Property editor of the NZ Herald

Housing crisis will hit employers

Widening wage and home ownership gap is employment time bomb, warn business leaders.
Business leaders have expressed concern about Auckland's ability to attract workers as house prices continue to grow while wages remain flat. Photo / Michael Craig
Business leaders have expressed concern about Auckland's ability to attract workers as house prices continue to grow while wages remain flat. Photo / Michael Craig

Business leaders have expressed concern about Auckland's ability to attract workers, particularly in key service sectors, as house prices continue to grow while wages remain flat.

Reacting to today's Demographia International Housing Affordability Survey - which showed Auckland climbing from ninth to fifth most unaffordable city in the world - leaders questioned the lack of effective solutions and progress in resolving the crisis.

Kim Campbell, Employers and Manufacturers Association chief executive, said the report highlighted an untenable situation.

He questioned whether the next generation of key or essential workers, including nurses, police, firefighters and teachers, would be able to afford Auckland.

"It's a disaster for New Zealand. It's a really serious matter," he said. "There's a risk that we won't have enough of these people in Auckland.

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Housing crisis will hit employers hard

"Many people in those jobs have been living here all their lives. But eventually there will be an issue about whether these people can afford to live here," Campbell said.

"Employers already pay more for people in Auckland. The high cost of Auckland housing makes it very hard to get people to move and when they do come they ask for more money.

"This distorts the value of our pay scales and gives a false sense of prosperity. The answer is to free up land for housing, encourage the building of more houses and simplify and streamline our planning/approval procedure to reduce cost and speed things up," Campbell said.

One short term device to help with affordability would be to allow primary residence buyers/occupiers the same deductibility on mortgage and rates payments as is common in other jurisdictions, and which is available to investors and landlords," he said.

It's a disaster for New Zealand ... There's a risk that we won't have enough [essential workers] in Auckland.
Kim Campbell

Property Council chief executive Connal Townsend said he was also worried about the trend.

"If Auckland is going to thrive, it has to have a workforce that's refreshed so it's going to have to get younger people in the work force and it's extremely difficult - so many of my colleagues don't own their own houses."

However, he ruled out looking to London's housing financial assistance schemes for key workers.

"I would view it as a fairly sad day if we had to that because we would be paying a subsidy to get around a supply crisis," Townsend said.

Steve Evans, Fletcher Building's chief operating officer housing, recommended shared ownership models, with entities such banks, pension funds, perhaps the Government and other entities splitting ownership 60/40 with first home owners.

"It would mean more people could afford their own home earlier than they would traditionally have been able to," Evans said.

But feedback from banks had not been totally positive, Evans acknowledged.

"The over-riding view is that it sounds good but the details are complicated. If there is a default on the mortgage, who has the first call?" Evans asked.

Banks must also abide by Reserve Bank lending restrictions which might not be able to be complied with under shared ownership models.

But he remains confident shared ownership will become more popular.

- NZ Herald

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