Budget 2017

Few surprises in store on housing front

Few surprises appear to be in store for the politically charged housing sector in this year’s Budget, after last Tuesday’s $2.23 billion spoiler promising 34,000 new Auckland homes.

But infrastructure is getting a boost.

Social Housing Minister Amy Adams announced last week that 8300 run-down houses on Crown land would be replaced with 34,000 new residences, although some were in already-announced projects at Tamaki and Hobsonville.

The properties were for vulnerable families, first-home buyers and for the wider market, Adams said.

On May 16, Adams said 310,000 households would get Government housing support “one way or another. That help comes at a significant cost — $2.3b this year alone”.

Community Housing Aotearoa chief executive Scott Figenshow said the billions already being spent came “nowhere near” meeting a desperate need, particularly in Auckland.

He cited references to about 500,000 new houses being needed, many of them to be affordable.

“It’s good the Government has changed its tune and become much more active and interventionist in the housing area. But its response is still inadequate,” he said. “We’ve lost the last eight years of making good progress.”

In his pre-Budget speech on May 3, Prime Minister Bill English said: “Over the next four Budgets the Government will allocate a further $11b towards capital infrastructure, taking our total capital investment over the next four years to around $23b. That’s on top of the $20b of capital investment the Government has made over the last five years.”

Transport Minister Simon Bridges announced this month that $812 million has been allocated to rebuild State Highway One through Kaikoura.

Another big Budget announcement came out six months ago.

In November, the Government said a $304m package would fund 2150 emergency houses, of which $120m was to build short-term modular and temporary housing on Crown land earmarked for roads and schools in the more distant future.

On the housing affordability relief front, funding is ongoing for the Government’s Welcome Home Loan scheme. But the numbers are tiny. This month, Smith said 1053 loans were made in the first year and 1218 in the second.

That scheme enables people with a deposit of just 10 per cent to get a bank mortgage through a government guarantee and the loans are exempt from the Reserve Bank’s loanto-value limits.

But the Government’s KiwiSaver HomeStart scheme appears to have helped, with grants of up to $10,000 for an existing home and $20,000 for a new one.

Building and Construction Minister Nick Smith said on May 6 it was “on target to help 90,000 first-home buyers with $435 million in grants over five years”.

Taxpayers’ Union executive director Jordan Williams predicted the house value threshold might be lifted in this Budget.

“This unfortunately just piles cash on to the fire: the more subsidies the Government gives to first-home buyers, the more they push up prices. The Government is not dealing with the supply constraints,” Williams said.

BNZ chief economist Tony Alexander expects nothing new from the Budget: “It all came out already,” he said referring to Adams’ housing announcement last week.

“It won’t help all that much because constraints for creating new Auckland housing are supply of builders, not land any longer.”

ANZ chief economist Cameron Bagrie said: “Housing and housingrelated infrastructure is going to chew up a fair chunk of the $11b announced by the Minister of Finance a couple of weeks ago.”

Labour leader Andrew Little said that he wanted negative gearing axed, removing about $150m of taxpayer subsidies for property speculators and to “see those savings invested into home heating and insulation for families”.

“Right now, speculators can take losses from their rentals and offset that against their personal income. It allows them to avoid paying tax,” Little said.

“This loophole is effectively a hand-out from taxpayers to speculators. It gives them an unfair advantage over Kiwi families. Labour’s closing that loophole.”

English dismissed Labour’s negative gearing call.

“At a time we need more houses, they’re increasing tax on housing,” he told Newstalk ZB.

Also already announced for this Budget is a $27m Maori housing and marae funding scheme, revealed on May 8 by Maori Development Minister Te Ururoa Flavell.

Green Party co-leader James Shaw said Adams’ plan for 34,000 new Auckland houses was too little, too late.

“Auckland is already 40,000 homes short and needs 15,000 more a year just to keep up with population growth.”