Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Huge opportunity in new state house policy: English

Huge opportunity for private builders in new state house policy, says English

By Pattrick Smellie

April 4 (BusinessDesk) – Finance Minister Bill English is urging infrastructure and construction firms to recognise opportunities to build the next generation of state houses as he predicts reforms that kick in mid-month will make the government the largest player in the medium density housing market.

Describing the housing policy changes as “the biggest change in state housing since it was invented”, but which had attracted “almost no attention”, English told attendees at the annual investor day for NZX-listed infrastructure specialist Infratil there was a large cohort state house tenants who were keen to move because their current state house no longer met their needs.

Older state house tenants represented a major opportunity.

“There’s been very little understanding of this group,” said English. “For the first time in 50 years we’ve gone and asked them whether they do want to be in a state house for life and quite a few of them said ‘no’.

“They don’t like being in three bedrooms on quarter of an acre in a street where people have loud cars and parties.

“There’s room for a product, not a gold-plated Ryman (retirement village) product, for around 15,000 tenants in some kind of medium density communal living.

“We could have Housing Corp do that and it would be a long, slow process or we could have a market compete to provide that product, which could allow us to free up a large part of our stock relatively quickly,” said English.

One of the implications of that policy was that “one way or another, the government becomes the main buyer of medium density housing in all New Zealand metro markets.”

“We would hope not to be taking the development risk, because we don’t know anything about development and its commercial and economic dimensions,” he said.

The government would be looking to provision by companies with property development experience rather than the Housing Corporation, in a process that was likely to lead to writedowns on the value of some of the current $17 billion of state housing stock.

“We’re starting a price discovery process and that’s going to tell us some things about prices that we don’t want to know, but we’ll have to face up to them,” English said.

On housing policy generally, English said there was another three to four years work in “chipping away” at the reasons behind New Zealand’s “choice” to have a “very expensive housing market.”

While there would be headlines about foreign buyers being a factor in high house prices, they were a distraction, English said.

“In the end, it’s a political and regulatory problem and the solutions are all a bit complex. Demand side focus is a distraction from the underlying supply side issues and the related infrastructure issues.”

Housing affordability remained a critical issue for three reasons. Firstly, if house prices kept rising at recent rates, interest rates would have to increase even more aggressively than had already been signalled.

Secondly, the debt burden carried by middle class families would see more demands for assistance of the kinds established in the mid-2000s, when house prices and interest rates were high, such as interest-free student loans, expanded early childhood education subsidies, and Working for Families.

“You can argue that (such policy) was driven by the housing market – middle class households who couldn’t meet the cost of housing and the government had to subsidise it,” English said.

And thirdly, the gap between those who can and can’t afford to buy a home has become a growing contributor to inequality.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Oceans: NOAA Declares Third Ever Global Coral Bleaching Event

As record ocean temperatures cause widespread coral bleaching across Hawaii, NOAA scientists confirm the same stressful conditions are expanding to the Caribbean and may last into the new year, prompting the declaration of the third global coral bleaching event ever on record. More>>

Scoop Business: A Decade Of Government Pre-Seed Investment

More publicly-funded science is being commercialised after a decade of government ‘pre-see’d investment, according to an independent review. More>>


Solid Energy: Plan To Shut Unprofitable Huntly East Mine

Solid Energy, the state-owned coal miner in voluntary administration, plans to shut down its unprofitable Huntly East mine and lay off 65 staff after deciding the site stands "no chance whatsoever" of finding a buyer. More>>


E Tū: Merger Creates NZ's Biggest Private Sector Union

E tū has been created by the merger of the Engineering, Printing and Manufacturing Union and Service and Food Workers’ Union. It represents more than 50,000 working New Zealanders in industries as diverse as aviation, construction, journalism, food manufacturing, mining and cleaning. More>>


Internet: NZ Govt Lifts Target Speeds For Rural Broadband

The government has lifted its expectations on faster broadband speeds for rural New Zealand as it targets increased spending on research and development in the country's information and communications technology sector, which it sees as a key driver for export growth. More>>


Banks: Westpac Keeps Core Government Transactions Contract

The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals. More>>


Science Investment Plan: Universities Welcome Statement

Universities New Zealand has welcomed the National Statement of Science Investment released by the Government today... this is a critical document as it sets out the Government’s ten-year strategic direction that will guide future investment in New Zealand’s science system. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news