Will state housing fix what Kiwibuild cannot?

Kiwbuild was this government’s answer to the housing problem, but it is not working. Providing houses to middle-class families who already have lots of choices was never the intention. They claimed that they would build houses for low-income families ‘locked out’ of the housing market. Actually getting on and building those houses for low-income families is a very different matter from shouting at the government from the other side of the house, as they are now finding out.

Those families are still ‘locked out’ and in the meantime, they have to be housed somewhere.

So is building a lot more state houses the answer? Bryce Edwards at Newsroom asks some pertinent questions: quote.

KiwiBuild is increasingly seen as not only delivering “too little, too late”, but also as focused only on housing relatively wealthy citizens. The Government has responded to criticisms of the scheme by pointing, as the answer, to its state housing initiatives and, in particular, to major work on providing low-cost rental housing.

Labour campaigned last year on building 1000 a year. Labour have now increased their promise to 1600 more homes a year, for the next four years – leading to a total of 6400 additional homes.

This is nowhere near enough. Given that New Zealand is experiencing such a serious housing crisis – especially for those at the bottom of the heap – surely a Labour Party might be expected to be doing something more impressive. end quote.

It is nowhere near enough, but the construction industry is maxed out, and if we bring in more builders… well, they have to be housed somewhere. So it is a vicious cycle. quote.

New Zealand currently needs a much higher number of state houses than in the past, due to both burgeoning population growth, but also greater need resulting from worsening affordability of home ownership.

According to economist Shamubeel Eaqub, New Zealand is short of 500,000 low-cost homes. And given the failure of the market to supply this shortfall, it seems sensible that the state should build more homes to rent out. end quote.

We cannot produce low-cost homes. It is impossible. The regulations, council fees, cost of materials and labour costs make it completely impossible. If large swathes of land were freed up, it might help, but then councils cannot afford to put in the infrastructure, and so the vicious cycle continues. quote.

Massively increasing the supply of state housing would have a huge impact on fixing the demand-side problem of the current housing crisis. Not only would it get many poor families into accommodation, it would also have a significant impact on relieving house price increases.

Unfortunately, this looks unlikely to happen. The benefits of a large-scale expansion of state housing are already very clear to the Labour-led Government, but they are simply unwilling to make the investment. Instead, Labour in government have put a greater priority on other spending. Remember, for instance, the surprise announcement that the Government was going to spend $2.3 billion on “submarine-killing” combat planes for the Air Force. end quote.

I don’t think that money is the problem. It is more likely to be the time factors involved in building, and also a very tight construction labour market. quote.

Unfortunately, the Government is also making it harder to expand state housing because it is currently selling off a lot of state housing land. At the moment, around the country – most notably in Porirua, Mangere, Mt Roskill and Northcote – state houses are being demolished and the rebuilt on smaller sections. The rest of the land is being sold to private owners – either through KiwiBuild or other private developers.

Essentially, state housing land is being privatised by the new Government. That this is happening when there is a massive need for building more state housing seems reprehensible. And in the future, governments will simply be able to justify their lack of state house construction with reference to the lack of land to build on.

Housing New Zealand have declared they are ready to ramp up construction at any time, with the CEO stating earlier this year, “We have capacity to build whatever the Government wants us to build”. end quote.

Do they have builders? Materials? Consents in place? Probably not. All they have is money, but as we are seeing, money isn’t the only thing needed to build houses. quote.

The Government need not borrow all the money itself. Already Housing New Zealand is being told to raise loans itself in order to pay for new houses. And since it already has large assets and steady income from rents, it could easily borrow much more itself, if necessary.

So, how serious is this Government about solving the housing crisis? Is it really a transformative government? On the issue of housing, it’s looking likely that the current administration will be judged in the future as being guilty of neglecting one of the biggest social problems of our time. end quote.

This government made solving the housing crisis sound easy when of course, it is not easy at all. Now that they have to try to keep their promises, their incompetence and lack of experience is really showing. By the time the next election rolls around, the housing crisis will be worse and after all the bloated promises they made, this is shameful indeed.

 


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Accountant. Boring. Loves tax. Needs to get out more. Loves the environment, but hates the Greens. Has been called a dinosaur. Wears it with pride.

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