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?

 

Ardern on ‘affordable housing’

Jacinda Ardern has been interviewed by Guyon Espiner on RNZ’s Morning Report on so-called affordable housing.

“This is still a price point significantly lower than what people are paying at market rates,” tells . The govt has raised its ‘affordable’ AKL price point from $600k to $650k.

Is $650,000 ‘affordable’ for an Auckland house? “For too many people it won’t be”.

“This is still a price point significantly lower than what people are paying at market rates.

“I would rather try than do nothing at all.” discusses what is ‘affordable’ for a house in AKL.

“We’re still doing policy work [on immigration fixes]. Making sure we have best export education system we can,” & also other changes in ensuring tests meet labour needs.

They keep missing what i think is an important point.

In the past most first home buyers started with older cheaper houses. Some people then go on to build new houses.

I’ve (part) owned seven houses and none of them have been new. I bought what i could afford at the time (sometimes barely afford). I don’t feel deprived.

Twyford under pressure on Kiwibuild policy of straw

Labour campaigned on a bold policy to build 100,000 new ‘affordable’ houses in ten years. Phil Twyford was prominent in promoting the policy and slamming the then National led government for it’s poor record on housing.

But Twyford has hit some speed bumps, with chimneys falling off Labour’s grand plans.

Twyford has been found wanting on detail over affordability and pricing of Kiwibuild houses, and it now seems that the Government won’t necessarily build all those houses promised – they will buy from existing housing stock, developments and off plans.  This may allow them to claim numbers, but it will reduce privately built and owned houses.

There has always been questions about how affordable Kiwibuild houses might be. How does half a million dollars for a one bedroom apartment  sound?

NZH: Larger Kiwibuild homes will cost $50k more than promised during election campaign

The Government has hiked the price of larger houses in its flagship building programme by $50,000.

Labour’s election promise to build 100,000 affordable houses in 10 years included prices of between $500,000 and $600,000 for standalone homes and a cap of $500,000 for apartments.

Tender documents sent out to developers on Tuesday show that new homes built under the Kiwibuild programme would now be priced according to how many bedrooms they had.

One-bedroom properties would be sold for $500,000, two-bedroom for $600,000 and three-bedroom for $650,000.

That meant the larger houses were $50,000 more than Labour promised during the election.

A spokeswoman for Twyford said that was because the modelling on the prices had been done two years ago and had now been updated.

Will prices be updates again when the houses are actually built?

Newshub: Housing Minister apologises for ‘confusion’ on price of KiwiBuild homes

Housing Minister Phil Twyford has apologised for a mistake he made about the price of a KiwiBuild home.

On Friday morning on The AM Show, Mr Twyford said the price of a one-bedroom Kiwibuild home would be $550,000.

Mr Twyford now admits he was wrong.

“I misspoke this morning when discussing the KiwiBuild price points. I apologise for any confusion caused,” he said in a statement to Newshub.

“Yeah, it’s gone up slightly. We did the original modelling for those price points two years ago, and under Judith’s [Collins, National housing spokeswoman] Government’s policies, build costs are rampant,” Mr Twyford told The AM Show.

 

And KiwiBuild seems to have also become KiwiBeg and KiwiBuy.

The Government has also been under fire from the Opposition over its plans to buy homes currently under development in order to reach its ambitious KiwiBuild targets. Documentation on the scheme now says it “aims to facilitate the delivery of 100,000 affordable dwellings”, rather than just build.

“By underwriting or buying affordable KiwiBuild homes off the plan, what we do is we de-risk and speed up developments that otherwise might not take place at all.”

It is also likely to take over private developments, simply moving numbers from private to public and not increasing housing stock as much as promised.

Duncan Garner calls it “a total hoax”r: If Twyford can’t Phil us in on KiwiBuy/Build, who can?

Seriously, what has Labour and its MPs been doing these last nine years? Eating their lunch? We’d been led to believe its flagship Kiwibuild idea was this amazing, smart and innovative housing policy. We’d been told it was an answer to the housing crisis for those who couldn’t get into their first home.

And I assumed KiwiBuild meant just that;  as Housing Minister Phil Twyford said, 100,000 homes would be built.

Now we learn, um no, that’s not the case. It’s Kiwibuy, that house, your house, any house will do.

Labour has simply thrown its arms up in the air and put up a classified advertisement the size of a house that calls for all houses to be bought and sold as Kiwibuild dwellings. Labour wants the biggest shortcut to success possible.

It wants to buy current homes under construction or off the plans and call them Kiwibuild’s own. It’s a total hoax.

And what, Labour suddenly wants to partner up with the private sector? How convenient.

What happened to development on a genuine scale and with true Government buying power.

To me, it looks like Labour and Twyford have made this all up on the back of a moving envelope. It is underwhelming nonsense from a party that looks bewildered and blinded by the size of the challenge. It lacks detail.

 

‘Affordable housing’ needn’t be new housing

Something obvious that seems to be often missed in debate about ‘affordable housing’  is that new houses are usually more expensive than older houses. The focus on ‘affordable housing’ shouldn’t be on new houses.

I’ve never owned a new house. All the houses I have owned have been decades old. My current house was first built over a hundred years ago (it has been added to).

Most first home buyers wouldn’t be in the new house market. It’s common, for most people essential, to start ownership in the lower end of the housing market and as you build equity and earnings work your way up to better and possible new houses when you can afford it.

Many people don’t get into new houses until the kids have left home, when they have the income and reduced expenses to be able to afford it.

RNZ: Unitary Plan – Poor housing for the poor?

Increased housing density under Auckland’s revised Unitary Plan may not mean more quality homes for those on low incomes, community housing groups say.

I wouldn’t expect poor people in Auckland to be in the new house market, unless they happen to win a state house lottery and get provided with one.

The Salvation Army said there was a very real risk Auckland’s most vulnerable would still have shoddy housing.

Policy analyst Alan Johnson said although Aucklanders needed to get behind the plan, he was concerned about the quality of future housing developments.

“What will happen is that speculative developers will come in and they’ll build the cheapest housing that they can get away with. And that housing will find a market because we’re so desperately short of any housing at any price in Auckland.”

It was a recipe for poorly designed, poorly run buildings in lower income areas, he said.

Community Housing Aotearoa chief executive Scott Figenshow also voiced concern over the revised plan and described it as a missed opportunity for affordable housing.

“The density provided by the plan is great but it doesn’t guarantee affordability,” he said.

These criticisms miss an important point. Most new home buyers won’t be first home buyers. They move up to a new house, making an older house available for someone else.

Poorer people usually live in cheaper older houses. Quality of older houses is an issue but that’s what should be addressed, not expecting poor people to be given expensive large new houses.

If the supply of land increases substantially and enough more new houses are built it will help keep the price of land and therefore new properties down, and this will flow on and reduce the price of older houses.

Many people never own a house. Some are unable to afford a house of their own, others choose to rent.

If there’s a good enough supply of land and new housing then the supply and cost of rental housing will improve as well.

If you want more houses you need new houses, but in general they will never be the most affordable houses.