As we approach the budget I think it’s fair to ask the government, “How’s that housing crisis going?”
It’s been the issue of the age, which has seen property owners grow richer and new home buyers grow desperate or even give up and it’s been the issue that many attacked the previous government on and the issue Labour promised to fix.
So where are we at.
First, we had the LVRs which had a short-term effect on slowing the price boom but now we hear that rent prices are getting so high because of supply problems that buyers are re-entering the market. And to be frank, the biggest effect was on first home buyers which was the problem we were trying to fix.
Meanwhile, the Housing Minister hasn’t been sitting on his laurels. He’s announced a major development in Auckland's Mt Albert with 3000 to 4000 homes,18 of those homes on defence force land in Papakura. But to be fair, the Mt Albert development has been an idea sitting around for a while and would have happened without the government stepping in and the Papakura development was just the government taking over a stalled private development. Good politics but hardly a housing supply revolution.
A couple of stories around this week highlight the real drag on housing. One was problems surrounding New Zealand’s biggest apartment development. The 800 unit project has been hit by delays that are upsetting agents and owners alike. There has been a holdup getting titles out of council. To be fair to the council, 800 titles is a swag of work particularly combined with all the other development underway. You wonder whether councils are gearing up for all the extra work all these extra houses need.
But on the good news front, Westpac has announced it will trial lending on prefab housing. Until now you could only borrow on prefabs once they were constructed, unlike traditional developments where you can get progress payments as the building goes up. The new regime brings us into line with the rest of the world and will greatly speed up construction. This was a no-brainer and I wonder why no government was leaning on the banks in the first place.
This highlights to me the problem with the government’s thinking. If they go into the building business they’re going to hit all the same problems private developers have had for generations.
It seems to me that if they want to speed up supply, they should be spending time and money on the impediments. Rather than building houses they should be laying water and power onto greenfield sites and improving the infrastructure for intensification projects.
They should be streamlining consent processes and helping councils gear up. They should be strengthening credit lines to the developers who know what they’re doing
They should be building transport and roading to these new developments rather than leaving new homeowners stuck in a traffic jam in the middle of nowhere.
I worry this well-intentioned government is actually creating more problems for the future rather than solving the problem we have right in front of our faces and spending a truckload of cash doing it.