A research paper for the Helen Clark Foundation, out today, poses answers to New Zealand’s ongoing “housing crisis”.
At all points, I feel it misses the nub of the issue.
The following handful of points are not made in the paper, and haven’t been a focus for national politicians (the fourth point has been a focus for local politicians):
- Forecast population growth, especially immigration
- Build to match
- Educate the construction workforce to ensure once-only builds
- Reduce competitive pressure by growing supply
- For Maori land, introduce house ownership while the land is retained by community.
The research paper, Somewhere to live: Exploring solutions to the housing affordability crisis in Aotearoa New Zealand, has been produced by Dr Jenny McArthur for the Helen Clark Foundation.
Dr McArthur is a lecturer & co-director of the Urban Innovation & Policy Lab at University College London. The Helen Clark Foundation is an independent public policy think tank based at the Auckland University of Technology.
Who should run urban development?
One answer in the paper, and by this government through the Urban Development Bill (on which submissions close today), is to have Government-controlled urban development authorities sweep through cities creating a large stock of new homes.
The central issues there are surging population growth and land supply. Given abnormally high immigration and a shortage of build-ready land, landbanking for profit was inevitable.
The new Auckland Council, which took over from 7 city & district councils in the region in 2010, immediately set about creating a unitary plan. It took 6 years before the bulk of it was in place. 2 factors in it are starting to change land supply: rezoning to allow far more infill & intensive housing, and fringe rezoning to enable more expansion.
Land supply for housing remains highly priced – and inadequate land is being zoned for industry, so the same issue arises there. Rezoning to increase supply will bring prices down – over time.
There’s landbanking and there’s landbanking
I still have the maps Universal Homes general manager Ron Goodwin marked for me nearly 40 years ago to show where the company was landbanking – not to scoop up profits from price hikes, but to ensure the company would have a steady supply of sites to subdivide at low cost.
The turnaround in thinking was not caused by those developers, but by the chaos of unplanned high immigration (and at times by intentionally high immigration for economic growth reporting purposes).
Gradually, rational growth has resumed, and in the last 2 years the net migrant inflow has shrunk – and that, in due course, can lead to price stability.
Consents for new homes topped 15,000 last year in Auckland – doubled in 5 years – and 37,000 nationally, up nearly 14% in the last year alone.
Maori land is a vexed issue which has never been sensibly addressed, leaving many Maori with ownership of an asset they can’t profitably use. Who is going to build “their own” house on communally owned land?
I haven’t studied options to overcome the widespread failure to make economic use of communally owned Maori land, but there are excellent examples of communal owners making the land work for them, especially in forestry.
On the conclusion
I haven’t gone through this paper to pick out individual points to debate now, but they should be debated.
In her conclusion, Dr McArthur has written: “There are ways to regulate the level of mortgage lending, to reduce incentives for speculation, to scale up government-led delivery, and to ensure that housing is managed in the interests of people.
“House prices can be brought down safely & sustainably, and the prospects of a damaging burst to the bubble can be avoided. The proposals in this paper show that we do not simply have to accept ever-increasing house prices in Aotearoa New Zealand. By de-escalating the speculative cycle, we can improve housing affordability, ease the crisis, and open up a new future for all of us.”
You can see worthy points being made. My issue is with the methods of achieving change.
Attribution: Helen Clark Foundation research paper.