Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

Speech: Newman - The Government And Private Rents

Should Government Dictate Private Rents?

Dr Muriel Newman

Speech to Whangarei Electorate Meeting

7.00pm Friday 2nd July 1999

Owning your own home is very much the Kiwi dream. A home is the largest investment that many families will ever make. Using the security of their property, families are able to build up sizeable savings in their home as, over time, they gradually repay their debt. Since the majority of families borrow to buy their home, the performance of the property market is of considerable interest to them. For many families, the increase in equity in their property over time enables them to trade up, gradually moving to more expensive properties, increasing their equity and asset value in the process.

As well as interest rates, there are many other factors, which influence the property market. The most significant of these is the demand for houses. The demand for houses has been on the increase over the last two decades due in the main to the growth in total household numbers, caused by our ageing population and the significant increase in separated families.

Steady upward pressure on the existing property market has also been brought about by the rise in the costs of building a new home. These increases are particularly associated with Resource Management Act and the emergence this decade of a raft of regulations with associated compliance costs. Collectively, these additional charges have pushed up the price of constructing new houses to the extent where it has been estimated we pay a premium of 20 to 30% over Australian house prices, maintaining the rising market value of existing properties. Further, rental incomes have increased as a consequence.

According to the 1996 census, there are 1,276,332 private dwellings in New Zealand, of which, almost 400,000 are mortgage free. Some 470,000 are owned with some form of mortgage, and around 300,000 are rented out or leased. These 300,000 rented or leased properties represent almost a quarter of the whole New Zealand property market, with a fifth of them owned by Housing New Zealand.

Since the 1930s, government has had a hand in the housing market. In order to assist low-income families, houses were either built by the government or by local authorities and rented out at favourable levels. The problem was that there were never enough houses. By the mid-eighties, as state house numbers peaked at 70,000, waiting lists reached record highs, as families desperately tried to obtain cheap state house rentals As a result of the pressure on state housing, the Labour Government introduced housing subsidies and market rents. These initiatives led to the present government's housing policy, which provides accommodation subsidies to low-income families, irrespective of who owns the property. Over 300,000 families currently receive the accommodation supplement, far more than ever received housing assistance under the last Labour Government.

The recent launch of the election year housing policy of the Labour Party, however, signals an end to the stability that has been evident in the property market. Apart from the glitch last year, when the government intervened in the market to make state house rentals market followers rather that market leaders, there has been little political interference. Even that move, however, saw some home values decrease by an estimated 10%, with wider consequences only being averted by falling interest rates.

As one of its election pledges, the Labour Party has signalled a return to cheap rents for state houses. If someone is lucky enough to qualify for a state house, they will be able to rent the property for 25% of their income. Meanwhile their neighbour, next door, who earns the same income but either wasn't lucky enough to get a state house or didn't have the right contacts, will have to pay much more.

Labour have also signalled an end to the successful home buy programme, which has seen thousands of state house tenants to buy their own home.

However, the property market will be significantly affected by Labour's commitment to "driving down private sector rentals". The implications of this are far reaching. If a Labour Government actively drives down the rentals on a quarter of a million homes. They will drive down the value of those properties. New Zealanders who own rental properties, in many cases bought as a retirement investment, will find their equity disappearing.

The effects will be widespread. Home owners, who have bought at the lower end of the property market, will find their values eroding away. Since the rental sector is so large, making up a quarter of New Zealand's property market, a fall in its values will de-stabilise the whole property market. Home owners investments will be put at risk if a Government enters the property market in this way.

Labour's raising of taxes, will push up interest rates, at a time when their housing policy will drive down values. Hardest hit will be low and middle-income families who have bought a home and will find the value of their property falling, eroding their equity base.

State Houses were originally built to meet the need of families who could not afford to buy their own homes. At that time there was not the surplus of houses for private owners to rent out properties. Today we are a very long way from that with the private sector now providing most of the rental properties in the country. The accommodation supplement has seen an end to the unfair policy that only gave housing assistance to those people living in State houses.

This change has also allowed low-income families the chance to escape the State Housing ghettos that the state housing policy forced them into. They can now choose where they want to live because the accommodation doesn't discriminate between private and state houses.

Government assistance for those families needing help with their accommodation shouldn't discriminate. Neither should the Government assistance impact on those New Zealanders who work hard to own their own homes or save for their retirement by investing in property. ENDS


© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Polls And National’s Leadership

Like his Tory counterpart Theresa May in Britain, National Party leader Simon Bridges seems widely unloved, and safe in his job only to the extent that no-one else on the National front bench seems ragingly keen on taking over the task of leading National to a likely defeat in 2020.

It is not a poisoned chalice like Brexit, but it comes close. More>>

 

MP Reportedly In Mental Health Care: Speaker Of The House Seeks Advice

After unleashing a volley of damaging allegations against his former leader, National's Simon Bridges, and his party, Jami-Lee Ross was reportedly taken into mental health care over the weekend. More>>

Gordon Campbell: On Jami-Lee Ross (And The New Hobbit Law)

Clearly, Jami-Lee Ross is not waging a normal form of political warfare, with agreed rules of combat and rational cost/benefit calculations.

This is politics-as-terrorism where everything is being sacrificed by the man in the bomb vest in order to remove Simon Bridges as the leader of the National Party. More>>

ALSO:

Film Industry Working Group:

Three Killed: DOC Supporting Family, Colleagues After Helicopter Crash

The Department of Conservation (DOC) is rallying around family and colleagues of the staff who died in a helicopter crash this morning in Wanaka... The helicopter, with two DOC staff on board, was on its way to undertake tahr control in the Haast area when it crashed. More>>

ALSO:

Political Donations: Greens Call For Tighter Anonymity Rules And Public Funding

“It is clear that those vested interests have a tangible influence on the decision making of political parties. This is a threat to democracy and should change.” More>>

ALSO:

Education Amendment Bill Passes: Urgency Sought For Partnership School Treaty Claim

The claim takes issue with the acts and omissions of the Crown in respect of the closure of Partnership Schools | Kura Hourua. More>>

ALSO:

Salvation Army Paper: Call For Public Housing Investment

To meet these future demands the report suggests the government needs to look beyond the private rental market and begin to invest heavily into home-ownership programmes and more public and social housing. More>>

ALSO:

Cull: Himalayan Tahr Control Operation Proceeding

“The target of controlling 10,000 Himalayan tahr over the next eight months remains. The revised plan provides for a staged control operation with increased reporting to the Tahr Liaison Group...” More>>

ALSO:

Health: Petitions To Fund Breast Cancer Drugs

Women marching to Parliament today, to present two petitions calling for Government funding of vital medicines, have 100% support from a coalition representing than 30 breast cancer organisations. More>>

ALSO:

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels