Press Release
ISSUED BY AFFORDABLE AUCKLAND
Housing

Affordable Homes Needed – Not More Subsidies

“Tinkering with KiwiSaver subsidies won’t help Aucklanders paying seven times their household income for their first home,” Affordable Auckland Waitemata & Gulf candidate Stephen Berry says.

With the median house price in the city now at over $550,000, the government is considering lifting the $400,000 price cap for KiwiSaver first-home buyer subsidies in Auckland. However Berry says unless the structural issues causing house price inflation are addressed, any increases in subsidy will feed directly into prices rather than spurring new building activity.

“The Productivity Commission found that councils are triggering house price inflation by restricting land supply, taking too long to process consents and failing to finance infrastructure properly.  The Auckland Council is a prime example of this institutional failure,” he says. “The problem is that Auckland houses are too expensive, not that the government isn’t providing enough taxpayer-funded hand-outs to first homebuyers.”

Berry says Auckland’s “woeful” building consent numbers, just over 4700 in the past year, are a damning indictment on the Auckland Council’s planning failure. This equates to only three new homes per 1000 residents, a level that is considered to be the replacement rate for existing stock. Houston, Texas, a city three times the size of Auckland, is building at a rate of 15 houses per 1000 people.  If Auckland built at this rate it would put up 22,000 new homes per year.

“The Demographia housing affordability survey, which rates Auckland’s housing market ‘severely unaffordable’, has shown year after year that cities with responsive land markets don’t experience price bubbles,” Berry says. “Demand has exploded in Auckland due to low interest rates, easy credit and foreign investment, but housing starts remain in the doldrums while prices skyrocket.”

Meanwhile, the Reserve Bank is planning to limit high loan-to-value ratio (LVR) lending, which Berry says will make it even more difficult for first-homebuyers. “Getting a big enough deposit is already hard in Auckland.  At the median house price a 10% deposit would be $55,000, while if a 20% deposit is required homebuyers would have to come up with $110,000. “These are eye-watering numbers.  The Reserve Bank has been left with little option but to act on the rampant housing inflation in Auckland.  First home buyers around the country will pay the price for the Auckland Council’s incompetence.” 

“Affordable Auckland maintains that the solution to house price inflation is to get Councils out of the way and prevent them from increasing regulation related expenses. More tinkering by central Government and the Reserve Bank is only going to make this situation worse.”

ENDS

Stephen Berry
Affordable Auckland candidate, Waitemata & Gulf
Leader, Affordable City

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