Bob Jones on Housing

Bob Jones writes in NBR:

Let’s get some facts straight, once and for all on this matter.  First, most house dwellers in Auckland are owners.   Make no mistake, it’s no crisis in their eyes.  Good luck to them for this wealth windfall. 

Prime Minister John Howard summed it up beautifully a dozen years back.  He listened patiently while a current affairs television journalist berated him about house prices.  “Listen,” he said, when the bore finally finished.  “Over the past three decades I’ve been harangued from one end of Australia to the other on every imaginable subject, with one exception. No one yet has complained to me about their home’s rising value.”

Secondly, Auckland is today and has been for the last decade or so, Australasia’s fastest-growing city.  In a nutshell, that’s the market, otherwise known as the public, voting with their feet – a huge compliment to the city.  With that rapid population growth comes unavoidable baggage, namely transport congestion and housing shortages. Nothing is free but what’s undebatable from the continuing inflow, not just from abroad but also from within New Zealand, is that those problems are a price people are willing to pay. That’s not opinion but logic; otherwise they wouldn’t keep coming.

Land re-zoning, house, road and rail construction to resolve these demand pressures can’t be achieved with a wave of a wand. They not only take time but lots of it.  More important, they’re all happening in Auckland right now. No one is sitting on their hands, despite the newspapers’ tiresome handwringing.

This situation is a global one with other cities experiencing similar inflow booms. London, Hong Kong, Sydney, New York, San Francisco and many more, are all having the same growth problems, without the accompanying tedious journalistic infantilism we are enduring.

Bob Jones is right that these large increases are occurring in many major cities around the world.

And there is a huge amount happening on both the demand and supply side, which I detail below. But the one thing which would make the biggest difference – a major shift in the urban boundary for Auckland rests with the Auckland council, not the Government. If you want cheaper land in Auckland, vote for a Council that will make the land available.

What has been done though is:

1. Tax changes so any sale of an investment property within two years gets fully taxed
2. Houses no longer depreciated for tax purposes
3. Reserve Bank introduced restrictions on the number of mortgages a ban can offer with less than 20% capital (and in Auckland less than 30%)
4. Obligation for all buyers to have an IRD number to track if foreign demand is significant and needs a policy response
5. New home construction in Auckland up from 3,579 a year to 9,566 in the last year
6. The KiwiSaver HomeStart scheme which allows more KiwiSaver members to use their savings and a grant of up to $20,000
7. A Government building programme in partnership with Auckland Council through the Tamaki Regeneration Company building 7,500 homes
8. The fully Government owned Hobsonville Land Company building 400 homes
9. Almost 28,000 new houses and sections consented in Auckland through the Special Housing Areas and a further 28,000 likely
10. RMA changes which have reduced some consenting costs