Matthew Hooton
No more excuses for housing crisis
OMC’s name was meant to be ironic. Everyone knew tara had no millionaires, let alone enough for a club. November’s $1.01 million sale of 1 Tate Place has predictably been labelled “how bizarre“. Yet the price paid for the 95 square metre, onebathroom, three-bedroom, weatherboard house on less than a fifth of an acre was not the first in
tara above $1m and most certainly will not be the last.
Nevertheless, the suburb may remain millionaire-free, with only about a third of houses in the Panmure-O¯ta¯huhu electorate, of which it is part, being owneroccupied. The electorate’s median household income is in the $50,000 to $70,000 range.
Closer to the action, Councillor Efeso Collins, who was born and raised in tara, says 80 per cent of Pacific people, the majority in his Manukau ward, do not own their homes – and there is now no chance they ever will.
Prime Minister Jacinda Ardern expresses concern, but says she wants house prices to keep going up.
Insofar as further meaning can be discerned from her remarks, it seems she hopes future wage inflation will be above house-price inflation.
Yet this is not the picture painted by Treasury in last week’s Half-Year Economic and Fiscal Update (HYEFU), signed off by Finance Minister Grant Robertson as reflecting all government decisions and other circumstances of which he is aware.
According to Robertson’s HYEFU, house prices will increase by another 32 per cent over the next five years while wages will go up by only 14 per cent, and consumer prices by 8 per cent.
The good news for an tara family with an annual household income of $60,000 wanting to buy a $600,000 house is that they can expect to be earning $156 a week more in five years’ time.
They’ll also be able to save a bit more, since their weekly supermarket shop will only go up from, say, $200 to $216 – although their bank won’t help much, since interest rates on savings accounts will remain dismally low for the full five years.
The really bad news is that the $600,000 house they have their eye on will go up by another $195,000. The Reserve Bank restoring loan-tovalue restrictions will make it even harder for them to buy it, but not those who already own a home, who they will need to compete with.
By dint of his own signature, Robertson says he knows of no government decisions or other circumstances that make these forecasts unsafe.
The realpolitik of the median voter model means that no one in Wellington actually cares or even thinks about a $60,000-a-year family in tara dreaming of one day owning a home – and they never have.
But Beehive strategists do worry about middle-class couples wanting to save for their first home over the next parliamentary term. Double or triple the numbers above, and you’ve worked out the equally impossible maths facing them.
Ardern and Robertson appear either oblivious to the effects of their own Treasury’s forecasts or utterly complacent about them.
Having wailed about a housing crisis for more than a decade – when house prices were half what they are now – they have not replied to the latest numbers with an emergency pre-Christmas programme the way previous governments with big mandates have responded to the economic, fiscal or social calamity of the day.
Instead, Robertson says the Government is now in a position to – and I quote him – “start addressing some of those long-term issues like housing [and] child poverty”. A “housing package” is promised next year, although it will apparently focus more on making renting easier than on home ownership.
The time for excuses on the housing crisis has surely run out. Ardern has been re-¯electedO with one of the most overwhelming mandates in the history of New Zealand or any proportional representation system. She no longer has the excuse of being new to the job or constrained by a coalition partner. She faces no credible opposition.
Nor is the housing crisis an issue where the best policy response has not been well-canvassed. Ardern and Robertson could do worse than even just re-reading Phil Goff’s Mayoral Taskforce Housing Report released more than three years ago, with
Labour’s support. It outlined a clear strategy covering everything from finance through to the building code, and was the consensus view of investors, lenders, developers, designers, builders, politicians, government officials and council officers.
As well as much-needed intensification throughout Auckland, Labour might also look at its own manifesto from 2017, which promised commuter rail linking the golden triangle of Auckland, Hamilton and Tauranga and new suburbs between them.
After the failure of the pepperpotting Kiwibuild, Labour could announce that new suburbs to the south and west of Auckland will be built as a single undertaking, including all necessary infrastructure and connectivity to the public transport network. Every construction company in the world would seek that contract.
In line with Labour ideology and the huge blow-out of eligible families on state-house waiting lists, these could start out as entirely state-house suburbs but with residents able to progressively purchase their home under a rent-to-buy scheme.
The surprisingly statist sharedequity scheme proposed by Roger Douglas some weeks ago should also be part of Robertson’s promised package.
I have become as tired of writing about the housing crisis as you are of reading about it. Even the lunchtime jokes among homeowners about their properties working harder than they do are now falling flat.
There is a genuine threat to social cohesion in New Zealand unless the ¯PrimeO Minister takes big, bold action on which she need not so much expend her political capital as invest it for further big political gains.
It is disappointing the first two months since her historic mandate have not been used more productively, but perhaps understandable given the senior leadership’s general exhaustion after Covid-19.
But there can be no excuses when the housing package is released in the New Year.
There have been enough platitudes. And there are no longer any constraints on Ardern from doing whatever she believes is necessary for the people she claims she entered politics to help.
Jacinda Ardern expresses concern, but says she wants house prices to keep going up.