Where does housing fit into Budget 2021?

June - July 2021 Where does housing fit into Budget 2021?

More houses, warmer homes and higher Māori home ownership were clear objectives in the Government’s latest budget, but they face criticism for lacking any real solutions to New Zealand’s housing crisis

Finance Minister Grant Robertson's fourth budget will invest $3.8b in a Housing Acceleration Fund, insulate 47,700 homes and put $380m towards raising Māori homeownership, which currently sits at just 30%. $131.8m will also go towards replacing RMA, which is hoped to improve the delivery of new housing.

Century 21 Owner Derryn Mayne applauds the Government on funding its housing initiatives, but says Budget 2021 will make little difference for most firsthome buyers.

“The Finance Minister has long promised to ‘tilt the balance more towards firsthome buyers’ but Budget 2021 has not achieved that.

“He could’ve announced partnership models such as ‘rent to buy’ schemes or that the Government would act as loan guarantor for eligible first-home buyers. Another initiative could’ve been interest-free government loans for deposits on first homes – like student loans in tertiary education. It’s those kinds of things that would’ve made a real difference.”

Property Council New Zealand Chief Executive Leonie Freeman adds that for many of the core issues around housing supply and delivering infrastructure at pace, the Budget doesn’t offer any new options.

“It’s encouraging to see the Government engaging with the community and investing in Māori housing, and our members are supportive of any initiative that increases and improves New Zealand’s housing stock.

“However, it would have been good to see further investment in alternative housing initiatives to help fuel our housing supply,” says Freeman.

“There is no mention of initiatives like Build-to-Rent in the Budget. At a time where all options should be on the table, Build-to-Rent offers the Government a unique opportunity to support longer term options for New Zealanders.

“Equally, support for local authorities and businesses to implement planning law reforms is critical to their success. Councils need the tools and resources to ensure the changes have a favourable outcome and remove any barriers that might exist.

“Much of the detail around the Housing Accelerator Fund is still left out, so it is hard to know how much of a difference this will make to supply. Along with significant workforce constraints,

it is not clear how effective this will be in the long term in increasing supply.

“We are skeptical about the bold assumptions made regarding house price inflation. There is no clear evidence that interest deductibility and bright-line changes will lead to such a dramatic reduction in house price inflation – especially since many of the details around these policy changes are yet to be finalised or announced.

Despite these criticisms, Building Better’s Dr Bev James says the Budget announcement should be considered in the context of recent housing announcements: the re-setting of tax policy in relation to the rental market, changes in rules regarding rent increases, the Healthy Housing Standards, the infrastructure fund, and the progressive homeownership programme.

These are all initiatives the Government have already set in motion to address New Zealand’s housing issues.

James says the boost for Māori housing is very much needed. The budget focus is on: • Increasing housing supply for Māori. • Improving house condition, performance and safety through housing repairs. • Enabling residential development through infrastructure development (ring fenced part of the Housing Acceleration Fund).

“Those areas are supported by research in Affordable Housing for Generations, and the Building Better Homes Towns and Cities National Science Challenge. That research has highlighted Māori housing stress.

“However, the research also shows, that for all housing, increasing housing supply is necessary but insufficient in itself to deal with housing stress.

“Research shows that new builds need to be targeted to affordable rental and purchase opportunities for low and modest income households. Therefore, price points of new builds need to be affordable to families and whānau.

“A large body of research shows that there is significant exposure to poorly performing housing, and links poor housing to negative impacts on health and wellbeing.

“The acceleration of new builds is clearly important. Our research shows that housing stress affects not just low-income households, but also modest income households, including in some regions, households with incomes above the regional household income median.

“All housing new builds should be price pointed to ensure that there is housing affordable to those on different income levels within a region, not just to increase aggregate housing supply. The progressive homeownership programme and investment into public housing recognises that.

“Research shows that affordable housing is critical to ensuring that people are securely housed, and their housing enables them to make a home.”

James adds that further work will still be needed on housing for seniors, particularly in the rental market.

“Our research shows increasing numbers of people will reach retirement as renters or with mortgage debt. Evidence suggests attention will need to be given to the prevention of homeownership loss. Our research suggests senior homelessness is already an issue.

She also says it is important that new builds provide fit-for-purpose housing over a lifetime.

“Previous research shows that accessible and universal-design housing support independence, living standards and reduces housing-related costs.”