Can anything be done about the lunacy of Auckland's housing market while the main players continue to blame each other?
A friend who’s been going to open homes most weekends over the past few months confirms the lunacy: properties that sold for $500,000 two years ago are now listed at more than $800,000; a poky flat is spruiked as “the jewel in the crown” of a drab sausage-block, with princely price expectations; “cute apartments” turn out to be smaller than a double garage. My friend has a decent deposit and modest lifestyle ambitions. She wants somewhere to live – a quaint, old-fashioned idea, I know, now New Zealand’s residential property is a domestic and international speculators’ market.
For eight years, John Key’s government not only refused to admit housing was a crisis, it tried to smear the pig with lipstick and call it a “problem of success”. National’s other tactic has been to blame its way out of any responsibility. The Resource Management Act and councils are its favourite targets, and Bill English shows no signs of changing the narrative. In late February, addressing his party’s Bluegreens forum (National’s advisory group on environmental issues), he said the high cost of housing was a result of efforts to protect the environment in Auckland and other big cities.
The councils don’t get off the hook, with their often arcane building consent processes and zoning rules that have encouraged land-banking, but it’s surely a blame-game too far to sheet the high cost of housing to councils’ “well-intentioned…but poorly-directed views about the environment”? Clearly, English isn’t worried about Auckland’s regular sewage overflows or the sound of chainsaws toppling mature trees, few of which are now protected against the city’s urban intensification.
Blowback for Auckland Council employees has become so unpleasant, management issued a series of internal memos over summer called “BBQ Conversations”. Essentially, they armed staff with facts to fend off curly questions from “those persistent friends-of-friends who always corner you because you work at the council”. The BBQ bulletin covering tricky discussions about housing – “it’s your fault houses are so expensive… all those consents and inspections” – suggested staffers explain that council doesn’t actually build houses, the construction industry does; that a record number of consents was handled the past year; and that meeting the needs of the city’s growing population was a challenge for not just council, but central government and the private sector as well.
The council’s internal email actually downplayed the unprecedented number of people pouring into Auckland. Not so its “Ratepayers’ Update”, mailed to householders in February. It stated that in a typical week in Auckland, there are 825 new residents, more than 800 additional cars on the roads and 278 new dwellings required. Auckland also needs two new teachers every week. Most teachers can no longer afford to live here, so good luck filling those positions.
Councils can’t control the number of people moving into the cities they serve, and Auckland isn’t alone coping with the migrant surge: Tauranga’s population grew by close to 8500 in the past two years, causing traffic woes and a spike in house prices, along with economic growth.
The government could control these numbers simply by dialling back immigration (there was a record net population gain of 71,305 in the 12 months to January). But it doesn’t want to. It would rather issue statements like its intention to build 69,000 houses on Crown land in Auckland – which English adds will require “an influx” of foreign workers to build them. Is there a nutty element to this? Where do the foreign workers live?
Likewise, National refuses to acknowledge that overseas buyers drive up house prices, even though common sense tells you when those bidders are willing to pay well over reserves, new highs are set.
As for putting a brake on local land-bankers and speculators – sorry, “investors” – the government’s tougher loan-to-value ratios have slowed the juggernaut a bit, but while there’s still no tax on assets, residential property will remain Kiwis’ go-to investment. And they’re now buying properties nationwide, boosting house prices and rents.
In early March, RNZ’s Morning Report interviewed a woman who, with her partner and child, could find only a cold, shabby house to rent in Wellington for $450 a week.
“Bill English says high rents in Wellington are a ‘problem of success’. What do you think,” she was asked.
“Success for who?” she replied.
This is published in the April 2017 issue of North & South.