Is there anything that Nick Smith touches that isn’t an omnishambles?
A new Government measure of housing affordability is more than a year late, and officials are worried ministers might not like what they see.
Cabinet first asked the Ministry of Business Innovation and Employment (MBIE) and Statistics New Zealand to create the Housing Affordability Measure (HAM) in 2012, filling a gap in official government statistics. The measure will show whether housing is unaffordable for both renters and first home buyers in specific areas and at specific income bands all across the country.
It is now long-overdue. The suite was meant to be released in 2015, then 2016, then February of 2017. It remains unclear whether it will make it out before the election, with officials noting its political sensitivity and the possibility that ministers would “disagree” with the measure.
Currently the Government lacks a proper housing affordability measure. This leaves the media and academia relying on third party data, and allowed Prime Minister John Key to point journalists to a handful of cheap Trade Me listings when asked about the housing crisis last year – there were no official numbers to rebut him with.
This measure has been kept mostly secret, but popped up in an Official Information Act release from Treasury earlier this year. A Stuff request for more information on the project was delayed for months, but has finally been released, albeit with heavy redactions.
The documents paint a picture of an ambitious but troubled project, one that would give household level data on affordability for both renters and first home buyers at a “Tier 1” statistics level, the same quality as GDP and inflation numbers.
A spokeswoman for MBIE refused to answer any questions about the measure, including how many people were working on it, prior to the public release. Documents in the information release tell us much about how that release may play out.
National were probably hoping to sneak out the announcement immediately after the budget or something…where it got buried in other news.
“Affordability – both current and historical – will be measurable by locality, household income level … housing tenure, and a range of house characteristics (size, age, etc),” the principal analyst wrote in a October 2015 briefing to Minister Nick Smith.
Instead of looking at housing as a percentage of income, the measure would set levels of “residual” income left over after housing costs for different income percentiles. A change late in 2016 meant that the “unaffordable” marker would be raised for lower income households, as the older measure – which used a consistent ratio across income groups – was “unrealistically low”.
Economist Shamubeel Eaqub said HAM will be very useful, but would not substantially shift the housing narrative.
“It doesn’t really matter how you measure it. It’s going to look bad, because it is bad.”
Of course it will look bad, Nick Smith is in charge.
Bill English has a cabinet reshuffle due 1 May. What’s the bet his mate Nick is a protected species?
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