13 Jun 2012

Govt urged to act as house prices continue to rise

7:33 pm on 13 June 2012

Housing experts say the latest price rises mean the Government must act urgently to deal with worsening housing affordability.

International research finds housing in New Zealand more expensive in real terms than in most parts of Canada, the United States and Britain.

Despite that, prices are getting higher, not lower. Recent figures by state valuation company QV shows nation-wide residential values rose 3.9% in the year to May.

Values nationally are 2% below their peak before the global financial crisis in 2008, and in Auckland and Christchurch are above it.

Christchurch analyst Hugh Pavletich says prices were too high already and should not be rising now.

He says the fact that they are will deprive many people of home ownership.

"Nothing has been done. This is really a great tragedy for young people in particular and the disadvantaged who are being denied their right to home ownership with these artificially inflated housing prices."

The Government asked the Productivity Commission to investigate the issue and a report has been on ministers' desks since April this year.

The Government says it needs to integrate its response with other reforms on issues such as the Resource Management Act.

However, Mr Pavletich says housing unaffordability has dragged on too long and it is clear what needs to be done.

"We've known for many years now what the problems and the solutions are. The only thing that has been lacking has been competent, political management.

"The Government has been most irresponsible in not dealing with this issue much sooner than this."

Mr Pavletich says streamlined local government and construction processes and freed-up land on city fringes could deliver New Zealanders sections for $50,000 each.

Meanwhile, Jenny Dixon, a professor of town planning at Auckland University, warns the city is building far too few housing units to meet a growing population.

"We are going to need something like 400,000 new units over the next 30 years. To meet that target we need around 13,000 new units built a year. Currently, we're only constructing around 4000."

Recommendations for dealing with this problem were supplied to Finance Minister Bill English by the Productivity Commission also in April.

The suggestions included making more land available for building houses, which government ministers are still looking at.