Housing Suggested Solutions Won’t Work

On Monday 30 October 2006, the Hon Chris Carter, New Zealand Labour Government Minister of Housing addressed the Local Government Housing Affordability Forum in Wellington. He stated that the Government recognises that the lack of housing supply is the core problem and outlined some suggested solutions that need to be considered.

He also said that the purpose of his speech at this stage is to encourage greater public discussion, prior to policy options being considered.

“Chris Carter must be warmly congratulated for the open approach he is taking to this issue and being clear in that the Governments focus is very much on increasing housing supply” said Hugh Pavletich, co author of the Demographia International Housing Affordability Survey www.demographia.com . adding “But regrettably, his initial suggested mix of interventionist solutions will not work. Put simply, urban land supply must be opened up.”

Hon Chris Carter outlined the seriously deteriorating New Zealandhome ownership levels, which are now below those of the United Kingdom, United States, Canadaand Australia. In 1991 our ownership level was 74%; in 2001 it had slumped to 68% and is now estimated to be 65%, with Aucklandjust 61%. The latest Census information due for release 9 December will clarify the situation.

New Zealand’s housing stock is approximately 1,400,000 units, which suggests that in less than five years around 43,000 houses have been priced out of home ownership, forcing people to rent.

“These sorry figures indicate that 120,000 New Zealanders have been denied the right to the opportunity of homeownership in just five years. Since 1991, a shocking 352,000 people have been thrown in to the rental market. This represents populations in excess of Christchurchand Manukau” said Mr Pavletich, adding “No wonder our crime statistics are up and social indicators are down, as young people in particular, are being denied the opportunity to participate fully in our society.”

The 2006 Demographia International Housing Affordability Survey www.demographia.com of the United Kingdom, Republic of Ireland, Canada, United States, Australia and New Zealand released January this year, identified 24 urban markets of the 100 surveyed as currently “affordable”, in that people did not have to pay any more than 3 times their annual household income to house themselves.

New Zealandsposition, as outlined within the Ministers speech and the Survey, is that New Zealanders housing is at in excess of 6 times incomes. In 1991 New Zealandhousing costs were near 3 time’s household incomes.

“It is important New Zealanders realize that these inflated prices creating this unnecessary social havoc, are artificial and caused simply by inept local politicians and planners, for misguided ideological reasons. All they need to do is ensure an adequate supply of land to solve the problem” said Mr Pavletich.

New Zealand’s land area is 269,000 square kilometres of which substantially less than 1.4% is urbanised. To provide sufficient land for further urban development would require 29 square kilometres or one hundredth of one percent of New Zealand’s land area each year.

“We couldn’t urbanise any more than a total of 2% of our total land area over the next 50 years if we tried” said Mr Pavletich.

ENDS

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