Housing crisis >> KiwiBuild crisis >> what next?

When in opposition Labour talked up the housing crisis, even though it was a problem that grew over many years.  They promised big – 100,000 houses big. And ‘affordable’.

In Government they launched KiwiBuild and soon conceded, sort of, that new houses in places like Auckland in particular were a long way from being affordable for people who needed housing the most. But the pushed on.

However it has become apparent that KiwiBuild is growing into some sort of crisis of it’s own  a a crisis of credibility for the out of depth Minister of Housing Phil Twyford, as well as for his Government. And if it can’t appear to be at least partly fixed by next year it could become an election campaign crisis for Labour.

What should happen right now? Listener: The KiwiBuild failure should galvanise urgent action on NZ’s housing disaster

When a nation’s flagship housing policy is such a spectacular failure that it makes the New York Times, the minister in charge cannot avoid the international embarrassment.

This is the position Housing Minister Phil Twyford now finds himself in. Having arrogantly sneered at all those who dared question his strategy and timetable, he has failed to deliver on the very thing New Zealanders care most about – the urgent need for a solution to our housing crisis. This policy was central to Labour’s pitch to voters at the last election. The failure to deliver 1000 KiwiBuild homes by July – so far only 47 have been completed – is the definition of a broken promise, ameliorated only by the likelihood that few truly believed the Government would keep its word in the first place.

That the previous Government struggled to make any meaningful changes in the housing area should have indicated to Twyford that affordability was more complex than Labour, and National before it, had assumed.

Prime Minister Jacinda Ardern declared the market had failed, so the Government had to step in. She was right that the market had failed, but wrong to assume that the Government would make complex problems disappear merely by becoming a property developer itself.

Perhaps she should have paid more attention to competence rather than kindness. A kind captain of a sinking ship is still in charge of a disaster.

Inevitably, it has come up against all the same obstacles private developers face. These include the high cost of land, labour and materials, restrictive regulations, local authorities’ planning rules, lack of infrastructure, the Resource Management Act and neighbourhoods where existing homeowners refuse to countenance more intensive development.

The market failure Ardern referred to will not be solved by swapping a private property developer for a state-owned one. The market failure is not ideological. This is the real world, and not the 1930s with plenty of suburban land available for state housing.

The Prime Minister hasn’t resiled from the Government’s commitment to deliver 100,000 houses in 10 years. But a Government that is elected for three years still promising to ratchet up house production with a goal 10 years hence when it may not be in office, is not treating the public with respect. New Zealanders, having already witnessed the debacle over tree planting, are not so easily fooled.

The Government needs to urgently do what it can to change those things over which it has control. The Opposition, having itself failed when in government to make headway on housing affordability, owes it to New Zealanders to support any reasonable legislative changes to facilitate more house building. Ratepayers, too, need to allow councils, which have more say than the Government over the availability of land for new, infill and high-density housing, to use the powers at their disposal. And we all need to accept that changes that make homes affordable may affect the value of many existing houses.

That’s a tough one.

Certainly the cost of housing is an issue that needs to be addressed, and quickly. But it appears that the Government hasn’t got the courage or the ability to do this.

The recent Demographia International Report, which compares median house prices in seven wealthy countries plus Hong Kong, reports that in Australia housing has become more affordable over the past year as prices fell due to tightening credit. Yet, alarmingly, New Zealand housing has simply become more unaffordable since this Government took office. Property here is now further out of reach than in the US, Australia and the UK. This is beyond embarrassment. This is a national disaster.

Disaster, crisis, whatever. It needs urgent attention – but does Ardern understand this?

 

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29 Comments

  1. Blazer

     /  8th February 2019

    ‘when in Govt National talked down the housing crisis, even though it was a problem that grew over many years. They promised big – Key had a 4 point plan in 2007 to ensure NZ’ers did not become tenants in their own country’.

    Yes National denied there was a crisis.Why?

    Because it suited the party of expediency who ‘didn’t have the data’ and embraced anything that impacted GDP growth and made them look good.

    Whatever Labour achieve is progress,and the effects of some of their initiatives are taking effect.
    ’.

    Reply
    • High Flying Duck

       /  8th February 2019

      You are assuming Labour will achieve something – they are going backwards at the moment.

      Reply
      • Blazer

         /  8th February 2019

        I am very confident they will make progress.

        It is a huge task.Key/National ruined the Kiwi Dream.That is their…legacy.

        Reply
        • PDB

           /  8th February 2019

          “I am very confident they will make progress.”

          Based on what? Hope? If you wish to live in the past then the Clark govt is where the ‘Kiwi Dream was ruined’ with greater house price rises under that govt than the Key govt whilst at the same time new dwelling consents declined rapidly esp. in Auckland.

          Reply
          • Blazer

             /  8th February 2019

            Based on them not being…National is one compelling reason.

            Reply
            • Trevors_Elbow

               /  8th February 2019

              Oh look it all boils down to Blazer hates the most. Pathetic. Your shilling for Labour and their running mates is truly weak…

              Labour have the power of numbers in a passive captive Greens and an NZF party searching desperately for a way to stay in parliament to actual change legislation to open up land for housing development – and at the same time give land bankers a slap by cutting the value of the land they are just sitting on… if Labour choose too but more importantly, if they actual are capable of organising something on a tight timetable. I doubt they have the skill set or drive to achieve anything.. after all that had ‘nine long years’ to actually plan and cost a policy programme and an associated execution model to sort the ‘crisis’ but so far going on for 18 months on the job they have achieved zero…

          • Duker

             /  8th February 2019

            False . HFD , where,s your graphs or numbers

            Reply
            • Duker

               /  8th February 2019

              Stats show the consents per month during labour with a rough average of a bit over 2000 per month, while the nats averages rough average 1300 per month
              And guess who pumped up immigration as well

        • High Flying Duck

           /  8th February 2019

          And yet residential construction only recovered under National after 9 years of steep decline under…

          Reply
          • Duker

             /  8th February 2019

            Steep decline under ?
            Not so . national never reached the numbers during the labour years until just before election. Reserve Bank , not the government jacked up interest rates in 2007 which slowed things quite a bit . Very low interest rates under national from 2009 …so whats their excuse for the slow increase?
            The numbers from Stats show this

            Reply
            • Duker

               /  8th February 2019

              Interesting with the dip from 2010 – before Christchurch earthquake Feb 2011

            • High Flying Duck

               /  8th February 2019

              Your graph literally shows what I said. When National came in consents had been falling steeply and were at the lowest point in decades.
              There was a dip in 2011 and then an ongoing rise. One that is flattening off now I believe.

            • Duker

               /  8th February 2019

              Average under labour, Abit over 2k per month. Average under national 1?3k per month, yet interest rates with nats were at record lows.what gives?

    • Ray

       /  8th February 2019

      Simple solution, just do what they have with Health, stop counting, problem solved
      But, but what about the media pointing out the problem?
      When did you last see or read a story about people living in cars?
      That’s right, nothing since Labour took the Treasury benches, nobody must be living rough, the whole thing was a miss-count by immigration.
      And if like Blazer you really believe this ’cause it isn’t National so it must be true, I have a nifty investment chance for you to double your money.
      Cheque’s made out to C ash please.

      Reply
  2. Finbaar Rustle

     /  8th February 2019

    A housing crisis in some areas, yes.
    Perhaps affecting 5% of all NZ ?
    [http://archive.stats.govt.nz/Census/2013-census/profile-and-summary-reports
    /qstats-families-households/households.aspx]
    # 2013,Census.
    The average household size in New Zealand was 2.7
    Households with one or two usual residents at 57.0 percent.
    Households with three or four usual residents, at 16.4 percent .
    Households with six or more usual residents 4.5 percent of households.
    There was little change since 2001.
    We had six growing up in our house in the 60’s. Top and tailed in beds as kids
    but never regarded ourselves as being in crisis.
    And Govt subsidies on milk or bread or butter power etc were not that important
    in fact we had significantly less than young kids require now.
    Coal range, outside toilet, no TV, places were not insulated and there
    might have been asbestos in the walls but we did alright.
    Maybe people want too much too soon too easy.
    May be its about using the housing more efficiently.
    2.7 per dwelling is a housing crisis?
    Really?

    Reply
    • Gezza

       /  8th February 2019

      Do you really think there is such a thing as .7 of person? 😕

      Reply
      • Finbaar Rustle

         /  8th February 2019

        Absolutely.
        James Bond is only 007 of a person
        and he lived twice .

        Reply
        • Gezza

           /  8th February 2019

          James Bond is fictional too. And he was the 7th secret agent, presumably out of 100+ agents. He wasn’t 00.7 of one.

          Reply
    • Blazer

       /  8th February 2019

      average annual income ratio to mortgage used to x3…now x10!

      Reply
      • Finbaar Rustle

         /  8th February 2019

        In the past people had more modest expectations and were prepared to wait.
        Too many today want too much and want it done yesterday.
        Now days people think going to Oz every
        2 years to see relatives or friends is essential.
        We thought going to Oz would be the trip of a life time.
        I still have not been there.

        Reply
  3. FarmerPete

     /  8th February 2019

    Just to disabuse the journalist you quoted about the market having failed, there is no open market in housing. Land is controlled by councils and the inflated price of raw land can be directly laid at their door. Government and councils are now getting together to fast track consents for KiwiBuild leaving other developers to labour away under the same restricted system. Additionally, building material supply is controlled by 2 or 3 companies. One only has to look at the large price differential between Australia and NZ on material prices to know something is very wrong here. Having been involved in private subdivisional development and building I can tell you emphatically there are no major price savings to be had under the current structure.
    In short it is a fallacy to suggest the market is open and unrestricted, because it is not. I am sorry to say that in my view KiwiBuild was never going to work without major structural reforms including a drastic revamp of the RMA. On top of the pricing issues there was the added complication that Twyford et al simply did not know what they were doing. The targets numbers offered to the public were never achievable, and the results achieved so far are just plain miserable.

    Reply
    • Blazer

       /  8th February 2019

      Red tape and price gouging by materials suppliers are part of the problem.

      Reply
    • Duker

       /  8th February 2019

      Kiwibuild won’t be building outside the urban area., So it’s not a shortage of urban zoned land.
      Yes the council’s can be frustrating slow to get development consent inside urban area, but Nationals SHA project was a good idea, with over 55,000 sites consented. Unfortunately most didn’t go to a dwelling consent as it was used to landbank sites.
      Most of theSHA land is held by owners who have no capital to develop the land, all the money went on buying it, and they want to hold till someone else buys and it’s again landbanked .

      Reply
    • Alan Wilkinson

       /  9th February 2019

      @FarmerPete, everyone who knows what’s going on agrees and it’s been blatantly obvious for nearly twenty years. Unfortunately socialism, environmentalism and vested interests now make it politically impossible to fix so politicians mouth platitudes and pretend to do things they know won’t work and the media are too stupid, ignorant and involved to help fix the public culture that maintains it.

      Reply
  4. FarmerPete

     /  9th February 2019

    Further to my comment yesterday there was an online article in NZH today echoing my comments about building material prices. nothing will change until this issue is addressed.

    Reply
    • Blazer

       /  9th February 2019

      the land cost is by far the biggest cost in the sum total.

      Reply
      • Alan Wilkinson

         /  9th February 2019

        There are three major components – land, building and consents. The easiest ones to reduce administratively are land and consents. The latter would have a beneficial impact on building costs too.

        Reply
  5. PDB

     /  9th February 2019

    The Kiwibuild disaster continues…

    “KiwiBuild homes that did not sell in the ballot in Wanaka are now being offered to the public.

    It was reported in November that three of the 10 offered for sale in the Northlake development had gone to buyers drawn from the KiwiBuild ballot.

    But now six finished properties are listed for sale. Although buyers will not have to go through a ballot to purchase them, they still must meet KiwiBuild purchase criteria.”

    A total of 211 KiwiBuild homes will be built in the subdivision over the next two years.
    Commentators said the development was not well-targeted because Wanaka did not have enough jobs paying the sort of salary that would enable buyers to service the purchase price.”

    https://www.stuff.co.nz/business/110468062/six-wanaka-kiwibuild-houses-on-open-market

    Reply

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