KEY POINTS:
National was quick out of the blocks to dismiss the Government's housing affordability proposals as election year desperation.
But it should think again.
Helen Clark has announced plans for a shared equity programme backed by the Government and new large-scale urban housing projects will be part of the
Labour-led Government's flagship policies this year.
National's housing spokesman Phil Heatley slams the Government's proposals to free up more public land for housing as no silver bullet. Heatley maintains that National's 2005 formula to make it easier for private owners to subdivide land, reform the Resource Management Act and streamline the Building Act to reduce compliance costs will help resolve the problem. Increasing take-home pay for New Zealanders and getting mortgage interest rates down is also part of National's housing affordability mantra.
But the Government is already committing to address the regulatory hurdles which stymie housing development. Increasing take-home pay and bringing down interest rates is a much harder feat to conjure up in the short term for either side. Anyone who believes an incoming National Government could perform that feat overnight must have been seriously astray in the mushroom patch.
More worryingly there is no sign (yet) that National - which has had its 2005 housing policy under review for more than 12 months now - has grappled with the complexities that underpin the modern housing market. Its policy will not be released till within months of the election date. Until that time don't expect other than a pro-forma critique of its opponent's policies.
The present Government may not have all the answers to the housing affordability predicament. It is also a moot point whether the Government should be announcing new housing affordability programmes at a time when the property boom may well be turning into a slump.
But irrespective of this the Government is on the right track to investigate the long-term issues that will affect housing affordability in years to come.
New Zealand is not alone in having to grapple with housing affordability. Other major Western democracies like Britain, Australia and Canada have already produced far-reaching policies in this area. New Zealand is simply playing catch-up after two decades of ideological struggles over issues such as whether Housing NZ tenants should pay income- or market-related rents, rather than grappling with systemic changes.
The debate has, in fact, moved on so much that National's current stance is simply risible.
The Department of Prime Minister and Cabinet set up the Housing Prices Project in the middle of last year to investigate sustainability issues.
The whole Government project has tapped into a wide range of policy work from Housing NZ, through to the Ministry of Social Development, Treasury, the Reserve Bank and IRD. It has also tapped into significant private sector players, regulatory bodies and local Government authorities for their insights. Among the complex issues the project team has been exploring are: How the tax system intersects with the housing market, inter-generational equity, family structures, buying versus renting, whether NZ should have tenants for life deals like Europe has; the impact of immigration and much more.
DPMC signed internationally renowned expert Professor Duncan Maclennan to critique its work and provide a perspective on New Zealand housing policies and affordability.
Maclennan takes a "think housing think communities" approach that rests on the view that affordable housing is the glue to building sustainable communities thus producing positive effects on health, education, employment and justice. He presented some of his findings in a guest lecture "Re-making Housing Policies for New Times, Global Trends and Implications for New Zealand" at Treasury late last year.
What Maclennan has done is put the pressure on housing into an international context where the impact of globalisation and demand for skilled workers results in more dynamic pressures on communities. Many communities now sport fewer nuclear families. There is greater cultural diversity, and also a higher single person demographic.
For many it is harder to get on to the first rung on the property-owning ladder as they are affected by rising costs and income inequalities, or marooned in low income suburbs.
This has led governments elsewhere to get involved on the supply side of the market introducing new polices such as rent-to-let deals, mixed tenure leases and low-middle income shared equity support geared to new build projects.
The Housing Prices Project has produced a significant body of work which is expected to be released within the next month.
Maclennan himself has an enduring research interest in applying economic analysis to housing and urban systems. He currently holds a professorial position at the University of Ottawa and spends half his time as chief economist, cities and communities, at the Federal Department of Infrastructure and Cities in Canada. He has extensive international experience at the World Bank and Scottish Development Agency. He was also director of the Cities programme funded by the UK's Economic and Social Research Centre.
Housing Minister Maryan Street is fast backfilling the PM's rather sparse announcement to take the sting out of political attacks.
Street points to the fact that household incomes are up in real terms by 25 per cent in the past eight years over and above cost of living increases. But while house prices are beginning to stabilise, they have nevertheless risen sharply in recent years in New Zealand and other countries, including Australia, Britain and Canada. Home ownership rates have fallen from 74 per cent to 67 per cent between 1991 and 2006. If current trends continue this rate will fall to about 62 per cent by 2016, a scenario "New Zealanders clearly do not embrace".
In Auckland alone, the number of working households unable to buy a modest house that meets their needs rose from 20,400 in 1996 to 54,900 in 2006, an increase of 169 per cent. This is the reality that underpins the policy development.
If its current poll lead translates into votes on election day, National will be Government. The DPMC project will inevitably form part of the briefing to the incoming Government - Does National seriously expect New Zealanders to believe it will reject the work?
