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Councils need to regulate, plan, to allow for more affordable housing, Finance Minister English says; 'Govt won't be increasing subsidies, tax breaks to help home buyers'

Posted in Property Updated
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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.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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52 Comments

The government is pretty keen

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.
Do you think what Bill is trying to say with this comment is that at the higher end our houses are affordable ? Probably not.
Maybe he could try.
Competition and Free markets. Why not, it might work.
1. Make all land available for whatever people want to do with it - now there would be some free markets and competition right there. Sounds a bit scary though. Much better to do what National does best. Look after their mates.
2. Break up the cosy building supplies industry- a bit of creative distruction would not go amiss So compeitition in Building supplies will help.
3. The Banks- now what do we do about the banks and the money supply. I know lets pretend that the NZD is actually the currency of New Zealand and not a plaything of private capital.
1. Loan to rentable value of property not how much people are prepared to pay in interest- banks will always lend more and more- notice how they only want to lend against stuff that already exists, like existing property
2. MIn deposit requirements- say 20%  do not bundge
3. Break up the banks- just kidding - would not be allowed
4. Tax system
1. Tax unearned income- land tax - really simple really easy really fast. Stop people making money from doing nothing - start redusing taxes on work and transactions- GST 10% or under  stop taxing people that do and start taxing people that just own stuff.
5. Foreigners
If you want to own prperty in New zealand you have to live in it - really simly, not racist at all. Just practical- follow the example of the Danish- oh no another European Country that The National Party can poke a stick at - The Danish keep their property market from being overrun by rich germans in this way.
6. Local Government
1. Make local government get by on rates alone, user pays has been a disaster- stop letting them charge for everything and get levys for developments- make them live on rates alone- that way votes will keep them in line because their rates will show them what their council is really costing them. User pays allows councils to build empires without accountablility. User pays was always a lie so get rid of it. No more rip off fees for building- look at How the Germans do it .
 
It is never one thing that will get the job done- it is lots of things working together
Anything else?
 
 

  "People need to understand

 
"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.
Good point. There are many other things that occurred during the "boom years" that won't be replicated again going forward. There also won't be any more tax cuts. Bonuses are now suppressed relative to the "boom years", a fact often overlooked (back in the mid 2000s I was receiving bonuses higher than 10K per year, by the time I left NZ I was receiving none. I know many who relied on their bonuses to help them with their mortgages). Youth unemployment is high, as is student loan debt, which will weigh on the next generation of potential home buyers. Economic growth is likely to be sickly moving forward. Those who think these are all pre-conditions for another boom are deluded.
The only things that will prevent a crash are immigration / foreign investment and low levels of house building. The latter is likely to be turned around at least to some degree when the new Unitary Plan for Auckland comes out next year. 
 

Actually I dont think we are

Actually I dont think we are at the bottom....with a depression rates are going to stay low or go lower.....what will change is,
a) ppls ability to pay, it will decrease
b) The asset value will drop if not collapse....
ppl will wish we had inflation.......
10k bonus?  damn.......the top bonus I could get by working my nuts off was $600....I stopped bothering with that when the company 2 years in a row cancelled the bonuses in November...like if they are going to treat you like sh*t whats the point.
 
regards
 

My girlfriend's a kindie

My girlfriend's a kindie teacher - just got  0.13c per hr pay rise! Fair to say the centre owners shouldn't have bothered. Only made the staff very unhappy!

and imagine how much time

and imagine how much time they would have spent calculating that bonus increase...

Privately owned by an

Privately owned by an infamous Australian investment bank by any chance?

Kiwi owned and govt

Kiwi owned and govt subsidised. Doesn't sound like the owner is raking it in. Its a high cost industry that can't be supported by parental fees alone as there aren't enough high earning households. Govt needs to subsidise it because the economic effects of single income households would be catastrophic.
 
If you have a moderate mortgage and children in Auckland these days you need $100,000+ household income to be moderately comfortable (ie not stressed about bills) and that's with current interest rates.

Got it - thks

Got it - thks

wtf -   thats all of $1.00

wtf -   thats all of $1.00  dollar an 8 hour day extra.Somali taxi drivers probably wouldnt sniff at that....

Why are you taking cab rides

Why are you taking cab rides round Owairaka...Gonzo..? Or did you mean in Mogadishu..?

I looked into the primary

I looked into the primary school there a few years back and was told that the largest ethnic group at the school was "other". Lol. European wasn't next either although I helped the percentage a little.

I know, I told her not to be

I know, I told her not to be so ungrateful! But would you want the Somali taxi drivers looking after and nurturing your children 9-5? :)
 

wtf, no hestation if you

wtf, no hestation if you happen to be a consultant in need - read article about Greater Wellington regional council's largesse.

5Hr/Wk, 48 Wk's/Year on

5Hr/Wk, 48 Wk's/Year on interest.co.nz @ $20/Hr = $4800
Looks like a generous bonus to me.

You have to smile at Billy

You have to smile at Billy Bob's presumptuous arrogance though don't you ...!
"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.
Nothing wrong in that per se.....except it assumes you will Govern for the next 5 to 10 years and further excludes any lolly scrambles if ,you look in danger of losing......so effectively a piffle quip Billy, just something a guy says when he's on top...............twat.

You have to ask yourself what

You have to ask yourself what went wrong in the last  3.75 years. Who put their hands on the NZD 43.636 billion of new borrowing since National came to power? - certainly not me.

I must say that the 1% who

I must say that the 1% who voted for the Act Party are getting a great bang for their buck, with the Act-sponsored so-called Productivity Commission (now how did that ever get onto the housing supply) getting such a great reception.
I mean to say, Bill, the price of housing would have nothing to do with the incredibly friendly tax regime for landlords, resulting in first-house buyers being locked permanently out of the NZ housing market, would it?
I'm ok about freeing up more land for housing development, but its hardly the whole picture.

Bill english is being too

Bill english is being too wishy washy with these Local Authority guys.
 
It must be blindingly obvious by now that Councils must not (a) be allowed to "tinker" with land supply and (b) finance infrastructure inappropriately.
 
I covered how these Local Government losers costs and revenue requirements get out of control, triggering unnecessary housing bubbles, last November with – HOW HOUSING BUBBLES ARE TRIGGERED –
 
 
http://www.scoop.co.nz/stories/AK1206/S00251/christchurch-the-way-forward.htm
 
 
Allowing them to do this, is simply an invitiation to them to be incompetent.
 
These Local Government losers hardly need any invitation to be incompetent.
 
Make the systemic changes Bill, so that these losers have to perform to an acceptable standard.
 
It wont happen otherwise.
 
Hugh Pavletich

Yep, I agree with that.  The

Yep, I agree with that.  The old Manukau City Council used to own massive amount of land in South Auckland and large number of commercial properties.  All of them are now under Auckland Council's Investment Company. 
They meant to be the council serving the rates payers of Auckland not an investment organisation.  The plot was lost many many years ago...

We set out what needs to

We set out what needs to happen in the context of Christchurch with – CHRISTCHURCH: THE WAY FORWARD –
 
 
http://www.scoop.co.nz/stories/AK1206/S00251/christchurch-the-way-forward.htm
 
 
Until the essential systemic changes are made – there will NOT be a sorely needed lift in performance within the Local Government sector.
 
 
The last thing we need is more pathetic tinkering by the tired Tories.
 
 
Like the rest of us.....Local Government will not perform, until it has to perform.
 
 
Hugh Pavletich

Council control of land /

Council control of land / housing supply should be taken away from them....hopefully English has this planned in his response to Productivity Commission...it's silly to have a group of councillors making decisions on land supply, when the results of those (quite often) poor decisions have huge consequences....perhaps implementation by Council, but Policy statements from Govt.

Ricardo - spot on.   Put

Ricardo - spot on.
 
Put simply, these Local Government losers have no right whatsoever to deny people affordable housing.
 
Local Government  love quoting the UN when it suits them - but I have yet to hear them quote the appropriate UN Conventions on Housing !

The Dutch, who have been able

The Dutch, who have been able to borrow up to 12 times their income to buy homes, are leveraged to the hilt. By some measures the Netherlands has the highest per capita mortgage debt in the European Union.
 
No wonder RaboDirect (NZ) - decided to impose a deposit limit on customers in a recently sent email :
 We may set maximum amounts that may be deposited with RaboDirect, for you or any class of customer including you.

Steven H - got my email

Steven H - got my email yesterday and have been wondering about this. Parent bank supplies the guarantee.

Bill is doing exactly the

Bill is doing exactly the right thing.
With no help for first time home owners the continuing pressure on rents and house prices will remain stong for the forseeable future.
A postive boon for investors, landlords and speculators, or anyone for that matter who is already on the property ladder.

And again Big Daddy with his

And again Big Daddy with his blind property spruiking talk. If Bill had announced massive subsidies it's good news. If he'd announced subsidy cuts it'd have been good news.... In the eyes of a property spruiker, if you ignore the warnings, theres nothing to fear right?

Esprit doesnt understand

Esprit doesnt understand irony even if it bit him on the backside. .

Having just spent $ 8500 to

Having just spent $ 8500 to get a resource consent for some renovations im starting to get an idea where the problem lies.
Gotta pay for that train set and all those personal greivance settlements somehow I guess......

Auckland Council once

Auckland Council once demanded over $2800 permit fee from me for a carport eventhough I can build one under 20sqm without permit under Schedule1, Building Acts 2009.  Bunch of Mafia..

Moa, that is quite typical.

Moa, that is quite typical. The local govt gravy train is one big joke. Most applications here in Adelaide cost no more than 100 bucks

Matt in Auck - just proves we

Matt in Auck - just proves we are getting ripped off here in NZ.  I went to get a building consent last week in Dunedin for a farm accommodation and they wanted $4500.  If I put it down as a habitable garage it was just over $2K..

Insane, what's the charge for

Insane, what's the charge for a shack habitable by Ovis aries? Might get you a discount.

robby217 - Ovis aries shack

robby217 - Ovis aries shack came under the commercial building consent fees - certainly no discount, the price went up to just on $5K.
 
If we put the building on skids - apparently no building consents.

Gosh, and here was I thinking

Gosh, and here was I thinking that Clueless Councils regulating, zonifying, planneristerizing and looking after the Four well-Beings with shedloads of OPM, was the proximate cause of the affordability hole we are currently in!
 
Clearly, I am misinformed.

Housing affordability issue:

Housing affordability issue: New Zealand well behind Australia now.....

 
(1)    Melbourne update....from Property Council of Australia. Melbourne section prices now cheaper than Auckland and Christchurch.
Property Council of Australia - Melbourne growth areas median land price falls
 

http://www.propertyoz.com.au/Article/NewsDetail.aspx?p=16&id=6278
 

 
(2)    2012 8th Edition Demographia Survey www.demographia.com Schedule 2 – Note 2/3rds of Australia’s major metros are more affordable (as at 3rd Qtr 2011 – gap widened since) than New Zealand.

 
(3)    Australian Financial Review article 5 July excerpt by Robert Harley –

 
Robert Harley

A tectonic shift is taking place in the way Australian cities are planned and developed.

The long swing to increased regulation and environmental restrictions has topped out.

The reason is simple. It’s the economy. Electors now understand. No development does equal no jobs.

Two months ago, the Queensland local government elections, largely ignored down south, swept a new breed of politician to power.

On the Sunshine Coast, where unemployment topped 6 per cent and many sought work elsewhere, long serving environmental and community activist mayor Bob Abbott was replaced by businessman and one time APN director Mark Jamieson.

“There is a realisation that if you want to enjoy the environment you have to balance it with economic and employment opportunities,” Jamieson says. “We have made it too hard for private investment to create opportunities. We want to get the pendulum in the middle.”

On the Gold Coast, sporting identity Ron Clarke has handed the mayoral chains to engineer and businessman Tom Tate. “The whole place has come to a halt; there is not one crane from Southport to Coolangatta,” Tate says.
“The place cannot go on this way if people are to survive and if rates are to stay at a reasonable level.”

Of course, the Gold Coast’s economic woes were not the fault of the council, but it had not helped.

“The council has been restrictive, not supportive,” Tate says.

Tate has a construction kick start program that aims to create 10,000 construction industry jobs in the next four years.

A one stop shop will be created, complying development will be processed in five days, planning litigation is being cut, and a holiday launched for infrastructure charges.

Longer term, Tate plans a wholesale planning review to create less red tape and with staff delegated to process smaller projects quickly.

The role of any government’s professional planning staff is critical. Around the country they have been marginalised by politics.

In the Sunshine Coast Regional Council, Jamieson says the first change is employee attitude.

“They now have a clear picture from council about how to work with private investment,” he says.

The executive director of the Property Council in Queensland, Kathy Mac Dermott, says the elections show that communities are looking for growth and employment opportunities near where they live. “To do that you need to pro-actively attract development . . . there is a huge era of change,” she says………………………(refer http://www.facebook.com/CantabriansUnite for complete text.

 
 
 
(4)   As the Productivity Commission made clear – NZs residential construction sector is a mess. It has essentially been bureaucratically bludgeoned back in to the Stone Age of cottage building.

 
(5)   The NZ National Coalition Government should have got on to this early 2009, as they said they would. Key chose not to.

 
(6)   This is very much a case of “too little – too late”. The Australians have clearly beaten us again. We chose to lose. The Clark Cullen Labout losers played a large part in creating this mess by allowing the unnecessary 2002 / 2007 inflating housing bubble - as illustrated in the case of Christchurch on this CCC Quick Facts Graph. illustrated on the Pur Purposes Page of Cantabrians Unite -
http://www.cantabriansunite.co.nz/Our-Purpose/ . It explains in large measure too why - 2 years following the first earthquake events - there is still no recovery in Christchurch.
 
 
Hugh Pavletich

There's nothing like a good

There's nothing like a good clean out of Politicians and kicking the bureaucrats into a new direction. Well Chch knows what to do at the next election. 

Christchurch is a complete

Christchurch is a complete bureaucratic shambles.

Hugh - surely there must be a

Hugh - surely there must be a case for the NZ Council for Civil Liberties.
 

and who else do they vote

and who else do they vote in? 
 

Steven - a new breed will be

Steven - a new breed will be voted in. People will stand up -they have had enough. Have you ever read Michael Gladwells book - Tipping Point.
 
Look at Queensland they have definately voted for change. In fact Hugh placed a link to a good article on Queensland yesterday.  When people have had enough, there will be change.

yes -- all he did was de-fun

yes -- all he did was de-fun a literary prize and open up mining.  not complex .
 
maybe they need good old new zealander sir joe to guide them again.

The trouble is that

The trouble is that Queensland is heading down the unsustainability track at increasing speed.
 
There's only one way that ends: badly. Admittedly Q'landers include a large percentage of non-thinkers (they thought Russ Hinze worth a vote, I seem to recall) but they may point to the way selfishness will go in every thwarted western middle-class.
 
Just a bigger mess to deal with afterwards.

When is there going to be

When is there going to be some physical action, the time for reports and reports on reports and answer to reports is well over, about 2 years ago NZ needed to start banging in some nails.
To many cubicle dwellers and members of the clip board brigade making decisions that effect an industry then a Nation.
My last resource consent was over $150 000 for a 24 lot development, took over 2 years, council contributions for being dicked about $260 000.
Next development QLD so Kiwis can buy a home off us.
With over 2000 kiwi builders now registered in Australia, no matter how you look at it they arent here so capability has been lost coupled with the new plastic ID Card regime the older boys are leaving in there droves.
Materials ratchet increase every year, in the past 20 years i have never recieved a notice that materials are going down, each year increases effect , Timber, Concrete, Tin, Glass, Labour and the regulatory prices seem hitched to a Wellignton Southerly.
Ive written to Bill English, Maurice Williamson and Phil Heatley but thats just a paper go round, it only encourages them to higher more consultants for yet another report.
Kicking the can down the road only works for so long and these guys are heading for a dead end cul de sac.
Also the decaying Housing Corp stock is coming to the end of it's life and the Polies havent even started to contemplate/comprehend the replacement of them.
Thank goodness its election year next year so we can all see exactly the fruit of Nationals housing construction programmes for the last 6 years.

MCMZ - you are describing

MCMZ - you are describing what happens at a certain point. In any regime, the easiest/best/cheapest are cherry-picked first. Obviously, the point gets reached where the assumptions made during the early cherry-pick, don't hold up.
 
I challenged David Caygill (not regarded as dumb) about this, in a recent lecture re electricity. He explained that every next generator would be the 'next cheapest on the list', that they were sequentially more expensive, and that therefore the cost per unit had to rise in relative terms.
 
Same goes for everything - but the linch-pin is energy. Not one of your developments, and not one of the components you mention, are created without it.  The best has been cherry-picked, flow-rates have plateaued even as the quality is beginning to decline. Exactly what Caygill described.
 
I pointed out to him that what he was describing, had to mean less wealth (which is the same thing as relatively rising prices) but he couldn't get it......
 
And you accurately describe the problem post-peak - the existing infrastructure (never bigger that at that point) starts to decay, demanding an increasing maintenance, just as you're trying to grow from a never-bigger yardstick.
 
Beyond efficiencies, you're into triage.
 
Wherever you try.

People, people,  people ....

People, people,  people .... you have it all wrong. The gummint MUST keep increasing tax breaks and subsidies to help home buyers, as this will continue to KEEP THE LANDLORDS rolling In clover, with supremo capital gains and increased rents !! ....not forgetting the BANKS, as they MUST be kept with their maximum profits intact ! 
C'mon why should the gummint stop now ..they have gone on this path since they came into office .....and why would anyone think they would change course now, must have rocks in their head...... the die is cast folks.  
This is all part of the plan to transfer what ever wealth there is, to a smaller and smaller sector of the population .... you are either in one camp or the other.
So get with the "winning team" .... MAX yourself with DEBT and jump on the property band wagon ... ALL ABOARD !!  .......as NOTHING is going to change.

.

.

Prices have moved rapidly. In

Prices have moved rapidly. In onehunga it’s tough to find a standalone place under $500k. This is one of the few. http://www.realestate.co.nz/1844968
The thing is that suburbs like this are trendy and considering aucklands attraction as an international city still good value. Olive trees, fruit trees, a harbor view and a safe quiet area… Most people in first world countries would say that’s a good deal.. Prices aren’t bad when you put our lifestyle into the mix.

South where? Compared with

South where? Compared with other parts of Auckland it has location to high density work areas and is in an area with more amenities ... Then there are socio-economic factors including lower crime rate.... Compared with elsewhere in nz the location of proximity to the services of higher population areas applies, as well as weather considerations.