A severe lack of investment sits at the heart of New Zealand's housing crisis.
We've underinvested in infrastructure, new homes, in skills and in our future.
The scale of investment now required is massive. We will spend as a country about $40 billion on construction this year.
In Auckland, just half the number of homes were delivered that were needed.
So $40 billion per annum is nowhere close to where we need to be, and on top of that New Zealand needs to build the 70,000 homes the country hasn't built over the past decade or so.
How much are we short? That depends on things like productivity, consenting and how quickly we can get off-site manufacturing under way. But whether it's $100b or $200b over the next decade, it's far in excess of what local or central government has available.
The only way to source this much money is by tapping into private capital markets.
The good news is that trillions of dollars of private money is floating around the world looking for a good home. We have the NZ Superfund, Kiwisaver funds, ACC, iwi and a plethora of global mega-funds eager to invest in New Zealand.
But there's one surprising problem — there's nothing to invest in.
Private capital can't unlock new housing because there's no infrastructure and it can't unlock infrastructure because institutional barriers get in the way.
Infrastructure responsibilities concentrated in central and local government agencies that are constrained by debt limits, fixed budgets and political gaming are the roadblock.
Frustratingly, there is ultimately someone to repay investors for infrastructure and housing — a new homeowner — but current infrastructure processes actually prevent institutions with money from connecting with families who need and can afford new homes. It's as extraordinary as it is resolvable.
To fix the housing problem, we must bypass the public infrastructure roadblock and enable private capital.
We have to create an environment where prospective homeowners (the people who will ultimately pay for homes and the infrastructure which support them) can be connected with the large amounts of money needed to finance development.
The key is scale. One home can't attract private investment in a new road and water system, but 1000 might and 10,000 will.
That's why relaxing metropolitan boundaries is so important. It opens up land holdings big enough and a price that is low enough for large developers to access private capital directly and bypass public financing constraints.
Developing at scale is critical to shifting to modern building practices. We can't double the number of builders and plumbers, but the combination of labour growth and productivity through manufactured housing could double output.
Our big home-builders cannot justify a major transition to off-site manufacturing as long as their order book is a couple of homes here and there. If you're going to invest $20m in a plant, you need to know that orders for 1000s of homes are on the horizon. Our cottage industry does not achieve this.
Relaxing metropolitan boundaries must come with added protection for sensitive land and productive soil. Luckily there is so much land around our growing cities that we can afford to both strengthen protection for sites of significance and loosen development restrictions elsewhere to facilitate scale.
Reducing restrictions to new homes is not a panacea. Consenting is going to have to become faster and more supportive. Pre-consented off-site manufacturing processes could dramatically improve productivity.
Councils need incentives to be more "pro-growth". Urban development agencies are needed to cut through obstacles and speed up development.
There's no doubt that there are many challenges that can be solved incrementally. But without private investment scale, we will not build the homes and infrastructure we need at a price that working New Zealanders can afford.
- Stephen Selwood is Chief Executive of Infrastructure New Zealand.