Universally Panned?
Well you know when Social Liberals, Neo Liberals and even Classic Liberals start panning National’s new housing policy from yesterday National might have a wee problem.
Twitter nearly fell over last night when everyone from both Left and Right were in agreement with Classic Liberal Auckland Councillor Dick Quax’s disapproval of National’s housing announcement at their launch in Manukau yesterday afternoon. And to be honest it is not that hard to figure out why.
This is what National are promising (note the median house price in Auckland is around $580,000 while the average wage is around $50,000/year):
Helping first home buyers
National will help tens of thousands more first home buyers and young families into a home of their own through changes to KiwiSaver.
These changes will encourage the building of new, affordable homes and help New Zealand families get a deposit together for a house.
Helping more people buy their own home will provide stability for families, strength for communities, and security in retirement.
National will:
- Help about 90,000 lower and middle income first home buyers into their own home over the next five years – 40,000 more than would be helped under current policies.
- Replace theKiwiSaver First Home Deposit Subsidy with aKiwiSaverHomeStart Grant, doubling the support for buying a new home and increasing the house price limits:
- Increase house price limits for the HomeStart Grant to $550,000 in Auckland, $450,000 in Wellington, Christchurch, and similarly-priced markets, and $350,000 for the rest of the country.
- Enable larger KiwiSaver First Home Withdrawals by including the member’s tax credit (meaning first home buyers will now be able to withdraw all of their KiwiSaver savings except the $1000 kick-start).
- Expand eligibility for Welcome Home Loans by aligning the house price caps with the new KiwiSaver HomeStart Grant.
- Encourage greater supply of affordable new housing. KiwiSaver HomeStart will complement our work that is freeing up land supply, reducing building material costs, reining in infrastructure and compliance costs, and investing in sector skills and productivity.
How it will work
Using an example of a couple both earning $40,000 a year – for example in South Auckland.
They’ve been in KiwiSaver for five years, and are looking to buy a first home that’s under the price limit.
Under our changes, they could together withdraw up to $29,000 from their KiwiSaver accounts, and get either a $10,000 or $20,000 HomeStart Grant, depending on whether they’re buying an existing or a new home.
In total, that means a deposit after five years of almost $40,000 – or almost $50,000 if they are buying new.
That would be enough on its own to get a Welcome Home Loan for a house costing up to $400,000 or up to $500,000 if new – depending, of course, on their ability to service the mortgage.
More Information
National to help 90,000 first home buyers
$218 million HomeStart package for first home buyers
Summary of Changes
HomeStart Q&A
Feature: Home Affordability
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Source: https://www.national.org.nz/news/features/first-home-buyers
This is Councillor Quax’s reply with further comment from Demographia (yes I know some don’t agree with them but that is besides the point in this post):
NATIONAL PARTY – FIRST HOME BUYER GRANTS SLAMMED
Hugh Pavletich
Co author – Annual Demographia International Housing Affordability Survey
Performance Urban Planning
Christchurch
New Zealand
24 August 2014
The first home buyers grants announced by Prime Minister John Key at the launch of the National Party Campaaign should properly be regarded as a Land Speculators Welfare Scheme … paid for unnecessarily out of young first home buyers savings and by excessively taxed taxpayers.
This is a cynical attempt by the National Party to buy votes at others expense.
It only fuels housing inflation.
It is likely the Reserve Bank will need to respond by lifting deposit requirements further and increasing interest rates.
This will in turn lift the $NZ dollar, damaging the export sector further.
So far this year, the dairy sector has taken a 40% hit in prices … the logging sector a 50% hit.
New Zealand economy is extremely vulnerable (refer … New Zealand’s Bubble Economy Is Vulnerable and China: Big Bubble Trouble ) .
With this cynical approach to the housing issue, Mr Key is punishing our exporters as well, by not allowing the $NZ to adjust to these dramatic price falls.
This will cost jobs … and risk putting vulnerable exporters to the wall … unnecessarily.
The National led Government is well aware the housing problems are impediments to affordable new supply.
Deputy Prime Minister Bill English made clear at the major October 2012 Government Housing Announcement, that the focus must be on …
*land supply
*infrastructure financing
*process
*construction costs
This was followed up with the Housing Accords legislation … and weak Accords entered in to with a number of Local Authorities by Housing Minister Dr Nick Smith.
All talk and no action.
The National led Government promised some 6 years ago in the lead up to the 2008 election campaign that it would deal with the impediments to affordable new housing supply.
Soon after, then Housing Minister Phil Heatley made this clear at the time of the release of the Demographia Survey early in 2009. ( refer … Bringing better balance to the housing market ) ..
Prime Minister “can kicker” John Key has always been “flaky” on housing (refer Housing: Mr Key – Get on the Programme ).
Mr Key is more interested in looking after the interests of Land Speculators and engaging in Crony Capitalism (refer … refer YouTube Video … CRONY CHRONICLES: I WANT TO BE A CRONY ).
The problem for Mr Key, is that the public can see through his cynical Crony Capitalism.
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Again:
*land supply
*infrastructure financing
*process
*construction costs
Land supply is addressed through the Future Urban Zone in the Unitary Plan as Council knuckles down with the 60:40 Brownfield:Greenfield urban development ratios. Simply put the FUZ is ample in supply providing Council does not drip feed out that land in the zone.
Infrastructure financing is a vexed one but Municipal Utility Districts might work for the bigger Greenfield developments like the Wesley Special Housing Area in Paerata – South Auckland
Process: LIBERALISE THE PLANNING RULES so the Freer Market can meet demand and supply for both Brownfield and Greenfield developments. Developers will follow where the demand is as that is where the money is. So get rid of those overtly complex development controls and restore housing affordability and choice.
Construction costs: Grrrr it is expensive to build in New Zealand and often the end product is not at the standard where it should be either. So something needs to be done to get this under control.
#attheendoftheday (as the Prime Minister likes to say) I think National’s housing policy just got panned
Talking Southern Auckland 
Hi Ben
With all due respect to your comments on enough present supply, your wrong. They are not releasing more affordable land. For two reasons:
1. With no restrictions you have enough land to give the essence of more supply than demand. But as soon as you restrict this, then it is seen as a restriction on supply. So we have gone from a RUB to a MUL to SHA to the SHA going to be released in tranches. The trend in every way says restriction of supply.
2. These restrictions (both real and perceived) pre and post any SHA have resulted in the land being bought at highly inflated prices which means that there is a minimum underwrite that needs to be achieved irrespective of what else happens. ie they have already paid too much for the land.
And finally, MUD sewer infrastructure, which is what 90% of the reason subdivisions are staged and SHA are released in tranches can easy be accommodated by STEP type systems on an individual, by street or small neighbourhood basis, if only council got out of the way.
If I released all the Future Urban Zone land right now for Greenfield Development, and liberalised out the Brownfield Development controls this is what will happen.
Land prices will fall in both Brownfield and Greenfield sites including Brownfield sites in the Isthmus. Thus the price of a house in the Isthmus falls (albeit temporary until the eventual new zoning restriction catches up again). However, with land now cheaper both in the Isthmus and Greenfield fringe sites the bulk of your development will still occur in those Brownfield sites as the developers rush to meet the demand of those wanting to be close to urban amenities such as transport, parks, education facilities and amenities offered in both the City Centre and the Metropolitan Centres.
Your Greenfield sites are bound to do this:
It will develop but not as you expect.
At first around 5% of the Greenfield land might become residential. However, and more likely with changing Geography in the Brownfield areas you will find that your heavy industry moves out to these new Greenfield sites first as land use pressures in the Brownfield areas will force them out as industry seeks cheap land as it usually does.
Thus a large proportion of your Southern Future Urban Zone would develop as industry with some supporting residential and commercial springing up later on down the track.
As crude as it was when you laid residential, commercial, and industrial greenfield zones down in Sim City 4 the industry developed first, the residential next then the commercial.
When rezoning in an existing development in SC4 the residential went first in being developed while the industry was first to disappear.
Similar things that would happen to Auckland
Couple of questions, what do you mean ‘until the eventual new zoning restriction catches up again.’
And if the release of all restrictions would cause what you are saying, then what is the right amount to release to achieve no growth in house price (excluding CPI increases).