With the New Zealand General Election scheduled for 23 September 2017, the Labour Party opposition has upped the ante on housing policy. From Stuff.co.nz:
[Labour’s] policy is to bankroll a “Kiwibuild” state house building boom like the one in the 1940s and 50s, which left solid-as bungalows dotted throughout towns and cities. It is pledging to build 100,000 of them, over ten years.
It would establish an Affordable Housing Authority, and would rapidly increase the number of apprentices to boost the building workforce.
Labour says it would remove the Auckland urban growth boundary and free up density controls. “This will give Auckland more options to grow, as well as stopping landbankers profiteering and holding up development.”
New developments would be funded through innovative infrastructure bonds, which economists and think tanks back.
It would ban non-resident foreign buyers from buying existing New Zealand homes, and extend the “bright line test” from the current two years to five years, and look at ending the ability of landlords to “negatively gear” properties with the help of tax breaks.
Labour’s housing policy is certainly far more comprehensive than the incumbent National Government’s, whose primary focus has been on expanding the supply of land for housing, in part by reforming the Resource Management Act.
Specifically, Labour’s policy would address both demand and supply-side impediments to affordability, namely:
Demand:
- Banning foreign buyers from purchasing established homes; and
- Reducing speculative demand in housing via tax reforms.
Supply:
- Building 100,000 public homes over 10-years;
- Boosting the construction workforce;
- Removing Auckland’s growth boundary (thereby boosting potential urban land supply); and
- Boosting housing-related infrastructure via bond financing.
Labour should be on a winner here. It’s fair to say that the National Government is failing on housing. While it has had some moderate success in boosting dwelling supply, it has failed to keep up with the Government’s mass immigration program (see below table).
Indeed, the New Zealand Herald yesterday released findings from Treasury, which estimated that New Zealand’s housing shortage has worsened under the migrant flood:
New Zealand is up to 60,000 houses short, with Auckland needing as many as 35,000 homes, estimates in a Treasury document suggest.
The figures are part of housing supply and demand forecast produced in September of 2016 and released in January as part of an Official Information Act request.
Using their own metrics, Treasury estimate that the “cumulative shortfall” houses in Auckland was at between 30,000 and 35,000 in June of 2016.
That figure is estimated to get slightly worse in 2018, as the population continues to increase, before improving.
It indicates that between June 2015 and June 2016, just under 9000 homes were added to the market in Auckland – but 16,748 buyers started looking for homes…
If population growth follows a “high projection” produced by Statistics NZ, the shortfall could grow by 30,000 homes by 2030.
Meanwhile, in the same article, ANZ projected the housing shortfall is growing by some 4,000 homes per quarter.
National’s focus on the supply-side of the housing market, while simultaneously juicing demand via immigration, was always going to lead to policy failure.
Policy action is required on multiple fronts. And in this regard, Labour clearly has the more credible housing policy.
