OECD housing alarm must be heeded

Wellington (10 June 2015): The OECD’s recent report on New Zealand has highlighted the urgent need to untangle the Resource Management Act (RMA), which has snared the housing marketing in a spiral of ever-rising prices, according to The New Zealand Initiative.

The public policy think tank said the findings of the bi-annual report resonated with much of its own research, particularly where zoning regulations have constrained the supply of new houses and pushed up prices.

“The OECD’s concerns about the fiscal risk that our overheating housing market poses to the New Zealand economy show that this is not just a problem for Aucklanders, but all of us who live in this country,” said Dr Oliver Hartwich, Executive Director at the Initiative.

“We have long said that we need to reform the system created by the RMA, which allows small but highly vocal groups to stymie much-needed housing development in our cities. That an international body has also pointed a finger at NIMBYS just adds weight to our argument.”

The OECD report also called for the greater provision of social housing and increased housing subsidies for those low income households not in social housing. But Hartwich said any action on these recommendations will only provide temporary relief as long as the housing supply blockage remains in place.

“Innovative social housing initiatives like the Tamaki Redevelopment Corporation have tremendous potential to boost social housing stock,” he said. “But really addressing housing affordability requires opening things up more broadly – both to density and to expansion. Similarly, higher housing subsidies simply reward landlords unless we significantly boost supply.”

Other OECD recommendations that echoed similar research by The New Zealand Initiative included the introduction of congestion charges and greater diversity of local government funding streams, in particular by allowing local authorities to share in the economic activity that occurs in their jurisdictions.

“There is nothing substantially new in the OECD report,” said Hartwich. “Many economic research institutes have reached the same conclusions as we have. The real question is how high does the mountain of evidence need to get before we actually take action?”

The New Zealand Initiative’s research into housing affordability and planning regulations include:
Empty Nests, Crowded Houses: Building for an ageing population
Up or Out? Examining the trade-offs of urban form
Free to Build: Restoring New Zealand's housing affordability
Different Places, Different Means: Why some countries build more than others
Priced Out! How New Zealand lost its housing affordability

ENDS

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