Bernard Hickey 's Opinion

Bernard is an economics columnist for the NZ Herald

Bernard Hickey: Govt eyes blind to housing crisis

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Auckland  needs at least 10,000 new homes each year. Photo / Chris Skelton
Auckland needs at least 10,000 new homes each year. Photo / Chris Skelton

New Zealand faces two crises, and one opportunity that the Government seems either ignorant of or unwilling to address.

The first crisis is of housing supply in two regions. Auckland and Christchurch now have huge shortages of waterproof and undamaged homes that regular families can afford to own.

The problem is set to get much worse in the years to come, given the lack of building happening and the population increase projected.

The Department of Building and Housing forecast this month that New Zealand needs to build 20,000 to 23,000 housing units a year over the next five years to keep pace with population growth.

We have been building at a rate below 15,000 a year for the past three years.

It could be argued that this also ignores the destruction or degradation of large swathes of housing stock in Auckland and Christchurch because of the leaky-building disaster and the earthquakes of 2011.

Auckland needs at least 10,000 new homes each year, yet less than half of these are being built. The crisis has intensified since 1999, with the introduction of the Metropolitan Urban Limit and the revelation that an entire generation of homes is leaky. Yet the lack of debate within New Zealand's political leadership is astonishing.

John Key has focused the Government on selling up to half of the shares in the state-owned power generators to avoid borrowing more money.

The Government has virtually ignored the strong analysis last year from its own Productivity Commission on housing-affordability problems, which are mostly about a lack of new house building. The Department of Building and Housing's advice to the incoming minister made no public impact.

Even Auckland Mayor Len Brown seems to be focused on other things, in particular a rail loop. He seems more interested in the underlying infrastructure for the very long term than the immediate crisis of a lack of housing.

The most obvious increase as a result of the shortage is in the price of homes and rents. Both are rising quicker than the inflation rate and price rises outside Auckland and Christchurch. Young Auckland and Christchurch workers, those who are not property owners, give up. They are leaving the country.

The second crisis is youth unemployment. New Zealand has 83,000 people aged 15 to 24 who are not working or in education. The youth unemployment rates for Maori and Pacific Island youth, mostly in Auckland, are scandalous at 30.4 per cent and 29.8 per cent respectively.

Yet, again, we hear nothing from the likes of Key or Brown. We have yet to hear our leaders even acknowledge the problem.

That brings us to a huge opportunity. Why can't we, as a nation, take a strategic decision to solve these two crises by training these 83,000 young people as plumbers, chippies, electricians, roofers and the like in preparation for a national-scale building programme?

Government-owned land would need to be opened up and town planners overruled. Taxpayer money would need to be invested, and lots of it. But is anyone even talking about it, let alone doing it?

bernard.hickey@interest.co.nz

- Herald on Sunday

Bernard Hickey

Bernard is an economics columnist for the NZ Herald

Bernard Hickey is the publisher of Hive News, a Wellington-based political and economic subscription news email service. He also writes for Interest.co.nz and appears regularly on Radio New Zealand, Radio Live, TVNZ and TV3. He has been a financial journalist for 25 years, having worked for Reuters, the Financial Times Group and Fairfax Media.

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