Labour can claim line honours in the race to build more homes but National also ran a good race in its last two terms in government, with the much maligned Resource Management Act in place

Labour can claim line honours in the race to build more homes but National also ran a good race in its last two terms in government, with the much maligned Resource Management Act in place

Housing has been one of the biggest issues in the lead up to the looming general election, as the parties make claim and counter claim about their policies.

One of the bottom lines for measuring the credibility of both Labour and National on the housing front must be how many homes they managed to get built, or least underway, during their respective terms in office.

A proxy for those figures is the number of new dwelling consents issued.

They are a proxy because consents represent an intention to build rather than a completed build. However research undertaken by interest.co.nz suggests very few homes that are consented do not get built, with most going on to completion. So the consent figures are a reasonably reliable proxy for the number of new dwellings being added to our housing stock.

The year to August figures (the latest available) show that from September 2014 to August 2017, which approximately matches National's last term in government, 86,291 new dwelling consents were issued.

But over the following three years from September 2017 to August 2020, which approximately matches Labour's term in government, 105,888 new dwelling consents were issued.

That suggests that nearly 20,000 more homes (+23%) were consented under Labour than under the previous National-led government.

So on those figures, Labour's performance on housing has clearly been better than National's.

But of course that's not the full story.

The graph below charts the number of new dwelling consents issued in each 12 month period to the end of August from 2009 to 2020, covering National's three previous terms of government and Labour's latest term (August year figures have been used because they are the latest available for this year).

What it shows is that in National's first term, which followed on from the Global Financial Crisis, new dwelling consents were at a very low ebb, averaging less than 15,000 a year.

But from 2012 onwards, during National's second and third terms, the numbers rose steadily every year, coming in at 30,736 in National's final year in office.

That steady growth continued under Labour, with 37,467 new dwellings consented in the 12 months to August this year.

So looking at the graph, you can see a steady increase in the number of new homes consented, that started under National and continued under Labour.

So it might be reasonable to assume that if National had been in government over the last three years, the numbers may not have looked much different, but of course we'll never know what might have been.

But well done to both of them for increasing the supply of new homes.

However Labour should also get some credit for the resources it has put into state and other types of community housing, and for broader initiatives such as carving housing out of the Ministry of Business, Innovation & Employment monolith and setting up Kainga Ora, and even, dare we say it, setting up KiwiBuild.

Labour moved decisively in these areas although it may have been naive in its expectations as to the quantity and timing of new homes that its policies would deliver.

National on the other hand seemed to adopt an almost Trumpesque response to growing housing pressures in its final term, determinedly refusing to acknowledge there was a housing crisis and adopting ad hoc measures to address the crisis it claimed didn't exist.

So Labour should get extra points for effort.

What is also interesting about the figures is that all of the homes built during the terms of both the three previous national-led Governments and the current Labour-led government, were all consented under the overview of the Resource Management Act (RMA).

National in particular has been harshly critical of the RMA, suggesting it acts as a handbrake on new property development and has long advocated that it should be scrapped.

Labour and National are both now proposing to replace the RMA with new legislation, but if you had listened to the criticism of the Act over the last few years, particularly from National, you could be forgiven for wondering how anything got built at all.

But the steady rise in consent figures, probably up to near where they need to be to start matching population growth, suggests the RMA's impact on the housing market may not have been as oppressive as its critics have been suggesting.

The RMA may well be an ageing and cumbersome vehicle that's due to be traded in on a new, more fuel efficient model.

But the effect replacing it could have on building consent numbers may leave its critics disappointed.

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37 Comments

This linking of housing crisis to the Resource Management Act has a couple of other flaws.

1. The Resource Management Act is more liberal than the Town and Country Act that applied during the house building/higher home ownership in the1950s to 1991.

2. A bigger change to the housing markets was the 1991 change from providing government support for providing affordable houses via demand measures such as capitalising family benefit and State Advances loans and supply measures such as central government assistance with infrastructure. This was replaced by a corporate welfare for landlords system of housing rental supplements.

The second part of the increasing levels of poverty from Richardson/Shipley that no government since has reversed.

RMA has always been the main part of the problem.
I mean you look at that graph and it is trending up from National time, ONLY AN IDIOT would try to claim that is due to Labour.

Ugh, misclicked report, sorry.

11
up

I was thinking the other day imagine if they had spent the accomodation supplement on building houses instead? 1.5 billion a year isn’t it? At 500k per house that would be 3000 extra houses a year. By now they could have built so many state owned houses that private we wouldn’t have this housing crisis.

This is if you want to fix the crisis, . They have been fixing debt affordability crisis And not house affordability crisis. They don’t see and don’t think high prices is the problem, they see not enough debt on citizens as a problem

Correct re the Accommodation Supplement being $1.5bn. But your build number of 3000 houses is too low. For state houses the Income Related Support Scheme contributes about 2/3 of cost and tenant rents -fixed at 25% of income contributes 1/3 of the cost. Most state house tenants are vulnerable beneficiaries who are not in a position to provide for themselves. Around the world about 5% of households are in this category. If the government contributed another $1.5bn a year in capital contributions to low-cost build-to-rents it could target the next group along the housing continuum -low income working households - people and families who work on or near the minimum wage who if the rent is affordable could support themselves. For this group the government may only need to contribute 1/3 of the housing cost in capital grants. So $1.5bn could build 9000 affordable rentals a year. This would definitely be a game-changer by providing those most ill served by the housing crisis with affordable homes.
This is essentially the Austrian housing model. https://static1.squarespace.com/static/5cae4d7ea9ab9533d3a45357/t/5d2b6c...
I like lots of aspects of the Austrian housing model. In particular, the option that renters can contribute 5% equity and then 10-year later that have a right to buy.

Will be more in next data reporting as many mum n dad have turned builders in Auckland and also many buying houses with land to make additional one or two houses in the same section as more lucrative than to do business and can use the equity of family home.

Yep the unitary plan has made dense infill housing possible and has increased the value of land. An completely predictable but seemingly unintended consequence.

One of the biggest factors in the housing ramp up was the Auckland Unitary Plan coming into effect in 2016/ 2017. National deserve a lot of credit for pushing that through. Their key role in that is seldom mentioned.
And that praise is coming from someone (me) who doesn't like National much.
Also the Special housing areas

Agree and I don’t like them much either. National pushed hard for more intensification during the AUP, Auckland council fought against it, and now Auckland council are taking the credit.

Yes exactly. The government was to thank for the much greater prevalence of high density zoning

Analysis has shown the special housing areas likely had prices 5% higher than houses outside of them, hence why Labour didn't extend the policy.

https://www.tandfonline.com/doi/abs/10.1080/00779954.2019.1588916

I've seen elsewhere, but can't find it now and don't know how true it is, but it certainly seems plausible, that the special housing area designation didn't reduce housing costs at all, but instead delivered windfall profits to whoever owned the land. The SHAs were "use it or lose it" designations, where I believe they had 24 months to start building on the land - so it gets new houses built quickly. But part of it is that the consenting process for houses built there was streamlined and therefore cheaper. So instead of paying say $400k for the land and $300k for the house, you ended up paying $450k for the land and $250k for the house - the land became more desirable because of its (effective) special zoning rights.

Its almost as if restrictive land use regulation increases the price of housing...

It doesn't surprise me that the number of new dwellings has increased year-on-year since the end of the financial crisis. That was truly a once in a generation type event caused by complacency over bank lending standards and a complete inability of governments to comprehend the seriousness of the situation, even when they did many took a counter-productive course of action in pushing austerity budgets.

New Dwellings includes apartments, town houses, homes units, and detached houses
Those graphs imply consents are issued uniformly across the nation
Be more convincing if seperate numbers or graphs were provided.
And more convincing still if seperate regional numbers/locations were provided

If you live in puketepapa you must be able to see how many are being built! They are popping up absolutely everywhere. Almost all of our neighbors are either talking about subdivision or in the process of doing it. Often 6 or more on one lot.

No, I don't live there
Tell us about it
How do you personally feel about it
Does it affect you
Is it looking good

A lot of big sections in our street. In a way it’s a shame but it’s just part of living in a growing city. It’s definitely increased our value, we are not planning to subdivide, we like the idea of having one of the few big sections left. Can’t say whether they look good most still in progress. Most the existing houses weren’t that flash anyway. Council look to be spending some cash on new footpaths parks etc - fair enough too.

Must be the huge amount of house Labour managed to build in there 100k house scheme.
45 I think they managed wasnt it and racked up massive debt with not being able to sell them.

Can anyone find the 100,000 Kiwibuild affordablehomes yet?
Or at least 30,000 by now - as promised.

If new housing means ones like in the photo, please do not build them!!!!

Looks like a leaker.

People gotta live somewhere.

Why does everyone believe building more homes brings down the price. It simply does not. Once leverage has occurred then falling assets destroys the banking system. Its not like flooding the market with apples reduces the price. By supplying more homes it will not lower the price.

Its not like flooding the market with apples reduces the price.

Er, yes it does. Supply and demand, economics 101. That's why seasonal produce is cheaper when it's in season.

Prices in Christchurch have been generally flat over the last 5 years due to substantial increase in supply post-earthquake due to the council unlocking land for development many years sooner than it otherwise would be.

I was meaning increasing apple supplies does bring down the prices.

It just doesn't apply to housing. VANCOUVER has a mass over supply yet has increasing prices. As if I was ignorant of economics 101 fool. Supply and demand does not apply to housing stock. Its leverage and credit that causes boom cycles. Learn to read and educate yourselves on how banks create currency for asset inflation.. You condescending...

Detroit definitely had over supply and low prices. Are you suggesting that if NZ had 10x the number of houses, most empty, that prices would still be the same? Doubt it.

This is correct. The supply of houses will never be able to satiate demand in a speculative credit driven bubble.

Yeah, Oz has some of the most expensive housing in the world, and about 1m of them are empty.

I think what you really mean to say, is given market constraints it won't be possible to bring enough new houses to market to have any substantial downward pressure on prices.

However that's not actually what you said. You've again made the blanket assertion that increasing supply of houses won't bring down prices, which logically means even if we had 10 houses per person, they'd still cost the same. Which is clearly wrong.

You don't take out a bank loan or leverage an apple. As new money is created to buy an existing home it means economics 101 does not apply as no new goods and services are produced.

Demand encompasses demand from speculative investment but are you saying that prices are determined by 3 factors - supply, demand and devaluation of the currency?

Perhaps we should say that prices are determined by 4 factors - the supply of and demand for housing but also by the supply of and demand for the currency.

Best response to what will happen when stimulus ends........Will have another stimulus.........

https://youtu.be/mrCxjbdDvck

Stimulus will be new norm.

I am building at the moment.
I was surprised how affordable it has been compared to buying a similar, existing house in the same area.
Buying an existing house is arguably easier, and certainly quicker so I guess people are willing to pay for that convenience.

As housing bubbles grow, more and more get encouraged to become part of it and start construction projects which would have not otherwise started it if would have not been because of the disproportionately high prices, in practice turning the bubble into a construction one. It is not new to NZ, it has happened all over the world in Ireland and Spain before the GFC for instance. One could call it the construction ladder ;)

True as long as rising house prices means rising profits for builders. If it's just driven by rising land prices the builders are no better off.