Following Russell’s and Toby’s recent missives, both of which in-turn build on the Herald’s excellent home-truths series, I thought it would be helpful to lay out what our government has done to address the Auckland housing crisis so far.
In 2012, the government denied there was any housing crisis in Auckland.
Nonetheless it tried to quell public unease by investing a measly $34 million a year for three years into social housing innovation. So far the policy has done nothing of note, as the social housing sector has no bigger slice of the Auckland property mix than before.
Over the subsequent 12 months, Auckland house prices went up 14%, some 19 times the pace of inflation.
In 2013, the government still denied there was any housing crisis in Auckland.
Nonetheless it tried to quell public unease by creating lots of Special Housing Areas with different development rules. So far, only 700 new homes have been built in these areas. It’s pathetic.
Over the subsequent 12 months, Auckland house prices went up 10%, more than six times faster than inflation.
In 2014, the government again denied there was any housing crisis in Auckland.
Nonetheless it tried to quell public unease by lowering the cost of things like gib-board and nails by a few percent. This had no impact at all on house prices – even for new homes - because house prices are set on the basis of what the market will bear, not on cost-plus.
It also tried to quell unease by giving certain home purchasers government grants to help buy homes. Not surprisingly, this had no helpful impact on house prices, as the extra money served to fuel demand rather than limit it.
Over the subsequent 12 months, Auckland house prices went up over 21%, some 54 times the pace of inflation.
In 2015, the government continued to deny there was any housing crisis in Auckland.
Nonetheless it tried to quell public unease by announcing 500 hectares of Crown Land would be turned into houses. So far none of those houses have been built, the government has only secured 5% of the land while blowing 100% of its budget, and the government has been forced to reveal its original 500 hectares included obviously unsuitable sites like cemeteries, power stations, and Government House.
On the subsequent 6 months (bringing us to the latest data), Auckland house prices have gone up at 9.4% per annum. Over the same period, CPI inflation was zero.
Now, in 2016, after all those price rises, the government continues to deny there’s any housing crisis in Auckland. That’s despite the fact that, over the previous four years, prices in Auckland have gone up 66%, some 24 times the rate of underlying inflation.
Nonetheless, to quell public unease they’ll implement a land tax on foreign buyers. Unfortunately, because the tax is on a certain class of investors only, any impact it has on overall market demand – and therefore prices - will likely be muted.
Meanwhile, house prices show little sign of slowing down.
In addition to agreeing with Russell, Toby, and the Herald, I also agree with Duncan Garner, Fran O’Sullivan, and Bernard Hickey on this. The government’s approach has been awful. It has failed the people of Auckland over a long period of time. Landlords and speculators– who now account for almost 80% of sales in some parts of Auckland - are getting rich while a generation of families gets locked out of home ownership.
It’s a scandal, tragedy, and farce in equal measure.