Housing crisis: Prime Minister Jacinda Ardern wants to 'tilt the playing field' towards first home buyers

STUFF
The Prime Minister addressed Myanmar, the economy and housing at her weekly update.

Prime Minister Jacinda Ardern addressed the housing crisis at her weekly post-cabinet conference.

When asked about the housing crisis, she said the Government is looking at what it can to “tilt the playing field towards first home buyers”.

“No one wants to live in a country where the only way that you can move into your own home is if your parents can help you,” she said.

Earlier in the day, Finance Minister Grant Robertson said the Government is planning to clamp down on property speculators to address the housing crisis.

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“There is a crisis when it comes to the housing situation right now in New Zealand,” Robertson said in a BNZ breakfast presentation in Wellington where he cited housing as a focus for the 2021 Budget in May.

“New Zealanders are seeing family members being crowded out of the opportunity to purchase a home of their own by speculators and investors,” he said. “We want to tilt the balance more towards first-home buyers, while also incentivising more investment in the construction of homes.”

After coming to power in 2017, in part on a promise of delivering more affordable housing, and KiwiBuild, the Government instead presided over continued house-price inflation, supercharged by Covid-19, which saw supply fall as people hunkered down and even more money chased even fewer houses.

House prices have soared since the pandemic, with the nationwide median house price up 19 per cent in December from a year earlier, defying economist predictions for a decline of between 5 and 10 per cent.

“We’ve seen how the effects of rising demand for property by speculators and investors has blown those mid-year projections for prices to fall, out of the water,” he said. “The clear intention here is to take the heat out of the housing market. Eventually what we will see is some moderation of house prices.”

Minister of Finance Grant Robertson says the cost of the scheme is part of being in the film industry, and he is comfortable with the pressures and trade-offs that the subsidy requires him to make. (File photo)
Ross Giblin/Stuff
Minister of Finance Grant Robertson says the cost of the scheme is part of being in the film industry, and he is comfortable with the pressures and trade-offs that the subsidy requires him to make. (File photo)

Robertson said the Government would announce a rolling series of measures to address the housing crisis, starting with moves to control demand in late February.

“We all know that building more houses, particularly affordable houses, is critical,” he said. “But we also can do more to manage demand, particularly from those who are speculating.”

The Government has received advice from Treasury and the Reserve Bank on measures to manage demand and discourage speculation and proposals will go before Cabinet shortly, he said. The advice includes new ideas and measures already available in the toolkit, he said.

Plans to improve the supply of housing will be announced as the 2021 Budget is finalised, he said. A “significant amount” of the extra $7 billion earmarked for infrastructure investment through to 2033/34 would go into housing, he said. That doesn’t include transport projects which are funded separately.

Robertson didn’t provide further details on the plans, but said it was time for “bold action”.

“The market has moved quickly and rapidly in a way that is not sustainable,” he said. “We have to confront some tough decisions, and we will do that.”

Housing will be a clear focus for the 2021 Budget in May.
Monique Ford/Stuff
Housing will be a clear focus for the 2021 Budget in May.

The economy has bounced back faster than expected from lockdown last year. A report last week showed the unemployment rate unexpectedly fell to 4.9 per cent in the December quarter from 5.3 per cent in the September quarter as a booming construction sector offset weakness in areas like tourism which have been hurt by the border closure.

“Our economy has rebounded far better than expected, and we are in a strong position to handle what comes at us,” Robertson said.

Updated projections from Treasury show net debt would sit at 36.5 per cent of GDP in 2034/35, $60 billion less than previously forecast in September last year, he said.

Robertson said he would focus on directing spending to the areas and people that require it the most, balancing investing in the public service with keeping a lid on debt.

“As the economy has rebounded stronger-than-expected, we are taking the opportunity to assess if money can be better targeted or reprioritised where it has not already been used,” he said.

Stuff