Brian Rudman: Government's new housing ploy - blame the market

Now, it seems, the "market" is to blame. Photo / Peter Bromhead

Obviously the thought of a grumpy Nick Smith waving hot tongs around the Christmas barbecue in darkest Dipton was too much for best buddy Bill English to contemplate. So instead of sacking him as Minister of Housing for gross incompetence, the new Prime Minister has expunged the role from his list of ministers.

Blaming market forces, he suggests the role of housing minister is Mission Impossible.

"In the long run we need more houses ... [but] you can't just push a button and crank them up," English told Radio NZ on Monday morning.

Across on Radio Live he added that "Housing's a big, complex thing. No one person has one answer, because if they did we would have solved all the problems."

He said the Government's focus should be on social housing, rather than the market.

"In terms of housing prices, that's a product of the demand with low interest rates and how many houses are coming on to the market - the Government doesn't control that. I don't think we should give the impression that we do."

Unfortunately he hadn't forewarned Smith of this volte-face, because while he was busy on the radio abdicating any Government role in increasing housing supply, out popped a final press release in the name Nick Smith, Minister of Building and Housing, doing just the opposite.

It proclaimed that with more than 30,000 homes consented in the year to October, residential construction had reached "an all-time high" thanks to "the Government's programme to increase housing supply".

He added that "this Government is ... getting on and addressing New Zealand's housing challenges."

It was an old tune.

A few weeks earlier, Smith was pushing the Government's interventionist housing policies, plugging the merits of a new 60-apartment development alongside the motorway at Te Atatu to be built by the Government to ensure the development occurred at pace and included social and affordable housing.

As recently as October, English, as Minister Responsible for Housing New Zealand, was at it too, saying the Government was preparing to build thousands of houses for private sale in Auckland to help solve the housing crisis.

"As we've been signalling for some time, the Government has a comprehensive housing programme that will deliver housing supply at scale to the Auckland market."

And in early July, English, Smith and then Prime Minister John Key jointly announced a $1 billion Housing Infrastructure Fund to accelerate the supply of housing where it was needed most.

Straying even further down the interventionist path, the joint statement announced the Government was "also considering establishing Urban Development Authorities (UDAs) to help further speed up the supply of new housing."

With the press release came a question and answer sheet heading "What else is the Government doing to increase housing supply?"

In other words, for the past eight years there has been a comprehensive programme, led by Smith and English, to try and increase the supply and affordability of housing.

Smith's farewell press release would have you believe it's been a raging success. The new Prime Minister's words suggest otherwise. As does the disastrous state of the housing market in Auckland.

Years of under-supply in Auckland have caused the average house price to hit $1 million. An Auckland City Mission census counted at least 228 homeless in the CBD alone.

While Smith plugs the latest 30,161 national annual dwelling consents as a sign of success, Auckland consents made up only 9947 of these. Even if all are built, that is well under the 13,000 new dwellings estimated to be needed annually to meet the city's expanding population, and does nothing to address the existing 40,000 shortfall.

With annual net migration running at over 70,000, and around half of these immigrants expected to settle in Auckland, Westpac Banking senior economist Satish Ranchhod is putting it mildly when he says "building in Auckland is still failing to keep up with population growth".

The Prime Minister, in his role in charge of Housing New Zealand, and Smith have spectacularly failed to solve Auckland's housing crisis over several years. Now, it seems, the "market" is to blame.

Is it any surprise they're not standing a candidate in the upcoming Mt Albert byelection?