Prime Minister Jacinda Ardern says KiwiBuild remains the “biggest lever” the Government can pull to improve housing affordability.
Treasury in July advised Housing Minister Megan Woods against making KiwiBuild her priority.
Asked by interest.co.nz in a post-Cabinet press conference on Monday whether [in the absence of a capital gains tax and the version of KiwiBuild Labour campaigned on] the Government needed to take more drastic action to lower house prices, Ardern said: “It [KiwiBuild] is our biggest lever on the affordability front.
“The goal of KiwiBuild continues to be to use the scale of the state to increase supply, and also try and bring down - by building en masse - the price of housing.
“It is not a subsidised programme though, so it does experience some of those costs that actually warrant us considering whether or not they’re fair, like the cost of building materials.
“But also, it warrants us looking at whether or not there are other opportunities to bring down the costs, like prefabrication.
“Those are all areas of work we know we actually need to continue to look at. In the meantime, we will continue to use the size and the scale that we have as the government to build en masse to make housing more affordable in New Zealand.”
Treasury told Woods: "Without supply reforms, building programmes will be expensive, inflationary, and slow to deliver.
“Even with substantial increases in budgets, housing assistance cannot address housing need across the spectrum in the current housing environment.”
Treasury suggested the new Crown entity responsible for housing, Kāinga Ora, needed to be specifically focused on “lowering the price of housing”.
Asked whether she agreed with this, Ardern didn’t provide a straight answer.
“We have had a longstanding focus on affordability," she said.
“One of the issues however alongside affordability has been whether or not deposits have also acted as a barrier to first-home-buyers. And that’s some of the feedback that we had coming through strongly as we were working on the KiwiBuild reset. And you will see from the reset that that’s where the focus has been.
“But we know affordability is an issue and that’s why KiwiBuild exists in the first place.”
Treasury advised the Government against doing what it’s doing by committing to lowering the deposit first-home-buyers eligible for a government-backed mortgage need, from 10% to 5%, and removing the cap on the amount groups of first-home-buyers buying houses together can receive via the Government’s HomeStart grant.
“Demand-side assistance such as rental assistance and home ownership assistance will struggle to increase supply given the constrained environment,” Treasury said.
“In fact, financial support is likely to increase prices when supply is constrained. The Accommodation Supplement and HomeStart grants are examples of demand side assistance.”
117 Comments
Ah speculator jumps out of the bandwagon..
https://m.oneroof.co.nz/news/36678 to understand the scale of supply in the pipeline.. treasury spoke about supply...
... the nails are being shot into the wood at a rat-a-tat-tat regular rythm ...
No , it's not a KiwiBuild home in construction ...
... it's the coffin of Taxcindas coalition government being built ... far from having the good sense to distance herself from this appalling failure of a dreadful policy , she's backing it , endorsing the mangey mutt ... flee if it has fleas Miss Ardern ... ..... ma'am , why are you scratching ?
... look at the pain on the face of the sign language lady in the photo at the top of the story ...
Is KiwiBuild impossible to sign politely , without resorting to the middle finger ?
... or , is her heart just not in it , trying to convey a ridiculous message from Taxcinda to the hard of hearing .... WHAT ?
So JA says:
1) lower the deposit for FHB to 5% (= 95% loan)
2) "The goal of KiwiBuild continues to be to try and bring down the price of housing"
So you get FHB's into a house with a 95% mortgage and then you try to lower the value of their houses… how is that going to end up? please JA think… just think a little
Maybe it's the voters bad.
She is what she is.
We only saw her for a couple of weeks before getting the job.
Not like had prior experience for this (executing sound policy) - assuming that such formulated.
Got the job in unconventional fashion (the switch) &(coalesced with least popular parties). - hence problem formulating sound policy
So she reverts to type. Advocacy.
The biggest lever demand side would be to shut the front door. No mention of that though is there..
Yes, but immigration is a key driver of the NZ economy and its "growth." Also, JA is a globalist. Shutting the door on immigration is ideologically abhorrent in a globalist mindset.
Great, they've just corrected the spelling error. Pity though, the original "biggest leaver" headline error was
quite suited to the likelihood of Kiwibuild being the biggest job "left" unfinished by the Labour party judging by how far it has fallen short of it's targets.
A poll would be interesting right now. My guess is that national would win an election today. Labour seem to be failing on all their key policies unfortunately. Not sure what they are thinking - surely building stuff would be good for a slowing economy so why not try? Subsidies were definitely not what I voted for.
Sorry to burst your bubble but National won't get anywhere near winning with Simon Bridges as a leader that is a fact. Funnily enough the only party i see is doing their job is NZ first. They have done better than any other government with their management of the Defence Portfolio at the moment.
Prefabrication is indeed the way to go, but not the old concept of it - my father did that version pre-1960; we've moved on.
My 135 sqm house was closed in in two day's work, by 2 teenagers and 2 adults, using SIP panels in 2005. Total build cost ex labour, 50k. What has made it more expensive in the intervening years, is folk commandeering what was once the commons - design, construction - and the regulatory tangle which resulted from the (human vs nature) arrogance that was leaky homes. Add OSH and similar compliances, and you've got most of it. Then it's the banks only loaning on multiple bathrooms, developers stipulating minimum sizes, and insurance insisting it be signed off before tenure - guaranteeing the taking on of instant debt, nudge nudge wink wink banks do well with captive audience and insurance is of 'more'.
Add that all together, and there will never be 'affordable housing'.
The commons might be the best escape route from our broken economic model...
https://youtu.be/xDKth-qS8Jk
Treasury's advice, FWIW, is fairly much exactly what most of the commenters on this site who have development/building/commercial experience have advocated for. No need to rehearse the sorry list yet again, most of us old hands can recite it in our sleep. If only that advice was being listened to, If only Gubmint had vertebrae, cojones, and the steel will needed to pump it through. Just like the '84 Labour crew.....But don't bet the farm/house/subdivision/company on their doing anything useful. They've had two years to Do, nine years to Plan what to do, and this is what we get....
Sheesh....
Because it's all about trade offs. The reality of those trade offs is that the nation would go into serious decline if we wanted "affordable housing." They're learning those realities now. The economy is built on housing being "unaffordable." It's the key wealth generator. Has been for a while.
I am astounded at the incompetence of Ardern .
How can she not know what is actually pushing costs of housing through the roof
Where the cutting of a single property into 2 costs circa $200,000 ?
Where the RMA is a massive hurdle to orderly development
Where councils use the subdividing of land as a revenue source , and a mighty big one at that
Where Watercare charges about half a years minimum wage ($20,000 ) for a $300 water connection
With all of this I am surprised anyone can afford a home
This is what you get with this joker.. to get more donations...
https://www.newshub.co.nz/home/politics/2019/09/simon-bridges-sings-com…
I have read this piece ...... TWICE, and listened to Jacinda .......... TWICE and she did not answer the question at all .
Basically she does not understand the problem .
While building material prices are high they are not excessively so .
Wages of tradesmen have gone up , by a significant % since 2010 , but even that is not the whole story
The real costs the have sprialled out of control is LAND , and for no good reason , other than excessive charges in DC LEVIES , RMA processes and very expensive costs to subdivide land , and onerous conditions of subdivision
Clueless
Increasing LVR and wanting house prices to fall.
And then this,
"we will continue to use the size and the scale that we have as the government to build en masse to make housing more affordable in New Zealand.”
I know of one Canadian Prefab builder that has enough spare capacity to send us 3,000 prefab houses a year, the largest home builder in the USA builds 55,000 houses a year, and in 18 months Labour have managed to get less than 1,000 built.
Economy of scale is a U shaped curve, the shape of the U based on the skill of the company. Labour are already maxed out.
You can tell from their 'density is good' speech, they are going to fund even smaller dwellings, 1) to get numbers up, and 2) to show that prices are dropping.
Who cares if it is not what you need and on a $m2 basis increases.
Smoke and mirrors, it's insulting that idiots take us for idiots.
I like the optimism, I really do. But as I sit here dreaming of what sort of investment property I would buy, the lower quartile houses are right in my firing line. If I can get one, and the government allows further injection of fuel to those who also need a small property, then I know my investment will pay off.
The biggest lever in improving NZ affordability isn't held in NZ. It's the Chinese capital controls preventing money flowing out of the country. The further tightening to prevent house and apartments and insurance being purchased will increase the effect.
JA can twiddle with KB but the house of cards is already teetering. The Antipodean in the Auckland CBD has 80 separate listings for units for sale on Realestate.co.nz How much are prices going to have to fall before locals want to buy is anyone's guess. But fall they will - as will the price of all these new builds simply to be able to get the stock sold.
Their "must sell" prices for 2-bedroom apartments start from over $1 million.
So...about ten times the average household income of Auckland for a basic 2-bedroom apartment, surrounded by many other apartment buildings including one directly in front. This seems frothy.
Well I think the current government is doing wonderfully in protecting the interests of property investors like myself. Young people have 'had it good' for too long under the former National government but Labour, well, they are the really showing National that killing progressive policy can be as easy as clubbing baby seals. The pièce de résistance for me would be for the current government to crash the economy by placing constraints on productive economic activity (energy, agriculture etc.), lower interests rates would really help us squeeze a little more juice from the lemons. The real question for me is if I can get an incentive on my next Lexus SUV because it's a "hybrid"? This truly is living gentlemen!
Dear PM Jacinda Ardern,
There are 5 things to consider, %, demand, supply, tax, Kāinga Ora
1) Price of money - we have low worldwide interest rates which drive up asset prices - nothing can be done about this
2) Demand - the excess demand is coming from an immigration rate that is too high for the demand response to stay up with. NZ has run a high immigration rate for a long time as a % of population. But, in absolute numbers that x% kept going up & most immigrants stayed in Auckland driving house prices upwards.
A high immigration rate drives up gdp (but with dis-economies of scale which have to be addressed but later down the track.) Cynically its a very easy way to prop up the economy.
The immigration rate is slowly falling under Labour, but we need a proper population policy of managing the immigration rate around maximising gdp/capita growth & socioeconomic benefits.
3) Supply. - The RMA was meant to be effects based legislation, but was hijacked & old style town & country planning act zoning was implemented which is rigid & inelastic. Every individual rule in the RMA certainly did not go through individual regulatory impact assessment. If they had most rules wouldnt exist.
The RMA needs revamping - All existing rules and covenants should be sunsetted with a 10 year horizon and a single effects based national level urban plan developed by all councils jointly guided by an appropriate National Policy Statement. (we dont need district plans stacked as high as the skytower for a population of 5m)
Developer contributions - these should be ditched. They simply push up the capital cost of housing. Its not the developer that creates the demand but the user. Targeted rates should be implemented.
Building supplies oligopoly - the ComCom needs more powers to ensure competition. The ComCom should have to give much more weight to the HHI index when making decisions.
4) Land tax - we need a land tax to drive the efficient use of land, offset by reducing other taxes
5) Kāinga Ora - Treasury is right in its advice. This entity should be purely focused on providing housing for the very poor in society (some currently living in garages), where the private sector cannot make a profit.
It should aim to also provide this accommodation mixed in with other economic tiers of housing (provided by private sector) to avoid the development of slums.
It's not the size of the lever it's how you use it. They have no idea how to use it as they are construction virgins. It would be great if the Government wasn't groping around in the dark hoping that they will deliver the election promise.
The incompetent fools at the Housing Commission are still providing bad advice to the Government, and the only correct decision is sack all of the fools at the top. Yet they haven't taken any action.
I think the only lever we will see is a deleveraging of debt. Tight conditions created by bank capital requirements are reducing liquidity. The reduced interest rates are just helping to keep some mortgages out of default. Due to this the 5% deposit is unlikely to be effective (they are targeting the top 10% income earners again).
Economic illiteracy and dishonest.
I like Jacinda but I am afraid there is no EFFECTIVE socialism in her government. It is all niceness and consulting people and not upsetting key voter tranche between 50-60% on income scale in key Auckland marginals. No tax increase on rich; no major cheap fabricated State funded for rent housing policy and no CGT. Plus no cuts or policy on reducing immigration. Nothing to sell therefore at next election stall. Usual limp Labour reality in office as always since 1976 in OECD countries
Food for thought
"There is an accommodation crisis - that is very different.
"I asked him in the ad break 'does it matter when you build your high rise apartment if I happen to buy a whole bunch of them and rent them out to people?'. He said 'no this is not about home ownership, this is about supplying places for people to stay'."
A breakdown of Auckland house prices by Barfoot and Thompson in January shows the average sale price for a three-bedroom dwelling is $913,056. The average rent is $568.
Richardson had a strong message to those complaining about the prices.
"I don't give a rat's ass if you can't afford a house, what I care about is if you can't afford to rent a nice place to stay."
Earlier this month, it was revealed that the public housing waiting list has ballooned to more than 10,000 households - a 73 percent increase in a year.
While the Government has built more than 1100 new state homes since taking power, its efforts with KiwiBuild haven't entirely worked out. In January, interim targets for the scheme were cut after it was announced only 300 houses are expected to be built by July - 700 less than the target."
https://www.newshub.co.nz/home/new-zealand/2019/02/there-is-no-housing-…
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