By Alex Tarrant
Councils need to commit to planning processes which would ensure the supply of more affordable housing, Finance Minister Bill English says.
Local authority regulations and processes were a vital part of the quest to provide cheaper housing in New Zealand, and councils had the choice of implementing policies to help with the goal.
Buyers should have no expectations that the government would give them further assistance with housing purchases through tax breaks like Working for Families or other subsidies, he said.
The government is currently working on its response to the Productivity Commission's report on housing affordability released earlier this year. Speaking to media in Parliament Buildings in Wellington on Tuesday morning, English said a response was likely to come in October.
“I think a vital part of this is the co-operation of councils. Councils have choices. They can choose to make rules and invest in a way that is going to increase the supply of housing, or they can choose to do other things," English said.
“When you see New Zealand as one the more expensive housing markets in the world, it’s certainly making us think pretty hard about what rule changes we need to change that situation," he said.
“A lot of this is about the will to make it happen. The government is pretty keen on taking the steps it can to assist with reducing the lack of affordability of housing, particularly at the lower end. We’re in discussions with councils, and we’re keen to see them commit to the kind of planning processes that will enable more supply of housing.
“Up until recently we haven’t seen that willingness. I think we’re starting to see that with councils," he said.
The players involved needed to be careful not to head towards schemes based on subsidies or the investment of rate-payers’ money in buying housing.
“We can get considerable gains if councils decide they want to see their housing more affordable, and they’re willing to make the changes that will enable more supply of housing,” English said.
Councils also faced rising costs for infrastructure development to support the new housing, which was also the subject of discussions taking place between them and the government.
“I’m not saying the issue is very simple, all I’m saying is, we all have choices here," English said.
"We can choose to make the planning changes and the policy changes that will give Kiwis a better shot at owning a home...and weigh that up with the other priorities such as large transport projects or whatever," he said.
Meanwhile, English said it was "a bit surprising how New Zealand house prices have held up," in response to the latest Economist global house price indicator, showing the New Zealand housing market was still one of the most overvalued in the world relative to rents and incomes.
The government was "spending a bit of time working on how we can get better supply of housing to the housing market," English said.
“I would hope there’s no expectation from the buyers that the government is going to provide more cash through Working for Families, or other subsidies to assist them with it," he said.
"People need to understand that we’re at the bottom of the interest rate cycle. If they’re borrowing large amounts of money to buy houses, they’re not going to get further support from government.
"Back in the mid-2000s there were large increases in Working for Families, early childhood subsidies, interest-free student loans came in. All of those things gave people more cash that enabled them to support larger mortgages. That is certainly not going to happen over the next five to ten years," he said.