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John Armstrong is the Herald's chief political commentator

John Armstrong: Battle lines over affordable homes

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Labour and National are throwing some impressive figures about as they argue about the housing crisis

Housing affordability is a particularly hot issue for Auckland. Photo / Richard Robinson
Housing affordability is a particularly hot issue for Auckland. Photo / Richard Robinson

Be warned. The battle between National and Labour for the political high ground on housing affordability is a battle fought in large measure with statistics.

And you know what they say about lies, damned lies and statistics.

There may be a drastic shortage of affordable homes in Auckland - that most crucial of political markets in determining who wins elections. But there is no lack of statistics as ammunition when it comes to the two major parties squabbling over the scale of the Auckland housing crisis.

Take the 33,500 new homes which could be built in the 63 designated "special housing areas" which have been established with breathtaking speed under the Auckland Housing Accord. The three-year agreement hammered out between central government and the Auckland Council last year removes barriers to the supply of houses and apartments and stipulates straightforward resource consents be approved within 60 days under new fast-track procedures.

The 33,500 figure sounds impressive. And - according to Housing Minister Nick Smith - is on a scale needed to address the shortage. But - as Labour is equally quick to point out - many of these special areas are still only potential sites identified by the council as suitable for new dwellings. They still have yet to attract the interest and funding resources of private developers to go ahead.

The better test of progress is the actual number of building consents now being issued in the wake of the accord's introduction.

A joint Auckland City-Ministry of Business, Innovation and Employment report in January which monitored the first four months of the accord predicted the first-year target of 9000 new dwellings and sections was likely to be exceeded by almost 1800.

But the report warned that despite this "good start", development would need to further accelerate to meet the more ambitious targets of 13,000 new dwellings and sections in the second year and 17,000 in the third, as well as meeting the long-run supply laid out in the council's Auckland Plan.

Whether or not those targets will be met obviously will not be known this side of September's election.

What National has to do is convince voters they will be met, especially as the ruling party is putting so much effort into the supply side of the housing equation.

So it was not surprising Smith welcomed as "good progress" the latest figures compiled by Statistics New Zealand covering consents approved for new dwellings, excluding apartments. These reached a seven-year high nationwide in March.

What Smith did not mention was that the 500 consents for new dwellings in Auckland, while up on February's level, was still markedly lower than the more than 770 recorded last November, prompting Labour's housing spokesman Phil Twyford to question whether Smith will even meet the accord's first-year target.

The two MPs make for an interesting duel.

Smith may be long in the political tooth and has had a somewhat chequered career, but he is still one of National's best when it comes to getting a message to stick firmly in voters' minds.

He has revitalised National's handling of a portfolio where Labour had started to make all the running with its promise to build 100,000 affordable homes over 10 years.

Twyford, meanwhile, was rewarded by Labour leader David Cunliffe last week with promotion to Labour's front bench for his efforts to keep National on the back foot on housing affordability.

Despite Smith's frantic efforts to regain the initiative for National, Twyford argues that the governing party is still vulnerable because housing affordability cuts deeper than just with would-be first-home buyers by also impacting on their parents and other close relatives.

Although National claims Auckland's housing shortage is a supply problem, the party is taking a political risk in doing comparatively little to address the other side of the equation - pressures of demand.

National has been a somewhat doubting observer as the Reserve Bank has sought to cool the housing market by putting mortgage loan restrictions in place through loan-to-value ratios (LVRs) which make it even harder for first-home buyers to enter the market by forcing them to stump up with bigger deposits. However, the signs that the LVRs are working could yet be of advantage to National, although equally any political benefit may be offset by the current round of interest rate rises.

In contrast, Labour is offering more populist policies on the demand side, such as blocking foreigners from purchasing existing homes, though not new ones that they build and thus add to the housing stock.

It is also looking at reducing immigration numbers when the economy is growing strongly and is not in need of stimulus.

Labour also has one weapon National shows no inclination for adopting - a capital gains tax on property other than the family home.

Labour MPs are expressing confidence that such a tax is no longer a millstone around their necks and that there is growing public support for such a measure to put the dampener on rampant house prices. That remains to be seen.

National has pretty much flagged there will be something in Thursday's Budget with respect to housing.

Given National's vulnerability on the demand side, Twyford is predicting some sweetener for first-home buyers.

Given housing affordability remains one of the most crucial and hard fought issues of the forthcoming election, Thursday's announcement is unlikely to be the last on the subject before voters go to the polls in four months' time.

- NZ Herald

John Armstrong

John Armstrong is the Herald's chief political commentator

Herald political correspondent John Armstrong has been covering politics at a national level for nearly 30 years. Based in the Press Gallery at Parliament in Wellington, John has worked for the Herald since 1987. John was named Best Columnist at the 2013 Canon Media Awards and was a previous winner of Qantas media awards as best political columnist. Prior to joining the Herald, John worked at Parliament for the New Zealand Press Association. A graduate of Canterbury University's journalism school, John began his career in journalism in 1981 on the Christchurch Star. John has a Masters of Arts degree in political science from Canterbury.

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