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Housing initiatives to support growing economy

Housing initiatives to support growing economy

Housing initiatives in Budget 2014 will lower the cost of housing, improve access to social housing for vulnerable families, and support the growing economy, Finance Minister Bill English says.

The Budget’s housing package temporarily removes tariffs and duties on building materials covering 90 per cent of a new home’s construction, provides new funding to increase the community housing sector, and increases administrative support for social housing tenants.

“This builds on the Government’s previous housing reforms to deliver more competition in the supply of building materials and to deliver social housing that is in the right place and is the right type to meet the needs of families and individuals,” Mr English says.

“We saw the damage done by soaring house prices in the 2000s, when house prices doubled. That led to mortgage interest rates of over 10 per cent, creating a substantial risk to the economy and adding to spending pressures on the Government.

“Rising house prices hit those on lower incomes the hardest, worsening inequality.”

The Government’s housing affordability programme is increasing housing supply by freeing up land, reducing infrastructure costs, lowering the cost of materials, and cutting the time and cost of resource and building consents.

Improvements in housing supply complement the ongoing social housing reform programme.

This programme extends access to income-related rents to the community housing sector, introduces regulation of standards on community providers, and shifts social housing allocation to the Ministry of Social Development to deliver a one-stop shop for those in need.

Budget 2014 housing initiatives include:

Immediate suspension of anti-dumping duties through Budget-night legislation of duties on plasterboard, wire nails and reinforcing steel bar for three years. From 1 July a zero concessionary tariff, to be reviewed after five years, covering around 90 per cent of the materials in a new home and expected to save around $3,500 on the construction of a standard home.

$64.3 million new operating funding and $16.4 million new capital funding for social housing needs assessment functions at the Ministry for Social Development.

$30 million boost from 2015/16 to the Social Housing Fund to help increase the size of the community housing sector.

$8 million to support higher social housing tenant mobility.

$5.2 million new operating funding and $1.8 million new capital funding for reviewable tenancies to ensure reviews are thorough and careful.

$75 million for a Christchurch housing contingency.

Social housing initiatives total $107.5 million operating funding over four years and $18.2 million capital. Elimination of duties and tariffs will reduce Crown revenue by $27.8 million over five years.

These initiatives build on previous housing reforms and initiatives including:

Signing housing accords with councils in Auckland and Christchurch, with the latter subject to consultation.

Reforming the Local Government Act to limit development contributions for funding infrastructure.

Increasing support for those on low and moderate incomes to get into their first homes by through increased eligibility for KiwiSaver first home deposit subsides and trebling funding for Welcome Home Loans.

Launching an inquiry into building materials costs that led to the elimination of tariffs and duties.

“We see considerable economic benefits from an immediate reduction in the cost of construction at a time when housing construction is taking off,” Mr English says.

“That is in addition to the social benefits of helping hundreds more high-need families and individuals into warm and dry homes.”

Ends

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