New Zealand’s housing crisis.

  28-Aug-2018 17:04:33

New Zealand Housing

New Zealand’s housing crisis.

Housing in New Zealand is a crisis that has reached its peak. The people of New Zealand have long been inured to shoddy housing conditions but as the housing crunch bites they face worse conditions than ever before. They are unable to afford their own homes and cannot demand better conditions for the fear of being evicted, or having their rent raised for being difficult tenants in an overheated market.

Tim Hazledine, a professor of economics at the University of Auckland says that New Zealand’s housing crisis is a symptom of its desirability, but unlike other popular cities such as Hong Kong, Vancouver and Sydney, wages in New Zealand are middling among their OECD counterparts. He says, “It may be a macro economic issue – we can’t afford to live in our own country. In a sense it is a nice problem to have because Auckland is such a desirable place to live. I have a feeling we should be more conservative with our land. In New Zealand, we are quite short-term in our thinking. We sell our land because, well, it’s a lot of money, but in a generation’s time our children won’t be so thrilled about that.”

On 20th of May, 2016, New Zealand's Social Housing Minister Paula Bennett said: "Housing problems in New Zealand are not new but the result of ongoing issues, and there is no housing crisis."

A day before that, RNZ reported that Social Development Ministry officials told the minister a year ago that the emergency housing sector was incoherent, unfair and unaccountable.

Speaking in an interview, Ms Bennett said she had been worried about the situation since becoming Social Housing Minister but did not believe the situation was getting worse. "I certainly wouldn't call it a crisis. I think that we've always had people in need. So the other night on TV, I heard the homeless story was second in and then the seventh story was a man who'd been 30 years living on the streets," she said.

She also said that many of the homeless people had mental health or alcohol and drug issues that needed to be worked on over time. But her priority is to have 'fixes'. "Not just at the emergency end, but along that kind of whole pipeline through to social housing through to affordable housing through to more supply. So I'm not sure it is a lot worse right now, I've been acutely aware of it for a long period of time." According to Bennett, the government had put a lot of funding into the housing projects.

She did agree that there were stories of growing numbers of people without accommodation. She said, "Certainly I reckon you've got people that are getting into debt people that are getting them into situations, landlords get to be a bit more picky. I've got to say from a social housing perspective in Housing New Zealand we are less tolerable of inappropriate behaviour and violent behaviour, so we certainly are kicking more people out than we used to."

She also said that Housing New Zealand would not allow methamphetamine to be smoked and manufactured in its houses and people will be kicked out for doing so. When asked whether market forces were not working in relation to housing, and whether it was time for some social engineering, Bennett said there certainly were people in social housing who should not be there, and that was why Housing New Zealand was doing tenancy reviews. As a result, 672 people had been moved on, more than 10 percent of whom went on to buy their own home. Housing New Zealand already had 600 houses in construction and already consented as she said there were "really good products" that were working, but "it's just not a click of my fingers overnight".

Talking about her duties, Bennett said she took the leadership role on social housing. "I spend the bulk of my time on social housing issues and driving my department into seriously thinking about different ways of tackling this."

But, according to the latest surveys, New Zealand’s number of homeless citizens is increasing and are now being temporarily placed in motels. An estimated 41, 000 people have been reported to need shelters in the country of apparently 4,749,598 people . According to a report by the Economist in 2017, New Zealand had the most unaffordable house prices in the world, with those in Auckland climbing 75% in the past four years, although the market has cooled in recent months. David Parker, Associate Finance Minister in the centre-left labour coalition government, has described New Zealanders as “tenants on our own land” and said the “great Kiwi dream of home ownership” is no longer a possibility for many. As a result ,the New Zealand government has banned the sale of existing homes to foreign buyers. The ban applies to all nationalities, except buyers from Singapore and Australia. Parker said, that in the last economic quarter, 10% of homes in the popular Queenstown Lakes District and 20% of homes in Auckland central were bought by foreigners. According to Parker, the ban would mean housing becoming more affordable for locals, and supply would increase. “We think the market for New Zealand homes and farms should be set by New Zealand buyers, not overseas buyers,” said Parker in an interview with the Guardian. “That is to benefit New Zealanders who have their shoulder to the wheel of the New Zealand economy, pay tax here, have families here. We don’t think they should be outbid by wealthier people from overseas.”

Before the ban, New Zealand had become a destination for buyers from Asia and America and gained a reputation as a bolthole for the world’s wealthy, who view it as a haven from a potential nuclear conflict, the rise of terrorism and civil unrest, or simply as a place to get away from it all. According to the latest figures from statistics New Zealand, 3.3% of homes sold in the last quarter were to foreigners, with the bulk of the buyers being Chinese, followed by Australians. Tax residents of the UK, US and Hong Kong were also among the biggest buyers of property.

However, under the new legislation, foreigners would still be able to purchase apartments in large-scale block developments off the plans, in an attempt to boost the overall housing stock for New Zealanders.

Land sales to foreign buyers boomed under the previous centre-right National government, with 465,863 hectares (1.16m acres) bought in 2016, an almost six fold increase on the year before. That is the equivalent to 3.2% of farmland in a country of 4.7 million people. But this ban won’t touch mega-millionaires like Peter Thiel and James Cameron, who gained citizenship in New Zealand, allowing them to buy homes under the previous legislation and the new measures, too. The preppers or survivalists though, will now have to look elsewhere, with isolated boltholes such as the Australian state of Tasmania and some Pacific Islands potential possibilities being discussed by the community.

On this case, Joe Carolan, chairperson of the Unite Union’s Auckland housing committee, says “scapegoating” immigrants isn’t the solution, and the government needs to increase investment in social housing by building 100,000 state houses in a decade – houses for professional workers pushed out of the market, as well as those on low incomes. He said, “There is a whole group of people being squeezed. People who are middle-class professionals are being murdered by rent. My rent has gone up NZ$185 in three months. So this is where you are starting to see industrial action driven I think by the housing crisis. Why are workers striking? It’s because the rent is sucking the wallet dry when it comes to wages. And that’s when people are starting to break.”

According to the figurative analysis , as of now, only a quarter of adults in New Zealand own their own home, compared with half in 1991, and in the last five years homeless figures have increased, with some New Zealanders forced to live in cars, garages and under bridges.

New Zealand has more than a housing crisis; it has several housing crises. First, there are rough sleepers, whose problems are likely to be complex, including drugs, alcohol and mental illness, and not simply the shortage of houses.

A second crisis arises from high rents and insecure tenure. Low-income renters who have to leave their home - for example if it's sold - are often unable to find an affordable alternative. Too many families are then left in severe housing deprivation, sharing over-crowded homes with relatives, or sleeping in tents, garages or cars. A recent estimate suggests about one per cent of the population falls into these first two critical categories.

The third crisis is the loss of social housing units. The present government reduced the social housing stock by more than 2000 between 2008 and 2016 which is a 3 per cent decline .

Housing New Zealand says that many existing units are in locations or sizes that don't meet present-day needs, so a reconfiguration of its stock is needed. But this should be accompanied by an increase in the total number of occupied units, not a decrease.

The fourth crisis affects those who rent but aspire to own a home. This is mainly, but not solely, an Auckland problem. Many young people are leaving Auckland, as 'economic refugees', or refusing to transfer there, regarding the city as beyond their means if they plan to raise a family in a decent home. And they'd be right. With median house prices around nine to ten times the median household income, the average young salary-earning couple are hard-pressed to buy a home in Auckland, beyond a one-bedroom apartment. A demand for entry-level apartments has motivated developers to build them, although construction costs and financial conditions have stymied numerous plans.

All of this makes housing aids, a huge election concern too. And that calls for serious help on the people's front as their lives are being torn between the political turmoil and their daily needs. Would the ban on foreign buyers, or building ten thousand houses per year, or supply, supply and supply till the crisis ends (as suggested by some politicians), be an effective way to solve this problem? People are eagerly awaiting answers.


Written by:

Rolly Singh

Banaras Hindu University