Government home building comes at cost of private development

The Government’s plan to build more houses will come at the cost of private housing development, says ACT Leader David Seymour.

“Bill English has stated how many houses the Government will build, but not how many will be built in total. Why? Because he knows that the Government’s program will suck land and resources out of the private sector, making little net difference to housing supply. Like all those National housing policies before it, this policy will have a bigger impact on the headlines than the housing market,” said Seymour.

“Government home building would cause a substitution effect where potential private development would just instead be undertaken by the state. This would mean no increase in the actual number of houses built in New Zealand, while also transferring investment risk away from private companies and onto taxpayers.

“Any Government housing development would run into the same costs and difficulties faced by private developers. Substituting private sector action for state action only serves to make the Government look busy. We need to focus on the underlying constraints on housing development.

“All the while New Zealanders wait for the Government to tackle the real problems: an overly restrictive Resource Management Act that needs reform, poor incentives for councils to fund infrastructure, and urban growth boundaries that strangle the supply of land.”

ENDS

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