Building and Construction Minister Smith says getting better estimates of NZ housing shortage is tough without becoming Soviet-style economy

There is little chance of the government getting clearer estimates on New Zealand’s housing shortage, bar becoming a Soviet-style planned economy, Building and Construction Minister Nick Smith has claimed.

Meanwhile, Prime Minister Bill English said he was sceptical about the value of official estimates on the housing shortage. The government was not trying to run policy based on estimates of what the shortage might be, he said. 

English yesterday said estimates on the national shortage were likely in the 10,000 to 20,000 range when presented with figures from the Labour Party that it could be as high as 60,000.

Speaking to media in Parliament Tuesday morning, Building and Construction Minister Smith said any estimates of the shortfall were highly speculative. Officials have advised that the numbers can vary by plus or minus 25,000, Smith said, adding the range is up to a potential shortage of about 50,000 houses in the country.

The speculative nature of the estimates is due to the number officials could use for the average number of residents per house, he said.

“The average in New Zealand is about two-and-a-half people per house. If you choose a number of 2.55 or 2.45, that can have a tremendous difference on the number of houses [required],” he said.

Put to him that the government carries out a census every five years, Smith said these numbers change over time. Nationally, the figure has been dropping historically, he said. Although, “in places like Auckland that number has not been dropping and that is one of the factors. The issue is that both house prices and rents impact on the number of people living per house.”

“If the housing market is tight, no surprise, rents are tight, and so you may get the teenage children staying home for a longer period than before they go flatting and living independently,” Smith said. “That is why any of these estimates around the housing shortage are going to be crude.”

Interest.co.nz asked the Minister what work was being done by the government to improve the estimates from such a large range of outcomes.

“Unless you live in a Soviet-style economy where the government tells people where to live and controls every aspect of peoples’ lives, you’ll never have a perfect estimate on the numbers that are required for a housing shortage,” Smith replied.

In Christchurch following the city’s earthquakes, officials were out by about two years, or 4,000 homes, at the point where the market stabilised, he said. “I.e. the best measure of when supply and demand is in balance is when house prices stabilise.”

Smith raised Tuesday’s REINZ figures, “actually showing in January, and in particularly over the last six months, house prices across the country are stabilising.

“That suggests we’re getting supply and demand better into balance,” he said.

English a sceptic

Prime Minister Bill English said Tuesday that he was sceptical about the value of official estimates on the housing shortage.

“What matters is not our opinion, it is the opinion of the buyers and sellers because that’s what’s setting the price,” he told media on his way into the National Party’s weekly caucus.

“We’re not trying to run policy on the basis of an estimate of a shortage. We’re just looking at the prices, because that tells you about the balance between supply and demand,” English said.

Prices have been flattening out a bit but were still high. “The answer in any case is to build more houses. That’s what’s going on right now,” he said. “The pipeline’s building up quite strongly. In the longer run that’s going to have an effect on prices.”

Update adds comments from PM English, videos

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39 Comments

Construction, yours is the musk of glorious industry. Comrade Smith would do well to spend less time making excuses and more time on the 5 year plan lest he be 'selected for resettlement' to the coal mines of the west coast where daily labour be his due reward and he be given the opportunity to show us the power of the proletariat.

Personally I could embrace a 'Soviet' approach so don't tempt me.

Nick Smith really does not look at all well , does he ?

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The reason Soviet economies are complete failures is they can't ever actually do this. Nick Smith is displaying gross historical ignorance.

Smith should have cited China who can organize such stuff , not Soviet Russia who were actually quite disorganized and incompetent

Ahh but racism.

Nonsense. Russia has produced far more competent mathematicians than most countries.

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Get some accurate figures on foreign/student ownership would be a good start to understanding what is happening with our housing Nicky boyo. Recent attempts have been embarrassing to say the least. At the worst you could almost think the feeble attempts have been deliberate to hide what we we all know anecdotally.

If they cannot handle the situation and take responsibility and act - why do they go out every 3 years asking to be elected.

Only people who can take responsibilities and act should be elected - National has to go for any solution to begin.

Nationals record of tax cuts, deregulation, outsourcing and selling assets means they are slowly but surely undermining the influence of the government.

They are effectively asking to be in charge of the process of selling the governments influence to the highest bidder. That is what "small efficient government" means. It certainly does not mean getting in the way of the wealthy making a killing in real estate.

Its a fine line, looking like they are doing something to get votes, while actually doing nothing to keep the gravy train running for their financial backers. Worst thing that can happen is they spend six years in opposition and then get back to the task at hand.

I actually want minimal Government 'influence" in my life anyway , why should I have to be told what to do in a nanny-state ?

Thats why people don't vote for the Greens

I for one, like having "nanny state" provide healthcare, welfare, infrastructure and security. All things National are either running into the ground, outsourcing, or flicking off for a pretty penny in the short term.

A lot of people vote for national as they are easily fooled into listening to fairy tales about "nanny state" telling them what shower head they will have to use, and completely miss the big picture.

Yep, who wants a nanny-state telling me I can't pollute and exploit the environment at the cost of future generations? Don't the Greens realise it's my right to be selfish and short-sighted?

It's not necessarily "our" state you'll have to worry about so much once enough of the country has been sold off into foreign ownership.

If we didn't have the clout to keep two French terrorists in jail in the face of trade threats, we won't have the clout to govern in ways that might impact the profits of foreign public-private companies either.

When called on your uselessness and incompetence, invoke completely imaginary dancing cossacks.

Well known for his original thinking

They tried to pull the ridiculous 'OMG Soviet Russia' reds under the bed rhetoric trick against opposition to selling off Meridian etc as well. Must think we're idiots.

Updated with video of the interview this morning,

Cheers

Comments from PM English in there now. He says he's sceptical of the value of the official estimates and that they're not running policy based on them. Videos in there too.

Cheers

Thanks Alex

Why scepticism? Why not outline and explain your forecasting or estimate models?

English's data-driven government, LOL.

Sure, but we create the data that suits us.

If they're not going to base policy on official estimates, then what exactly do they plan to base it on, given that they've shown no interest whatsoever in gathering better or more accurate data? Maybe they could disembowel Nick Smith and read the entrails. Makes as much sense as anything else they've tried. Vague handwaving and denial doesn't cut it, Bill. Concrete plans that will benefit NZers rather than foreign crooks or GTFO.

Labour says:

English leaves hundreds of state houses empty during housing shortage

Despite the housing shortage, more than 250 state houses have been sitting empty for over a year as Bill English tries to sell them, says Leader of the Opposition Andrew Little.

Housing New Zealand documents obtained under the Official Information Act show that there are nearly 2,500 empty state houses, more than 500 of which have been empty for over a year. Of those long-term vacant state houses, 254 are empty pending sale. Others are in need of repairs or upgrades.

“In the middle of a housing shortage, why on Earth is Bill English leaving state houses empty why he tries to sell them? We should be building houses, not leaving the ones we do have vacant.

“There are nearly 5,000 families waiting for state houses, up by more than a third in the past year.

“We know what Bill English will say – the same old excuse that these are the ‘wrong houses, in the wrong places’. Well, any house would be welcome for kids living in tents. The truth is, most of the houses Bill English is selling are in cities with long waiting lists for state housing.

“With the housing shortage growing by over 40 houses a day, the very least Bill English could do is get those houses filled straight away.

“Labour will build thousands more state houses and end National’s policy of taking a dividend out of Housing New Zealand, as part of our comprehensive plan to end the housing crisis,” says Andrew Little.

Little should be careful throwing statistics around that incite emotions

We need to ask :-

Where are these houses ?
Why are they unoccupied ?
Are they vandalized ?
Are they habitable ?
How many have been damaged beyond economic recovery ?
How many were used a P houses and are now only good for demolition ?

I would have thought the government would have already come back with a solid rebuttal if any of those categories represented a substantial amount.

They are big enough to defend themselves...

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We get it Nick.
You can't do anything.
Stand aside for someone who will.
Even soviet styled thinking would be an improvement, on this bunch of Bull Sh*tters.
No doubt our political media will accept Smith's statement , as a legitimate concern.

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Get out, Smith, get out while the getting is good. You are incompetent and of all the p,ss poor excuses I have ever heard you utter for the complete failure your government's housing is and has been, that must be the best (worst). And as for creating scary soviet monsters, all I can say about that is, my rice pudding's skin is still intact.

PA - you are missing the reason Nick is there in his now "Non Housing Housing Minister" portfolio. He is housings George W Bush or Murray Muccally , someone who fills a position without making too many waves while all around him people make whoopy. There are a lot of them in National and Nick has a hard skin to be staying on after the election while everyone with half a brain seem to be abandoning the Nats.

What ever happened to best / worse case scenarios? It seems to work in the private sector when using forecasting.

I may vote for Labour , am just waiting for Labour's comprehensive housing policy document , that must be practical , workable , implementable and affordable in a reasonable time-frame .

The stuff on their website is out of date, the market has run away from them ( land prices at $600k to $700k alone have exceeded their $300k turnkey houses) and the stuff on their website is nothing but a wishlist .

You see we have two adult kids in their twenties and with their partners , need two houses , so if Labour can deliver , they can get 7 votes from our family alone

I hope Little has a big rabbit up his sleeve

Boatman if housing is the main factor in your voting decision then you should vote Labour. At this stage Labour by far have the better set of housing policies. Leith Van Onselen the Australian economist writes about it here.
http://www.macrobusiness.com.au/2017/02/nz-labour-throws-gauntlet-housing/

To me this is not surprising. The DNA of the National Party is they see rising house prices as a good thing. They see rising house prices as increasing wealth -therefore a good thing. They cannot conceive in their little heads that more affordable housing is actually the good thing. That the whole economy would work better if housing was affordable.

It is the bubble in their heads we need to burst.
https://www.nytimes.com/2017/02/10/upshot/popping-the-housing-bubbles-in...

Edit: Brendon beat me to it, I posted the same article from Macrobusiness

What about basic probability? Expected vs observed? Work out the difference and calculate the estimate.

Really pathetic effort from the govt. Incompetent

Yep head shakingly frustrating....

I would happily bang their stupid heads together.

He’s sceptical on housing occupancy ratios? Red herring
Is he sceptical on housing unaffordability? The crux.
What a poor straw man argument.
So taking the Soviet line, you’re a communist if you want to solve the housing crisis?
The irony is… Auckland is being sold off to unreformed communists.

Bill English's alternative facts.
Govt slashes housing shortfall figure without explanation
http://www.radionz.co.nz/news/political/324491/govt-slashes-housing-shor...

I will repeat my mantra of many years...."Vested Interests" should not be allowed to make rules, fix the system to their advantage, drop interest rates on their Rentals and their crony rental, stop competition on big business, over tax workers, in favour of shirkers, Housing dragsters, create Monopolies, favour Land Banking and drip feeding, employ drips who think they know it all and can force Inflation to inflate away debt, to their advantage. Thus they take on even more debt in the Taxpayers name.

I think they call them "Members of Parliament". and overpaid, over indulged, over opinionated, some are not members, they are Ladies of ill-repute. Hands in the till, until the end of time. A drag on Society, no good to man nor beast, fit for nothing, long serving wastrels, corrupted agendas, but you voted em in.

All citizens should wake to the facts, but I suppose you are all busy painting and decorating the Family Jewels.....to Flip on to the next Imported, Millionaire species, a knock on, knocked off affair of the rich and infamous. It is just a big numbers game...in favour of a few, it is why they call the Game...Monopoly.

Stop playing, stop importing the House of Cards, Richer Players, it will all go away, as quick as a flash.
The Ladder is broken, propped up with Bailing Money and twine. The NZ way.
How bizarre.?