Housing construction, lending and affordability appear set to
become a polarising election issue this year, following a
slew of data released last week which fuelled heated debate.
The hot real estate market and the likelihood of the
interest-driving official cash rate (OCR) being raised
repeatedly by the Reserve Bank during the coming year, will
refocus attention on the housing issue.
While the 21,300 new dwelling consents issued during 2013 was
a six-year high, underpinned by Auckland construction and
Canterbury's rebuild, the national median prices are
mirroring those last seen at the market's height in 2007 and
hit a national median high in December of $427,000.
Minister of Housing Dr Nick Smith claimed the increased
consenting as a win, by delivering Government policy, while
Labour's housing spokesman Phil Twyford contended Auckland's
house prices were ''out of control''.
The average price of $A648,176 ($NZ696,963) there is now
higher than in Melbourne.
Green Party co-leader Dr Russel Norman accused the Government
of failing to fix Auckland's housing crisis, which would
result in interest rate hikes hurting the whole economy.
''A possible 1% hike in the OCR (official cash rate) will
raise the average homeowner's interest payments by $70 a
fortnight,'' Dr Norman said.
Housing remains the focus of the Reserve Bank, which last
October introduced loan to value ratio (LVR) restrictions on
the percentage of their total money banks could lend to
people with less than 20% deposit.
Those striving to attain the minimum 20% deposit appear set
to be doubly hit by the Reserve Bank raising the official
cash rate in March.
Locking out first-home buyers from building new homes enraged
franchise home-builders and the Master Builders Federation,
and the Reserve Bank back-tracked and issued an exemption on
The interest-driving official cash rate was held at 2.5% last
week but appears certain to be raised in March, three years
after the record low 2.5% was set.
Dr Smith said the issues with housing supply and
affordability were not unique to Auckland.
''The Government is also in talks with the councils for
Wellington, Christchurch and the Bay of Plenty, to
investigate setting up regional Housing Accords,'' he said in
The Government was committed to ''tackling the root causes of
housing affordability'', which included freeing up land
supply, reducing building material costs, reining in
development contributions and cutting compliance costs.
It would invest in skills and productivity in the
construction sector, and support first-home buyers through
the Welcome Home loan and KiwiSaver first home deposit
Labour leader David Cunliffe said apart from rising interest
rates hitting all home owners and raising rents, they would
strengthen the New Zealand dollar, which would dampen
business expansion and slow job creation.
Labour intends to exempt first-home buyers from the LVR
restrictions, implement a capital gains tax on second homes
and ramp up its KiwiBuild programme of 10,000 affordable
starter homes per year.
Dr Norman has said the Greens would introduce a capital gains
tax, restrictions on foreign investment in housing and a
government-led programme of affordable house building.
The party's ''progressive ownership'', a rent-to-buy
programme for first-home buyers, would offer repayments on a
$300,000 house at more than $100 per week below mortgage
rates, and would also stabilise house prices.