KEY POINTS:
"Buy land, they're not making it anymore," said writer Mark Twain.
Yet some submissions being made at Parliament this month are calling for councils to stretch city boundaries so more folk can live on the fringes.
Real estate investors want more land to develop, unions want higher wages
so people can afford houses, builders say they're hamstrung by red tape when trying to build and the Reserve Bank wants a capital gains tax to cool the market.
These are some of the suggestions made in papers prepared for the parliamentary inquiry on housing affordability.
The Property Council, representing investors with interests worth $20 billion, wants zoning restrictions around city boundaries lifted.
The Council of Trade Unions, representing 39 unions with 350,000 members, wants higher wages and more state subsidies to help people buy their first homes.
Registered Master Builders, with 1780 member companies representing 65 per cent of the annual dollar spend in the industry, says chippies want more sections and less red tape.
The Reserve Bank wants a capital gains tax on rental properties when they are sold, and the Government to consider changing its management of immigration.
Demographia, which surveys housing affordability annually, wants land on urban boundaries freed up for housing, saying land scarcity is the single most critical component in the affordability crisis.
Hugh Pavletich, a Christchurch developer and co-author of the Demographia survey with Wendell Cox of Missouri, said he was heartened to see many of the submissions to the inquiry had criticised restrictive urban boundaries.
The Inquiry
* Parliament's commerce committee is holding an inquiry into housing affordability.
* Its aim is "to ensure that as many New Zealand families as possible will be able to achieve the traditional Kiwi goal of home ownership at a fair and reasonable price".
* It will consider issues including land supply, household debt, demand from investors, building costs and council processes. Public submissions closed last Friday.
* The inquiry was forced by National against the Government's wishes.
What the experts think:
THE PROPERTY COUNCIL National director Connal Townsend
The council said the housing affordability crisis was caused by councils restricting land supply.
"Land containment" was the main cause of house price rises because urban boundaries had restricted supply, it said.
Land prices had increased twice as fast as house prices in the past 25 years and Auckland was one of the most obvious examples of an area where the policy had disastrous consequences.
"Auckland's price increases have outstripped the national trend as the decreased supply of residential-zoned land has become a major price driver," said the submission on behalf of real estate investors holding assets of about $20 billion.
It criticised the Auckland Regional Council for trying to limit land development through the Regional Growth Strategy.
THE COUNCIL OF TRADE UNIONS President Ross Wilson
The CTU is concerned about workers' debt levels. It questioned if enough houses were being built and said more needed to be done to lift wages. Wage increases were well below the OECD averages.
The low-wage economy was restricting people's ability to buy a house, particularly for new entrants to the sector. Although wages are high compared with China or Thailand, they are 30 per cent below Australia.
The council called for subsidies on home lending programmes, more deposit assistance and the further promotion of shared equity schemes.
MASTER BUILDERS FEDERATION Chief executive Pieter Burghout
The federation criticised council infrastructure levies and fees that it said had risen 15 per cent in the past five years. Compliance costs were up by the same amount.
More red tape meant builders were tied up in consent process delays, uncertainty, variability in outcomes and long waits for approvals, it said. They also had to wait to get house inspections and code compliance certificates at the end of a job.
But the builders said land costs were the biggest single contributor to housing unaffordability.
RESERVE BANK Governor Alan Bollard
The bank's paper prepared for the inquiry called for a clampdown to enforce the existing tax regime on rental property sales because stricter enforcement of present rules was needed.
It also suggested a capital gains tax as a means to depress the demand for property.
The new tax could be struck at half the normal tax rate. "Consideration might also be given as to whether taxation policies could be more in line with those in Australia where realised capital gains on rental properties are taxed but at half the normal tax rate," the bank said.
The submission also suggests the Government consider changing its management of immigration and the impact it has on demand for housing when it rises in response to labour shortages.
DEMOGRAPHIA Co-author Hugh Pavletich
The country is lightly populated and has large tracts of rural land on city boundaries that could be freed up for development, the annual housing affordability survey says.
A more plentiful supply of land will push down land prices and allow more people to buy sections and build.
Demographia said the country had fallen for the "forced urban consolidation myth" and was suffering from poverty, excessively priced and poor-quality housing, excessive household debt, high interest rates underpinning a ramped-up currency, declining home ownership rates and an economy stifled unnecessarily.
Councils were "strangling" land supply on city fringes and inflating prices. The country has about 1.47 million houses but needs another 34,700 a year to keep up with demand. However, new-house developments are well under this level.
