Grow the regions to solve housing crisis

As more subdivisions have come on stream in Christchurch, the surge in house prices appears to have at least slowed.
Dean Kozanic

As more subdivisions have come on stream in Christchurch, the surge in house prices appears to have at least slowed.

Auckland average house prices top $1 million. Christchurch people struggle to afford anywhere decent to live. Owning your own home seems like an impossible dream, something from the past that only previous generations could attain. Housing affordability looms like a black storm cloud over our largest cities.

As the annual Demographia survey has revealed several years in a row, Auckland and Christchurch are "severely unaffordable". House prices have rocketed away well in excess of the official inflation rate.

The housing crisis is real and the Government and high-powered agencies have thrown all kinds of solutions at it, with mixed success.

The Reserve Bank tightened up lending criteria, increasing the deposit required to buy a home. All that did was make life even harder for young first-home buyers. It also reinforced the already widely-held belief that men in suits on six-figure salaries sitting in Wellington offices lack empathy and don't have a clue what life is like for people in other parts of the country. It didn't work.

The Government has introduced a HomeStart programme based on KiwiSaver to boost deposits available for first-home buyers. It won't fix soaring house prices, though.

Labour wanted a capital gains tax, despite the fact that such a tax has not worked across the Tasman. In Sydney, for example, houses are also "severely unaffordable". New Labour leader Andrew Little has backed away from a CGT. The Reserve Bank is in favour. The National-led government is opposed.

Cracking down on foreigners buying property in New Zealand is an often-repeated call, yet it is unlikely such a move would be a game-changer. What would?

Increasing supply of land and affordable housing is the strategy most often cited as having the best chance of success. Freeing up more land and reforming the Resource Management Act may make a difference ­– although any changes must be balanced by respect for the environment.

As more subdivisions have come on stream in Christchurch, the surge in house prices appears to have at least slowed. Christchurch is still a long way from being affordable. House and section prices remain out of reach for many. New subdivisions have also been characterized by an ad hoc approach without considering infrastructure, community amenities, and transportation.

Reining in building costs would help, but everyone is demanding better construction and rightly so. Design and architecture could make a difference. We need to change our mindset. Large single-storey homes on individual parcels of land are not the only housing type. Apartments and clusters of townhouses with shared landscaping and amenities are a practical way of meeting the needs of a changing population with increasing numbers of elderly, single people, and mixed families. Housing can be both practical and attractive.

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None of these measures alone will fix the housing crisis. Perhaps a new solution may not just to focus on supply but to address the demand side of the equation, too. Here's how.

Let's make a distinction. The housing crisis is not a New Zealand-wide crisis. It is greatest in Auckland and Christchurch.

I like Auckland. It is lively, multi-cultural, with a beautiful harbour and beaches. It's big and sprawling but that's its nature. House prices are crazy, but people want to live there. A woman who put in a bid for a house in Auckland neatly summed up the dilemma.  She wouldn't mind moving to a part of the country where houses are cheaper. But Auckland is where the jobs are. That, surely, is the nub of the issue.

In our 21st century "rock star" economy, when technology allows many businesses to operate from virtually anywhere, it is remarkable that Auckland dominates the nation so much.

Could the solution to the housing problem in Auckland, and also Christchurch, be to actually discourage people from living there – or rather, to make other areas more attractive? Grow the regions. The demand for houses in the big cities would then diminish.

I met a young environmental technician from Britain who had moved to Invercargill with his family. He loved it. Where else could he buy a big family house on nearly an acre of land for such a good price? Access to spectacular scenery and an easy-going lifestyle appealed.

Visit other countries and you will find many successful small to medium-sized enterprises tucked away in unlikely locations in small towns. I have visited a bunch of them in Germany. Many export high-quality products around the world. Businesses contribute to both the nation's powerhouse economy and their local community.

Why can't New Zealand promote regional growth, too? The Northland by-election result underscores the significance of the regions.

Come next election, and it is a surefire bet that the Opposition will be hammering housing and inequality. Whatever government fixes housing and fuels regional growth will leave a lasting legacy.

 - The Press

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