Housing crisis: anyone got a plan?

Power Play - Political cynicism has reached new heights in Parliament with the Speaker of the House accepting a statement the government has a Comprehensive Housing Plan as fact, because it was written in caps.

The government has desperately been churning out policies and initiatives in the hope of creating the perception it is on top of the housing crisis.

Figures out this week showing house prices rising at the fastest level in 12 years and the average Auckland price just a whisker away from $1 million show the government clearly is not.

The government has also tried to inspire confidence through its language, inserting the word "comprehensive" into any statements about its housing initiatives, and doggedly refusing to utter the word crisis. However, ministers now acknowledge it is a "challenge".

In the last day of the sitting session before a month long recess, National MP Todd Muller had a patsy question to the Building and Housing Minister Nick Smith, asking about house building under the "government's Comprehensive Housing Plan".

When questions for ministers are submitted, any statement of fact contained in them have to be authenticated and then approved before they are included in the list for question time.

Whether or not the government does in fact have a "comprehensive" plan for housing is clearly subjective, which was acknowledged by Mr Carter.

But then, with a straight face, the speaker advised the house he had been shown a National Party video that referred to the Comprehensive Housing Plan, therefore it was fact.

Let's hope that particular ploy doesn't catch on.

Regardless, this is a political problem that shows no signs of abating, and may well flow into election year.

While rising house prices may have benefited the National Party amongst its Auckland voters in recent years, as they enjoyed the benefits of the increasing value of their homes, housing unaffordability is becoming a generational issue.

There is simmering resentment within the generation below the baby boomers; saddled with student loans, locked out of the housing market, and becoming resigned to the fact there will be little left in the kitty to fund their retirement.

And like the student loan debate some years back, housing is an issue that is not just about the individual - parents, aunts, uncles and grandparents worry about the impact on younger members of the family, and in many cases are being asked to help out financially.

Labour forms its own plan

All of this presents an opportunity for Labour, which has promised its own "comprehensive" housing plan, built around its 100th year centenary.

The first of its policies is to create thousands of new emergency housing places, mainly by funnelling money through non-government organisations.

The rest of the plan will be based on the existing Kiwibuild policy, constructing 100,000 homes with the government involved.

Last year the National government introduced what it calls the "brightline" test, aimed at dampening demand - taxing capital gains on houses bought or sold within two years, excluding the family home.

Labour is likely to build on this policy, potentially extending eligibility past the two years to cover more houses, and make it harder for speculators to get around the policy.

The advantage is the policy is already in place, so National has already done the explaining.

The disadvantage is it raises tricky questions about the Capital Gains Tax policy Labour took to the last election but has since abandoned, and why it can't come up with its own plan to reduce demand.

As well as being comprehensive, Labour's plan will also have to be credible; if it's too ambitious it will just become easy target practice for National Party ministers.

Long wait for new lending limits

Meanwhile, the Reserve Bank has effectively ignored the prime minister's not-so-subtle hint for the central bank to "get on with" imposing further lending limits on investors, particularly in Auckland.

Deputy Reserve Bank Governor Grant Spencer has acknowledged all of the pressures on the Auckland residential market, saying the heavy investor presence has the potential for greater financial instability, as evidence from overseas shows they are more likely to default on mortgages.

If a home owner defaults, they have to move out, but investors do not face the same prospect.

The bank also says even with the boost in supply, Auckland is probably 20,000 to 30,000 houses short of what is needed.

The supply side needs to be "urgently addressed" which Mr Spencer hopes will be delivered through Auckland's Unitary Plan.

The bank has also pointed out there are drivers the government itself can deal with, including migration and tax treatment.

But it is still talking about the end of the year before it extends lending limits based on the size of the deposit, or the buyer's income, compared with the value of the house.

Which, judging by the prime minister's comments earlier this week, will not be fast enough.