Housing affordability has become a focus after the
Government reacted to the Productivity Commission's
recommendations. Business editor Dene Mackenzie reports on
Property Investors Federation president Andrew King says
housing is a complex issue that plays a critical role in
people's lives whether they are home owners or renters.
It was difficult for the Government to make legislative
changes aimed at changing the behaviour of people.
"It is usually doomed to failure as preconceived ideas get in
the way of sound problem analysis and the implementation of
But that was what the Government was trying to do. Finance
Minister Bill English agreed last week with the Productivity
Commission that housing could be made more affordable. So the
Government has started on a programme to make that happen.
Mr English warned there would be no quick fixes. Instead,
work was needed in several complex areas and across multiple
government, local government and private sector agencies to
tackle issues that were deeply imbedded.
The Government had four main aims:
• Increasing land supply - that would include more
green-fields and brown-fields developments and allowing
further densification of cities, where appropriate.
• Reducing delays in and the costs of Resource Management Act
processes associated with housing - that included introducing
a six-month time limit on council processing of medium-sized
• Improving the timely provision of infrastructure to support
new housing - including considering new ways to co-ordinate
and manage infrastructure subdivisions.
• Improving productivity in the construction sector -
including an evaluation of the Productivity Partnership's
progress in achieving a 20% increase in productivity by 2020.
"Decisions made by local councils not only affect their
communities, but have wider effects on the economy and the
"Many of the changes that will make a difference lie with
councils and the Government expects them to share the
commitment to improving housing affordability," Mr English
Labour Party finance spokesman David Parker said a capital
gains tax was a key part of house affordability, something Mr
King firmly disagreed with.
Mr Parker said the Government's refusal to consider a capital
gains tax, that would help put a lid on property prices and
increase wages, showed it was not serious about making
"Owning your own home is a dream that's disappearing for many
hard-working New Zealanders, in part because the tax bias
effectively subsidises landlords," he said.
Proponents of a capital gains tax on rental property believed
it was the right thing to do because they believed property
investors had been the cause of property price increases, Mr
"They believe that property investors have a tax advantage
over first-home buyers and therefore have an advantage when
bidding for property. This is clearly incorrect."
More often than not, property investors were outbid by
first-home buyers, who tended to be spurred by emotion, he
Owner-occupied homes accounted for around 70% of all
properties in New Zealand, meaning they had a larger effect
on the housing market than investors.
"These points illustrate why attacking property investment
would not help first-home buyers to better afford their own
home. In fact, the opposite is true. Increasing the cost of
providing rental property would lead to higher rental prices,
which would make it harder for tenants to save a home
deposit," he said.
Building consents out last week confirmed the Canterbury and
Auckland regions would lead new residential building this
year while the rest of New Zealand remained flat.
Statistics New Zealand figures showed consents for 1520 new
homes and apartments were issued in September, a 22% increase
on the same month last year and virtually the same number as
issued in August.
Registered Master Builders Federation chief executive Warwick
Quinn has been predicting a "tale of two cities" for some
Housing pressures in Auckland and Canterbury were also
driving up property values, he said.
Those were the only regions in New Zealand that had rising
prices, which generated greater levels of building activity
to meet a shortfall in supply. The rest of New Zealand had
flat property prices and similar levels of building activity.
"There has never been a better time to build, with low
interest rates and a highly competitive market, but this
window will close once the Canterbury rebuild starts in
earnest and the economy picks up again," he said.