Affordability of housing isn’t a simple matter.
Someone wanting to sell, or with a large mortgage wanting more equity in their property will be happy with higher prices.
However, there are more people finding it more difficult to buy and in responding to the Productivity Commission’s report on housing affordability, Finance Minister Bill English spells out why it matters:
“High house prices matter because many New Zealanders spend a large portion of their incomes on housing and that has helped fuel household debt and contribute to damaging imbalances in the economy,” Mr English says.
“In particular, high housing debt diverts money from more productive investments, contributes to New Zealand’s significant overall level of indebtedness and exposes taxpayers to growing demands for State assistance with housing costs.
“Those factors make it vital that housing becomes more affordable. In addition, projections suggest that many more homes will be required in coming years than are being built.”
There are no quick fixes and improving affordability isn’t just the government’s responsibility but it has a programme with four key aims:
- Increasing land supply – this will include more greenfields and brownfields developments and allow further densification of cities, where appropriate.
- Reducing delays and costs of RMA processes associated with housing – this includes introducing a six-month time limit on council processing of medium-sized consents.
- Improving the timely provision of infrastructure to support new housing – this will include considering new ways to co-ordinate and manage infrastructure for subdivisions.
- Improving productivity in the construction sector – this includes an evaluation of the Productivity Partnership’s progress in achieving a 20 per cent increase in productivity by 2020.
Decisions made by local councils not only affect their local communities, but have wider effects on the economy and the Government’s books.
“Many of the changes that will make a difference lie with councils and the Government expects them to share the commitment to improving housing affordability,” Mr English says. . .
These measures will help, but a culture change is also needed.
My generation and older were brought up with the idea of a single story house on a quarter acre section as the norm.
That is still possible in some places but in cities, notably Auckland, where demand for housing is so high and land supply inadequate it is no longer realistic.
People who want to live in those places need to accept that their sections will have to be smaller and houses higher. Terraced housing and apartments are normal in most other parts of the world where a lot more people are packed into cities which cover far smaller areas than ours.
Denser housing will affect communities too – if people no longer have big sections round their homes, there will be a need for more public green spaces and play areas.
Those not willing to accept the change will have to move to smaller cities and towns where there’s less pressure on land and prices which could be good for both the city they leave and the place where they settle.
The full report is here.