All housing affordability measures have their drawbacks, but all point to one policy response required, PM English says. 'Build more houses'; Welcomes some Auckland land price falls, says materials costs need to be next

All measures of housing affordability have limitations, although all point to the same required policy response of building more houses at lower costs, Prime Minister Bill English says.

On that front, he welcomed news that land prices in some parts of Auckland were falling and that Auckland consenting had been made electronic, cutting time from the process. However, work is still needed on reducing the costs of building materials, English said.

English was speaking to media at his post-Cabinet press conference after Radio New Zealand reported Monday that the Reserve Bank of New Zealand had warned the Ministry of Business, Industry and Employment (MBIE) that its new Housing Affordability measure should contain higher interest rate assumptions than had been used, yet MBIE released the measure regardless last month.

Read David Hargreaves' article including Labour’s response. For a review of the measure's timeline, including that MBIE also didn’t include the most up-to-date information available from Stats NZ, read Alex Tarrant’s article from 22 May here.

Asked whether he was disappointed the measure had been released without incorporating the Reserve Bank’s concerns, English said the HAM index was a matter for MBIE. The only advice he’d seen was there had been some complication about a series the RBNZ was set to discontinue, he said.

“Any measure of housing affordability has limitation, whether it’s income to property value ratios, or whatever, they can’t measure everything,” English continued. “What we do know is that any measure points in the direction of getting more houses built, faster and more cheaply. And so, we focus on that.”

Asked whether his comment indicated a desire for house prices to come down further if building costs were to be brought down, English replied:

“Land prices in some parts of Auckland are actually coming down, I’m advised. But there’s a lot of work to be done about the costs of the consenting process and expansion of the supply of materials so that the cost of the materials isn’t too high.”

There had been progress with the Auckland building consent process going electronic in the last month or so. “I’ve had a bit of anecdotal discussion with people using it who say it’s a big step forward from where it was, and will be less costly. So that’ll be great,” English said.

Put to him that two of the greatest costs were land and materials, English added a third was time. “Just the length of time it takes to get any housing built, particularly through the statutory processes – consenting processes. The system tries to work on all three at the same time,” he said.

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59 Comments

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Still not acknowledging demand. Along with his attitude to Pike River, this could be his undoing.

It is definitely a worry - but when the greens are calling for increased refugees (so are completely ignoring the whole immigration, lack of housing, etc... message) then what are the real alternatives?

Nonsense noncents.

"Party co-leader James Shaw said it would put a cap on overall net migration at 1 percent of the population, including returning New Zealanders.
He said that would help to smooth out numbers from year to year and avoid massive spikes.
Mr Shaw said under the policy, immigration numbers would have been about half what they have been this year, but in other years the numbers could rise".

http://www.radionz.co.nz/news/political/315879/greens-would-cap-migratio...

+ 200 refugees
- 30,000 fake students

(both numbers made up)

Sounds like a pretty good head-count reduction to me.

......... except that what the Greens say and what they do, hasn't actually been tested.

Nonsense?

He will cap immigration, but the Refugee cap will increase. Based on that logic he is effectively swapping Kiwi Citizens for refugees.

Also what happens if more than 1% of people are solely returning citizens? Are they going to stop them from entering? Maybe WETA workshop need to install Gandalf figures at all the aiports saying "You shall not pass!"

At best it is a poorly worded (and therefore will be poorly executed) policy. At worst it is pure incompetence.

..as incompetent as the national open door policy?

If we are taking people, I would rather we take people form countries we have stood by and either assisted or cheerleaded the West in bombing the c##p out of. People that are homeless for no good reason of their own, as opposed to people from countries they just want to get out of because they breed to rapidly

So in the ideal world, I'd take none.

Don't get me wrong I am not advocating National. I just don't see why we have this incessant need to help others before helping ourselves.

The Policy should have been to cap immigration to returning Kiwis only.

I hear people saying "But we need..... ", no we don't!
- If we don't have the skills, then train our own people
- if we aren't motivated to do the job, then pay us more,
- if we are drugged out, then address the causes

Charity begins at home. Maybe it's time for one party to focus on our current citizens first, before worrying about any potential new ones.

..no argument..fully agree.

Would temper that with moderating our enthusiasm in supporting those who support bombing other countries...and then grizzle about refugees fleeing from the shambles created.

Exactly, keep our noses clean would be a great start. Maybe that should have been their policy. We won't interfere in nations to create refugees.

Greens are compromising their green values by abstaining on the sale of part of a public reserve. The point England development enabling Bill. AKA The development enabling Bill. Precedent setting. Lets see where this shortsighted brings us!

Return of citizens can't be prevented, even if they're big-time dangerous criminals, as with the hundreds that Australia have been returning to us. If it was enacted, any cuts would have to be from other sectors.

If return of citizens was that big and sudden, there would probably be bigger things going on in the wider world, and tweaking immigrant percentages the least of our problems.

How will he cap immigration - he seems to want about 25,000 less than this year? Increase point counts? Increase minimum wage requirements? Require immigrants to live in places they don't want to go to?
It seems obvious that the success of immigration in NZ is its diversity. Note there is no proof of economic success (in fact some evidence that it is not helping our unemployed nor our low paid workers) but we don't have the racial attacks and terrorism seen in other countries (even Samoans and Tongans seem to get along well) and we get many of the benefits of an OE without actually having to travel.
I once proposed that they should introduce a cap on immigration by country of origin so as to maximise diversity - this would reduce numbers from China, India and my own country of origin Britain but not say Romania or Ghana and I was immediately accused of being racist by a distinguished immigration expert. Rather odd since the Dept of Immigration has had quotas by country for at least 20 years applying to its working holiday visas.

>"Note there is no proof of economic success (in fact some evidence that it is not helping our unemployed nor our low paid workers) but we don't have the racial attacks and terrorism seen in other countries"

There's a good chance that's more about critical mass and lack of opportunities. We'll sometime reach critical mass, and as this government lets housing spiral out of control ever further we'll also eventually end up with people feeling the lack of opportunity.

Waiting lists.

25,000 - (New Zealander net migration past 12 months) = number of people to be granted visas

Allow spouses and children, pick the highest valued.

Simple. Not hard. Completely possible. In no way racist.

These are the latest figures for a year of approved permanent residency. There are plenty of temporary work visas that may change into residency which explains the over 70,000 that is reported.
Application Stream Approved
Business / Skilled 29,365
International / Humanitarian 3,971
Parent Sibling Adult Child Stream 3,006
Uncapped Family Sponsored Stream 12,618

The parent sibling has been arbitrarily frozen and the Humanitarian has been expanded by 250 so expect some changes. The family sponsored is all the Kiwis who collect partners while on OE and the recent immigrants who go home to find a wife/husband.

So cutting to 25,000 will roughly half the skilled migrants if there was no net loss of Kiwis.

Now who says who is highest value? I came as experienced but elderly computer programmer - a cheaper but younger programmer may have been a wiser choice for NZ. Is a Careworker more value than a shelf-stacker or assistant chef?

I have no problem with higher end immigration. There really is no need for low value migrants. It suppresses wages, encourages corruption and puts a strain on services.

I don't know much about the care industry, but they are severely underpaid for such a demanding job that offers so much to society. To say kiwis don't want to do the job is only half the story. Of course kiwis aren't going to want to work in professions where due to immigration settings the highest they will ever get paid in their entire career is a few dollars above minimum.

1% is still far too high. Here are some numbers to add perspective. Note that in some of the following countries, many people are complaining about immigration being too high :-

New Zealand currently 1.5% !!!!!!!!!
NZ Labour proposed (40,000) 0.9%
UK 0.39%
USA 0.3%
France 0.04%
Germany 0.19%
Australia 0.75%

Party co-leader James Shaw said it would put a cap on overall net migration at 1 percent of the population, including returning New Zealanders.

I find it strange that the Green party try to support both population growth and Environmentalism at the same time.

At 1% net migration they are excepting around 35,950,000 tons more CO2 emissions per year and rising, not to mention resource consumption, water use, household and other waste etc.....

So James Shaw must see himself and the Greens above the Universal Declaration of Human Rights? He cannot stop a citizen from leaving or entering this country unless there is a criminal issue.

"Still not acknowledging demand. Along with his attitude to Pike River, this could be his undoing."

......or its making.

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An obvious case of "Duh" here Farmer Bill.
Coupled with the HAM fisted approach from the MBIE reported yesterday shows they will do anything to kick the can down the road until Sept.

Oh, bravo, the penny drops. So what's he going to do about it?

And what's he going to do about mitigating population pressure and foreign and speculative demand? Hmmmm?

Somebody remind this turkey of the responsibilities of PM, make sure he realises that there's more to the job than stuffing your pocketses with fraudulently acquired accommodation allowances.

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Stuborn Arrogance Ego at best.

Like Pyke River definitely national is trying to hide and protect few, otherwise why will they not talk about demand side of the problem - Surprise.

Election will and should humble the arrogance.

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Some anecdotal evidence its NOT a supply problem: I was at a few open homes on Sunday up Kumeu way as there's a large concentration of new builds. Turns out all the Chinese re agents had the same comments:
1. No more hot money
2. Banks don't want to lend locals anymore money
At the last house the Chinese agent said the builder reduced the price overnight by $118k as he needs the money to pay for new sections coming up for settlement.

"he needs the money to pay for new sections coming up for settlement."
This happened in Christchurch when the GFC hit. A small developer who had a commitment to buy his next 13 blocks from Ngai Tahu found that lack of sales of the newly developed stuff left him short of cash flow. Result? Ngai Tahu claimed default; confiscated the blocks and kept the deposit. Come the earthquake, and all the need for new building, and I'm sure the tribe did very well!

Well, hopefully this means that before too long the nice elderly lady recovering from a recent hip replacement will be able to move out of the leaky house bus she's camping in and will have access to a rental. Earth to Bill, keeping on top of this kind of thing is the responsibility of Housing NZ, which is part of the government, that thing you're supposed to be in charge of, perhaps you've heard of it?

When they speak - are they showing their intelligence or ours - people of New Zealand.

High time for them to go.

Besides their policy will support vote for change just on their I, Me, Myself attitude.

How and Why should kiwi tolerate such attitude except people who are making fortunes by their ponzi - can ignore.

I honestly believe we don't have the intelligence to vote them out.

Look at all the screw ups we have had
- Pike River
- Housing
- Immigration
- Out and out corruption (looking at you Judith)
- Flag debacle
- Water quality
- RBNZ interference
- Anything to do with Auckland (Traffic, infrastructure, housing, etc...)
- CHCH Earthquakes
- Peter Thiel
- Kaikoura Earthquake
- Child poverty/abuse/neglect
- Catering solely to corporates
- Justice (Looking at Keys comments to Asian/Indian communities)
- Drugs/Gangs
- Employment and wages
- Costs of living.

Now look at the voting patterns....
- Gerry (Creator of Earthquakes) Brownlee consistently wins his CHCH electorate.
- Nick the (environmental wizard) Smith consistently wins this local electorate.
- Judith (nothing to see here) Collins gets voted in consistently.
- National get the party vote in Labour seats, and Labour get the party vote in Naitonal Seats.

Then you have the opposition...
The Tiny Racially based party that isn't racist
The how do they have a future party
Failure to Act
Tax Our Populace
Winston First
Angry Andy and the fractured minorities.
The misguided Hippies

Maybe we do just get what we deserve. The New National(s), fixing the issues by replacing the voters themselves.

Aren't you being a little hard. I don't think the flag vote was a debacle - it established what we want and although no one would say it was sensibly or economically organised it could have been worse. And I don't think the nationals caused the Kaikoura earthquake and wasn't it Labour who did the non-transparent citizen Thiel deal. However all the other points seem right on.

>"and wasn't it Labour who did the non-transparent citizen Thiel deal"

No it wasn't. It was National. I'm shocked that history has been rewritten so quickly to foist it on Labour.

Apologies - I should have checked. But both parties like the special category of NZ citizen by party political donation with the ceremony done in private. Really gets up the nose of an honest immigrant especially when the Chinese government asks for us to return 5 of its top wanted economic criminals. I'd prefer a world where we are in the right and the Chinese are in the wrong.

It was a debacle. At no point did they ask if/why we should change the flag, they then used dubious methods to determine the popular 5, then politicized it beyond all logic.

Didn't it come out later that the main reason Key pushed on with that stupid referendum despite a complete lack of interest and notable absence of support was that his nuts were being twisted by the Chinese business lobby?

It is a pretty bad rap sheet when you put it like that, huh.

The calibre of representation is a direct indicator of the calibre of voter, though.

Sadly you are right.

Although you could argue that the non voters are now valid votes towards no confidence in anyone. Maybe why they continue to be the biggest single block.

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This is what needs changing...mitigating population pressure and foreign and speculative demand. Really shows Nat in the corner of banks and specuvestors and no one else. Reset needed, vote time coming soon.

I won't be sitting back and relying on the Government - this one and whichever one holds power after 23 September - to sort out NZ's housing problems. Governments either can't or won't make a big difference. They tinker around the margins (especially in election year) but they aren't suddenly going to make houses available and affordable for everyone who needs/wants one.

As unfortunate as the above may seem, people do need to face reality.

Those who want their own roof over their head, and/or want an investment property or two, need to devise their own strategies for achieving this. It's still possible but it's certainly getting tougher......

The structural shift now underway in NZ's housing market, means house prices aren't destined to retreat by much in the short term (despite the magnitude of the recent upswing). And in the medium/long term, prices will almost certainly keep climbing.

It really depends how angry young people get.

People only own houses now because previous governments DID carry out radical change at points in NZ's history. E.g. introducing land taxes to break up land banks held by local and foreign landowners in order to get land into the hands of more regular Kiwis.

Governments can make a big difference. National won't because their voter bloc is their older set who benefited from both affordable and (now) expensive property, and they won't want to give up any of their nest-egg. What it needs is enough people who get angry enough to rebalance policies a little more like they were in the past, the type that fostered a high rate of home ownership in the past.

It'll need an interested young electorate and a party willing to look at the needs of more Kiwis than just the lucky ones born at the right time.

Oh, you are being way too kind to National. Sir John Key made a massive difference when he declared all of Auckland region as a super city. A city of more than a million people is now officially exactly the same as a small town. A legal fiction creating such a loophole, that a whole housing crisis has eventuated. Sir John's greatest legacy.

Today huge sprawls of land around Pukekohe or Wellsford or Clarks Beach are being paved over. But the relatively small amount of land that Auckland City requires for growth is being shut off forever. Costs spiral out of control and construction slows to a crawl.

Please don't count out the elderly as self-interested. That is the young. Like many other gold-card holders I want a change that helps my children and grandchildren. The only selfish pensioners are the ones without grandchildren.
Please do get the young to vote but ask them to think before they vote and not just vote selfishly. It was embarrassing to see no interest loans to uni students - what an obvious election bribe. Where does my son a building labourer get an interest free loan - all he gets is a system that keeps wages low except for graduates.

Fair call, I know there are older folk who want things rebalanced to give their children and grandchildren a fair chance. Was just noting that young people need to participate more in democracy if their interests are going to be looked after by politicians.

Agree re interest free student loans...about as good an idea as subsidising dairy farm irrigation schemes, company wages via Working for Families, and property investors via the accommodation supplement. On student loans, I see the problem as more being about education being run as a business now, and companies nigh on universally requiring a university degree where in the past they required only high school education before they were prepared to invest in workers.

very well said, tothepoint

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Governments either can't or won't make a big difference.

National could have introduced capital gains and undeveloped land tax, slashed the immigration numbers by tens of thousands, reduced the number of "skilled" worker visas issued, developed factories to produce kitset homes cheaply, invested in the training of new tradie apprentices, invested in the fields of IT, R & D, programming, coding etc, started schemes to financially educate the public...

Arguing a government can't make a big difference to a country is laughable. I agree that National won't make a difference, though.

And who the heck would pay for all this Wildcard? The Toothfairy?
What you have written is the greatest issue facing NZ......it is people thinking they can tax a country to wealth or regulate it through the problem areas some see........all this does it skew the markets further.

It seems to me the Christchurch earthquakes have passed you by......who they heck was going to repair and rebuild the damage? There has not been near enough locals or national skilled people around the country to address Canterbury and then the following Kaikoura quakes and damage that flowed through to Wellington........

Your rant doesn't even make sense.....you want to reduce skilled worker visas and then train locals......why would you do that to people with houses that have tumbled down? Government has no role in producing kitset homes or training apprentices.....they aren't in the real market and always get the numbers wrong.

There is no political party prepared to fight tooth and nail for the constitutional rights of the people. There is no political party that is prepared to take their hand off the rudder and deregulate and this is what is needed. Not just here in NZ but across the Western world............do you think foreign investors would be so keen to invest here in a proper free market?

A government is not there to do what you or I want it is meant to be there to ensure the constutional rights are upheld.......it is the people corrupting governments purpose that is the problem......politicians who don't uphold the constitutional rights are meant to be voted out.........

Bill English has issued an edict that materials prices must fall. There's only one dictator around here.

There's a complete overload of work in the construction sector and all prices will remain high. Land costs need to drop a lot, demand needs to be addressed and there's going to be a finance problem with increasing interest rates. Our big banks being downgraded means more costs to borrow on top of the Fed rate increase and the coming increases.

I can only conclude that the PM is just hanging on until the election and hoping that people believe he can control materials prices by command. Of course the PM doesn't realise that labour is most of the cost and a drop in materials prices will be absorbed as margin.

Well if the National are prepared to admit that land and property prices a slipping in Auckland, then you can be sure that they're going to drop even further leading in to next year. Even they recognize that the top end buyers are gone.

If housing is too expensive then why did the govt decide to increase the costs to house owners by putting up the cost of EQ insurance, the fire service levy and effectively give the green light to the uneconomical train tunnel project which has already cut other more economical transport projects and massively impacted our rates bills?
Oh that's right, during its term in office, this govt also put up GST. When that was brought in, overnight all new house costs went up by 2.5%.
Makes you wonder if the govt genuinely cares whether house prices, rates and insurance costs are high or not.

You want to know who is responsible for the greatest amount of costs ?

We built a new 160 sqm single level house 2 years ago - it cost us $103,000 for just 2 items, GST and electricity connection including the transformer

That was 20% of the total cost - just 2 items - without adding in the cost of council consents
Apart from GST the power connection was the single biggest cost item

At those prices, anyone building new would be foolish not to consider going all in on solar. $40,000 gets you 10kw of solar panels and 20kw of lithium battery storage

Solar still doesn't pay unless you have a large number of people living in a house or your quoted ridiculous charges to connect your power because your trying to build a house in the middle of nowhere. What people fail to consider is the lifetime of the system, basically the electronics will do you 10 years at best, same with things like batteries and the system also requires maintenance.$40,000 gets you ALOT of power from existing suppliers and also factor in if you invested this money it would pay your power for 15 years anyway. There are specific set-ups when solar is a good idea but I'm not yet seeing the right systems.

That is what I was thinking. 40K gives you 20 years of normal, trouble-free, power against 10 years of solar power at best and with hassles I imagine.

"uneconomical train tunnel project "
After years of building nothing but roads and sprawl we have some of the most expensive houses in the world...

Yawn, Yawn. What do we expect if the election is within 100 days. Slept for 9 years and now a different spin to console the first home buyers and youngsters. Is this electorate still that gullible? Let's see in September.

I'm still trying to figure out whether the lowest intellect falls with our pollies or their respective voters....They keep out doing each other which makes it terribly difficult to draw a clear conclusion. It's going to be a tight race to the finish line....at which point the voters blame the pollies for poor policies and the pollies blame the voters for supporting them in their poor policies....the pollies are the blind mans cane - in this case, National voters appear to have full trust in the direction National are taking them - but don't realise the cane is faulty. But when both the blind man and the cane don't have eyes, it literally is the blind leading the blind. They're stubmling around in the dark, but both the cane and the blind man are too proud to tell the other the truth..

The current land price reduction in Auckland is a fall in demand as the smart money heads for the exit.

To reduce land costs relative to demand would require our idiot council to stop the development ban on all the land around Auckland.

This has been staring them in the face for their whole tenure in government, i.e. 9 years. It is long past the time when they should have solved these issues; so English's words are pretty hollow and without any credibility.

IMO, I think we are going to end up like the UK with our policies. High intensive council / government housing, tower blocks are going to come eventually due to high housing prices. IMO there are now some major problems in the UK which have been highlighted even more by that tower fire. It is all about the haves and have nots, and due to an increasing divide between rich and poor. Current policies are only making this worse, as the divide has only increased in the last 9 years.

Wow for the first time I can remember the BNZ just sent me an e-mail about their term DEPOSIT interest rates. Is this a sign that the banks will start moving on this and need more local funds for lending ?