A 'housing accord' bringing together politicians, policymakers and experts to come up with binding recommendations for housing going forward is "well overdue" ASB senior economist Mark Smith says.
In ASB's latest Economic Weekly, Smith says that with our politicians "the needs of the country need to come first, rather than using housing as a political football and an avenue for point scoring." ASB is New Zealand's second biggest mortgage lender with a $62.236 billion home loan book at the end of September.
Smith has come up with a series of suggestions to tackle the vexed housing questions.
He concedes it is "not an exhaustive list of considerations" and not all of the above suggestions made may be politically palatable.
"However, it is better to highlight the issues and look at potential solutions rather than throw this into the too-hard basket and watch the housing crisis intensify."
And Smith has some reasonably blunt messages for our politicians.
"The blame game needs to stop, and group and self-interest needs to be parked. A housing accord is well overdue, to bring together politicians, policymakers and experts to discuss what could be done. Recommendations from this will need to have bite rather to be consigned into the too-hard basket by central and local government," Smith says.
In terms of the policy approach, he says a "multi-faceted and co-ordinated policy approach" will be needed to tackle the housing issue, covering both demand- and supply-side aspects.
"Proposed moves to add house prices in the [Reserve Bank’s] monetary policy remit may not add much in practice according to the RBNZ but they will promote transparency and a more considered view on how the housing market impacts the monetary policy outlook.
"Re-imposing the loan-to value ratio (LVR) restrictions from next March looks to be long overdue and it is good to see banks play their part in reining in some of the riskier lending. The RBNZ should also be prepared to further expand its policy toolkit to help rein in demand."
Smith says the Government has an important role to play on both the housing demand and supply side.
He says the taxation system is in need of an overhaul to tilt incentives towards boosting incomes, employment and productive investment.
"The tax treatment of investor housing will need to be revisited, with consideration of capital gains or land taxes to help level the playing field or encourage efficient use of land available for residential use."
In order to tackle housing affordability, Smith says the country needs to get much, much better at building affordable homes.
"Boosting productivity in the construction sector and the provision of affordable housing should be a top priority.
"Regulatory reform may help here as will increasing more supply-side grunt via increasing employment, skills and training in this sector. But let’s not kid ourselves that this will be easy. Lifting economy-wide productivity has proved to be much easier said than done and experts have generally been stumped as to why NZ’s productivity performance has been so persistently poor."
Smith says there needs to be a nationwide conversation on how many people NZ needs, and the adoption of a population policy given the sizeable implications for housing and infrastructure provision.
"Should NZ’s population be 5 million, 10 million or even 100 million people?
"A discussion on immigration settings is needed.
"About two-thirds of the close to half a million gain in NZ’s resident population over the past five years has come from net immigration as opposed to around one third since the 1960s."
The current border restrictions provided an opportune time to assess how well the economy and housing market will cope without more people streaming in, Smith said.