Welcome back to a hot and humid New Year. It certainly has been a blistering summer and hopefully everyone got a chance to spend quality time with friends and family over the summer break.
Housing has been a major political issue over the last few years. Many people have found it difficult to get into the housing market and others have lamented over the barriers preventing their children from achieving home ownership. Some people have also done very well out of the market with valuations of properties increasing significantly in recent years.
The current Labour-NZ First Government proposed a significant state funded construction called Kiwibuild, a programme intended as a solution to these concerns.
The Kiwibuild programme proposed to build 10,000 houses per year to meet home ownership demands. Unfortunately, this programme has become a complete failure with only 47 houses completed in its first year. This is a far cry from the 10,000 houses originally planned, or the renewed target of 1,000 houses set in recent months.
The Kiwibuild programme has suffered from the removal of any targets, the failure to build houses that meet market needs, unsubscribed ballots for the houses, changes around capital gains enabling purchasers to retain these gains, and the ability of investors to now purchase the properties.
Altogether these problems have hurt the integrity of the Kiwibuild programme and it no longer represents an opportunity for new home owners.
What this does show is that a government initiated programme is not necessarily the answer for New Zealand's housing issues. The basis of Kiwibuild is fundamentally wrong. The housing market is one of the most sophisticated markets in our economy. It is not just about building properties — it is also about how, when and where those houses are built.
It is a market that relies on a skilled workforce and individual investors that are willing to undertake property development. It is not a market for the faint hearted, or in this case, a bumbling government department.
The market is already correcting itself with house prices dropping in Auckland. Supply will soon catch up with demand and this will be exaggerated under the current Government. House hunters need to start looking at long term apartment living. There will always be difficulty in gaining home ownership, it is something to strive for and so will always be a challenge.
Overall, Kiwibuild has been a complete failure. It is not even an admirable attempt to confront the housing issue. It does show however that sometimes the market knows better than the government.
Perhaps an approach which enabled the market to meet demand through RMA reform and the emergence of apartment housing would have been a better solution for New Zealand's housing issues.