| OPINION |
By Greg Ninness
Newly minted Housing Minister Megan Woods may well be remembered as the Tinker Belle of the housing market.
Woods’ much anticipated KiwiBuild reset announcement will have left most of those hoping for substantial policy changes mostly disappointed.
Instead what we got was a lot of tinkering and some vague promises around some new initiatives, the details of which are yet to be released.
The most important announcement was that the Government has committed to introducing what it is calling progressive home ownership schemes.
The information provided at the announcement said these could be what are called shared equity schemes, possibly combined with what are known as rent to buy schemes.
It described a shared equity scheme as an arrangement “where a household owns part of the property and a third party owns the rest. Depending on the scheme, the household may not pay rent to the shared owner but may share capital gains.”
The same document described a rent to buy scheme as something “where a household rents a new home from a third party, and may be charged discounted rent to enable them to save a deposit. The household may have the right to purchase the home either outright or through a shared equity or ownership scheme.”
Note how often the word “may” was used in both of those descriptions, which we have highlighted for our readers’ convenience.
What’s missing from the announcement are a few details like who the third parties will be that will co-own the homes, how their stakes in those homes will be structured, who or what will be providing the homes in the scheme, who will qualify to buy the homes and how rents will be set in rent to buy schemes.
Which suggests that the Minister and her minions may or may not have decided exactly how the schemes will work, which could lead the rest of us to conclude that they may or may not work.
But there was no such equivocation from the Minister when it came to deciding how much money to tip into the schemes, with $400 million being allocated already.
If the lack of detail around proposed progressive ownership schemes made them sound like so much fairy dust, the rest of the KiwiBuild reset announcements were more in the nature of tinkering than a major overhaul.
The deposit requirement for a government-backed Welcome Home Loan (which is to change its name to First Home Loan) has been reduced from 10% to 5%, which will undoubtedly help some first home buyers get a foot in the housing door.
And changing the rules around withdrawing KiwiSaver money to help fund a deposit, to make it easier for people to club together to buy a home between them, and restricting KiwiBuild developments to areas where there is a demonstrable shortage of affordable housing, are sensible tweaks.
But they are not game changers.
Considering the scale of the housing problem the Government is facing, with the best part of a generation locked out of home ownership in places like Auckland even though mortgage rates are at record lows, these latest initiatives amount to little more than tinkering around the edges.
The real opportunity to substantially improve both housing supply and affordability, especially in Auckland where the housing market has been under the greatest pressure, lies with the Government’s already announced plans to form an over-arching housing authority – Kainga Ora, which would spearhead major new housing developments, potentially in partnership with prefabricated housing providers, with the aim of bringing a substantial number of new homes to market as well as bringing down building costs.
But fresh news on that front has been in short supply lately.
It may be that the Government is saving major announcements in those areas until we get closer to next year’s general election, or perhaps those plans have hit a few snags and been forced onto the backburner.
We shall have to wait and see.
But in the meantime we must make do with tinkering.
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72 Comments
I feel the incumbents vastly underestimated the affordable housing crisis in NZ. It's not as simple as building more cheap accommodation to fill the void.
It'll take more than just Kiwibuild to tackle the crisis; RMA overhaul, more trades skill supply, cracking down building materials monopoly - all these combined possibly with creative solutions like rent-to-buy and shared equity. I believe they are on the right track.
Also, we can't deny that the government's foreign buyer ban, despite its criticism at the time, has gone a long way in arresting runaway house prices around the country.
I did two simi detached 2 bed, internal access dwellings a couple of years back, 160m2 all up. The materials cost $150,000.
$75,000 materials including landscaping for a 80m2 dwelling isnt that bad.
30% tax on profit if you sell before 5 years is a killer.
Kezza, i wonder if that tax on profit is actually inflaming the supply shortage. There is disincentive to sell it so therefore you choose to rent it until the 5 years has lapsed, which in turn has reduced supply, increasing the price. Just my thoughts, not saying that no tax would be better but the tax itself may be having an unintended consequence
Yes it is. The figures risk 'v' reward dont stack after tax for the small guy. They pay higher material costs, can't afford a inventive accountant to hide profit. May as well go and work for someone else.
Help a thousand small guys and they will deliver two houses each per year. How many houses did Kiwibuild produce per year and how much did it cost?
Pound for pound the small guy is going to out proform a company with massive overheads.
So basically what you're saying is that it makes more sense to have larger house builders operating with economies of scale rather than a fragmented industry with small players incurring high marginal costs.
... so just like every other industry.
Not seeing where I should have sympathy for you here.
"May as well go and work for someone else."... yes, may as well. That's called market efficiency.
The total opposite cmat.
My business model produced two houses for one person without any Gov't help.
Question. How many houses were produced with the Labour economy of scale, the cost and if it worked or not?
Feel free to jump on and take the massive rewards to be had if you want, apparently it's easy. What it takes is over a hundred hours a week, living on bakebeans without a holiday for over ten years. Fill your boots mate, it bloody near broke me and my wife.
Your business model only worked because your labour hours were effectively zero rated, and by the sounds of it you didn't pay tax. So yes, it does look like economy of scale works.
Could have charged the hours through my company and paid 20% instead of the 30%. Couldnt be bothered.
Maybe I read this wrong but you seem to have done this exercise to make money? Therefore (taxable) income producing activity? So it should be taxed? Maybe even gst registered
Indeed, sounds that way. Not paying tax on the profit would appear in this case to be simple tax evasion.
What else... "you can't prove I did it for profit!"...?
Small guys chance of evading tax... 'v'
big companies chance of evading tax ???
Pay the tax / decrease the house prices, push me, pull me, sorry mate I'll slap a broom in my posterior and sweep up along the way.
Justification for tax evasion?
Was evasion tax mentioned? No it wasn't at all!
Congratulations Rick, your comments have made me take a look at my properties and the future. On the market they go and then I wait till the recession hits and buy up for cents on the dollar.
Excuse me if I don't bother replying when you keep pushing lies.
Was invading tax mentioned?
No, invading tax was never mentioned, that's quite correct. Taxes are unlikely to invade any time soon as they are by and large not that aggressive.
The discussion was about buying and selling with the intent of capital gains, and that taxes are applicable where this is the intent. New Zealand suffers the unfortunate malady of people buying and selling with that intent whilst pretending it is not their intent in order to avoid fair taxes.
The topic is Labour, NZF & the Greens are useless and can't get Kiwibuild off the ground while taking the 30% on profit. Then a pack of Labour trolls jump in with their poor me.
Long time to the next election and this Gov't can't get the basics right in the good times, there is zero chance they will be able to get anything right when the bad times hit.
It will be a lot of election cycles until people forget the shambles they are creating at present!
Sounds like a different discussion to tax invasion / evasion.
Im with Kezza. If your going to tax the small guy, you need to tax the big guy e.g. Google, Amazon. Whats the point taking 100,000 of tax off a local company when a foreign company takes 100 million??
Who doesn't agree that multinationals need to contribute to society too, given they enjoy taking revenue from societies? Not sure that "two wrongs make a right" is any more true because of that.
@ROBT If he builds a lot it could be deemed he is a property developer , 2 units built and held for years ..............investor .
"30% tax on profit if you sell before 5 years is a killer."
So much facepalm.
Try being in a real productive business where there is no question about paying tax... regardless of how long it takes to sell your product.
What I said is the tax makes it hard and you guys jump in with the angry.
So uninspiring to get out there and increase houseing stock while taking bad public press. That's me out and waiting for the house price correction.
Who failed to deliver on Kiwibuild again? Labour and the Greens, go rattle their cage.
The only 'facepalm' here is Kiwibuild and those who failed to implement.
Don't worry, Soimon will close the loophole that Labour found in our fta's that allowed some sort of ban on foreign buyers, and will go even further than Key did to try to see that no-one ever again, in the future can change that. The Nats need to be kept well away from any chance to do that
Two kinds of people in this world, the sayers and the doers. I've found there is less competition in the later.
The lack of detail and clarity associated with the reset does not bode well.
Over the past year or so there were clearly issues associated with KiwiBuild and given that we have been hearing about the reset one would have thought that the Government would have time to get detail.
The terms "floundering" and "incompetence" come to mind.
Floundering and incompetence are an understatement. Labour completely lack any ability to design, plan, and implement any sort of solution.
9 years in opposition and they didn't work through a single solution for their main campaign issue (Housing) they just picked a number out of their @$$. Now they are "reseting". Again without a single detail being worked out.
How anyone thinks it will be a success is beyond me?
National were voted out for just plain ignorance. I am sure there will be a backlash against Labour next election - but who does it swing too? In my eyes it can't be National and can't be Labour? So what are we left with?
The next election is a fair way off with storm clouds on the horizon and the history of this Gov't the road is going to be very rough.
Not holding up much hope that the election helicopter money will be well spent.
It took the previous government three terms to strategically turn house price growth and immigration into GDP-inflating Ponzi schemes. Selling state houses in the face of a housing crisis (which they didn't believe in) would seem counterintuitive to the able-minded but not to Key and his lackeys.
Simon may not be blatantly denying the housing crisis like his predecessors did. Nonetheless, he insists on breaking open immigration floodgates and reopening our real estate markets to "productive" overseas investments.
kezza
It will be interesting.
KiwiBuild has been a Labour flagship policy that was spectacularly failed in its targets. I remain skeptical that the new reset will significantly achieved much and I note that there is comment that we didn't have the housing shortage that was assumed.
Also notable is that at the announcement of the reset besides Wood, the Greens were there ($400m appeasing their progressive home ownership policy albeit with little detail). What is significant is that NZF were neither there and seem to have always distance themselves from KiwiBuild.
The next failure of Government to be widely acknowledged will be the multi-billion PGF failure to provide anywhere near the number of provincial jobs that was touted - however Jones will never acknowledge that and will continue to bluff his way through it.
Remember that Jacinda promised that 2019 would be the year of delivery (implicit in that was things weren't being delivered) and that doesn't seem to be happening with a growing list of failures. It seems that whenever an issue arises - such as Maori health - the Govenment's reaction is simply to make announcements allocating money with little or no detail as to how that money is to be spent. The failure of abolishing Tertiary Fees is an example of throwing money at an issue with no tangible benefit.
Sayers and doers mate.
A total lack of faith in the system in which no one is prepared to invest no matter the how many carrots are dangled and a total collapse.
What we just witnessed was the equalivant of the All Blacks sending out a little known player out to tackle the press just before the RWC.
Install a high flying CEO to run the country.
So. Clearly no interest in actually fundamentally addressing housing affordability.
A subsidy here, a pie in the sky idea there. But, no real intentions to reverse growth in land or construction costs.
How about 'smashing the RUB' and building 'up AND out', to use PT's favourite phrases
In theory, Kainga Ora is a game changer.
However, I for one have very little confidence that this incompetent government can deliver on its promise.
In theory it should work in practise, but in practise it won't. Only because politicians and the public servants that advise them, have no idea that by adding costs into a system it is by default impossible to make things more affordable, unless of course these extra costs are written off into the Public accounts.
With Marama Davidson sitting by Woods side, I think the looney left and their high density, lock up the countryside ideology is now in control of the Govt. over this. PT was seen too right wing for them (but still left of center), and has been told, 'you have had your go, now it's our turn.'
It's like you are saying Mr. Ninness that good intentions don't automatically make good policies - it's like work has to be done. Careful, you will be labelled a tory-troll soon.
Yeah, nah to the troll aspect. Greg is simply telling it like it is: no detail, a fogginess over important principles, the swooshing of OPM into the most obvious pain points without measurement and therefore accountability, and a Minister caught in a rip (not of her making), no water wings on, and being swept out way beyond the breakers into the Wide Blue Yonder. It'd be amusing if it weren't for the OPM being wasted....
Cue the Jaws 'get outta the water scene'...
waymad - I think you may have misunderstood me. I am very supportive of Greg. But the commissars will jump on him and label him a tory-troll for telling it as it is - take a look below at J.C. Anyone that dares point the very obvious is labeled one by the "true-believers".
Tory trolling is a cop out. You can have as many talkback radio hosts ranting about common sense and pinkos and all that other nonsense, but the reality is that NZ simply doesn't have the scale, motivation, or vision to create a society where the cost of housing is not a primary barrier for people to focus on other things for self actualization.
I very much doubt The Hosk could do much else besides run a radio or TV show. Anyone can parrot tired right-of-center cliches. It's not a skill or an art.
this is where the major focus should go, rather than try to prop up developers,
its time to turn back the clock pity the MOW is no longer around
Kainga Ora, which would spearhead major new housing developments, potentially in partnership with prefabricated housing providers, with the aim of bringing a substantial number of new homes to market as well as bringing down building costs.
The major housing "crisis"is for people who cannot afford to buy in Auckland because land price is too high.
This is held up by fact that banks continue to give loans up to ridiculous levels re earnings.
There is no shortage in Auckland, there is a surplus, esp of stuff that FHB cannot afford.
Kiwibuild has done nothing about this issue.
Apartments (-53%) and houses (-48%) in the $500-750k bracket are selling fewer this year (last 3m) than they were in 2015.
Looking at homeless people as an issue, about which Labour made all kinds of fuss pre 2017 election: silence now. State is not building. It is building an utterly inadequate number of HNZ houses too.
What is needed, as I repeat ad nauseous, is reasonably priced rented 3 bed housing for families.
Labour will not build 100,000 of these because if it did it would mean that general house price index would fall more than otherwise (due to incipient recession and the drop in mortgage lending and drop in velocity of money and its supply since 2016.) If that happens, Labour will lose votes it cannot afford to lose among non-politicals wo like Jacinda but have no interest in her social policy agenda.
Government moderation by Winston means that little gets done, except consultations and gabby gabby niceties. As recession comes in, and Greens support and Winston support languishes dangerously close to 5%, Labour looks unlikely to win again. What wins do they have to show?
I'm just angry at the fluff and incompetence, 9 months and all we get is more "may", "could" and "to be detailed at a later date". It's just not good enough, at all. At some stage good intentions don't cut it anymore, they just turn into empty promises and disillusion, I think we are unfortunately past that stage
The Good Intentions Paving Company (2017) Limited is looking very Limited indeed, but, seriously, what did we all expect?
Were you as angry at National when they created the problem?
Stop the bus and we'll go back in time Glitz.
But anyway let's deal in the present to change the future.
Ironically many of the problems we have in housing today can be traced back to the 1988 abolition of the Ministry of Works and Development. In particular to its housing and motorways divisions. Between these two divisions MWD effectively designed and built our larger cities. It certainly wasn't the patchwork quilt of little towns, boroughs and counties that made up local government at the time.
Kainga Ora will go some way to re-creating the housing division of MWD. And, if they suffer any more scandals over at NZTA, Kainga Ora may have to take over motorways as well.
Back to the future.
The most incompetent government of all time! yep.
Rent to Buy and Shared Equity schemes will just not work!
Who in their right mind is going to discount the rent on the home that they own just so tenants can save for a deposit so they can buy the home?
No one is!
Who in their right mind is going to put large amounts of money into a house so that someone else benefits from the capital gains?
No one is!
Just continuation of the bollacks that this COL provides.
... this is the Tinkerbell Government . . all smiles and fairy dust ...
Sigh ! .. and we were thinking that Wild Bill and the Gnats were useless . . Wow , a big wake up call for voters ...
I worked for MWD back in the day, building out a City (if Invercargill could be termed That), as it happens. The show was a glorious mixture of engineering competence, operational make-do, equipment mainly derived from American war surplus (my old D7...), and crusty old males uppermost in the hierarchy. It will be hard if not impossible to paste back together except in the most limited sense. Coupla modular housing factories, maybe.
Pretty sure there's a picture of you dozer driving in one of Barry Crump's books.
I was thinking more of the organisational heft rather than the boots on the ground. One thing is for sure as we "celebrate" the 30th anniversary of the Re-organisation of Local Government (TM): councils, left on their own, even with only the lightest of constraints in the form of the RMA, have made an absolute dog's breakfast of urban development. Something has to give.
Kiwibuild has been in the morgue for a while now, I just checked on it and its still dead but the difference now is its starting to stink really badly. The COL need to find a way to bury this before the next election or the next funeral service will be theirs.
Funny reading the Labour shift the blame comments.
I believe Jacinda called this the year of delivery for the CoL. I assume the first year was the year of talkfests.
It would appear we have cut short the year of delivery and already moved into the year of backtracks.
Did you see mrs Ardern on TV backing up her minister mrs Woods at the unveiling of the reset? No? I didn't either, I think she wants to be as far away from KB as possible but surely we'll see her at an AB's match, or cuddling an unfortunate person left behind by the system
Yvil.
Well done interest.co.nz on increasing their market share but the Labour doom and gloom, let's push the blame machine onto the past is bloody annoying and not constructive what so ever.
Catch you arround I'm off to watch my silver and gold increasing in value, it is quite concerning that I've only made a little over 20% in the last month. At this rate it I will only be able to help the 20 Labour voters who are attempting to sell their houses when the market corrects itself.
Painting my daughters bedroom at the moment, hopefully I dont get caught and taxed for it.
But seriously, looking and responding to the comments forced me to take a good look at myself. There is no helping some people, look after number one.
I think we still need to look after others in New Zealand who genuinely need it KezzaR. Countries that you give up on helping are the likes of South Africa, Zimbabwe,Argentina, Greece to name but a few. We really don't want our way of life in NZ to ever drop to this level.
It would take leadership. Let's face it Jacinda isnt stepping up what so ever and no real world experiances to base any forward moving plans on.
Chances of getting any buy in from me with the current Gov't? ... ZERO
Look after #1, go hard time for me. Too many people putting their hands out and expecting bucks for no input.
The year of delivery was Jacinda having a baby. Sorry about the misunderstanding.
Oh and that means kiwibuild was a breachbirth?
Why no mention in the media of the mass immigration policy of the last years driving demand?! Nuts.
Its not just immigration ................ its low interest rates , land-banking , an Auckland council that will not allow outward expansion , costs of $200,000 to subdivide a single section , undue delays , the RMA . ...............
Shhh that's 'racist'.
It drives me nuts, too, Mr Pirate. Mass unskilled immigration gives us low wages and high rents, which means it is impossible for many to even save a deposit. The media virtually never mentions the role immigration plays in maintaining high house prices (or for that matter our overflowing hospitals, sewers, roads and schools).
Much of the media are too scared of being seen to be racist or xenophobic to mention it. (Or they like the idea of a "Big Auckland/NZ"). But it's at the heart of most of Auckland's current problems.
The removal of the Auckland RUB to increase land supply is no longer sought.
In Helen's day she wouldn't have fronted on these issues.. just like Jacinda.
However Helen had bench strength.... she had Ministers she could rely on with the likes of Cullen, Maharey, Caygill etc who she could trust as her 'fix-it' guys.
But Jacinda sends in Megan Woods and Marama Davidson.. everything they have said and done in this announcement (hell even the pic above) says they are well out of their depth.
Kiwibuild is going to keep on hurting them all the way until the next election... she needed to send in David Parker or Andrew Little.. however I suspect both of those guys are too smart to get involved.
How does the pic above say they out of their depth, say what you like, but the picture shows nothing or should they wear life vests. Not sure about these comments on a forum like this....
The affordability problem needs to be unpacked :-
It costs $200,000 in Auckland to create a section
It costs almost $20,000 to instal a $300 water meter
Council or more of a hurdle than a help
Delays cost money , which council staff dont understand ............ there is no commercial urgency understanding when it comes to them processing applications
The risks of possibly having to go through the RMA is too much for people like me
Is anyone surprised its so expensive to buy a home in Auckland ?
Parks and reserves fee 7% of the section valuation. That hurts....
It'll take more than Megan Woods to sort out a self entitled generation of people farming baby boomers and the deeply entrenched 'business model' that has trapped so many Kiwis. Well, GenX is in the house and watch out, we mean business in addressing this mess. The upcoming reboot of Ministry Of Works will gradually address the fragmented approach to infrastructure we have been sufferring from for the last 40 years and push the private sector to the margins, where is belongs.
Rent to buy = #upyourslandlords
HA HA HA HA!!!! Total Visionary NOT.
The picture says it all. Would you trust these two?
I don't get this comment.
From that picture I see two woman, nothing more, they could be very able and competent people, or do they need to be white middle aged men with suits to fit your ideal type.
Be interesting to find out what you don't particularly like.
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