Gimme shelter: Why can't Kiwis rent their homes securely and comfortably?

by Virginia Larson / 16 July, 2018

Home ownership is now out of reach for many people after lawmakers and regulators over the past 15 - 20 years failed to control the supply, demand and quality of housing. Photo / Getty Images

RelatedArticlesModule - housing

New Zealand is a nation of aspiring homeowners - but for many, it'll be an unrealised dream. Could we follow the European example of making long-term renting a safe and comfortable option?

Everyone needs a job, a house and a date on Saturday night. It’s an old saying, but one that still holds true. We all need love, shelter and gainful employment.

Right now, there’s certainly work for New Zealanders with skills and ambition. It’s a shame we remain mired among the low-wage Western economies, but at least we’re not Greece or Spain, where unemployment rates hover in the high teens.

Governments can’t do much to help us find love and companionship. But they can exert considerable control over the supply, demand and quality of housing. On that score, lawmakers and regulators of the past 15-20 years get a fail: not only were they responsible for the leaky buildings crisis, they also fiddled while property prices soared high above the rate of inflation. News that the average value of an Auckland home hit $1 million recently should have us questioning our collective sanity.

Plummeting homeownership rates and rising unaffordability aren’t spread evenly across the country, but they’re no longer a solely Auckland-Queenstown problem. And even if the contagion was confined to our biggest city, you have to ask how Auckland – a fairly ramshackle bunch of suburbs between two nice harbours in a country sometimes left off world maps altogether – ended up in the same desperately unaffordable basket as global super-cities Hong Kong, San Francisco and London.

The short answer is because we made “investing” in residential property a very nice little earner for anyone who could rustle up a deposit. And rustle they did, encouraged by the banks. We also hoisted a “For Sale” sign to the world. There’s a lot of money out there, not always squeaky clean, looking for safe havens. “Come on in,” we said, “buy our land and houses. And look, no capital gains!”

I hope the government sticks to its ban on foreigners buying houses. Even if the number of homes sold to non-citizens is not as high as the 11-21% ASB economists reported in June, it was always more than the 3% touted by National. Furthermore, many overseas buyers are willing to pay well over the asking price, which immediately hikes property values in those neighbourhoods and sets absurdly high bars for first-home Kiwi buyers.

National’s immigration policies will eventually be seen as cynical and costly. Yes, we have skills gaps in certain industries and need immigrants to fill them, but the net non-citizen inflow of 300,000 people in the last five years of National’s term delivered no real improvement in productivity, and the export sector actually shrank as a share of GDP. Meanwhile, Auckland, Tauranga and Queenstown’s housing and infrastructure groan under the pressure of their rapidly growing populations.

But have we also got too big for our walk-in wardrobe boots? Our households are getting smaller, but we’re building bigger homes. Stats NZ says in the mid-70s the average Kiwi house was 110sqm; by the end of 2016, it was 182sqm. I put this to Auckland University School of Architecture senior lecturer Bill McKay, who spoke at a “Smart Thinking” presentation on housing in June alongside two proponents of the “tiny house” movement.

“This may sound strange coming from an architect,” he says, “but the best thing for Auckland housing would be a high-speed train – one that gets you from the CBD to Huntly in half an hour.” It does sound strange coming from an architect, but McKay is on a roll, as it were. Fast, efficient, affordable public transport allows people who want the bigger – or cheaper – house to make the commuting trade-off, he says. Driverless cars will also improve traffic flows. And cars add surprising costs to a home build: councils’ off-street parking and reversing requirements currently mean a couple of cars can eat up 30-40% of precious square metres on a residential plot.

McKay also sheets high house prices back to the cost of land – and building supplies: “We’ve allowed land and housing to become a commodity. It’s New Zealanders’ way of making money, and fairly low-risk at that. Then we pay through the nose for building materials.”

So what about the rising popularity of the “tiny house” – couldn’t one in the backyard accommodate the baby-boomer downsizers, or the young adults in the family? McKay says it’s an attractive option, but challenging. You have to prevent people dumping an uninsulated tin shed in the garden and renting it out, he says. Council consenting processes for tiny houses vary wildly and you can get contradictory responses from the same council.

“There are some quality, Kiwi-built cabins you could lower in with a crane,” he says. “They’ll help, while we remain a country of aspiring homeowners. But really, we need the Superfund, iwi... to build rent-to-buy and long-term rental houses. Many Europeans rent for life, securely and comfortably. Why can’t we?”

This article first appeared in the August 2018 issue of North & South.
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