Smith, Twyford & Peters battle over housing figures as consents-to-builds rates, state house building and shortfall estimates are aired in Parliament

Housing shortfall estimates, the consents-to-builds conversion rate and plans for state-led house building in Auckland received a solid airing in Parliamentary Question Time on Tuesday.

Labour Party housing spokesman Phil Twyford kicked things off, asking Minister for Building and Housing Nick Smith how much Auckland’s housing shortage had worsened since the government’s 2013 housing accord showing a 20,000-30,000 gap.

Smith responded that annual housing construction in Auckland had risen from 4,000 in the five years to 2013, to about 13,000 now. “No one claimed that this more-than-trebling would occur overnight – we have achieved the accord targets and the longest and strongest growth in residential construction in Auckland’s history,” he said.

He then repeated Tuesday’s comments made by himself and Prime Minister Bill English that the National-led government was sceptical about official figures on any New Zealand housing shortage.

“Officials have advised me that depending on what assumptions are made, they may vary by as much as 50,000 homes,” Smith said. For instance, assuming a difference of 2.8 or 2.9 people per house makes a difference of 20,000 in the number of homes required, he claimed.

Twyford raised one of the PM’s favourite sound-bites during his eight-year tenure as Finance Minister: that this government would rely on “evidence-based policy” in its decision making. Was it not strange that Smith was not seeking better estimates of the size of the shortage?

“The best indicator of the deviations between supply and demand is prices,” Smith replied. Supply and demand are in balance in Christchurch, and progress is being made in Auckland, he said.

If that is the case, Twyford asked, how can Auckland be ranked the fourth most unaffordable city in the world in terms of price-to-income ratios?

Smith could not help a political dig: “The difference is that house prices doubled under the previous Labour government and they did nothing.” The current government’s reform programme is seeing the rate of house building grow from 13,000 per year to over 30,000 per year, he said, adding residential investment in Auckland grew by 27% last year.

Winston weighs in

New Zealand First leader Winston Peters could not be left out. Could Smith say why, in the five years to 31 October 2016, 13,676 fewer dwellings were built in Auckland than were consented, he asked.

“The Member’s figures are garbage,” was the reply. “If you compare the number of consents that are issued between the last two census, and the census data on the number of new houses that are completed, they were within one percent,” Smith said.

Both tabled documents to support their arguments. Neither seemed to. Peters’ document did not refer to the number cited. The key quote from Smith’s was that the numbers “show that overall, historically, new dwelling consents have predicted total dwelling numbers (as counted at Census time – occupied and unoccupied) to within 10% nationally and 5% in Auckland.”

The relationship between consents and dwellings nationally, with a lag of six months was 89% between 2006 and 2013, Smith’s MBIE figures showed. This compared to 92% between 2001 and 2006. (87% and 93%, respectively with a 12-month lag).

Meanwhile in Auckland, the conversion rate was 100% between 2006-2013 versus 94% in 2001-2006 (97% and 93%, respectively with a 12-month lag.)

Twyford stood again to ask Smith about the government’s intentions to increase the number of houses on state-owned land in Auckland from 27,000 to 69,000. With English’s comment Monday that the bulk would be sold to the market in the background, he put to Smith that there was no commitment from the government to ensure any of the new houses would be affordable.

Smith dodged Twyford’s point, inviting him to a tour of building projects in Hobsonville, Tamaki and Northcote. “Last year government agencies built more homes than in 25 years,” he put to the House.

Not to be denied extra comment on the numbers, Twyford issued a press release following Question Time:

Nick Smith has confirmed National has no plan to build 69,000 houses in Auckland, says Labour Housing spokesperson Phil Twyford.

In Question Time today, Nick Smith admitted that the 69,000 figure is only the theoretical number of houses that could be built to replace 27,000 existing state houses over the next 30-50 years. There is no plan to actually build these houses, let alone to ensure they are affordable for first homebuyers or kept as state houses.

“Bill English is buckling under the pressure. He’s got no answers on the housing crisis and is making up policy on the fly. Nick Smith has now admitted the government has no plans to build 69,000 houses.

“This isn’t leadership; it’s desperation from a Prime Minister who just wishes the housing crisis would go away but won’t do anything about it.

“At the same time, Nick Smith is trying to claim the housing shortage is ‘only’ 10,000-20,000 houses but he can’t back that number up in any way. The Government’s own documents say the shortage in Auckland is 30,000-35,000 and the nationwide shortage is 60,000.

“Bill English and Nick Smith are in cloud cuckoo-land when New Zealand urgently needs is practical solutions to the housing crisis.

“Labour will build 100,000 affordable homes for first homebuyers; we’ll stop the state house sell-off and build thousands more state houses; and we’ll lock out the foreign speculators who use our houses as gambling chips,” says Phil Twyford.

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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78 Comments

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22

Fling all the figures you want for as long as you want, but the truth of the matter is, the National government is doing far too little, far too late. Absolutely bloody disgusting. They will have to go.

I am sure that like many Kiwis , I will vote for Labour at the next election over this housing issue BUT ONLY IF they produce a Housing Policy Document that is :-

Workable
Practical
Makes sense
Is affordable
and implementable within a reasonable time-frame

Their current ideas as set out on their website are a wishlist full of imaginative ideas that Walt Disney would have been proud of , so they need to get cracking on this strategy document so we can all see it and decide for ourselves if we will vote for it

Look at the big picture for the country as a whole not just for one particular segment of the economy.
Your criticism of the Government is ill founded . What do you want a boom or bust situation in the housing market.. i t took years for the housing problem to emerge and i will have to work its way through. Do you want a reevaluation of the whole housing market. Because if interest rates start to rise to historic levels that is what you are going to get. Again the average New Zealand will suffer

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21

"Evidence based policy" - it is the policy of denial, lie and manipulation - one very good example is non resident/overseas buyer data (The very defiantion of overseas buyer manipulated to justify their motivated policies).

Can anyone argues on that be it politicians or so called experts.

Time for national to go - it is inevitable.

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18

Its almost painful to listen to Nick Smith speak because he just oozes arrogance. Does he actually believe his own BS? It appears he does.

I would say he oozes equal parts arrogance and incompetence.

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13

You should try talking to him in person. You'll quickly realise he's an idiot.

lol. Everyone knows

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11

Because the government(s) continue to favour a speculator-based, tax-friendly property market, no one has any idea what kind of housing stock is required. Reforms are badly needed.

Waste of time arguing the numbers and pointing fingers. Get your finger out and get something done, all of you.
This is why people get sick of politicians, zero responsibility and even less action
How many houses are we short by? a lot.
How many do we need a year? a lot
How many have we done in the last few years? not enough.

it is time for total reform, do away with neg gearing on homes, get rid of accommodation supplements and channel all those funds into building new houses. land tax for owning more than one home, and make it tight with no loopholes
in ten years housing will be stable in price, government expenses for housing will stop rising
will never happen as too many MPs have their hands in the cookie jar

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18

For Bill English evidence based policy will go out the window this year. All he has left in his political armoury is spin.

The plain facts are that the government's mass immigration programme is bigger than the construction boom. More people are coming than we can build houses for -that is the simple fact -that is why we have a growing housing shortage. It is easily measured -divide the population increase by the number of houses built and if it is greater than the average house occupancy rate then the housing shortage is getting worse not better. Every year under National it has got worse.

National have refused to address over stimulation to housing demand for 8 years and their supply improving measures have been 'too little too late'.

Even worse for Bill English is his distorted use of evidence is beginning to be noticed by the experts. For instance.

An Independent Australian economist states that Labour by far has the better housing policies. Because it addresses both supply and demand. He says "the National Government is failing on housing. While it has had some moderate success in boosting dwelling supply, it has failed to keep up with the Government’s mass immigration program (see below table)." Note; the table shows that non-citizen immigration has doubled to 70,000 in 5 years -so it is not just returning/non leaving kiwis that is contributing to immigration fueled population growth.

http://www.macrobusiness.com.au/2017/02/nz-labour-throws-gauntlet-housing/

This is because English is running a "data-driven government" that finds things "too hard to measure" if they're inconvenient.

Selective data just equates to "lies, damn lies and statistics".

Correct it is policy of denial, lie and manipulation.

The issue here isn't the politicians. It's the people voting for the politicians. Governance in democracy is just a reflection of society. Babyboomers and homeowners are the major demographic of society (for now) and like the fact that houses are expensive because it's made them 'rich'... Why would any people pleasing democratic party get off side with the majority?

So in reality, it isn't the politicians that need to take a look in the mirror, it's the people that are voting for them. If they change, the politicans must change as in the end they're just trying to please the majority. Our society has simply rewarded their incompetence in recent past because there has been financial gain for the individual.

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14

I hope everyone has been noticing how Bill English, Steven Joyce and Nick Smith excuses and spin on housing are getting more circular and pathetic.

When opposition parties said NZ needed better polices to reduce housing demand stimulation and better policies to improve housing supply. The government were united in their replies of there is no problem -we know what we are doing. The opposition parties response was -I don't think so -look at the house price to income ratio it is one of the worst in the world.

Bill, Steve and Nick all responded by saying supply was increasing -so everything will be ok. When opposition parties showed that the increased supply was actually not keeping up with the bigger increase in demand -more people were coming than we can house -so the shortage is getting bigger not smaller. In other words, everything is not going to be ok.

When this was pointed out Nick Smith went back to saying house prices were the best measure. This is eye rolling bad and a pathetic end for the careers of Nick Smith and Bill English in particular.

Either that or MMP prevented them from reforming the RMA in a timely manner, like the first six months of their first term.

Pray tell us how the RMA has a significant effect on the number of new builds.

Or the immigration rate, or foreign buyers, or reforming how infrastructure is supplied, or a government backed build programme, or any number of interventions they could have done to take the heat out of housing demand or made housing supply more responsive. The government for 8 years have been negligent on housing and now they need to own the the problem. We the voters need to hold them to account....

Feel sorry for Bill English as will be defeated again but on the brighter side - a consolation prize that was - the PM for almost a year.

I don't think so what this space. The other parties have nothing better to offer..

Foreign media suggests Labour's policies for housing are a better and more comprehensive set than National's (partly because National doesn't have much).

I haven't read them - just noting foreign impressions.

Hope everyone is aware that the politicians are investors themselves, hence why

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14

Everyone is more than aware of the colossal conflict of interest, Wiseguy. It's selfish, greedy and pathetic that a handful of MPs have deliberately and willfully caused the greatest housing crisis in New Zealand's history just so they can make a bit of dosh. They've even sold out the entire next generation of young Kiwis (of which I am one) via asset sales, no vision or long-term goal for the country, stupidly high house prices, ballooning debt, water quality degradation, little maintenance or upkeep of roads, railways or water utilities....

And in the interests of bi-partisanship.

Everyone is aware Auckland City has been governed by Labour and that this is an Auckland problem. It's selfish, greedy and pathetic that a handful of local politicians have deliberately and willfully caused the greatest housing crisis in New Zealand's history just so they can make a bit of dosh.

Yes - and we need to understand that Key was the major driving force thru all this.

Any author considering a biography of the man needs to wait until the full blood letting of the Ponzi he set up plays out.

wildcard ... unfortunately the lifestyle that you ordered is out of stock

http://www.oftwominds.com/blog.html

One word greeneyed

Where is the justice in that and where and who to turn to?
What really needs to happen is a political correction.

100% of the above comments are (rightly) condemning National for their lack of action in housing and are wanting National out. But why is National still polling far higher than other parties (about 47%) ?

Good point Yvil - because the "opposition" are absolutely fractured and hopeless.

I'd love a viable (non-negative protest vote) alternative but jeez its hard to see one.

The only glimmer of hope I see is Greg O'Conner entering in the Labour party - at least he can speak with passion and get a point across and isn't a wimp, unlike the current leader (seriously cant even remember his name) who is just hopeless...

Until then I'm forced to choose between the status quo who have proven to stand for nothing in particular and be bereft of anything but populism (Just cant do it again...my conscience wont let me) or a protest vote with "you know who....."

Frankly all of them currently make me feel unclean.

Because Len Brown.

Partly it's a failing of the fourth estate to communicate reality. People find this site to be a refreshing source of insight and fact because of the failings of our traditional media. Few of them call out the government...heck, Corin Dann was waxing lyrical about the huge investment of effort National has put into cracking the housing crisis over the past year...that's just ridiculous...in the last year they've even persisted in refusing to acknowledge any crisis exists.

Rick I think you are right -but I attach no blame to the 4th estate -it is the technology of social media.

An interesting statistic out from the UK which I think could be true for NZ is that those over 50 years consumed a lot of news by main stream media -reading newspapers for instance between 30 to 40 min a day. This was across socio-economic divide -people chose their newspaper of choice -Sun, Daily Mail, Guardian, Telegraph..... People under the age of 30 mainly consumed news from social media -Facebook etc -but the killer is they are only consuming 1 minute of news a day on average.

So the young people most affected by the likes of the housing crisis are the least informed about it. This is why opposition parties will need to make a big effort on direct contact with this voter base -to explain the issues. This will not happen until closer to the election -so the effect will not be seen in the polls.

P.S Also the media often do not acknowledge their declining influence and therefore blame opposition parties for not getting 'traction' on issues. Because that is easier than facing the hard fact that less people are interested in MSM news....

The Fourth Estate?
Does that include Patrick Gower, who I am told reported that Government planned to build 69,000 new houses over the next ten years in Auckland. Apart from there being no plan, apparently those potential 69k units would partly replace (but not add to) the existing 27k units already there.
I stand to be corrected as I missed his comments.

Isn't it because the polls are done via landline? The Boomers and the elderly are more likely to have them whereas us younger Kiwis tend to use cellphones instead. Also the Boomers and the elderly would be more likely to vote for National because they want NZ house prices to continue rising to stratospheric levels so they can keep getting dem capital gainz.

Yeah, it's interesting now to see the bitter tears of boomers at the intensification that will be made available via the unitary plan, intensification that is only required because they've continued condoning, approving and voting in politicians who escalate the house prices.

This is the other side of the coin, intensification. Bit late for tears now, after having sold the next generations of Kiwis down the river for so long.

If there truly is a shortage of homes why have rents not risen to reflect the shortage. Speculation can distort asset markets and blinker everyone from the reality.

Isn't it obvious?
If there is a substantial enough amount of purchases by 'investors', then new rental supply is adequate to stabilise prices. Either that, or we are approaching the limits of rental affordability.

Nymad , so as long as 'investors' are willing to pay ever higher prices irrespective of declining yields this asset market will be ok.

That's not what I was saying.
You asked a question of why rents were stable - I gave you the possible answers.

Nymad, I appreciate your logic and actually do not disagree with it .However , between January 09, and October 16, median Auckland house price rose 110 percent , rent on a 3 bedroom home 35 percent. Rents are not driven by speculation .

Again, I never said they were driven by speculation.
I said they were driven by supply. Increased speculation implies increased rental supply..Increased supply means...downward pressure on prices...
Alternatively we are at the limit of affordable rent/approaching an pivotal elasticity point.

I don't understand your logic nymad, you seem to believe that more investors mean more rental houses. This may make sense at first but it simply isn't true. Investors buy houses that are either:
1) already tenanted (so the rental supply is not increased) or
2) owner occupied, in which case the rental supply is increased by 1. But these owner occupiers need to buy another house to live somewhere, and if they do not buy but rent, then the rental demand is increased by 1.
In any case the outcome is a sum zero. The only way to increase rental supply is to build new houses to rent.

Yes, investors only tend to buy existing dwellings. However it is only a zero sum in the case that you do not consider new builds or transitivity of the population.
Look at the substantial growth in prices in other parts of NZ - we have to assume that people are realising a wealth effect by selling in Auckland and migrating to the regions.
So, the wealth effect of property is stimulating an increase in aggregate supply of rentals...Sure, it is at the cost of property ownership, but it doesn't matter - the markets are distinct.

The other logical reason is that we are fast approaching a point of rental unaffordability.

I think rent is at the ceiling. People simply can't pay more.

Rents have risen.

it doesn't help when ANZ is offering 4.39% for 1 year fix

Nick Smith (and I so don't like him) does have a point when he says that under labour up to 2008, house prices doubled and they were building 4000 houses pa in 2008 in Auckland and in 2016, 13'000 houses got built under National

Yes prices doubled under Clark's Labour administration.

I think this illustrates the boiling frog problem. Temperatures doubling from 20 to 40 degrees is pretty uncomfortable and rightly the public voted in a party promising to turn the temperature down. John Key promised to do this by making a big run on affordable housing in 2007.

But the National government in power did not fix affordable housing and now temperatures has doubled from 40 to 80 degrees which is lethal. In housing not frog boiling terms that means families living in cars and garages, rents and house prices rising faster than incomes and an entire generation locked out of home ownership.

Labour in 2017 is not the same as Labour in 2008. Their housing policies are massively improved. I believe Labour has the political will to fix the housing problem. Affordable housing is part of of Labour's core DNA and Labour under Andrew Little look to be heading back to its roots.

You really are the perfect voter, aren't you.
Sure, house prices grew ~100%. However, even an elementary understanding of finance/economics would show you that that it is in fact the absolute increase relative to disposable income that is the issue in the case of Auckland.

Conveniently NS doesn't refer to the build rate prior to 2008 - Stats NZ would suggest that it was substantially higher than the 4,000 during the period 2008-2013 that NS specifies.

This election has just one major issue and nothing else .......... the housing shambles .

The rest is going well, the economy is flying along at a clip , we have great employment levels , we are exporting food and importing tourists and life is great ( its still summer and the fish are biting )

But if Labour want a shoe in then the Labour Housing policy needs to be tied in to a reduction in migration , a fast track system for the freeing up of land for expansion and they need to tell us how they intend to overcome the backlog................ all at a reasonable price and with minimal impact on the budget .

I have my doubts , but I am sure that like many Kiwis , I will vote for Labour at the next election over this housing issue BUT ONLY IF they produce a Housing Policy Document that is :-

Workable
Practical
Makes sense
Is affordable
and implementable within a reasonable time-frame

Their current ideas as set out on their website are a wishlist full of imaginative ideas that Walt Disney would have been proud of , so they need to get cracking on this strategy document so we can all see it and decide for ourselves if we will vote for it

The housing shambles is all encompassing.

It covers...
- Immigration (demand)
- Wage stagnation (affordability)
- Employment (Affordability to maintain mortgage payments)
- Land availability and intensification (Supply)
- Cost of living (Ability to save for deposit/make repayments)
- Infrastructure (Liveability and sustainability)

Each party may touch on one issue, but they aren't ever going to hit enough to rectify the problem.

No, it is just Auckland.

Everywhere else is building much faster than Auckland, generating high wage growth. The ability to rationally use land supply is a pretty mediocre talent, which is utilised world wide and gets results.

Mediocre planning suggests that if the land price of a city is high, you add a mediocre amount of land to the city area (incurring a small infrastructure cost).

Auckland planning takes a different route, suffering a high land price Auckland decided to add huge amounts of sprawl miles away from the city area (incurring a very high infrastructure cost).

Aye? How does building houses generate high wage growth? Wages for builders, architects, labourers etc maybe, but not in general for the rest of the economy.

The direct construction sector is 7% of the workforce, taking the brakes off Auckland construction would cause the output of this sector to double. The numbers of people employed in this sector would need to grow substantially. Those new entrants to the sector would need to be attracted by high wages. Hence we all get high wage growth as our own employers need to compete for our labour.

Now back to reality.

Wages would not increase
Construction workers (Low skilled labourers) would flood in from overseas.
Shoddy work, illegal pay rates, and general carnage would ensue.

Case in Point - Christchurch.

You think what we have in Auckland today is low immigration and excellent building practice?

No, hence my first comment

unaha-closp,

What a bizarre view of the world you have. I am sure that there would be some wage growth in some sectors of the the building industry,but much of the workforce required would have to come from overseas and that would cap any significant,sustained increases. A massive increase in building would also lead to some price falls in the existing housing stock and that would leave many feeling poorer and thus less willing to use their properties as bank accounts for large scale discretionary purchases,as well as home improvements. It would also lead to yet more shoddy buildings being erected.

I've got a very good view of the world, the world is building a massive glut of new housing supply. Only Auckland isn't and that has very negative implications for Auckland property prices.

Yes but it has also created many many Auckland millionaires ;-)

It has created millionaires all over the world.

The only slight difference is that elsewhere the millionaires own modern, energy efficient, structures that people can live and work in.

In Auckland the millionaires own dirt.

Aucklanders = Land-bankers

Are you kidding ? You have to book readymix a month out now. Unleashing land will not increase build numbers when the supply chain is at capacity.

It would free up hundreds of thousands of dollars per build, that we could use to buy a better supply chain.

Boatman - I disagree. Patient Zero is the high immigration rate.

This leads to the housing, wages, infrastructure issues mentioned above, plus long hospital waiting lists, education issues, traffic delays, increased crime etcetera, etcetera....

Car stickers in Perth state it well, "F%?k off, we are full"

Nautical-man - Make your mind up
You are an inconsistent turncoat
Yesterday you said you'd vote for Winston
Now it's Labour

I will vote on issues this election and vote for whoever comes up with a solution ( a workable one) to the housing shambles .

If its Winston , so be it , but I dont think he has the ability to do it

Gareth Morgan is an unknown qty

National have got us into this mess

The Greens are ideologists not grounded in reality

That leaves Labour to come up with a plan

I just wonder if Andrew Little has a big enough rabbit under his sleeve ?

Dreams are free, Dream on

Labour do not need to make it into government to solve the housing crisis. Labour can solve it today.

Phil Goff can solve the housing crisis any time he wants. Open up land at Ardmore, at Swanson, on the Albany Hill. Len Brown could have done the same, but he didn't.

Phil Goff won't because that would drop about $250,000 off the price of every Auckland house in less than a year.

Fully agree. Christchurch values are stagnant, rents have fallen, and it is possible to pick up a house/plot package for around $400-420K at the low end.

This happy outcome is down to massive builds, aided and abetted by competition for residents by TLA's, and the originating cause being the overthrowing of planning constraints by a Land Use Recovery Plan (LURP) which cut right through the Planners' zoneration and restricting tendencies.

Ms Market did all the rest, despite population fluctuations as residents moved around, contractors moved in and now out, and insurance wrangles played out.

A lot of building and construction businesses were formed, thrived, and some died. This is Schumpeter's Creative Destruction in action. No Gubmint direction here - just market forces inexorably acting as always.

However, the Canterbury situation cannot be transferred to Awkland, where the bulk of the population increase fetches up, and where the zoneration and restriction is most out of control.

The question is the age-old one - how do we get There from Here?

waymad, have you ever considered that the oversupply in Chch houses is due to the thousands of houses which had to be built as part of insurance payouts ?

We leave Auckland.

Office and accommodation rentals are due to fall everywhere on a global tsunami of oversupply. Except not in Auckland which has a chronic under supply. All the corporates in Auckland are about to find very good reasons to leave.

Is he allowed to put a 20% foreign purchase stamp duty on purchasers in Auckland? That would be a good start, a la Vancouver.

No, Vancouver isn't like Auckland. Vancouver did the thing where they built stuff and had an oversupply.

We have the complete opposite, because we haven't built anything. Applying Vancouver's measures would be monumentally stupid. Mind you this is Auckland Council so...

We are better than Vancouver! At least we have Rangitoto they don't have teehee~

As with the US, it doesn't actually matter who wins the election ...

http://kunstler.com/clusterfuck-nation/made-for-each-other/#more-7049'