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National Party showing leadership over housing

27 February 2007

"NZ National Party showing leadership with housing affordability crisis".

On 22 February National Party Housing Spokesman Phil Heatley wrote to the Chairperson of Parliaments Commerce Select Committee requesting an Inquiry in to Housing Affordability, with broad and open terms of reference .

The Committee comprises four Labour Government Members, four National Members and Gordon Copeland of United Future. Mr Copeland supports the need for an Inquiry provided it focuses on the issue of land supply.

Prime Minister Helen Clark stated Monday that the Government was working through the issues and expected to make an announcement next week, on the steps that needed to be taken in addressing this issue of housing stress. She said "the focus is on supply".

The Labour Government Housing Minister Hon Chris Carter had earlier been focused on the supply aspect of the housing crisis, but had recently indicated land supply was not his concern and indicating a preference for higher density solutions.

The 2007 3rd Edition Demographia International Housing Affordability Survey released 22 January this year assessed housing stress within 159 major urban markets of the United Kingdom, United States, Ireland, Canada, Australia and New Zealand.

All the major urban markets of New Zealand were found to be severely unaffordable with Auckland at 6.9 time's annual household earnings, Wellington 5.4 and Christchurch 6.0.

The international standard for housing affordability is that housing should not cost any more than three times annual household earnings. Most New Zealand urban markets achieved these standards a generation ago and 41 major urban markets within Canada and the United States retain this affordability rating today.

The Demographia Survey found that the major reason why urban markets are not achieving affordable ratings is because they strangle land supply around their urban fringe. The steps required to restore housing affordability are set out within this years Demographia Survey.

"Phil Heatley of National and Gordon Copeland of United Future must be commended for their concern for young New Zealanders, in pressing for a Parliamentary Inquiry of this nature" said Hugh Pavletich, co author of the Demographia Survey, adding "It is unfortunate the Housing Minister Chris Carter appears more interested in protecting the bureaucratic interests of a small constituency within the ranks of Local Government, rather than the interests of unnecessarily disadvantaged young New Zealanders".

Mr Pavletich is of the view that the price of sections around the urban fringes is grossly excessive. Real Estate Institute statistics for December 2006 indicate that the median price for a section is $165,000, double what it was five years ago. Prices of $200,000, $300,000 and above are not uncommon. This has meant that most young people have been priced out of housing and those that are obtaining housing are getting much poorer quality than they should be.

"If you get the land wrong, everything else is wrong" said Mr Pavletich.

In normal affordable markets that achieve the affordability standard of three household earnings, around 25% of the cost should be land, with the balance spent on the actual development of the new home. Currently within the severely unaffordable New Zealand urban markets, in excess of 50% is being spent to buy the section, forcing a substantial reduction in the funds available for the development of the new home.

ENDS

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