Year of the house in 2021 as Labour rolls out its plans
It was very much business as usual for the well-oiled Labour machine in its first public outing of the year – a caucus retreat in Nelson.
The prime minister kicked off the year by giving her team a pep talk while also delivering a stern warning about how Covid was going to continue to make life difficult. Then she and most of her top tier ministers – Grant Robertson, Chris Hipkins and Megan Woods – trooped out to the Nelson suburb of Richmond to show off a new well-built row of Ka¯ inga Ora state houses.
While there Jacinda Ardern re-announced the fact that the Government was building loads of new state houses, but it has now also made decisions and produced some promotional material about where they will all go.
Labour has identified nine areas of urgent need where the building will be focused – all in the North Island.
Then Ardern announced when the rest of the Government’s housing announcements this year will be.
By late February, there will be announcements on proposed demand-side measures that the Treasury has been busily working on. Robertson also confirmed that the Government expects to respond to the Reserve
Bank’s suggestions for extra tools to cool the housing market (such as through debt-toincome ratios).
In February, the Government will also announce ‘‘high-level’’ decisions around the Resource Management Act and expects to have an exposure draft of the first bill released in May.
In May, the Budget will also contain ‘‘further measures to address supply’’.
Then in July, the National Policy Statement on urban
development, which requires councils to do a stocktake on available land, kicks in.
It is testament to the political nightmare this issue has now become, that Labour feels the need to do an announcement on future announcements.
Its political purpose is to reassure the public that work is in fact being done.
In the meantime, Labour likes to conflate its public housing building programme with the broader issue of house prices. State houses are about providing houses for those on limited means, while house prices are about Kiwis’ – and first time home buyers in particular – ability to buy a house.
And, Labour could be forgiven for feeling a bit hard done by: the underlying conditions that created last year’s 20 per cent house price increases have been created by successive governments of both stripes and then exacerbated by Covid-19.
But one of Labour’s key election promises in 2017 was to boost housing supply, in part building 100,000 private houses over 10 years through KiwiBuild. Nothing close to that materialised.
Practically, it is very difficult to see what measures Labour can take that will ease house price rises in the near term, unless its ‘‘demand-side’’ measures are draconian.
Managing demand would realistically have to involve rationing credit in some way, or simply barring some people (say property investors who own more than two homes) from buying houses for a set period of time until things cool off.
But neither of these options are ideal and each carries political risks for Labour.
Increasing supply – generally considered to be the real structural solution – will take years to have a significant impact to stabilise price rises. 2021 is shaping up as the political year of the house.