Andrew Dickens: Housing package fails to address the real issues

Author
Andrew Dickens,
Publish Date
Mon, 29 Mar 2021, 12:44PM
(Photo / File)
(Photo / File)

Andrew Dickens: Housing package fails to address the real issues

Author
Andrew Dickens,
Publish Date
Mon, 29 Mar 2021, 12:44PM

It's nice to be on air again after another depressing week hearing New Zealand media, politicians and talkback callers give us their wisdom over how to solve the housing crisis.

In simple terms houses cost too much in this country. Currently seven times median income. 10 years ago they were five times the median income. The international benchmark is three times median income.

A house in New Zealand is twice as expensive as anywhere else in the world. That's not a good look.

But let's also remember that people have been prepared to pay twice the price - because we have no choice.

Most markets correct themselves when the price becomes too high and the market realises they don't need to pay that. But when it comes to houses you do. Because everyone needs a roof over their head. And the roof needs to be where a job is.

This has been a multi-generational planning failure of epic proportions based on some 1930s utopian view that every New Zealander can live in their five bedroom, quarter acre, pavlova paradise.

So now we're here what do we do? We moan and wail at the government to do something about the fact we can't house ourselves.

So government after government has tried to put a cap on prices by penalising demand with taxes like the brightline test, or limiting who can buy with LVR rules. Bad people for wanting to buy houses.

Anecdotally we've heard that the first week has seem an abrupt decrease in sales and inquiries from investors but let's be honest, these guys needed a break, it's been a busy summer. They'll be back because nothing fundamentally has changed except on the edges of their margins.

What will the new tax do? Will it provide cheap affordable homes? No. Will it stagnate an already suffering economy? Yes. Will it halt price growth? Yes. But only temporarily until investors remember that the upside still exists. Happens every time.

Will it mean a rise in rents? Yes. If the government increases costs then that's passed on to the people paying for the service.

And this is the greatest crime to me. Forget first home buyers. The most vulnerable in our housing market are those who will never have enough money to buy a house and depend on the money bag investors to let them rent a house from them

Most importantly, will it build new houses? No. Not at all.

Which is why I was amazed how little attention was paid to the one part of the proposal which might create a house or two. The government money to be invested to build infrastructure.

Because houses are not built on land. They are built on pipes and wires and roads and shops and service stations and transportation routes and bus services.

One expert spoken to by ZB Drive on the day casually said that the government probably needs to spend 10 times that amount. Unless of course you want be like Wellington where you build more and more houses until the streets explode in a fountain of poo. Forget taxes. Build infrastructure. You'll never regret it.

And one final note. Why is the housing crisis solely the government’s problem? They are bit players in this market compared to the buyers, the developers and the builders. The private sector has failed to meet the demand of the market.

This was driven home by the news that Carter Holt Harvey is to stop providing timber to the independent wholesalers preferring to supply big players like Fletchers.

Why? They underestimated the demand for wide timbers used in multi-storeyed developments.

They've run out of wood. In a country with the second largest forest plantation in the Southern Hemisphere.

It beggars belief.

If the people who provider the wood can't keep up with the property market, then what hope is there for the amateurs in the government?