Parliament resumed yesterday after a long winter recess. Andrew Little, supported by Metiria Turei, in their first confrontation with John Key:
3. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he have confidence in the Minister for Building and Housing, given that, after 3 years in the job and numerous policies that were supposed to make housing more affordable, he now says it’s “probably not a good time for a young family to buy” and they “should be patient”?
Rt Hon JOHN KEY (Prime Minister): Yes. I am pleased that the member acknowledges the Minister has advanced numerous policies as part of the Government’s comprehensive housing plan. They include a new $1 billion Housing Infrastructure Fund, over 210 special housing areas for 70,000 new homes, an expanded HomeStart scheme for first-home buyers, the national policy statement on urban development, Resource Management Act reform, a raft of extra tax measures, a new unitary plan for Auckland, more tools for the Reserve Bank, and independent urban development authorities for areas of high housing need. By any definition that is a comprehensive housing plan.
Andrew Little: In light of that answer and moving on from good intentions, does he agree it is a bad time for young families to buy, especially given Bill English’s estimate that only 500 affordable homes were built in Auckland last year?
Rt Hon JOHN KEY: I think the point the Ministers have been making is it is important for every person who buys a house to consider all the factors and to do so with their eyes open. We have interest rates that are at a 60-year low. Of course, we have a very strong economy with strong wage growth, and that makes it more affordable. But house prices do go down, as well as going up, and I think it is important that people just are observant of those facts.
Andrew Little: Given Auckland house prices have doubled on his watch from $496,000 to $992,000 does he now accept that the average Auckland house is out of reach for most families?
Rt Hon JOHN KEY: No. If you look at the year to 31 March 2016 in Auckland there were 31,963 sales. Sales in the under $600,000 category of existing homes were over 30 percent of that—9,638 sales. For new houses under $650,000 there were 11,842 constructed—37 percent of sales.
Andrew Little: After 8 years why has he failed to stabilise house prices and build enough affordable houses?
Rt Hon JOHN KEY: As I said to the House before, in the early part of the term of this Government there was not strong demand for housing, but because of the economic programme of the Government we have now seen New Zealanders returning from overseas, we have seen New Zealanders not leaving, and on the back of all of that we are actually seeing the biggest housing boom in New Zealand’s history. An enormous number of houses are being built—and yes, of course it is taking some time to work its way through the system. It is not unique, I should say: if one looks around the world at cities like Melbourne, Sydney, London, Dubai, New York, and many others, they are also experiencing quite high house price increases.
Tim Macindoe: How is the Government’s comprehensive housing plan translating into new houses around New Zealand, where they are needed most?
Rt Hon JOHN KEY: We are now in the middle of the biggest housing boom New Zealand has seen. We are on track to build 85,000 houses across New Zealand in this term—
Mr SPEAKER: Order! [Interruption] Order! I apologise for interrupting, but the level of noise now coming from my left is at a level where I am going to have to deal with it rather severely. I do not mind some interjection, but just because members may not like a question or like an answer it does not need to lead to a constant barrage coming from my immediate left.
Rt Hon JOHN KEY: The construction industry is the biggest it has ever been; there are around 40,000 more people working in the sector than 2 years ago. In the year to June residential building consents increased 16 percent to over 29,000—the highest for a June-year since 2004. The Government’s comprehensive plan is boosting housing and supply, and we need to build on this good momentum.
Andrew Little: Why is Auckland City 40,000 houses behind what it needs to accommodate today’s population?
Rt Hon JOHN KEY: Primarily, actually, it is because of bad planning rules, I think, around Auckland. But the good news is that those planning rules are about to be reformed under the new Auckland Unitary Plan.
Andrew Little: Rather than hoping that the problem will fix itself, is it not time that he got off his backside and he and his Government got in behind Kiwis who want to own their own homes, and just built some bloody houses?
Rt Hon JOHN KEY: The only person who is in hope is Andrew Little, who hopes that one day he will poll higher than Winston Peters.
Tim Macindoe: What reports has the Prime Minister seen about whether alternative approaches would succeed in controlling house price inflation?
Rt Hon JOHN KEY: I have seen one report, which was completely inconclusive about its chances of controlling house price inflation. It said: “It’s hard to be specific about that.” That was, of course, Andrew Little on his pipedream of building 100,000 houses for just $2 billion.
Andrew Little: Why does he think that the majority of New Zealanders now back Labour’s KiwiBuild plan to stabilise house prices and build 100,000 affordable homes for families to buy?
Rt Hon JOHN KEY: A sound bite does not make a plan. [Interruption] If the best that New Zealand can do is 100,000 houses over 10 years then we are in serious trouble, because this Government will see 100,000 constructed over 4 years.
Andrew Little: Is this not the truth: his half-baked policies, his bumbling Minister for Building and Housing, and all the hollow promises will not solve the housing crisis, and that he leads an arrogant and out-of-touch Government that has given up on the Kiwi Dream of homeownership?
Rt Hon JOHN KEY: No. If one looks at the activity that has taken place, the enormous amount of action that we are actually seeing—and actually the inaction that we saw in the 9 years of the previous Labour Government—then we can actually see a credible plan to more houses being built. And that is the reason why most New Zealanders actually can see that that is working. Of course it is going to take some time, but that is a factor that we are working our way through. [Interruption]
Mr SPEAKER: Order! [Interruption] Order! Mr Twyford, please, less interjection from you specifically.
Metiria Turei: Does he agree that for homes to be more affordable for families, the gap between house prices and incomes needs to reduce?
Rt Hon JOHN KEY: Well, as the Minister for Building and Housing said earlier in the House today, that is a factor—but there are many other factors, including interest rates. One thing I will say is that if house prices in New Zealand were to halve, that is a war on the poor. It is the poorest New Zealanders who, in percentage terms, borrow the most against their houses. Metiria Turei has been telling New Zealanders—and the Opposition is supporting her—that halving house prices will actually see the poorest New Zealanders have all of their equity eliminated. That is a war on the poor.
Metiria Turei: Given that house prices are rising at more than 10 percent nationwide but Treasury predicts wage growth at less than 3 percent, when does he expect that housing will become more affordable for families in Auckland?
Rt Hon JOHN KEY: There are a number of factors. Firstly, very low interest rates, stronger real wage growth than we have seen for a very long period of time, and strong employment markets actually are supporting young people and, actually, people across the board to be able to afford housing. That is the reality—that they have got the confidence of doing that. One of the reasons why more people are interested in buying houses in New Zealand, particularly in Auckland, is that they do feel that confidence in the Auckland market.
Metiria Turei: How many of the 400,000 Aucklanders aged between 20 and 40 will be locked out of the housing market because of low wage growth and skyrocketing house prices?
Rt Hon JOHN KEY: By any definition, you cannot say there is low wage growth in real terms. When one looks back at the previous Government, there was virtually zero real wage growth in New Zealand because inflation was high. Inflation is running at extremely low levels, interest rates are extremely low—in fact, they are at a 60-year low—and employment markets are very strong. They are the conditions that support young people to get into a property. What we will see, I think, is a change in the nature of the sorts of properties that young people buy—more of them buying apartments and the like. That is an international trend that we are seeing. But to say that someone cannot buy a house in Auckland at under $600,000—which is where the Government’s KiwiSaver HomeStart scheme is set—is not true: there are many apartments, townhouses, and some homes in that category.
Metiria Turei: Given that when he became Prime Minister the median Auckland home cost six times the median household income and now it is almost 10 times that, when does he expect that that number will stop growing?
Rt Hon JOHN KEY: When I became Prime Minister, 35,000 Kiwis a year net left for Australia. When I became Prime Minister, interest rates were 8 percent, and 11 percent in some retail numbers. When I became Prime Minister, there was a significant recession and a decade of deficits. One of the reasons why New Zealanders are coming back to this country is that they see the opportunities that are being created. I think most New Zealanders would prefer the conditions they see today than those in 2008 when I first became Prime Minister.