Tuesday, 11 October 2016

John Key has an unbelievable solution for affordable housing


John Key has an unbelievable solution for affordable housing, which he recognises is urgent – and made more urgent by government inaction:

It wasn’t so long ago, in the 1990s, in fact, that New Zealand had a high level of home ownership compared to other countries. Not so anymore. We now have what has been described as the second worst housing affordability problem in the world.
    Make no mistake; this problem has got worse in recent years. Home ownership declined by 5% [in the last five years] to just 62.7%. To put that into context, home ownership for the preceding five years had been stable at 67.4%.
    If you dig down into those numbers a little deeper, some worrying facts emerge. The share of homes owned by people aged 20 to 40 dropped significantly [in that period]. Young people – the people we most want to prevent joining the great Kiwi brain-drain – are really struggling to get onto the property ladder.
    This decline shows no signs of slowing. In fact, on current trends, the crisis will only deepen. Home ownership rates are predicted to plummet to 60% within the next decade. And one of the biggest factors influencing home-ownership rates over the next 10 years will be the difficulty young buyers will have getting into their first home.
    This problem won’t be solved by knee-jerk, quick-fix plans. And it won’t be curbed with one or two government-sponsored building developments.
    Instead, we need government leadership that is prepared to focus on the fundamental issues driving the crisis. National is ready to provide that leadership. Earlier this month I announced our four-point plan for improving home affordability:

    1. Ensuring people are in a better financial position to afford a house.
    2. Freeing up the supply of land.
    3. Dealing with the compliance issues that drive up building costs.
    4. Allowing state house tenants to buy the houses they live in..
National’s goal is to turbo-charge the supply of housing in New Zealand by confronting the fundamental constraints that have kept a lid on it. By contrast, Labour’s instinctive reaction to the housing supply problem is to say the government must get in and build some houses…. I think it’s dangerous for the Government to pretend that developments such as that [government-promoted scheme] at Hobsonville are some sort of panacea to the housing affordability crisis…


Great stuff, don’t you think? Magnificent in today’s context.

Well, let’s get real here. If we want to make houses more affordable for first-home buyers, we need more houses to be built as cost-effectively as possible. Unless the Government thinks it can do the job all by itself, we’re going to need property developers to come on board.
    That means providing a legislative and regulatory environment that makes it cheaper and easier for people to develop and build houses. That helps first-home buyers.
    Going back to basics, supplying a house requires the following things:

     Land to build it on.
     Someone, i.e. a developer, who is motivated to build on that land.
     Regulatory consent to build on that land.
     Resources, i.e. materials and labour, to build the house.

So, it’s safe to assume that when supply is lacklustre then something must be going wrong with one or all of these things. That’s certainly the case in New Zealand:

     There’s been a lack of land available to build on.
     Opportunities for developing the land have been reduced, and the costs of doing so have got bigger.
     Acquiring resource and building consent has got harder and harder and takes longer and longer.
     And resources for building, particularly skilled trades people, have become scarcer.

If we’re serious about increasing housing supply, we need to enhance the incentives to build new houses by addressing these problems. Because, for as long as the costs of development keep rising, housing investment will fall and housing affordability will get worse.
    So, National’s plan for housing affordability tackles these supply-side problems in two main ways. First, by freeing up the supply of land and secondly by dealing with the compliance issues that drive up development and building costs.


Great stuff, I”m sure you’ll agree – and I can’t wait for him to get on with it.

Sadly, however, this was not John Key speaking this week, this month, or even this year.

Not even this decade.

No, it was the Prime Minister speaking in 2007, before he was even Prime Minister.

And this decade? Since you lot voted him in? Since he got the top job? He’s done nothing. Nothing for nine long years.

Nothing to ensure people are in a better financial position to afford a house.

Nothing to free up the supply of land.

Nothing to deal with the compliance issues that drive up development and building costs.

Nothing. Nothing at all.

Zero – apart from a smile a wave and a small litter of panacea projects to grab a headline and do nothing to solve the problem.

Nothing that Labour before him had already (not) done.

And so, now, nine years later, even fewer people own their own homes, even fewer young people even try to, and we read this in this afternoon’s news …

The Government is tightening the number of residency permits it grants, in a bid to stem rising demand among foreigners to live and work in New Zealand… A spokeswoman clarified that the changes were a bid to pre-empt rising demand for residency, which was forecast to blowout beyond the normal planning range within a few years. 

… and this in this morning’s:

The Government is preparing to build tens of thousands of houses for private sale in Auckland as it tries to tackle the city's housing crisis, Finance Minister Bill English says.

More intervention to cure (not!) the results of all the previous intervention (and the failure to fix all the previous intervention) of this government and every other.

A restriction on immigration and one or two government-sponsored building developments, even more panaceas, neither of which will come close to curbing the problem this government’s inaction has caused, and more problems down the rack from both. Not mention the effect on every would-be buyers and would-have-been immigrant.

Market failure? No, it’s not.It’s abject, complete and self-evident government failure. Government failure by the very political party that introduced and administered both the RMA and the Building Actthe two pieces of legislation more than any other that have created this mess, which the Bolger Government introduced, which the Shipley Government did nothing to repair, and which the Key Government has never begun doing anything with other than tinker.

And some of you people still support these malodourous, malingering, irresponsible, do-nothing pricks.

It makes me want to turn to heavy drink.

[Hat tip Hugh Pavletich]



  1. Well ranted. I agree. I support your anger. And I'll join you for that drink.

  2. They have also supercharged the procession of wankers from councils with their hands out by agreeing to pay for Len's train set and a billion dollars worth of the infrastructure that council budgets are supposed to be spent on, and emboldened pricks like Justin Lester to claim in the same breath that they are going to insist of tens of thousands of extra dollars of cost in every new house with mandatory bike parks and solar panels, while delivering "warm, dry, singing, dancing, champagne from the taps" homes to everyone who has a heartbeat. And people keep voting for these arseholes!

  3. Well said! When I look at our useless government and its appalling track record on issues like this, I think every sane man owes it to himself to invest in a still.

    I also think the Local Government Act 2002 has a lot to answer for. It has enabled the obstructive, wasteful culture that infests our local councils, and it has encouraged them to spend their money on vanity projects at the expense of infrastructure.


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