Peter Dunne calls for a National Housing Summit to develop a single, comprehensive, integrated national housing strategy

Peter Dunne calls for a National Housing Summit to develop a single, comprehensive, integrated national housing strategy

By Peter Dunne*

The current housing debate has a pathetic sense of déjà vu about it. Before the 2017 election Labour successfully hyped the then housing situation into a crisis and implied it had all the answers if elected to government.

But now, one term of Labour-led government later, the situation is worse than ever. Housing prices have sky-rocketed, nowhere near enough houses are being built, and waiting lists for public housing have soared. And the responsibility for this deteriorating situation apparently lies with everyone else.

Labour still keeps blaming the previous government; National blames Labour and the Reserve Bank; the Reserve Bank blames trading banks for too liberal lending policies; trading banks blame the Reserve Bank for changing the rules; local authorities and developers blame the Resource Management Act; and, according to the Real Estate Institute, the fault lies with the demand caused by first-home buyers. Yet as this pass-the-parcel blame game continues, not one extra house is being built because of all the shouting.

The government that alleged it had all the answers before it came to power now seems all at sea, with little idea what to do next. It has long since abandoned its previous flagship Kiwibuild policy as a disaster but has done nothing to replace it. Instead, the Prime Minister now promises to “take advice” which looks increasingly plaintive, and hardly inspires confidence.

Yet there are some points of agreement amongst this disjointed cacophony of noise. Everyone seems to agree that there are not enough houses being built, and that the cost of housing is far too high. It is what to do about it that no-one seems able to agree upon.

There are many players with a legitimate vested interest in the housing issue – central and local government; the banking and financial sectors; the construction industry; social service agencies; property investors and residential home buyers; renters and the homeless. All have a perspective to offer and a contribution to make in resolving the issue. But, at present, no-one is really listening to what anyone else is saying. Everyone seems far too interested in pushing their own barrow, which is why nothing coherent is happening.

The escalating sense of drift is becoming intolerable. The government must move beyond just wanting to take more advice and show some leadership on the issue.

A good starting point would be to stop looking at housing issues in a vacuum, and treating them like symptoms to be addressed, one by one, but rather as an inter-connected coalition of issues that need to be focused on collectively. This is not just the government’s problem, but one that involves all the groups involved in housing – and they all need to be part of both developing the solution and its eventual implementation.

So, it surely makes sense to bring them all together in a National Housing Summit to develop a single, comprehensive, integrated national housing strategy, to which they would all be required to commit to and take ownership of. That strategy should include specific performance targets, with each sector from central government outward accepting responsibility for meeting them. Each sector could then be held to account for the delivery of its agreed targets. Such a process would be transparent enabling the public to see clearly where and why the blockages might be, and the solutions required to overcome those.

As the Covid-19 crisis unfolded the government was able to make considerable play of the fact that we were all in this together, and that effective solutions required the support and participation of everyone. It was extremely successful in that approach, and the country responded to the frequent exhortations to the “team of five million”. Well, now it is time to apply the same leadership to the housing crisis.

But for the moment, everyone involved in housing seems to be doing their own thing, which not only means nothing is actually happening, but is also a considerable and pointless waste of resources and expertise. It has often been said that nature abhors a vacuum, yet the indecision and uncertainty currently affecting housing policy means that is precisely what we have now. It cannot go on.

No one credibly expects any government to have all the answers. They cannot – but they do have the unique capacity to bring together those with the relevant expertise to develop and implement the best solutions. Right now, that is what we should be holding the government to task for, if we are serious about addressing the housing crisis.

If the government really wants to do more than just continue to “take advice” on the issue, convening urgently a National Housing Summit of all the relevant interests to develop a plan for the future would be a very good place to start.


*Peter Dunne is the former leader of UnitedFuture, an ex-Labour Party MP, and a former cabinet minister. This article first ran here and is used with permission.

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134 Comments

39
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I seem to recall Peter Dunne was the reason National was unable to change the RMA while they were in government.

Sounds like he's passing the parcel here, too.

It's a pity he didn't call for a housing summit back when he was part of government.

Yes that's how I remember it too now that you mention it.

Congratulations Peter you are to blame for this mess .... quote from the 2015 article "Dunne's position has not budged. The RMA... wasn't meant to be a fast-track development act; the fact that it might make some developments inconvenient was irrelevant."

Dunne was concerned about environmental protections being diluted as were the Maori Party. From the same article - "Seymours seat means the Govt can do what it wants with the RMA". Context is everything

labour had the last 3 years to do something, now they have outright majority... let's see what changes they make if any

They've already said they're replacing it with 2 new acts.

I expect that they'll table something in the first sitting period before Christmas.

Fast lawmaking is bad lawmaking. The RMA is so big and the issues so complex that I doubt there'd be much happening this year.

Peter Dunne is a sycophant from yesteryear.

Unclear to me why he's still trying to promote himself.

TTP

National could have passed a RMA National Policy Statement on Urban Development (NPS-UD) like Parker recently did at any point over the nine years they were in office. A NPS is a RMA directive that all local authorities must follow. The Minister of the Environment can implement a NPS directive at any time - it only requires their sign-off - not Cabinet or Parliament.

Brendon if Labour issues a National Policy Statement does National get the credit??

But they did.

Maybe worth noting that the National Policy Statement on Urban Development 2020 (NPS-UD) is only an update to the National Policy Statement on Urban Development Capacity 2016 (NPS-UDC) created under National. Most of the core objectives and requirements are the same, just with updated and more nuanced language.

The link in the post above would suggest your recollection is incorrect, or at best only partially correct

How is your question being constructive in slowing housing bubble- numpty

Incorrect, “ which is why nothing coherent is happening” , prices coherently go up in insane pace and onlY part of market participants are coherently benefiting and the other part is coherently being ditched

Pass the Parcel as neither Mr Orr nor popular Ms Jacinda Arden is interested and infact are interested in the ponzi to continue SO why will they and bith have made their intention clear that rising house price is what they want and promoting.

Chloe Swarbrick is at least correct in that there is a massive conflict of interest with so many politicians (and central bankers) heavily personally invested in assets that their action and inaction serve to inflate in price.

16
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I built some apartments years ago. Never ever again. The councils have you over a barrel as a small developer and they know it. They make your life and business hell. The problem isn't really the RMA so much as how councils apply it. They often go well beyond what they can legally do. I think they'll continue to do this with any new laws.

12
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Therein lies three sticking cogs depowering any efficient and economic hope in house construction. Firstly councils with unaccountable authority over what is done, charging exorbitantly for work for which they take no ultimate responsibility , you have to pay them first and then second to fix their own mistakes. Secondly such as the hungry Lion Fletchers have a vice like grip on supply and service and hold any Joe Blow trying to build completely to ransom. Thirdly the builders themselves, cut corners and stitch customers as they like, if something rebounds, just start another company. Far far too many in the industry from council, to suppliers, to builders to sub contractors are simply not trustworthy. If building costs and activity are not disciplined then inevitably new house are going to be as expensive as what can be got away with.

When I come back in another life it will be as a developer of land. With the exceptions of Auckland & Wellington both of whom have particular problems,, the cost to develop a new section from a green paddock is minor part of the $300,000.00 or more that it costs. Profit margins are significant. There is what I know regard as the normal obfuscation from Councils - its just a fact of life that we can do nothing about & it continues to get worse.

Our best one was when you submit something I.e a contamination site plan prepared by an expert on your behalf. Council then out source the pair review of this to an expert who is in competition & doesn't like your expert. You then have 3 months in downtime while these experts try & make one another look bad over petty garbage.

Yeah I find the interesting too. Presumably they are concerned your expert will dance to the tune of the piper if you are footing the bill and cut corners. Could the answer be a government direction that the council is in commission the expert and pay them and charge it on? At least then just one expert required and time saved.

The government, through the august establishment of MBIENZ, needs to do something useful. Every individual who contracts to build a new house should be able to apply, before commencement, for an independent audit of how it developed and eventuated from A to Z. A random selection annually of say 1000 projects, would reveal certainly what shenanigans might have been at play. At least some come back on offer. Every builder knows they are safe from anyone suing for less than say $40k. Hence the little nicety our family experienced, “see you in court then” when the final invoice whopped out.

Whilst Peter Dunne's article is suggesting what ostensibly seems a good idea, it should be remembered that all the high powered advisory committees enacted by Labour in its last term largely had their recommendations ignored. The TWG, the WEAG were all expensive exercises which led to virtually nought. How many investigations have been run on OT?? Taking advice is one thing - actually acting on it is a whole different beast especially if it's politically risky. Won't be holding my breath on this one.

16
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Peter, I don't think a workshop followed by a strategy is the way to go. Too many stakeholders will mean a watered-down strategy.
Better for Labour to instead put a bold strategic statement straight to the public, spoken by the PM herself. For example; "Labour is dedicated to a NZ where the ratio of house price to income is X. We will use any means necessary; tax policy, immigration policy, RBNZ mandate adjustments, special rules for investors, red tape removal and state funded housing and infrastructure."
See what effect just that statement would have.

10
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Yes!!!!!
Will they do that? No!!!!!!

They're ruling it out.

Jenee article yesterday showed the widening social division the housing crisis is causing is between property owners and renters. The goal should be to ensure the renting cohort do not become a permanent under class.
The bold strategic statement spoken directly to the public by the PM herself would be that "the bottom 20% of income earners should pay no more than 30% of their income in rent."
Peter Dunne is right that the housing crisis is part of a systemic problem. It affects at least the following Ministers - Finance, Infrastructure, Housing, Transport, Local Government, Construction... and that is just central government.
A siloed approach cannot work and will likely result in the pass-the-parcel result that Dunne fears.
In many ways NZ's version of capitalism is flawed - it is a crappy crony capitalism version. But wrt housing there are better versions. I like the versions in Japan and Europe, others like the version in parts of the US.
NZ could even look to its own history. In the 1930s NZ's capitalism model was failing. Despite what right-wingers might say Michael Joseph Savage rescued capitalism - he made the system work again - for the vast majority of people - not just a property owning elite.
Renters did not suffer under the 1st Labour government. Savage when faced with a 1 in 100 year economic depression used monetary policy to build 30,000 state houses at a time when NZ had 1/3 of the population it does now.
In my view NZ should do a modern version of Savage - build lots of state and community housing provider houses. We can even do it much better because we can also address climate change and learn the lessons from overseas - place likes Austria. Like recommendations 7 and 8 here
https://medium.com/land-buildings-identity-and-values/if-not-now-when-f9...

Do we really need to reinvent the wheel? This was solved a long time ago. It's just a matter of bringing back the policies that created affordable housing and a productive society that we phased out over the last 50 years or so. https://en.m.wikipedia.org/wiki/Progress_and_Poverty

Nice link

10
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Peter Dunne is a failed career politician.

And yet he is mysteriously ubiquitous, offering his reckons on every topic and getting them published on (seemingly) every outlet. Odd!

much like echo-nomist Sham Eaqub, who even upstaged Phil Twyford at his own event

15
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fh... IMO Shamabeel is possibly the only NZ economist that seems to understand the issues and make sense. He also seems to know what he doesn't know and realises he cannot hope to accurately predict the future, a rare trait indeed for economists. His Newshub Nation interview this morning was a good example of his ability to explain things in easily understood language.

How about what he is saying here though? Do you agree or disagree, any value to add?

We need action now, less talking more walking. How long would it take for anything to be done after a summit?

Saw one Auction today at pakuranga heights and CV 940 agent expectation million plus to maximum 1.1 or 1.150,as market is hot but went for 1.350. Standard very average house which before lockdown would have feteched 900.

Every week a new benchmark id set.

Seen quite a few properties in different areas going for the same amount - similar cvs. Not even good school zoning etc.

the official stats give figures of about ten percent gain over the last 12 months not 35 to 40 percent.

Official stats lol. You think they've measured the last 3 months or so?

Mental. Pakuranga ffs!!!!

A summit. That'll fix it. Why not have it in Queenstown at Millbrook (taxpayers are on the hook for these get togethers) and boost the local economy. Get in a couple of rounds of golf too.

22
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Once again, no mention of the mass immigration scheme (temporarily halted) as a key component in this shambles.

NZ has been running a population Ponzi scheme that results in the housing problem that many like to have. Asset owners get capital gains or tenants, business owners get more customers and cheaper, more willing wage-slaves, and the government get to expand the tax base.

“Growth” is derived from the basic positive feedback loop where we need immigrants, to build houses for immigrants.

Hush - you must not mention immigration
There's a tacit agreement among the nabobs, aristocrats, elites and news-media to not mention it

Although the net-migration mass-influx has curtailed doesnt mean house prices will fall
Bit late for that - The damage was done years ago

See Basel Brush July 2012
Today a local Asian RE agent buying on behalf of a China buyer, sight-unseen, a property in Botany area. The price paid was $1.6m for a property with a CV of $800k
http://www.interest.co.nz/opinion/60396/thursdays-top-10-10-japanese-pen...

Timmyboy... 60 000 kiwis waiting for housing (40K homeless + 20K state house waitlist). 60 000+ annual immigration gain. Coincidence???

Not really, even if we had 0 migration there'd still be 60K on waiting list.

Surely you can agree that 60K+ extra people in NZ annually results in lots more kiwis struggling to find a home? Personally, if 0 migration allowed even one more kiwi to get into their own home it would be a good trade-off.

There are currently 200,000 vacant dwellings in NZ. There is plenty of housing capacity, it's just not being treated like a place of resident. Houses are treated primary like an investment in NZ, not shelter, and changing that mentality is the first step to a solution.

dia06c: 'There are currently 200,000 vacant dwellings in NZ'. Where do you get that figure, proof please?

Defintions are important.

From Stats. NZ defintion:

Unoccupied dwelling
A dwelling is defined for census use as unoccupied if it is:

unoccupied at midnight and at all times during the 12 hours following midnight on the night of the data collection.
Unoccupied dwellings may be classified as 'empty' or 'residents away'.

An unoccupied dwelling is classified as 'empty' if it clearly has no current occupants and new occupants are not expected to move in on or before census night. Unoccupied dwellings that are being repaired or renovated are defined as empty dwellings. Unoccupied baches or holiday homes are also defined as empty dwellings.

A dwelling is classified as having 'residents away', where occupants of a dwelling are known to be temporarily away and are not expected to return on or before census night. Like all the people on holiday that might.

An existing dwelling that is being altered, repaired, or extended and is unoccupied is coded as an 'empty dwelling'.

The real question that is left unanswered is, "What is the real long term number of houses sitting empty that would otherwise be available for rent?"

Whatever it is it, is far less than the number you have quoted.

Regulation is the only way to change the mentality. This government has to throw down the gauntlet ASAP. They possibly have the only opportunity in my lifetime, without a coalition to negotiate with, to effect real change in this disgusting housing obsessive mentality. And let’s probe these damned companies and trusts buying property and really see how many foreign buyers are still gouging our our residential housing stock.

It still does not change the fact that additional, basically unnecessary migrants, contribute hugely to our housing problem. Also, did you wonder how many of these vacant homes are owned by "new NZers" who, IMO should never have been granted residency and/or allowed to buy property here?

"60 000+ annual immigration gain" hopefully you understand that since covid that is all returning Kiwis... It's been net negative for migrants...

no the 60k gain was mostly pre-covid and mostly foreigners.

I meant pre-covid. Since immigration is such a massive net negative for kiwis long may the net negative migration continue

we have no immigration now ; we had no foreign buyers for 3 years - it is the interest rates and supply constraints stupid :)

So none of these immigrants live in houses that could be used by kiwis? Where do they live? If we have no immigration for a few years it may not totally solve the problem but it will improve things greatly. 8400 student visa were just changed to work visas. These people should have been sent home and the places they now live in used to house kiwis who need a place to live in their birthplace. We owe foreigners nothing (except politeness and a place for a short term holiday) and MUST ALWAYS place our own people before others. It is not personal so don't take it that way. If you were not born here it is a huge priviledge to be permitted to live here.

" If you were not born here it is a huge privilege to be permitted to live here."
- I do not need your "kind" permission. I am here legally , I pay taxes.
Having been born here ( presumably ) does not make you different from me legally ; if you have a problem with that you can always leave.

paashaas.. if you have been granted permanent citizenship or residence then congratulations. Rest assured that I welcome you here and will treat you exactly the same way as any other kiwi. Enjoy NZ.
As for anybody yet to receive permanent residency or citizenship also rest assured that I will try to make a sensible case for our Govt to stop this madness and refuse permanent status to all but a very select few and will voice the opinion that immigration is a huge net negative on NZ society whenever I can. The problem I have is not with you but with our idiotic Govts for allowing you to live here.
If I did choose to leave could you help me to live legally, pay taxes and buy a house in your country of birth? Not a chance, I bet.

I think you're getting a bit xenophobic karl.

And that is the problem. The minute you make any sensible argument that mass immigration has caused problems in housing, transport, schooling and hospital care, you will have some sanctimonious git accusing you of being xenophobic.

Totally agree kiwikeith. You are also labelled a racist too for mentioning immigration. It defies belief that we have let soooo many people come to our country in the last 20 years with absolutely zero policy in place to figure out what may happen to our infrastructure. To me, its the main reason we have an out of control housing market as the demand is out of control. Yes, there are many factors but if we had 200k less people here now, would we have a housing shortage, me don't think so. So come on JA, stop bloody mass immigration for at least 5 years would be the most simplest, easiest first step this bloody government could do. But hang on, big business will bitch moan and complain that they cant get any workers to pay cheap wages to so oh shit, we had better keep the floodgates open. Time for me to have a lie down and a cup of tea I think.

It's how you frame the argument. If you say "we have had far too many people migrating from countries such as Ireland, England and Australia" then it's okay. It's when you neglect to define the country of origin that people fill in the blanks by assuming you're referring to Chinese and assume that you're European therefore Racist. What if the person making the comment is Maori? Is that still a racist comment?

I agree with your comments. It's not a racist comment coming from anyone in my opinion. I've been labelled racist for even suggesting cutting immigration. It's simply a point that we have too many people coming here. To me it doesn't matter where the immigrants come from, we simply have too bloody many. I actually don't care whether they are wealthy americans or poor indians, to me we simply have had too many coming here too quickly. Don't get me wrong, I'm all for immigration as I have many friends in NZ from all corners of the globe. We just need to rain it in quite substantially for a number of years to get on top of all our infrastructure issues as kiwikeith mentioned. It's not just houses, its everything else.

Nzdan... to allow so many unnecessary migrants into NZ while we have such serious housing, employment, water and pollution problems is straight out irresponsible and shows a total lack of care for our young. Until these problems, which are exacerbated by a larger population, are solved then it is not in NZs interest to allow them here. Personally I don't care whether they come from South Africa, China, India, England or Mars.
Both The AM Show and Breakfast Show interviewed Jacinda about housing this morning and not one word about immigration. Why not? The supply side of the housing shortage is only half the issue. Does immigration not increase the demand? Come on John Campbell and Ryan Bridge. Do your job and ask the right questions please.

"Does immigration not increase the demand" I'm laughing as it seems to only a few of us that this is so f...ing logical. Go figure huh. I want to throw something at the TV or the radio when these questions aren't asked.

Njay..I sometimes wonder if the TV network bosses do not specifically tell the hosts that immigration based questions and comments are strictly off limits. Maybe they just don't want the hassle of handling the inevitable accusations of racism.

I'm sure you'd be right on that. The part of this conversation that just completely baffles me is that reducing immigration is not racist in the slightest is it. We aren't saying no Indians or chinese or whatever bloody nationality you are, there is just simply too bloody many people, fullstop, coming here. You and I seem to be the only ones that get it.

Hook... definition of Xenophobic is "having a prejudice or dislike of people from other countries" which I certainly do not have. I chose to live abroad amongst foreigners for the last 22 years and even married one. Spend some time in Asia to help you understand xenophobia.
However, I do have an extreme dislike for a system which allows our quality of life to be eroded and especially so when the areas most negatively affected are so important to the fabric of our society. We owe it to our children to stop this insanity and prioritise them over migrants. We will regret this madness so much.

Agree KS, well put.

Well actually we still don’t know how many foreign buyers there are because they don’t look at companies and trusts. And it’s actually removal of LVR that is fuelling this bubble, stupid. Courtesy of a 300% increase in investors who didn’t have the 40% deposit before, now don’t need to find it.

UUhhh... when did anyone need a 40% deposit?

Around 2016 for investors...

swingt.. also no evidence but I hazard a guess that there are quite a few "new NZers" buying on behalf of non NZ friends and family.

... But there is hardly any immigrants now and the Overseas Investment Amendment Bill locked out most foreign buyers, and prices are still rocketing off.

It's time to stop the ol distraction tactic of "foreign Boogeyman" and admit that this is a largely domestic NZ problem and NZers need to address it.

My daughter has friends in New Plymouth who put an offer for $500k where offers were sought over$495k. Average home in average area. Sold at $615k. When will this madness end. Will JA own up and get it sorted.?

Not to worry, i'm sure if her friends leave their details in the book by the exit the new Landlord will be in touch to discuss a potential tenancy.

Landlord's probably got a mortgage at 70% LVR = $430k = $200 per week interest only. Rent at $450 per week. Such a service, saving your daughter's friends a whole load of hassle servicing the mortgage P & I at $414 per week over 25 years @ 80% LVR + other costs.

10
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Such a disappointment that Governments of all persuasions perpetuate the housing supply myth (https://www.dunedinvaluations.co.nz/news/the-housing-crises-is-a-myth). The real issue is that market rent is unaffordable for hundreds of thousands of kiwis - even with huge Government subsidies (aka welfare for landlords). The actual problem is a socio-economic problem and a mis-placed faith in the market.

BS analysis. Housing prices are a function of supply and demand.

15
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House prices these days are a function of credit availability sadly enough.

Totally.used to think otherwise, particularly in terms of immigration, but I was wrong. The ponzi is in the control of the banks for the banks.

Yeah I used to think it was lack of supply. But it really is just interest rates. I bet if they put them back up to say 8% we wouldn’t have a price issue (well we would have a different price issue)

No, it's supply.

You have to put supply and demand in the right context. It's a first principles thing.

Here is an analogy:

Houses are the fuel:
Restrictions to supply are the ignition to cause house price rises:
Interest rates, immigration, etc. are accelerants.

If the fuel is not ignited, then you can put on as many accelerants as you want, but the fuel won't ignite.

it's an attractive analogy, but that doesn't make it correct. In fact, it would be more accurate to say that demand for housing is the fuel for heating up house prices - the accelerants are: how much people *can pay* in rent or mortgage (interest rates are a function of this), rental yield for landlords (interest rates are a function of this too), and investor confidence in increasing house prices (note the feedback loop). If supply is constrained - and this might be true in some places - then this would be an additional accelerant but I doubt it is the most important in the model.

No, Read it again. You missed 'ignition' source.

Accelerants had no effect on the rate of burn ('Churn') if there is no ignition).

Petrol (an accelerant) poured on firewood (fuel) won't cause the fuel to burn until the fuel is ignited. And once ignited causes the fuel to burn faster and hotter than it would normally have done.

House = Fuel
Ignition = lack supply/demand balance, causing prices to rise.
Accelerants = everything else like interest rates, Govt. subsidies, rate of immigration etc, which causes how fast and high house prices rise.

Yes, but the devil is in the detail... assuming that low supply + population growth is the underlying driver of house prices is lazy and almost certainly wrong. Just because it sounds right to blokes in the pub doesn't make it so.

House prices are currently, evidently, at the *right* level for the economic conditions. How so? Because current interest rates, tax rules, and even the most cautious housing market forecasts mean that I can *still* buy houses and apartments in towns and cities and expect a decent rental yield. This is why landlords have been buying more houses than first-time buyers for some time - the math still works. So, the rental market is driving 'demand', which increases prices (as you would expect)... but people still only talk about the supply side.

In a usual economic model, house prices being out of reach of so many NZers would lead to a fall in demand, but stable, high rents (often subsidised by Govt), low interest rates, and, perhaps, buyers who have built equity during the boom keep the prices heading north.

Of course, nobody in their right mind would build or buy housing for affordable rent at the moment (apart from the Government) and it is in this sector that there is a serious supply side problem (see endless housing waiting lists and thousands of families in motels). New Zealand has about 10% of the social housing that northern UK cities have.

Everything about what you said is 180 degrees wrong. Your argument seems to be it's all about rental yield...

Perhaps do some reading.

“High rents *often* subsidised by the government”???? What country are you in, or what planet are you on? We have about 60% housing ownership in NZ. So you think the other 40% of the population get some of their rent paid by the government?

Problem is the nature of supply and demand.

We can have adequate supply of housing for housing's sake. But no amount of supply is adequate when the demand is actually for the government subsidised and protected investment class that is property in NZ.

Ashley Church's estimates at first glance seem plausible however given the number of vacant dwellings in Auckland alone (I think about 30K?) his figures are a bit blunt. Dividing the current population (5,101,400) by the average dwelling occupancy rate (2.7) gives you a requirement of about 1,889,408 dwellings. Current dwelling numbers apparently sit at 1,919,800 so technically there is a surplus however using a DOR of 2.6 there is a deficit. Given low mortgage serviceability costs vs rents currently, is this what is driving house prices? Renters can now become owners. The depth of data regarding what is REALLY driving prices is missing - if you don't or can't measure something, or you do measure but get crap data you can't manage it. Figures from other Govt sources reveal that there is currently a DOR of 2.85. So which figure is correct - 2.85 (a surplus) or 2.6(a deficit)??

Ashley responded to some of this in a follow-up article here: https://www.oneroof.co.nz/news/was-i-wrong-about-there-being-no-housing-...

The 'renters can become owners' point is valid - but there a lot of barriers: availability, minimum deposit (and linked credit worthiness), and remember 200,000+ people rely on Govt subsidy to help with their rent.

Ashley is using outdated figures. Check the numbers for yourself - Stats NZ have figures to March 2020. I'm not sure how he makes his assumptions regarding Ghost houses and the Census. If they are empty obviously there'll be no Census return, moreso if they are offshore owned.

Yes, have had a look. Looks like people per dwelling came down 2.68 in 1990 to 2.53 in 2013 and then back up to 2.63 in 2020 (still well below 1990 levels). There is reasonable data on occupied and unoccupied houses in the census - estimated 190,000 in 2018. Worth noting that Auckland and Wellington have the lowest % of empty houses.

This is the problem with the data. When you divide the number of households into the population count in 2020 the DOR rises to 2.85. So very contradictory and confusing. Depending on whether you use Stats NZ or the Census you get a figure of either 1,855,962 or 1,787,900. Hence my statements above about crap data.

hook... that disgraceful Ashley Church interview on the AM show this week just highlighted what a financially illiterate charlatan he is. He spent the whole interview backing up his predictions by constantly referring to past performance without even one reference to anything that may point towards the future.
Any real financial expert ( as opposed to self proclaimed property experts) will tell you that this is a the first sign of complete financial ignorance. And BTW property prices dropped 38% (inflation adj) over a five year period in the 1970s, which proves his whole narrative on the past to be completely false anyway. I view him as the modern day John Holmes of the property media propaganda machine.

so I trust your predictions were much more accurate ., right ?

Exactly right. I make my living and support a family solely based on making good predictions. Ashley Church makes his money fishin in a marine reserve or huntin in Yellowstone.

I was not really asking about your moral virtues ; I am sure they are only equaled by those of Mother Theresa.
Were your housing market predictions better than his though ?

paashaas.. Again, yes but that is not saying much when Ashley is unable to even accurately "predict" the PAST 50 years. Who mentioned moral virtues?

According to Ashley’s double every 10 years theory, the average price in Auckland will be $1 billion in 10 cycles (100 years). If wages increase at 3% the average will be about $1.3 million in 100 years. So you would need to spend your entire salary for 770 years just to pay the principle let alone the interest. This seems unlikely to me, so at some stage Ashley has to be wrong. Considering interest rates are now almost 0% I can’t see too many doublings happening again.

Before you flip out Jimbo - given the long run average(30 yrs) increase in house prices of about 7%/pa he's probably not far off. A sobering thought when wages are so far behind.

At some point, we will run out of ways to extend the means to pay i.e. mortgage terms, number of payers etc. Then the only way house prices can continue to double every 10 years will be if wages double. 7% p.a. wage inflation with an OCR of 0%??

Nzdan.. exactly. And what is the most likely, or maybe even only way, for Govt to reduce the debt in a few years? Inflate it away of course, and we all know what always increases with inflation. How much interest accrues PA on a $1.3M mortgage at 7% again? 100K+ with a little principal. Ezy peezy.

Jimbo.. Ashley can't even accurately "predict" the PAST 50 years. His use of the phrase "empirical data" on the AM Show this week was cringeworthy.

This is exactly right - I am calling it now - supply side issues is a convenient excuse. Right now our population is flat to negative and we are adding thousands of houses monthly. Yet house prices are going gang busters.

It's not a supply side issue. It may have been 3 or 4 years ago, but since then we have been building heaps of houses. If it was supply issues, we would see prices dropping right now, but we see the opposite. This is all due to the reckless actions of the RBNZ and the "unforeseen" consequences of their actions. And instead of doing something about it, the monkeys in charge are doing as Dunne suggests and ignoring the issues and passing the buck to each other.

RBNZ needs emergency actions to stop it from being idiots. Shamubeel has it right here, Marama is correct about the effects, but has no idea about solutions and simply wants to tax everything: https://www.msn.com/en-nz/news/national/davidson-warns-of-growing-wicked...

One day the penny will drop, it's supply, supply and supply. More specifically supply restrictions.

In spite of what you say, we are not building enough affordable housing due to the undersupply of affordable sections.

But you are right in saying that if there was enough supply prices would drop, ergo there is not enough supply.

It's a government guaranteed investment class. That's the fundamental problem.

Demand is far greater for a government guaranteed and subsidised investment than would be present just for housing for the sake of housing.

Yes exactly, and that is why the definition we use for what is 'affordable' needs to have a very clear meaning, and then if it does not meet this definition, then it is unaffordable.

So a house does not become more 'affordable', just by cutting the size of the house in half (not comparing like for like), or by Govt. Subsiding the cost of ownership, even as the price goes up (another false equivalence) etc.

And it should not be a speculative store of wealth like Gold, but to provide shelter as a homeowner, or as a rental owner to produce a yield in a free competitive housing market.

How do you explain all the empty houses in many major cities (London/Vancouver/Auckland), empty cities in China STILL with high house prices?

It's because governments control the prices and/or it's a financialised asset that our entire financial systems rely on maintaining or increasing prices. The prices can't drop, or everything goes to hell in a handbasket. With central banks able to print unlimited amounts of money and with a mandate to not allow the financial system to go bust, they print money to bail out the housing market. It's happening here with $128b about to be pumped into the housing market, in America with the FED purchasing (so far this year, to be doubled next year) $1.25 Trillion of mortgage backed securities, in Australia with delinquent loans classified as performing etc etc.

The media spends it's days calling people every ism you can think of. Globalists call for an end to consumption and polluting yet call for mass immigration.

When will the media admit credit and Leverage is the reason for this housing bubble disaster. As if supply will drop the price of your existing home that you leveraged to the max. Or as if the banks want that also.

But no let's blame supply and the rma and building supply...

It's not just credit though. It is immigration and council red tape and land cost and building supplies cost. It's all of that.

But yes, the biggest component might well be the reduction in interest rates.

10
up

Everything that is wrong with why we have unaffordable housing couldn't be better summarised by 'let's have another talkfest.'

haha... Yeah. Which will take 12 months or so by which time the data they use will be out of date. With a govt that has no clue (Labour) or refuses to confront the issue (Nats) this won't be solved anytime soon - if ever.
Perhaps it will be left to the market after all.

On interest rates being mega low as the cause that's factually inaccurate.

There are no empirical studies to back up the claim. Our biggest gains ever happened between 2002 and 2007 when house prices went up 100 percent but with rates at 9%.

The charts indicate credit creation is the biggest factor and that happens unrelated to rates.

And a major driver of the 2002-07 leap in prices was the clueless Gubmint policy of Welcome Home loans: criterion for acceptance - can you fog a mirror? And the consequence was to slip a high floor under all house prices immediately, and instantiate a ratchet effect of prices spreading sideways from hot to colder markets, that continues lo until this very day....

To be fair, mortgage rates went up *during* the 2002 to 2007 boom (from 6% to 9% ish?) and with over 400,000 extra people working during that period, more people were eligible for credit (although banks got crazy giving it too!)

The Govt need to start a large scale Govt housing project providing 1000s of houses for low income renters. In addition to get local Govt to open up areas for low cost small houses that are affordable - there seems to be zero appetite for low cost housing suburbs as if these people are not wanted by LG.

If low interest rates are the cause of mega house inflation - then how come the USA, Germany uk etc don’t have the same problem to the same degree?

Bang on mortgage belt...

To answer your last question 'If low-interest rates are the cause of mega house inflation - then how come the USA, Germany UK, etc don’t have the same problem to the same degree?'

The answer is because low-interest rates have no effect if supply is allowed to equal demand.

To repeat the analogy:

Houses are the fuel, restrictions to supply are the ignition to cause house price rises, interest rates, immigration, etc. are accelerants.

If the fuel is not ignited. then you can put on as many accelerants as you want, but the fuel won't ignite.

Agreed.

Also Germany and the UK have kept their population growth more in-check with their ability build houses and infrastructure while New Zealand has long since given up.

I find that interesting. The UK cannot control immigration while still part of the EU. I can't comment on the supply side but would doubt the ability to ramp up housing supply easily. The population density is high and available land can't be that good in the areas that need it.

Credit is the fuel. Interest rates the ignition and FOMO the accelerant.
Supply of houses? Only a fire retardant at massive oversupply levels.

Yet in jurisdictions with amply supply due to no supply restrictions, prices are twice as affordable as in NZ, even when they have easier credit and lower interest rates than NZ.

Easy of credit and low-interest rates are the common denominators between us and them, the only difference is we have supply restrictions, they don't.

I call on government to call a summit to form a comission to take public submissions to write a report about what is blindingly obvious to the rest of us. Then, in a decade when that process is complete, in the finest traditions of New Zealand governments we'll ignore that report.

It's far too late for good policy now, this will descend into a desperate scramble one way or another. We should instead prepare for long overdue disharmony because we have failed at transitional policy.

The only way the problem can be solved is by passing policy that either directly through taxation on investors, or indirectly through RMA reform, results in the property market coming down. That reality cannot be escaped. Very few politicians will ever pass policy that is not good for their own financial positions. No politicians pass policy that that will take away votes in the next election. They dont do what is right.. they do what is good for them. So we are screwed..it will continue going up until we get an event( like covid should have been) that is out of the government's control and it crashes uncontrollably. It would be so much better for it to deflate gently.. But as I have already made clear, that requires politicians at personal ethic level way above what is currently in power. GRASP THE NETTLE AND BRING IT Down

Funny you forgot that the first thing labour did when they got into power was ban foreign buyers, something National kept saying was impossible to do.

Its not rocket science.

Systemic failure by government after government & increasing real house prices since the 70s/80s

It takes real leadership & I'm beginning to wonder whether Jacinda has it in her.

1) A population strategy - KPI maximise total welfare (wellbeing) per capita growth, not gdp/capita & certainly not just gdp. This will keep demand to a sustainable level.

2) RMA - the government did make some changes to allow high density in CBDs and key transit corridors earlier this year, but its not enough. We need:
a) RMA or other law built on national environmental standards (set on cost benefit assessment) & the legislation to require government to issue these within a shot timeframe
b) no limits or otherwise on zoning or density.
We dont need city plans stacked as high as the skytower with rules writtern by planners who dont bear the cost of those rules
(Aside: its almost worth considering banning development as a right and getting developers to bid for the right to develop and Councils taking the lowest conforming bids)

3) The government to provide a fiscal stimulus by building more social housing than ever before, in the market segment where there is no profit for developers.

4) Congestion charging in Auckland & Wellington at least, to support dense development around MRT

5) Give ComCom the powers to break but monopolies & oligopolies like building supplies, & make ComCom take into account the HHI index in decisions

6) Amalgamate local governments into unitary authorities. We dont need 60+ for 5m people & some are already uneconomic.

7) We need a land tax. Its the land price being bid up, not the house prices. It needs to be used efficiently.
https://en.wikipedia.org/wiki/Land_value_tax

Just bought a house in Auckland as we don’t like to masking dicatat. Saving $20,000 a year on public transport - cheaper to drive and have a mortgage !

Shift your post to the latest conflagration, it'll be interesting to read the results. Are you saying you spent $400/wk on fuel?? That's insane

Wow, echo from the past governance voices. I'm waiting another echo from CullenCGT camp at any moment. But for sure none of them matter though with the current regime, hey we all voted for them right? - so, let's just enjoy this massive unlimited gains. Nothing can stop this good feel wealth, trickle spending into the economy etc.

Finally, my "pass the parcel" property analogy, I use so often in comments here, has been used by the editor to link this article. Nice!