Immigration further strains housing

20:42, May 15 2014

A forecast surge in migration is expected to place further strain on the housing market, and Opposition parties are criticising the lack of solutions in the latest Budget.

Net migration inflow is forecast to peak at about 38,000 people in the second half of this year, 12,000 more than forecast in December. Finance Minister Bill English said the impact was already being felt and that the Government was still trying to understand what the full effect would be.

The forecast was included in the Budget, which also revealed the Government would suspend import taxes on most building materials to bring down the cost of house construction. Housing Minister Nick Smith said the move would save $3500 per standard home build, after research showed Kiwi consumers were paying as much as 30 per cent more for materials than Australians.

It is the latest initiative aimed at addressing house price inflation, along with releasing more land, reducing infrastructure costs and streamlining consents.

"It's not about gimmicks or tricks but about doing the hard policy yards . . . $3500 per house is a significant chunk but it's only part of the Government's wider story of improving housing affordability," Smith said.

The measures will reduce Government revenue by $27.8 million over five years and save the residential construction sector about $75m a year.


Labour said the saving was less than a month's house-price inflation in Auckland, where the average price climbed by $6208 in April. "There's nothing here for first-home buyers, there's nothing here to build a single new house, there's nothing here to make homes warm and dry in the rental sector, there's nothing that's going to make houses cheaper, so it's a huge let-down on the big issue that New Zealanders were hoping to see action on," housing spokesman Phil Twyford said.

Surging migration would exacerbate the housing crisis.

NZ First leader Winston Peters agreed. "When it comes to housing, infrastructure, all sorts of facilities like education and hospitals, any attempt to get on top of our problems is thrown out the window by this massive influx."

Green Party co-leader Metiria Turei said "cheaper Gib board and a discount on a few nails" were not the solution to the housing crisis.

But Smith said strong migration was the result of thousands of New Zealanders coming home - many with skills which could help address the lack of supply.

Other initiatives included $30m for the Social Housing Fund and $96m for the Ministry of Social Development to help with its new responsibilities for assessing who gets housing assistance.