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


Housing plan commendable, but more innovation needed

The Government’s plans to boost the rate of housing development are commendable but the practicalities remain problematic, say Colliers International property experts.

The Labour-led coalition’s first formal Budget today included an appropriation of $493 million towards the previously announced $2 billion KiwiBuild programme.

The funds would be used to set up a proposed Housing Commission, buy residential development land, and deliver a target of 1,000 affordable residences for first-home buyers.

Alongside KiwiBuild, the Budget allocated funding for 1,600 new state houses a year, in addition to the previously announced $100 million towards tackling homelessness.

An extra $124 million was also committed over four years towards insulation grants for homeowners.

Alan McMahon, Research and Consulting National Director at Colliers International, says the Budget delivered little new detail on how the Government plans to deliver its KiwiBuild targets.

“The Budget takes us a few small steps along the way to unlocking the housing problem, but it’s not just about money – we need to do things differently,” he says.

“We need to change how we procure housing for both renters and owner-occupiers. Just throwing money at the issue isn’t going to be enough, but it is encouraging to see this Government making housing a top priority.”

McMahon says the funding boost for Housing New Zealand, with its ability to borrow from third parties, will accelerate the Government’s planned housing output.

“When the new state housing targets are added to the already known KiwiBuild targets, that adds up to a lot of homes,” he says.

“Finding enough available and developable land with infrastructure, and finding surplus capacity in the building industry, will make achieving the targets almost impossible – unless they are combined with some serious innovation.”

McMahon says the Housing Commission would be the best place to bring innovative new ideas. “It’s good to see funds allocated to the Housing Commission’s establishment, but it needs to be set up with urgency if the Government is serious about achieving its goals.”

Pete Evans, National Director of Residential Project Marketing at Colliers International, says the current level of new supply is not sufficient to meet market demand for new dwellings.

“The undersupply of new dwellings, particularly in Auckland, means first home buyers who don’t qualify for KiwiBuild houses will need to compete with established homeowners who are seeking new apartments in the CBD and city fringe, and terrace and standalone homes in the suburbs.”

McMahon says the problems of inadequate supply and unaffordability have been mitigated overseas with innovations such as shared tenure and rent-to-buy policies.

“By contrast, this Government’s approach so far has been trying to do the orthodox thing more quickly,” he says.

“Unless the Government directly subsidises buyers on a grand scale, it will need to find innovative ways around the 20 per cent to 40 per cent deposit problem, without risking market distortion.”

McMahon says these innovations are likely to be channelled through a ‘third sector’ which is neither wholly public nor wholly private.

“Such ‘third sector’ thinking is embryonic in New Zealand but has been established for decades in overseas markets, for example through the many long-established Housing Associations in the UK.”

McMahon says another innovation we need, and which Colliers International is trying to encourage directly, is the entry to the market of institutional private renters.

“These organisations are well-capitalised and expert in what they do and positively welcome long leases, in contrast to the attitude of a typical private renter today, whose interest is in achieving vacant possession quickly when a capital gain is to be had.”

McMahon says until more housing is delivered, the old law of supply and demand will remain in play.

“Demand will remain constant even if immigration dips a bit. It looks like a major supply boost is some way off, so prices are likely to remain firm for some time.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Banking: Westpac NZ Lowers Merchant Fees For Small Businesses

Westpac NZ is rolling out a new merchant fee pricing structure that will lead to cost savings for more than 10,000 small and medium Kiwi businesses, and could make contactless transactions more widely available for customers. On 1 September, most ... More>>

REINZ: Million Dollar Plus Property Sales Increase 11.7% Nationally

The number of properties sold around the country for one million dollars or more during the first half (H1) of 2020 increased by 11.7% compared to H1 2019, with 5,426 million-dollar plus properties sold (up from 4,858 in H1 2019) according to the Real ... More>>

Waste: Government To Regulate Plastic Packaging, Tyres, E-Waste

The Government is stepping up action to deal with environmentally harmful products – including plastic packaging, tyres and e-waste – before they become waste. As part of the wider plan to reduce the amount of rubbish ending up in landfills, ... More>>


Bankers Association: Banking Becomes First Living Wage Accredited Industry

Banking has become New Zealand’s first fully living wage accredited industry, leading to nearly 1800 employees and contractors moving onto the living wage and gaining greater economic independence for them and their families. As of today, all ... More>>


Economy: Funding For 85% Of NZ Not-For-Profit Entities Impacted By COVID-19

Results of a recent Institute of Directors poll show that 85% of board members on not-for-profit organisations say COVID-19 has moderately or significantly affected their funding. The ‘pulse check’ conducted in the first two weeks of July looked ... More>>

Volcano Detection: Eruption Alert System Would Have Given 16 Hours’ Warning At Whakaari

An alert system that could have given 16 hours’ warning of last year’s eruption at Whakaari/White Island is ready for deployment, University of Auckland scientists say, with warning systems for Ruapehu and Tongariro the next priority. ... More>>

Property: Queenstown Rents Experience Biggest Drop In Seven Years

Rental prices in the Queenstown-Lakes district saw the biggest annual percentage drop in seven years after falling 28 per cent on June last year, according to the latest Trade Me Rental Price Index. Trade Me Property spokesperson Aaron Clancy said ... More>>

Seismology: The Quiet Earth

As many daily activities came to a halt during lockdown, the Earth itself became quiet, probably quieter than it has been since humans developed the technology to listen in. Seismologists have analysed datasets from more than 300 international ... More>>

RNZ: James Shaw Says Kiwibank, Not Ministers Should Decide On Investors

Climate Change Minister James Shaw says Kiwibank's decision to stop doing business with companies dealing in fossil fuels is the right one. More>>


FMA: Kiwis Confident Financial Markets Will Recover From COVID-19, Plan To Increase Investments

Despite the majority (60%) of investors experiencing losses as a result of COVID-19, the outlook on investing remains positive, according to a Financial Markets Authority (FMA) survey. Most Kiwis (71%) were optimistic that the pandemic will pass eventually ... More>>

FIRST Union: Warehouse Using Covid For Cover As Extensive Restructure Makes Everyone Worse Off

(FIRST Union comments on The Warehouse consultation and proposed restructure) 'Unfortunately the Warehouse have done the disappointing thing and used Covid-19 to justify a bunch of operational business decisions that will leave hundreds of workers without jobs ... More>>


Stats NZ: Mixed Performance By Regions Leaves National Emissions Picture Unchanged

Approximately two-thirds of New Zealand’s regions recorded decreases in their total greenhouse gas emissions, while one-third of regions saw increases between 2007 and 2018, Stats NZ said today. “While some regions reduced their emissions, ... More>>

RNZ: Economic Activity And Business Confidence Bouncing Back

Two surveys from ANZ show business confidence and economic activity have rebounded, but uncertainty about the future remains extreme. More>>