Media Statement

24 August 2007

Private home ownership vital to public health and stability

Increasing numbers of young New Zealand families and whanau will be left socially dislocated unless they can move from renting to owning a home.

That is the view expressed by the Manurewa ACTION Team, which this week presented its submission to the Commerce Select Committee Inquiry into Housing Affordability.

“Young people in particular need to be able to make the jump onto the rung of the home ownership ladder. Yet the dream of home ownership is becoming more distant for thousands of young people in Manukau City, particularly Maori and Pacific people. The rate of private home ownership among that group is declining,” Manurewa ACTION Team council candidate Mote Pahulu said.

Fellow council candidate Waina Emery told the Select Committee that communities such as Clendon needed to experience an increase in the level of private home ownership in order to achieve a more stable population.

“A transient population has a negative impact on families and whanau, and the wider community. Children in particular suffer when they have to change schools multiple times. But neighbourhoods also suffer because the low rate of home ownership means a reduced sense of ownership and belonging. A strong, stable population is an essential ingredient to a healthy home and a healthy community,” Waina Emery said.

In presenting the Manurewa ACTION Team’s submission, Daniel Newman said the ability to purchase the first home was being hampered in part of the inefficiencies and poor policy decisions stemming from the local government sector.

“Our evidence presented to the Select Committee clearly demonstrates the crisis facing aspiring first home buyers:

- at the end of 1997 the medium house sale price in Auckland was $240,000. At the end of 2006 the medium house sale price in Auckland was $420,000, compared with the national index of $330,000;

- in the context of the Auckland region, the average section price was $60,000 in 1992. By the end of 2002, the average section price in the Auckland region was $130,000. By December 2006 the average section price in the Auckland region increased to $255,000 (a 96 per cent increase over five years and a 325 per cent increase since 1992);

- in 2004 Manukau City Council approved a levy of $14.62/m² and $4,505 per Household Unit Equivalent (“HUE”). In 2006 the council increased the development contribution levy to $16.28/m² and $5,956 respectively. This represents an 11.4 per cent increase in the per m² development contribution, and a 32.2 per cent increase in the HUE over just two years; and

- a $270,000 mortgage with a 9.15 per cent interest rate for a basic house in Manurewa, paid off over 25 years, would cost $1,058.04 in fortnightly repayments. Add a nominal $18,000 development contribution levy charged by the Manukau City Council to that mortgage and the homeowner is faced with the unpalatable option of either paying an additional $70.53 a fortnight for 25 years, or extending the life of the mortgage by an additional 5 years and incurring thousands of dollars in additional interest payments.

“We’re at the point where people are stretched beyond the point of reasonable. As a result more and more young New Zealanders are being shut out of the residential property market.

“The Manurewa ACTION Team is clear about one thing: we need to be a nation of homeowners, not a nation of renters. To do that the artificial barrier that makes housing less affordable need to be addressed. This must surely start with public policy reform within local government. We would be more than happy to make the Manukau City Council the first ‘cab off the rank’ by overhauling its development and reserve contributions policy, its building and resource consent administration, and its District Plan,” Daniel Newman said.

The Manurewa ACTION Team also opposes the council’s proposal to introduce a Real Estate Transfer Tax (RETT) on the basis that such a tax discriminates against first home buyers in particular. The proposal to introduce the RETT was endorsed by the council’s Strategic Directions Committee (17 April meeting) chaired by Cr Colleen Brown, which then recommended to Council that the submission be forwarded to the Local Government Rates Inquiry Panel. The council (26 April) endorsed the Committee’s recommendations and approved the lodgement of the submission. The minutes of both meetings indicate that not one councillor voted against the tax proposal.

“We are campaigning to consign that selfish, short-sighted and greedy policy recommendation to the dustbin where it belongs,” Daniel Newman said.

ENDS

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