Future New Zealand: New Zealand's multiple housing crises

Associate Professor Grant Duncan believes it’s time to put state housing back on the agenda
Making low-income families rely on private landlords results in poor social outcomes. Photo / NZ Herald
Making low-income families rely on private landlords results in poor social outcomes. Photo / NZ Herald

Housing will be the big election issue in 2017. And New Zealand has more than a housing crisis; it hasseveral housing crises. First, there are rough sleepers, whose problems are likely to be complex, including drugs and alcohol and mental illness, and not simply the shortage of houses.

A second crisis arises from high rents and insecure tenure. Low-income renters who have to leave their home - for example if it's sold - are often unable to find an affordable alternative.

Too many families are then left in severe housing deprivation, sharing over-crowded homes with relatives, or sleeping in tents, garages or cars. A recent estimate suggests about one per cent of the population falls into these first two 'critical' categories.

The third crisis is the loss of social housing units. The present government reduced the social housing stock by more than 2000 between 2008 and 2016 - a 3 per cent decline - just when we needed more.

Housing NZ says that many existing units are in locations or sizes that don't meet present-day needs, so a reconfiguration of its stock is needed. But this should be accompanied by an increase in the total number of occupied units, not a decrease.

In a hot property market, making low-income families rely on private landlords results in poor social outcomes. We should have learned that from history.

The fourth crisis affects those who rent but aspire to own a home. This is mainly, but not solely, an Auckland problem.

Many young people are leaving Auckland, as 'economic refugees', or refusing to transfer there, regarding the city as beyond their means if they plan to raise a family in a decent home. And they'd be right.

With median house prices around 9 to ten times the median household income, the average young salary-earning couple are hard-pressed to buy a home in Auckland, beyond a one-bedroom apartment.

A demand for entry-level apartments has motivated developers to build them, although construction costs and financial conditions have stymied numerous plans.

Dr Grant Duncan is an associate professor.
Dr Grant Duncan is an associate professor.

But this leads us to the fifth crisis: the gutless political compromises of the Auckland Unitary Plan. Auckland's existing urban limits could easily accommodate the projected population increases. But doing so is too politically sensitive, as it would affect the amenity values enjoyed by many of those who are lucky enough to already own a home.

Building sufficient numbers of condominiums in areas where most people want to live is practically possible, but politically hazardous, especially when approval of the Unitary Plan is closely followed by a local election.

Across the city, people have appealed against new higher density limits, in defence of the urban environments to which they've become accustomed. This, inevitably, will delay the provision of the much-needed housing supply.

Councillors abandoned a requirement on developers for minimum percentages of 'affordable'homes. The Unitary Plan errs on the side of deregulation, and affordability quotas were regarded as inefficient.

In any case, 'affordable' is defined as below 75 per cent of the median, which in Auckland could mean up to $750,000. That's not affordable on a median income. With plenty of cheap credit around, developers will happily build large expensive homes and high-end apartments to maximise profits, and not cater for young couples with little equity, let alone those on low wages.

If we gradually shift the emphasis away from subsiding private rentals and back to building publicly-owned assets, or state houses, this creates permanent capital value plus beneficial social and health outcomes.

There'll be no end to the housing crises unless the state builds plenty of good quality dwellings to rent on a secure income-related basis. The recent announcement that 300 existing state houses in Northcote will be redeveloped to build 400 new social housing units, within a total of 1200 new homes, is a welcome first step, and a major political U-turn for the National Party.

Indeed, the 2017 election campaign may ironically see National and Labour competing over which party has the best plan to build the most state houses. The government presently spends $1.1 billion on the accommodation supplement, subsidising rents for people on low incomes. That's a hand-out to low-end landlords, in addition to generous tax-breaks.

If we gradually shift the emphasis away from subsiding private rentals and back to building publicly-owned assets, or state houses, this creates permanent capital value plus beneficial social and health outcomes. We've done it before; we can do it again.

- NZ Herald

Dr Grant Duncan is an associate professor in the politics programme at Massey University

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