Auckland's next generation will be divided into those whose parents owned a house and offspring of renters doomed to rent themselves, an economist has predicted.
Shamubeel Eaqub, NZIER principal economist, said today's home ownership situation could well decide the financial fate of the next generation of Aucklanders.
"We might see only the children of people who own homes become owners of homes, which is a growing inequality. You can only dream to own your own home in Auckland if your parents own their home and you're rich," he told yesterday's Property Council's residential development summit at the Pullman.
Nick Smith, housing, environment, building and construction minister, vowed Resource Management Act reform. Deputy major Penny Hulse revealed plans for a new Auckland Development Agency, understood to be a merger of council-controlled Auckland Council Property and Waterfront Auckland. They would become one new more powerful urban transformational unit. But she said she did not want to reveal details before the announcement.
Mr Eaqub said foreigners were not responsible for driving up prices and at maximum, only 8 per cent of house sales were to non-residents. New Zealand investors and movers dominated new house purchases, he said citing CoreLogic data showing investors made up 45 per cent of house purchases, first-home buyers only 19 per cent and movers 28 per cent.
There are a lot of misconceptions of who are the active participants in our housing market," he said.
The Economist's chart of house over-valuation relative to incomes listed the world's worst markets as Canada, followed by France, Belgium, Sweden, New Zealand, Australia, Britain, Netherlands, Austria, Spain and Italy.
New Zealanders' dreams of home ownership had been dashed, peaking in 1991, "so this is not a new issue and mortgages which took 30 years to repay now take 50 years. If you are a slave to your house for 50 years, when do you have time for financial savings for your retirement?" Mr Eaqub asked, adding that his next crusade after "zombie towns" which identified those with low economic growth would be against highly restrictive rental terms in Australia and New Zealand. The two countries had the most restrictive rental policies in the OECD, he said.
Capital gains of around 8 per cent from real estate were now assumed and expected but he warned against this thinking.
Housing was incredibly over-valued and if Dr Smith and Penny Hulse achieved Auckland intensification, the city would no longer be one of the world's most expensive housing markets, he said, calling for tighter regulation of banks to require them to hold more capital, removal of tax incentives on rental housing and faster supply of land for housing development.
Connal Townsend, Property Council chief executive, said non-member businesses at the conference included Universal Homes, AVJennings, the Australian Property Council, and those behind the new SugarTree apartments complex.
Dr Smith acknowledged "some argy bargy" between the Government and Auckland Council over supply of land but he paid tribute to Ree Anderson's Housing Project Office which he said had achieved considerable gains in uniting different arms of the council.
Auckland housing affordability solutions
Yesterday's residential development summit suggested:
• Reform the Resource Management Act to speed up new supply (Nick Smith)
• Open up more land for development faster (Shamubeel Eaqub)
• Make banks hold more capital as a buffer against a downturn (Mr Eaqub)
• Remove tax incentives on rental property (Mr Eaqub)
• Establish new council-owned Auckland Development Agency (Penny Hulse)
• Acknowledge and further the work of the council's Housing Project Office (Nick Smith)