By David Bennett
As we look to the year ahead, we have to address the issue of housing; it is fair to say many Kiwis have experienced increasing difficulty entering the housing market over the last few years, whilst others lament over the barriers that prevent their children or grandchildren from achieving home ownership.
On the flipside, some people have also done very well out of the market which has seen property valuations increase significantly in recent years.
The current Labour-New Zealand First Government proposed a significant state funded construction called Kiwibuild, a programme which was intended to be a solution to these concerns.
The Kiwibuild programme proposed to build 10,000 houses per year to meet home ownership demands. Unfortunately, this programme has become a failure, with only 47 houses completed in its first year. This is a far cry from the 10,000 houses originally planned, or the renewed target of 1,000 houses set in recent months.
What this does show is that a government initiated programme is not necessarily the answer for New Zealand’s housing issues. The basis of Kiwibuild is fundamentally wrong.
The housing market is one of the most sophisticated markets in our economy. It is not just about building properties – it is also about how, when and where those houses are built. It is a market that relies on a skilled workforce and individual investors that are willing to undertake property development. It is not a market for the faint hearted, or in this case necessarily government departments.
The market is already correcting itself with house prices dropping in Auckland. Supply will soon catch up with demand and this will be exaggerated under the current Government.
There will always be difficulty in gaining home ownership, it is something to strive for and so will always be a challenge. Perhaps an approach which enabled the market to meet demand through RMA reform and the emergence of apartment housing would have been a better solution for New Zealand’s housing issues.
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