Build more bloody houses - Little

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New research shows that investment in affordable housing leads to social and economic gains – just as the Labour Party ramps up its calls for more houses to be built.

Wednesday, April 12th 2017, 2:30PM 1 Comment

by Miriam Bell

Labour Party leader Andrew Little

Labour Party leader Andrew Little has told media that New Zealand’s massive housing supply shortage can only be rectified by building more houses.

Price changes are not a solution to the problem as there are tens of thousands less houses than are needed to accommodate the population, he said.

Estimates of the extent of the country’s housing shortage range from a nationwide shortfall of 60,000 houses up to 100,000 or even 500,000.

Last week Westpac estimated that Auckland alone currently has around 35,000 too few homes and should be building around 11,000 new homes per year to keep up with the population.

Little discounted the impact of a fall in house prices on the current housing crisis.

"Just trying to manipulate the prices of existing houses isn't going to provide the 60,000 houses needed,” he said.

“There is only one answer to the housing crisis and that is build more bloody houses and that's what we are going to.”

Under its KiwiBuild policy, the Labour Party would build 100,000 affordable, starter homes and units and sell them to first homebuyers at cost.

Little said that a large proportion of the KiwiBuild price would be based on the price of land and that economies of scale would be possible with long-term supply commitments from building materials suppliers.

This meant they would be able to offer the properties for considerably less than the average house price in the market they are building in.

However, as part of housing supply solution, Little also reiterated Labour’s speculator targeted policies.

These include expanding the bright line test from two years to five, getting rid of negative gearing, and only allowing non-residents to buy new builds.

Meanwhile, the New Zealand Housing Foundation has announced it wants to prompt investors to consider affordable housing.

The Foundation today released research showing that helping families into affordable home ownership leads to positive social, economic and health outcomes for both the families and taxpayers.

Foundation chair, Tony Lanigan said there remains a significant lack of desire and funding to support the development of new housing that is affordable.

“The housing crisis is real: Just two months ago New Zealand topped the IMF’s survey of house price increases-to-income ratio across the 30 wealthiest nations, and home ownership rates are now at their lowest level since 1950.

“There has been a lot of talk about social investment and the need to front end the spend, in general terms.

"We agree, and this investment needs to happen in affordable housing, not just social rentals.”

He said the new research presented a clear and compelling case for more investment in affordable housing.

For example, it shows that transitioning Kiwi families from private rentals or social housing into their own homes would deliver the Government net fiscal savings of $6.4m and $11.1m respectively.

This is because the Government ends up spending less on things like healthcare, welfare, and accommodation supplements.

The Foundation hopes the research encourages the Government, and other stakeholders to become active investors or co-investors in affordable housing solutions, he said.

Read more:

Shortfall to get worse before it gets better 

Negative gearing to go under Labour

Election 2017: what investors need to know 

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