A majority of business leaders responding to the Herald's CEOs Survey want the Government to take urgent action to address housing affordability.
One in five say the Government does not need to move, while 11 per cent are unsure.
"Unfortunately, both the Prime Minister and the Minister of Finance are on the record saying that they want house prices to continue rising, "though more slowly"," says a leading banker. "Housing affordability would improve quickly if the Metropolitan Urban Limit around Auckland was scrapped as the Labour-NZ First Government promised in the Speech from the Throne in 2017."
There is little question that houses here are unaffordable. Research group Demographia's 2020 housing affordability survey showed the median New Zealand house costs 10 times the median household income. It says a score of five is "severely unaffordable". It would be worse today.
The Productivity Commission has observed that housing affordability is essential for the wellbeing of New Zealanders.
It can also have significant ramifications for the wider economy as housing comprises the main share of both household assets and debt, and the scale of the housing industry and its employment is significant.
Rising house prices are not unique to New Zealand, there has been an 9.2 per cent average increase across 55 countries during that time. Yet we are second only to Turkey.
Record low interest rates and quantitative easing programmes pumping money into pandemic-hit economies have seen asset prices rise.
Despite Reserve Bank and Government intervention, house prices continued their steep upward climb in the past year.
The year to June saw prices across the nation jump 25.9 per cent. That's down from the peak which hit 30 per cent earlier in the year, yet people expect rises to continue.
Several survey respondents see land supply as holding the answers. Federated Farmers CEO Terry Copeland wants the Government to increase the supply of available business land and simplify the resource consent process.
A company director says the cost and availability of land is the biggest issue. "The working from home phenomenon means the territorial authorities and Government should look further out for rezoning as the five day per week commute is going to be a thing of the past."
A fuels executive notes that the planning and consenting process managed by local councils lock up land, add cost to construction, and slow the process of building. "Bold steps would be opening up land for development providing funding for the infrastructure and easing the rules on things like mobile homes to enable real large scale low cost (manufactured) housing to be built and installed quickly.
"It will risk creating trailer park ghettos but better than people being homeless."
Other suggestions included remitting the GST on every new house built to councils which would help will enable them to pay for the horizontal infrastructure needed for new housing. "It will see councils incentivised to consent new developments with their ears pinned back," says the NZ Initiative's Roger Partridge. "We will not solve the problem doing more of the same. And the Government's proposed, more-of-the-same-but-worse RMA legislation is more likely to hinder than help."
T&G Global director Carol Campbell Limited cautions the market controls prices. "All that the Government has done so far has failed."
While house prices and rental rates have escalated, just 5 per cent of business leaders are considering paying staff in expensive locations like a housing supplement.
Kevin Obern, managing director at OfficeMax is not considering a supplement, but says he has seen the idea work with 'London weighting' in the UK.
MinterEllisonRuddWatts partner Lloyd Kavanagh warns the idea may be counterproductive.
"If we all do that, all it will achieve is bidding up the price of housing further. A better option, is facilitating people living and working remotely (including outside of Auckland)."
Others suggested more social housing needed to be sorted: "Multiple governments performance in this area is simply appalling," said a major realtor.
The Icehouse's Gavin Lennox adds the ability for the government to do so is limited apart from enabling the construction of more housing.
Creating supply was essential, a banker underlined: "You cannot rely on the RBNZ and macroprudential tools".
Numerous tax measures have been (or are being) introduced by the Government including the ever- broadening bright-line test, loss quarantining and interest deductibility rules that have dampened the tax attractiveness of this asset class.
but not in any way slowed historic house price inflation.
Asked if such tax measures are secondary to supply shortfall, which is the key factor in house price escalation, 70 per cent of CEOs agreed. Some 16 per cent didn't and 14 per cent were unsure.
Peter Thompson of Barfoot & Thompson suggested, "we also need to recognise
"The only way to stabilise the housing market is to increase supply. When supply exceeds demand, price pressure is relentlessly upwards, regardless of changes in regulation," said a major funds boss.
A media executive noted: "These are all tinkering around the edges. The most impactful lever is to introduce a capital gains tax but this requires the political courage to do the right thing versus retain power."