair wage too...

I think it is obvious that something like this needs to be done. The challenge in Auckland is building a lot more houses than we are used to. The market left to its own devices isn't going to deliver them. It's producing about 3000 houses a year - we need 13,000 a year for the next 30 years

A govt effort that sells houses at prices linked to the cost of building would be an interesting move in widening home ownership. Hats off to David Shearer .

I am a simple man. I won't take one political side nor the other but I have a few simple questions on the proposal:

1. Assuming for the moment the houses can be built for $300,000 are they then sold for that amount? I read the Govt would take a 1% margin ($3,000) so presumably $303,000?

2. There is talk of that money being recycled to fund the building of further houses - but when do the bonds get repaid? Who pays the coupons on the bonds in the interim?

3. What is to stop (and here is the rub on most of these affordable housing schemes) the balloted purchaser immediately onselling at market prices and pocketing the profit? Yes I understand they are carefully selected as having a real housing need, but that does not mean specifically THAT house - the purchaser could buy for $300k, sell for $600k, repay the debt borrowed for the initial purchase and move to Taihape ...

Still getting my head round it ...