22 Jan 2019

Government disappointed by housing affordability figures

11:24 am on 22 January 2019

Senior Cabinet Minister Chris Hipkins says he's incredibly disappointed by figures showing housing is still unaffordable in the major cities.

Watch Chris Hipkins full interview here:

The annual Demographia International Housing Affordability report shows New Zealand has continued to be one of the most unaffordable countries in the world to buy a house, with the median price more than six times the median annual household income.

Of the eight New Zealand markets looked at, none were considered affordable.

Palmerston North-Manawatu was the least expensive at 5.0, then Christchurch at 5.4, Dunedin at 6.1, Wellington at 6.3, Napier-Hastings at 6.7, Hamilton-Waikato at 6.8, then Auckland at 9.0, followed by Tauranga and the Western Bay of Plenty as the most unaffordable at 9.1.

Anything more than three times household salary is deemed unaffordable and homes more than five times a median annual household income is considered "severely unaffordable".

Auckland was the seventh most unaffordable major city in the world, behind Hong Kong, Vancouver, Sydney, Melbourne, San Jose and Los Angeles.

One of the reports co-authors, Hugh Pavletich, told Morning Report yesterday that Housing Minister Phil Twyford had been "dithering" and the government was failing to tackle housing needs.

Responding to the report today, Mr Hipkins told Morning Report the figures don't paint a pretty picture for New Zealanders.

"Certainly incredibly disappointed to be in this position, it's not okay that housing is so unaffordable in New Zealand.

"The government's absolutely not satisfied with that, we know this is going to be one of our biggest tasks to get housing under control.

"We also knew it was going to take some time to do that, you can't sort of magic up hundreds of thousands of houses.

"We are making progress ... we would like to speed up progress, no question about that, we'll be going as fast as we can," he said.

The government's Kiwibuild tracker shows 33 houses have been built so far under Kiwibuild programme.

Under the plan, the government has pledged to build 1000 in its first year, 5000 by June 2020 and 10,000 by June 2021.

Mr Hipkins said the building process has been too slow, but he believed the government was on track to deliver its promise.

"We've got 4000 homes that have been contracted to be built, we've got another 10,000 through major developments that we're working on at the moment. We're one year into it, of course it takes time to build a house, you've got to get the land, you've got to get the consent, you've got to get the design, you've got to get the builders.

"It is slow, but we were always very clear that it was going to be slow in the beginning and that the Kiwibuild programme would ramp up and it is starting to ramp up, we obviously want it to go faster and we're going to keep pushing.

Mr Hipkins said several factors were causing the slow speed of the Kiwibuild programme.

"One of the constraints is the building and construction industry itself is facing capacity constraints.

"We haven't, over the last decade or so, trained enough tradespeople and again, we're working as hard as we can to increase the number of tradies that we're training so that we can actually get the workforce we need to build more houses. The industry itself is at capacity, there aren't any unemployed builders out there," he said.

Mr Hipkins said he's confident the government's Kiwibuild programme will help housing affordability in New Zealand over time.

"There's a market here, you increase the supply of houses and you will improve the overall affordability of housing.

"Does that mean everyone's going to be moving into a brand new home first up? No it probably doesn't, but actually if you increase the overall supply of houses, then as people move up the property ladder into more expensive houses then less expensive houses will become available," Mr Hipkins said.

National Party Leader Simon Bridges.

Natonal party leader Simon Bridges. Photo: RNZ / Rebekah Parsons-King

National Party leader Simon Bridges said the main driver of house prices was the lack of land for new homes.

"We've artificially constrained land," he said.

"Were the government today to come up with a comprehensive RMA [Resource Management Act] reform on both planning and the environment, we would be collaborative on that."

As for the current government's KiwiBuild policy, Mr Bridges said it hadn't worked.

"We're a year and a bit in, we've had 40 homes. The government said they'd do a 100,000, they're not going to meet that. I don't hold out hopes for KiwiBuild."

Confident about the future, he said he was "excited" about this year.

"I know within myself that I am the best person to lead the National Party. I know what to do, National's got a great team.

"We're going to outline our plans this year. Over the next couple of months you'll certainly start to see positive police initiatives from us."