Solving the need for affordable housing

In our last blog post we explored the increasing need for affordable housing. Unaffordable housing polarises society, breaks down communities, prevents citizens from fully participating in metropolitan life, has negative effects on health and wellbeing, and creates economic disadvantage. It can even prevent our emergency services staff from responding quickly due to the distance they have to travel from home to work. On the other hand, affordable housing tackles poverty and inequality helping to maintain a balanced and equitable society and economy.

According to the 13th Annual Demographia International Housing Affordability Survey, 2017 edition, https://www.demographia.com/dhi.pdf by Wendell Cox and Hugh Pavletich, New Zealand’s increasing inequality is most apparent in the house prices.

“High house prices are not a sign of city’s success but a sign of failure to deliver the housing that its citizens need.” Dr Oliver Hartwich Executive Director The New Zealand Initiative

Like other reports and surveys, this Demographia survey suggests that the cause of unaffordable housing is supply restrictions. Freeing up density controls and removing urban limits have been touted as potential solutions. It may be simplistic to suggest that lifting restrictions would solve such a multi-faceted problem, but it’s worth considering the pros and cons.

A good place to start might be a review of how our councils operate. Council requirements for obtaining consents is bureaucratic and problematic adding unnecessary time and costs to the building process. If council streamlined the process to make it easier, more accommodation could be placed quickly on existing sites. This additional housing could go a long way to providing much needed affordable housing.

Germany and Switzerland are examples of countries that provide housing stability. In his foreword to the Demographia Survey mentioned above, Dr Oliver Hartwich, Executive Director, The New Zealand Initiative said, “In jurisdictions where local decision-makers stand to gain from new development, they will be much more eager to make it happen. In Germany and Switzerland, council budgets largely depend on their ability to attract new residents and taxpayers. This is why both countries have traditionally had a more responsive and flexible housing supply side. The available financial incentives to planners and councillors have made all the difference to house prices in the long run.”

Reviewing council best practices in other countries could help New Zealand learn valuable lessons on how to implement processes that increase affordable housing.

Conversely, bringing in restrictions around the so-called practice of ‘flipping’ could have a positive effect on housing affordability. In an OECD Insights from February 2017, the author talked about how Auckland is one of the hottest housing markets in the world where the buying of properties to quickly re-sell them at a much higher price has become commonplace. This inflates prices needlessly exacerbating the lack of affordable housing.

In our next blog post, we’ll explore more solutions including the use of brownfields and inclusionary zoning.