14 Dec 2020

Yes, it's a housing crisis

From The Detail, 5:00 am on 14 December 2020
Richmond housing development

Photo: RNZ / Tracy Neal

A 150-page report from Stats NZ has revealed home ownership has hit its lowest level since 1951.

In Auckland, ownership dropped from nearly 73 percent in 1991, to a touch under 50 percent.

The average house price, the report said, was roughly 11.5 times the median household income.

It's been repeated so often it's become conventional wisdom: getting onto the property ladder has never been so difficult in modern history.

However, there may be a shred of daylight amid the clouds of doom and gloom.

Building consents are on the rise.

The Resource Management Act - long seen as an impediment to people building their own houses - is in for a large-scale revamp.

Interest.co.nz reports new dwellings in Auckland are being completed at a higher rate than population growth.

So: are things starting to turn around?

Today on The Detail, Emile Donovan speaks to Infometrics director and senior economist Brad Olsen about how things got to this point; where they’re trending; and whether we need to move away from narratives of silver bullets and quick fixes, and recalibrate our expectations as to how long meaningful change will take.

Olsen says New Zealand tends to be very good at highlighting problems when it comes to housing – but less so when it comes plans and solutions.

Case in point: KiwiBuild.

When that policy was front-and-centre, New Zealand was towards the tail-end of a private sector building lull: the population had increased by half a million people in just six years, and housing hadn’t kept up.

But that was more a lag than an abdication, Olsen says – by the time KiwiBuild was up and running, the private sector was already building up a head of steam.

Add because houses were being built in areas with few employment prospects and little demand for these types of homes, the project was doomed, Olsen says.

In the podcast he also discusses the factors that led to such a shortage of housing in New Zealand; the changing nature of the “teams” in this debate; political inertia; and the realistic time-frames we’re looking at before getting more parity in home ownership.