Labour is the tortoise to housing’s hare
The Government prompted a few double-takes when it released a video this week revealing it had put 12 families into their own homes through its progressive homeownership scheme.
‘‘Transformational stuff on top of the raging success of KiwiBuild,’’ one Twitter user commented.
National didn’t need to make any more attack ads, another said; the party could just reproduce the Labour-created advertisement and allow the Government to take a shot at itself.
I looked at it twice, too. Coming on top of the problems of KiwiBuild, which last time I checked was going to take 400 years to reach its initial targets, you’d have thought the Government would have high hopes for this scheme, which puts people into existing houses.
The $400 million scheme aims to get low-income families into home ownership by supporting them with ‘‘shared equity’’ arrangements, where the Government takes on some equity in the house, allowing lower deposits for mortgages and low interest rates.
Housing Minister Megan Woods said it was a longer journey to get people into home ownership than traditional purchases, and numbers would pick up.
But 12 families in seven months – how can that really be a success?
In January alone, 4957 houses changed hands for almost 20 per cent more than the year before and it’s estimated that house prices will rise more than 50 per cent in the first two terms of the Labour Government.
The Government seems to be focusing on the wrong places. Helping families into ownership is a sound idea – but even at full capacity we’re talking a few thousand who might be helped through this scheme. There are about 580,000 renting households in the country.
The First Home Loan is another good example of the Government trying to give people a hand up into the market – but the property ladder it’s hoping to help them on to is more like a super-speed escalator that keeps moving out of reach. That scheme offers low-deposit loans to people who meet house price and income criteria. But the house price caps in Auckland and Wellington can’t keep up.
In the year to January 31, just 102 Auckland first-home buyers qualified, and 32 in Wellington.
Economist Brad Olsen says all the tinkering is ignoring the actual drivers of the housing market.
Regardless of who helps whom purchase a property, there has to be a house to buy.
The Government still hasn’t worked out how to really get supply of new homes going.
Meanwhile, historically low interest rates benefit those already in the market and wanting to snap up more.
There’s a sense among some that the Government is good at turning schemes on but not so great at monitoring them or turning them off even when it’s clear they’re not delivering.
‘‘New Zealanders do feel that housing isn’t getting the attention it deserves. Then you hear 12 people through this scheme and throw up your hands – is this what we’re patting ourselves on the back for?’’
Olsen’s colleague Gareth Kiernan says there are too many ‘‘lead agencies’’ on housing, all pulling in competing directions.
This week’s announcement that the Reserve Bank would be required to consider housing when it makes its policy decisions was progress in that regard, though it had a tinge of buck-passing from the Government.
If the Government wants improvement, it needs a clear, comprehensive strategy to ensure that everyone who has input into the market – local, central government, the Reserve Bank – has their eye on the same outcome.
The current piecemeal approach needs to be overhauled for the sake of all New Zealanders worried about their housing future – not just the lucky 12.
The Government seems to be focusing on the wrong places.