Ardern: “housing for every price point, every income, every need”

In an interview on Newshub Nation Jacinda Ardern has defended Kiwibuild providing what many would see as expensive housing to people with very good incomes, and said that the Government should provide housing for just about everyone – “So for us it’s about providing housing for every price point, every income level and every need.”

That’s a remarkable statement.

Here is the whole part of the interview transcript that discussed KiwiBuild and housing.


You mention KiwiBuild — there’s been more controversy this week around the income thresholds for KiwiBuild. Have you over-promised on how affordable KiwiBuild homes actually are?

I think when you look at the context of where we’re building in the Auckland market, when you’ve got houses sitting around the million-dollar mark, and first home buyers saying that’s simply not a threshold that we can meet. What we’ve done with KiwiBuild, of course, is not about subsidising housing, but about providing more supply in the housing market where builders and developers just were not producing houses.

From memory, roughly five per cent of houses being built in that market were what you would call something adequate for a first home buyer. We’re trying to turn that around. We’re intervening in the market by building what people are looking for. When you think about that fact that, say, two teachers with five years’ experience, you know they just come under the threshold for KiwiBuild and even then those couples are struggling to find a home.

So that’s what KiwiBuild is all about. It’s rightly been popular, and I think we’ll look back on what we’re doing in the housing market and think this is something that will be a real turning point.

MBIE figures released to us early this year suggested that a first home buyer would need to earn at least $114,000 to buy a $600,000 home. The median household income is only $88,000. We’re looking at seven times the median income in order to afford a $650,000 home. That’s not considered affordable. The New Zealand initiative would say that you would need to bring that down to three times the median income to meet international affordability ratings.

Two points that I would make there. That’s the upper end of KiwiBuild, of course there are price differentials across the country, and we expect they’ll be much more affordable in different parts of the country. That’s the first point. The second point is that that demonstrates — the fact that even at 650 that’s a very big difference from the million-dollar houses that we’re seeing sold more frequently in the Auckland housing market — pointing to the unaffordability that we have right now. So we know we have an issue.

That’s the top end of what KiwiBuild is offering. There are lower price points as well for slightly smaller homes that are good starter homes and, again, they’re cheaper across the country. But it points to the problem that we have in New Zealand that that is the price point that people are having to look at in order to get into the market. We are looking at other options. We’re looking at shared equity schemes.

We are increasing the number of public and state houses available. We’ve got an agenda to build 6400 state and public houses within New Zealand as well.

So for us it’s about providing housing for every price point, every income level and every need.

Alan Johnson from the Salvation Army says KiwiBuild is one example of how Labour has become the party of middle-class welfare. What do you say to that?

I totally disagree. People still have to pay for these homes themselves. They have to muster a deposit themselves.

I think that many would argue with that. KiwiBuild has been criticised widely for months, like “Disappointment is setting in as more people realise that the scheme is really only going to benefit the rich.” – see Political Roundup: Kiwibuild is now ‘socialism for the rich’ (NZH).

The high income couple who Labour used to promote the first KiwiBuild house hand (Ardern described it as “a momentous occasion) over said it was like winning lottery – see Purchasing new KiwiBuild home ‘like winning Lotto’ (1 News).

This is just one of the things that we’re doing across housing. I’ve already mentioned state housing. We’ve brought on an extra 1200 public housing spaces. We’ve invested in housing first, which is to try and work with those who are homeless in New Zealand. We know that a home affects everything. It affects your ability to build community, to keep your kids in the same school, and so we’re looking at everyone’s income needs and everyone’s housing options to make sure that we’re providing for everyone.

But what I would say to Alan as well, is that it’s part of our psyche — the idea of home ownership and the fact that people who consider themselves to be in the middle haven’t been able to afford a home, we should want to turn that around too. I don’t apologise for that — as long as we’re also meeting the needs of other New Zealanders who might not be able to muster those deposits and that’s why we’re looking at shared equity as well.

There are almost 9000 people waiting for a state house; you mentioned state housing. 800 homeless in Auckland alone. Can you see how people would think maybe that $2 billion going to KiwiBuild could be better used elsewhere?

And again, we need to be really careful around the way that we talk about KiwiBuild. That’s, of course, a rotating fund that’s set up to ensure that we have the initial funding for the project. Of course, people are purchasing these homes, and that money goes back into the pot to rebuild additional houses. This is not a subsidy.

This is actually just the state using its large buying power and determining that there’s a gap in the market and partnering with developers to build what’s missing. It is not a subsidy scheme for buyers; it’s just plugging the gap and ensuring that we’re providing where the market has failed.

More than 296,000 people, Prime Minister, are getting an accommodation supplement because they can’t afford their housing costs. That’s 6500 more people than this time last year. Do you need to do more?

Look, absolutely. Absolutely we do. And that’s why it can’t be just about KiwiBuild. It can’t be just about state housing. It can’t be just about emergency housing places.

But one of the great issues, of course, with things like accommodation supplement – what we ultimately need to be doing is making sure that we’ve got that public housing in the first place. So that’s why we stopped the state housing sell-off under the last government. We are increasing supply. We just announced a huge amount of work that we’ll be doing in Porirua to renew and refresh 2900 state homes there. It is a huge agenda that we have.

And I hark back here to something Michael Joseph Savage first said when we first started building state houses under that Labour government. He said, ‘We don’t claim perfection, but we do claim a considerable advancement on where we have been in the past.’ And I’d say the same for us. It’s not perfect. We’ve had 12 months, but already, we’re ramping up a building programme that I think will really pay dividends and make a real difference for people who need shelter.

It was always going to take quite a bit of time to make a significant difference on housing. The National Government tried (with disappointing results) to resolve growing housing shortages and homelessness. The Labour-led Government promised a lot but struggled to show results over their first year in office.

And things aren’t going smoothly. To try to fast track KiwiBuild houses the Government has bought houses ‘off the plan’ – from developers who were already building houses.

The elephant in the room largely remains unaddressed, the Resource Management Act. Things like the constraints it puts on making land available for new housing, and the use of the RMA by NIMBYs to oppose high density housing in their neighbourhoods.

The shortage of land and the shortage of housing are major factors in pushing the prices of housing up to levels that are unaffordable for many on lower incomes who can’t save deposits and can’t afford large mortgages, even at the current low interest rates.

A typical KiwiBuild house has a price of about $650,000. That requires a deposit of at least $65,000, a substantial amount for those on low incomes. And a mortgage of $585,000 at say 4.5% (current KiwiBank rate, low deposit buyers often pay higher mortgage rates) would cost about $26,000 a year, or about $500 per week. That’s hefty enough, but if mortgage rates go up (they were more than double current rates 10-12 years ago) many people would be unable to afford to pay their mortgages.

It is proving difficult enough to build 10,000 houses a year (Labour had a target of 100,000 houses in ten years).

But suggesting that the Government should provide “housing for every price point, every income, every need” sounds like Ardern is in lala land.

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22 Comments

  1. NZ Herald Political Roundup: The Political left is turning against KiwiBuild

    Labour’s parliamentary opponents were always going to hone in on the problems and contradictions of the scheme, but what’s interesting and telling is the criticism of the scheme is now also coming from the political left, with a building consensus that KiwiBuild is not up to the scale of the task required by the current housing crisis.

    It’s “probably time to call the Government’s flagship KiwiBuild programme for what it is – state sponsored gentrification of state housing suburbs” according to Salvation Army economist Alan Johnson. He explains that many of the KiwiBuild projects are actually being built on state housing land, which is meant for social housing.

    https://thedailyblog.co.nz/2018/10/08/must-read-exclusive-call-it-kiwibuild-but-it-is-still-gentrification/

    Yesterday, leftwing political commentator Chris Trotter published his weekly Otago Daily Times column criticising the scheme, and explaining why it’s become “a dog”. He argues that “tragically… the Coalition Government is selling the poor a pup”

    https://bowalleyroad.blogspot.com/2018/11/kiwibuild-should-be-targeting-poor.html

    Even the pro-Government blogsite, The Standard, is publishing criticisms of the scheme – see: KiwiBuild doesn’t fly. According to this critique, the Government is effectively privatising “state housing land”, to be used by private developers and the KiwiBuild scheme, meaning that most of the land will be for privately-owned houses. It says John Tamihere is correct in his call that development on state housing land in Mangere is akin to “social engineering”.

    https://thestandard.org.nz/kiwibuild-doesnt-fly/

    Reply
    • While The Standard is generally pro-Labour and pro the Labour led Government, Bill (the author of ‘KiwiBuild Doesn’t Fly’ is much further left than Labour and not pro-Government.

      Reply
  2. Griff.

     /  November 4, 2018

    Goberment buys a large block of suitable farm land Makes council re zone it residential.
    Pays for infrastructure roads drains etc.
    Gobement buys basic transportable houses like this
    https://www.builtsmart.co.nz/transportable-homes-floor-plans-prices/2-bedroom-house-plans/36-2-bedroom-plb59
    = New suburb.
    No paying profits for developers
    No fancy 4 bed McMansions for middle income earners..
    No land bankers profits.
    = Houses Auckland district from $250,000 each.

    But but but .

    Many of us come from such suburbs.

    Reply
    • Pink David

       /  November 4, 2018

      If the government can overrule the regulations that cause high land prices, why don’t they just do that and house prices will come down regardless. They don’t need to build any houses to reduce the prices.

      Reply
      • Blazer

         /  November 4, 2018

        So you believe there is enough housing stock and land.
        That empty houses and landbanking and accomodation subsidies have distorted the market.

        Reply
  3. Bill Brown

     /  November 4, 2018

    Arden is so out of touch. Proves she has little idea of commercial reality.

    Builders going to the wall. Large experienced firms with no idea.

    What next – will she find materials cheaper than anyone else so build costs stay down? Good luck with that !

    Immigration alone will see the gap of houses required just get bigger I would have thought

    Sadly like much of NZs infrastructure its woefully inadequate from successive govts.

    Every builder I know says costs on the day of quote are often out of profit within weeks at the moment as materials keep rising and sub trades keep moving charge rates up

    I just finished a minor renovation and costs moved well above the estimate over the course of the 3 months. I don’t see this abating any time soon. Very hard to find a fixed price deal these days

    Reply
  4. Gezza

     /  November 4, 2018

    Somehow Twyford thinks he can outsmart the market with taxpayers’ money
    1. Twyford so far has only ever managed to outsmart himself.
    2. Twyford is not remotely smart.

    Reply
    • Bill Brown

       /  November 4, 2018

      Gezza that should read “Twyford will attempt to use tax payers money to try and prove he is smart”

      Another fail in commercial reality

      Reply
      • Gezza

         /  November 4, 2018

        I don’t think so. I got some petrol at the local BP & superette this morning. There were 2 young women and one young men there. Early 20’s. The place was empty so we had all had a chat. One young woman didn’t vote (“God, no!”), the young man voted for Gareth Morgan’s party, although he now thinks Gareth has the social skills of a punch-drunk ex-boxer who coulda been a contender, and my favourite cheeky little redhead voted for Jacinda. Why? ” “Because I thought she was great”.

        Told them I voted for O’Connor because he had indicated in an article in the Dompost that he’d been to the US and was at least open to looking at change to cannabis laws, and Maori Party – and why. But I didn’t know who I’d be voting for at the next election, but not Bridges.

        I asked if she’d vote for Jacinda again next time: “Well … mmm … I don’t know. She’s a great talker and all that. But haven’t really delivered on anything much yet and their Housing Policy seems to be building expensive houses for rich people!”

        (One of the things I like about liking people and being chatty is that I always seem to encounter lots of nice people, of all ages. Even my Samoan taxi driver yesterday who took me up to see ma gave me his mobile number and said – “Call me directly on that when you’re ready to come hom. I’ll come and get you. And keep it: call me anytime you’re going in to see your ma. I’m going to tell my wife and kids about you, when I go home tonight. You’ve really made my day! ?” 😀

        Reply
        • Gezza

           /  November 4, 2018

          PS: I reckon the redhead will still vote for Jacinda again next time, because she likes her and she’s a girl. And if she votes next time, the other young lady will vote for her too. They think JAG’s drive to put more women in positions of power is nuts. That if women want to be in power they already can be, but that most girls and women are too sensible and have different priorities – who wants to be in the office all hours with no life with your friends and kids, and having a heart attack aged 50?

          Reply
        • Gezza

           /  November 4, 2018

          (PS: I’m getting a special fixed reduced price from my personal nice Samoan guy taxi driver. )

          Reply
  5. Blazer

     /  November 4, 2018

    realising there is a crisis that needs addressing is progress on its own.

    Freeing up land,the foreign buyers ban,5 year brightline test …all these will begin to impact on the supply/demand curve over time.

    Take aspiration over apathy any day.

    Reply
    • Gezza

       /  November 4, 2018

      Aspiration’s fine as long as there are real, measurable achievements and improvements in most “ordinary people”‘s lives, otherwise Aspiration can quite quickly turn into Exasperation.
      It’s early days, and I’m not terribly impressed with anything that Labour’s achieved yet although I think I prefer their roading priorities and am happy to see at least the idea of Regional Development funding via the PGF. I have some concerns about whether the PGF is being wisely spent and will deliver worthwhile returns in terms of real growth and permanent jobs.

      I do believe National was letting things slide and was bereft of innovative ideas in the areas of infrastructure, regions, roading and education. I haven’t seen much from them yet that indicates they have solutions. The next twelve months and the next budget are where I think Labour will get a chance to show they can learn on the job.

      Certainly an election held tomorrow would probably see them back dominating the numbers in a coalition.

      Reply
      • robertguyton

         /  November 4, 2018

        Despite all the sound and fury, National can’t besmirch the Government enough to reduce their handy lead in the popularity stakes.

        Reply
        • Gezza

           /  November 4, 2018

          Well, yes. That’s how I see it too. National in Opposition has the same problem Labour had in Opposition. They feel obligated to criticise EVERYTHING the goverment does and most voters I think still watch te tv news. Doing this makes them – and the leader – seem like a pack of negative whiners, carping on about everything.

          The more intelligent of the print media journos are probably the ones selling themselves the most successfully as doing the best job of analysing the government’s performance and holding them to account – although Bridges and co can take some credit for finding the weak spots and embarrassments for the media to work with.

          Tv works for Jacinda because so many of the reporters are females and they give her quite fawning coverage because she’s a girl & they’ve elevated her to a celebrity. But you know, she’s certainly up there with John Key in terms of smooth talk and ability to sell their government. So I think they’re still up for another term at the moment.

          Reply
  6. phantom snowflake

     /  November 4, 2018

    To return to the issue of the Kiwibuild development in Wanaka which was covered yesterday:

    At the time he announced the Wanaka programme, Mr Twyford said the Queenstown-Lakes district had been “absolutely hammered by the housing crisis”.
    “So here in Wanaka and Queenstown we’ll be announcing more KiwiBuild homes because we want to give young first-home buyers a crack at affordable home ownership and currently they’re locked out.”

    The trouble is; those who have been “hammered by the housing crisis” in this area are mainly low income workers in tourism and hospitality who need reasonably priced rentals which are not overcrowded and damp. It’s hard to see that developments aimed at middle class/middle income owner occupiers are going to be any use at all to the group with the highest need in this district. Twyford/Kiwibuild are addressing the wrong problem here.

    Reply
  7. Fight4NZ

     /  November 4, 2018

    I disagree the elephant in the room is the RMA and NIMBYism. Is there any good reason that the quality of life in NZ should not be staunchly defended, the very purpose of the RMA.
    The elephant in the room is told by the affordability statistics given on income multiples. Most of the so-called rich buyers, like myself can’t afford the million dollar plus homes because of income, that would have to be $300k+. Very few earning that money.
    Most of those around 40yr old and over simply bought affordable houses under $200k and watched while successive govts let foreign money largely bought in through immigrants plus population growth create property hyper inflation. This was the sole economic policy of the last govt and no real alleviation from this one.
    The elephant in the room is unfettered demand not issues with supply.

    Reply
    • Kitty Catkin

       /  November 4, 2018

      You forget that 20 years ago wages were much less than they are now, so houses were, too,

      A man wrote to the paper that when he was a young married man, first houses were much smaller, whereas now people want larger and better ones (he wasn’t doing this in a critical way, just making a statement of fact) which are more expensive, something that those who talked about how cheap houses were once tended to ignore. His point was not that there was anything wrong with wanting a nice big house, just that these were naturally going to cost more than small ones.

      Reply
  8. sorethumb

     /  November 4, 2018

    The distinctive feature of the New Zealand economy is that land is an important input into the productive process. This is obvious with the agricultural,fishing and forestry sectors but it also applies to international tourism. In a simple model of the New Zealand economy where the supply of land is fixed, and New Zealand’s isolation means it is not a ‘natural’ location for the production of a broad range of internationally traded goods and services, then an increase in the labour supply through large scale immigration will reduce the marginal product of labour. As a result:

    Real wages will fall

    Owners of land will benefit

    There will be an outflow of ‘native’ labour in search of higher wages in Australia

    The economy will be bigger, but average incomes will fall

    Resources will flow into low value service production.
    http://www.tailrisk.co.nz/documents/TheSuperdiversityMyth.pdf

    Income’s can’t compete with land price inflation, even if you relax urban limits the market will only deliver a box with long-drop or chicken coop apartment for the lower paid.

    Reply
  9. Kitty Catkin

     /  November 4, 2018

    I cannot understand why the wellbuilt, virtually maintenance free prefab houses are not being used. They are cheap because they are massproduced without looking like clones, they can be made very quickly because much of the work is done under cover and they are well-designed to make the most of their area. I would happily live in one.

    Reply
  1. Ardern: “housing for every price point, every income, every need” — Your NZ – NZ Conservative Coalition

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