Property News

Politicians under pressure to fix housing market

Price inflation showed no sign of slowing in December, and politicians have laid out plans to fix the housing shortage.

BY DANIEL DUNKLEY

Housing plans expected in budget

The National Party has proposed working together with the Labour Government, as house price inflation continues to rise across the country.

Prime Minister Jacinda Ardern has confirmed the Government will announce plans to increase the supply of new homes in the May budget, amid rising pressure to address runaway prices and a shortage of listings.

Ardern said decisions around repealing the Resource Management Act would be announced in this month, with a first draft of the bill due to be published in May.

In principle, the Government has agreed to implement recommendations made by a review of the RMA by Tony Randerson. The review called for the RMA to be replaced by a Natural and Built Environments Act and Strategic Planning Act.

The report also called for a Managed Retreat and Climate Change Adaptation Act to be created to address issues around moving properties away from high-risk flood areas.

On the demand side, Ardern is also exploring changes to subdue house prices. While the PM has pledged not to introduce a capital gains tax while she is in office, the Government is said to be exploring an extension of the brightline test.

Under current rules, the bright-line test captures properties bought for the purpose of being sold, and sold within five years. There are rumours the Treasury could extend the term, a move that would hit property investors.

Government slammed over housing plan

Jacinda Ardern’s Government has come under fire for its lack of action on the housing market.

The Government announced in January that it intends to build 6,000 public and 2,000 transitional homes between now and 2024, though the details were first announced at last year’s budget. Commentators called on the Government to do more to fix the crisis.

Ardern backed her government’s record, and the Public Housing Plan. "This is the largest public housing build programme since the 1970s," she said. "We are working at a cracking rate on public housing."

Since 2017, Labour-led governments have built 4,500 state homes. The Government wants to surpass 1,800 new homes within the next three years.

However, the waiting list for public housing is growing longer. A total of 22,500 people are on the list, prompting concerns across the political spectrum.

National wants bipartisan approach

The National Party has proposed working together with the Government to fix the housing crisis.

The opposition wants to introduce a temporary emergency legislation to build more homes, similar to the laws used to rebuild Christchurch following its devastating earthquakes.

At National leader Judith Collins’ State of the Nation speech in January, the opposition called for a bipartisan approach to the housing problem.

“It is too hard to build a house in New Zealand – it's as simple as that. We need to make it drastically easier," Collins said.

"It's really important that we take away those roadblocks," she added.

"Those roadblocks, as we've seen before, once you remove them as we did in Christchurch for a limited period of time, it can get houses built." Collins said. Ardern batted away Collins’ request. "The thing that she's saying we should do, we've already done," Ardern said on Tuesday. "But, I take the offer in good faith. We want to fix the housing crisis."

Concern over rent increases

Rents rose across the country after last year’s rent freeze was lifted, according to data from the Ministry of Business, Innovation and Employment (MBIE).

Tenants are increasingly turning to advocacy organisations and taking cases to the Tribunal to fight against increases of nearly 40%.

Nationwide, average rents rose by 11% between September and the end of the year, after the imposed freeze on prices was lifted.

The average rent rose 3% in the month immediately after restrictions were lifted, according to MBIE rental bond data.

The Wellington region saw the biggest increases, with prices now higher than Auckland.

Tenancy Tribunal adjudicators have expressed surprise at the level of rental increases.

One tenant took their landlord to tribunal after their rent rose from $250 a week to $350 a week, an increase of 40%.

The Green Party Co-leader Marama Davidson called for “bold solutions” to help renters.

“The Government should be looking to increase the supply of affordable community rental homes and ‘build to rent’ developments, for example by extending Kainga Ora’s ‘buying off the plans’ underwrite to community and iwi housing providers,” she said. ✚