Govt responds to housing affordability report

The Government agrees with the Productivity Commission that housing can be made more affordable, and has embarked on a wide-ranging programme to make that happen, Finance Minister Bill English says.

The Government today issued its response to the Productivity Commission’s report on housing affordability.

“High house prices matter because many New Zealanders spend a large portion of their incomes on housing and that has helped fuel household debt and contribute to damaging imbalances in the economy,” Mr English says.

“In particular, high housing debt diverts money from more productive investments, contributes to New Zealand’s significant overall level of indebtedness and exposes taxpayers to growing demands for State assistance with housing costs. 

“Those factors make it vital that housing becomes more affordable. In addition, projections suggest that many more homes will be required in coming years than are being built.”

Mr English warns that there will be no quick fixes and instead, work is needed in a number of complex areas and across multiple government, local government and private sector agencies to tackle issues that are deeply embedded.

Having carefully considered the Productivity Commission’s recommendations, the Government is today responding with a comprehensive work programme with four key aims:

• Increasing land supply - this will include more greenfields and brownfields developments and allow further densification of cities, where appropriate.
• Reducing delays and costs of RMA processes associated with housing - this includes introducing a six-month time limit on council processing of medium-sized consents.
• Improving the timely provision of infrastructure to support new housing - this will include considering new ways to co-ordinate and manage infrastructure for subdivisions.
• Improving productivity in the construction sector – this includes an evaluation of the Productivity Partnership’s progress in achieving a 20 per cent increase in productivity by 2020.

“Decisions made by local councils not only affect their local communities, but have wider effects on the economy and the Government’s books. 

“Many of the changes that will make a difference lie with councils and the Government expects them to share the commitment to improving housing affordability,” Mr English says.

Some of the programme is already well advanced, with work under way in the Building and Construction, Environment and Local Government portfolios.

Other recommendations from the Productivity Commission require more detailed exploration and the Government has asked for more work to be done on specific policy proposals including:

• Whether Building Consent Authorities can be consolidated in a regional or national hub.
• The possible establishment of a competitor agency for resource consents/plan changes.

In addition, the Ministry for Business, Innovation and Employment will undertake a market-level inquiry into the construction sector to identify barriers to improving housing affordability.

More work will also be commissioned on the specific problems of the Auckland and Christchurch housing markets.

Mr English says the current economic climate, as well as projections of housing need, make it more important than ever for the housing market to function efficiently.

“Our response to the commission’s report also reinforces our existing programme aimed at reducing New Zealand’s vulnerability to foreign lenders, and removing economic imbalances caused by a disproportionate investment in housing.

“If implemented fully, today’s announcements on housing affordability will reduce housing stress and enable the housing market to better meet the needs of middle and low income New Zealanders,” he says.