By Bernard Hickey
Finance Minister, Deputy Prime Minister and Housing NZ Corp Minister Bill English has told Auckland Council to design a planning system that recognises the consequences for current and future residents, and the rest of the country.
He addressed the issue of urban planning in a speech in Auckland in the wake of Auckland Council's decision overnight to withdraw its more dense Unitary Plan maps from the Independent Hearings Panel process on the Plan.
He said the Government was focused on rapidly rising house prices for three reasons.
"They can have a significant effect on the macro-economy and financial stability. They can drive inequality, as high prices favour current owners. They are a fiscal risk for the Government," English said.
"We spend $2 billion each year on accommodation subsidies. Sixty per cent of all rentals are Government subsidised, and the Government owns one in every 16 Auckland houses. When house prices skyrocket, it means these services become more expensive," he said.
"There’s no quick fix to the Auckland housing shortage. Lack of land supply, and hence higher prices, occur when the planning system isn’t working properly. We want a planning system that recognises the consequences for all current and future residents, and for the country. One that coordinates these interests, but does not restrict growth."
'New rules appear to having effect on house prices'
English said the Government had taken various measures to increase housing supply.
"But because increased supply won’t be immediate, we’ve also taken other steps," he said.
"New rules ensure investors, particularly those from overseas, now pay their fair share of tax when buying and selling residential property for profit. And Inland Revenue has extra funding for compliance and enforcement. Combined with the Reserve Bank’s tighter loan-to-value rules, these changes appear to be having some effect on Auckland house prices," English said.
"Regardless of whether these figures signal a turn in the market, we need an enduring solution to housing supply. By 2045 Auckland is expected to grow by more than 700,000 people. It is essential that central and local government works together in deciding how to best meet these demands So there is plenty of work ongoing," he said.
English hopes Govt relationship with Auckland isn't hurt
"And as an aside, it is my hope that election year in Auckland won’t affect the positive relationship between central government and Auckland city, developed in recent years," he said.
"We have developed a focus on generating solutions based on a common understanding of the problems. I hope mayoral and councillor candidates will feel the same pressure we in central government feel – the need to solve obvious problems faster."
The Auckland Council would have to respond to the Independent Hearings Panel on the Auckland Unitary Plan this year, he said.
"It is critical that the plan provides enough scope for increasing housing supply to meet the demands of this growing city. Exactly how that is delivered – the combination of up and out – is something that Auckland should decide for itself."
English then mentioned an ongoing Productivity Commission review of resource management, urban planning and transport planning.
"Longer term, we are looking at a wider set of options for regulating our housing market, because our cities need to grow efficiently," he said.
"Over the past 25 years New Zealand has gone through extended processes to reform our electricity, telecommunication and financial markets. In each case it took years to understand the impact of existing rules, and how to change them to achieve a more efficient market. Now we are addressing housing in the same way. Often politicians are accused of being focused on the short term.
"That’s one of the reasons issues like long-term social dysfunction and housing market reform haven’t been dealt with properly in the past. This Government is taking a long term view."
(Updated with more details on economy and urban planning)
43 Comments
'Bill English has told Auckland Council to design a planning system that recognises the consequences for current and future residents, and the rest of the country.'
This is truly beyond any kind of bizarre joke, way beyond anything utterly surreal even.
We are wondering whether the Arctic will become ice-free this northern summer
http://nsidc.org/arcticseaicenews/charctic-interactive-sea-ice-graph/
and how quickly temperatures will rise globally:
'1. The most-rapid scenario starts with the current 1 C above baseline and adds about 3 C from loss of global dimming plus 1 degree from moistening of the upper troposphere (to avoid counting the feedbacks twice), plus 11 C from Arctic methane, for a total of 16 C above the 1750 baseline by November 2024.
2. At the slower end of the abrupt-climate-change spectrum is 1 C currently, plus 1 C from loss of global dimming, plus 1 degree from moistening of the upper troposphere, plus 5 C from Arctic methane, for a total of 8 C above the 1750 baseline by November 2034.'
http://guymcpherson.com/2016/02/how-hot-how-fast/
Even if the McPherson analysis does not eventuate (and there is no evidence at this point of time it won't) the loss of Arctic ice alone will cause even faster melting of the Greenland ice sheet than is already taking place (potential 7 metre rise in sea level) and even more disruption to global weather systems.
Yet all government policy is geared to cramming in yet more people and forcing them to live fossil-fuel-dependent lives, and totally ignoring the consequences.
Two things are absolutely certain:
1. Auckland will not grow by 700,000 by 2045.
2. Present energetic-economic-financial arrangements will not persist much beyond the end of 2016.
They should consider only citizens to purchase existing property to calm the market. If you want to immigrate to Auckland, to prove you want to live in Auckland, you should become a citizen. Becoming a resident is currently very trivial considering the multiple ways to become a resident.
http://www.immigration.govt.nz/migrant/stream/work/worktoresidence/cani…
http://www.immigration.govt.nz/migrant/stream/invest/investment/default…
http://www.immigration.govt.nz/migrant/stream/work/worktoresidence/defa…
http://www.immigration.govt.nz/migrant/stream/live/familycategories.htm
http://www.immigration.govt.nz/migrant/stream/live/samoanquota/
http://www.immigration.govt.nz/migrant/stream/live/pacificaccess/
The right to own a part of our country should only be limited to people who are citizens of the country.
You have that dead wrong. Becoming a resident is an expensive and onerous process - I've been through it, and I do not complain of it, NZ has every right to be stringent about who gets residency. Once you've got that and have lived here for five years, becoming a citizen is actually quite straightforward
"rising house prices driving inequality " .................. well blow me down Mr English , what planet have you been on since 2008 ?
Rising house prices can be traced back to just one thing and one thing only .............. Migration policy .
Our immigration policy is driven by 2 elements , you need either money or skills (or both) Those with money and the ability to earn big are usually well educated , or they are not stupid ....... AND CERTAINLY DONT WANT TO RENT .
They are the drivers of house prices
Yes immigration does play a part but I think you'll find the main reason for why Aucklands house price had shot up was mainly due to Overseas Investors who were buying up lots and lots of property. But now a Asia has vastly restricted their capital out flow and largely stopped overseas investment. So you're very likely to see a significant drop in AKL's house prices over the next six months.
Council aren't interested Bill and you pollies will also run scared from the issue as the next General Election approaches. Doubt you will see any Auckland MP's support the Unitary Plan and there is no chance council will vote it in 3 weeks before council elections. Back to square one. Plenty of suckers paid premium prices for properties that will not now benefit from the unitary plan.
"We spend $2 billion each year on accommodation subsidies. Sixty per cent of all rentals are Government subsidised," Here Bill English is admitting that they are subsidising the housing crisis, by subsidising investors through rents. He is also admitting that they don't have the balls to actually do something about it.
It is simple really - legislate to cap rents for a whole house at $200 per week (aprox. 25 - 30% of average take home pay), save the government well over $1 billion (some will still need help), kick the support out from under investors, drive down house properties making them more affordable for Kiwis, throw in a rule to require residency for property ownership, and provide some kind of limited parachute for first home buyers caught in the trap and voila! housing crisis is over!
There have been housing crisis in the past, and govt response was simple, build a heap more houses. Nowdays they just chuck money at landlords. $2Billion would build about 5,000 homes per year, which the govt could own, and collect rent on every week. Reducing the amount of tax they charge me, just to prop up a ridiculous situation in Auckland.
A day or two ago, I ran the Dog Poo Patrol on the front lawn. As I lofted the knotted plastic bag into the appropriate bin, I observed that there was a young snail in with the rest.
A small, innocent snail, fated to spend eternity in a sealed bag with a pile of faeces.
I reckon there's a metaphor for the Awkland housing market in there somewhere....
This make me so sad. I think there are a few of us, although I feel very alone. Working 3 jobs to add to a decent amount of money in savings which should serve me well in perhaps putting down a deposit in a modest house/apartment/unit in a city I used to love. And yet, it is not enough, it is no where near enough for me to get on the ladder even in the furtherest reaches of Auckland in the tiniest places/roughest areas. How long do I continue to do this when the goal posts are moving further away much faster than I can save? By asking this question I feel like I am labelled as 'entitled' so I shirk away and hide and become more and more confused frustrated and depressed at the thought of having to leave and start my life again somewhere else.
As most MP's have rentals and are themselves subsidised by the Taxpayer, it is a double whammy, so expect no changes whatsoever to the rules on Housing Subsidies. It works against you, Hardworker. Sorry, but you cannot save, faster than people can borrow.
Likewise most rental occupiers....benefiting from the State run Monopoly.
They would be shooting themselves in the foot with a Double Barreled Shotgun, if they removed all so-called subsidies.
No one likes the truth, but as you voted them all in...truth often hurts....the Taxpayer.
Why is Fuel still overpriced. Why was Dick Smith overpriced. Why is most things, over priced.
Because someone over borrowed money, speculated and is now paying dearly and still expects someone else to bail em out. Millions wasted on Dick Smith, but the Taxpayer may have to pick up the pieces. A con-job is still a con job, ask the original owner I think his name was...Dick Smith.
He will be remembered ....but it was not him who sold it down the river.
He sold it for what it was worth, someone else sold the overpriced shares to mugs in an IPO, then have the Fortune to dispose of.
The poor sods who work for a living, pay taxes and then lose their jobs with a mortgage, I feel sorry for. So do the ones working three jobs, but cannot beat speculators.
Those speculators who thought it would never end, I do not feel sorry for..
Most Farmers are in the same category, rentals to not pay tax, but getting subsidised, yet again....So no sympathy there either.
Their customers, cannot, will not pay. Hard Cheese. Crap over priced products.
If you borrow, expect the consequences. If your Customers have problems, so will you.
Even if the Interest is supposedly 'Tax Deductible' No income, no real benefit. No real inflation.
Tough.
But someone else will pay dearly...never an MP, never a cashed-up Bwankers, who dreamed up the money to pay for the Fiat Money Speculations.
A Ponzi is still a Ponzi, Govt run, and Govt subsidised, but Taxpayer funded, then looted by the very same people, I usually...speculate.
Never trust anyone with a vested interest. Even as low as it gets, the pickings are so easy, when ever larger sums are involved.
Someone needs to tell Bill English that his administration is partly to blame for the housing fiasco in Auckland and that the Government must do 2 things urgently
1) Ring-fence property investor "losses" which are costing us a fortune in lost taxes ( or tax leakage)
and
2) Either reduce ( or phase out) the rental subsidy gradually which boost rents artificially and investors cash-flow , this will have investors exiting like rats of a sinking ship .
The fixes are easy to implement.
The government simply does not want to. What is their Motivation when they are heavily invested in property personally. In addition, immigration is the only thing that has kept NZ's economy from falling off a cliff.
Most people with half a brain leave Auckland. There's a whole world out there that is not filled with nimbys and retirees, and does not require debt servitude for life for the most basic of human needs: a flipping roof over your head.
Has anyone thought out what would happen if a NZ government suddenly pulled out from under the feet of landlords the rug of low-income rental subsidies. I reckon landlords would suddenly have to become price-takers and rents would be reduced across the board proportionately..........this would really put the cat among the pigeons. For a start you and I would cease subsidising landlords. Panic selling of property would ensue because rentals may not then cover outgoings.
Overall result = lower house prices.
( Don't forget that landlords who rent to subsidised tenants are thereby themselves social welfare beneficiaries. )
It is a good idea as any type of benefit like this (including KWS, WWF) just becomes essentially a private subsidy which fails to address root of the very obvious problems. i.e. affordable homes, living wages, and the promotion/ incentive of product producing businesses
Quite so Justice. We have become so used to government subsidies we are barely aware how insidious they really are.
Ask yourself; why is it that someone on the median income cannot afford to feed, clothe and house themselves or raise a family never mind take care of medical, dental, insurance, transport, retirement savings and so on. There is something seriously wrong when the typical Kiwi needs a government handout for day to day living.
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