Understanding the New Zealand housing crisis

There is a housing crisis. There must be a housing crisis when a modest dwelling in Auckland costs $800,000 and most New Zealanders are simply priced out of the market. And yet, there is not a housing crisis. At least not if you believe Prime Minister John Key, Minister for Housing Nick Smith.

Except that there IS a housing crisis. The crisis is not a purely Auckland thing either, though the highest prices are perhaps there. The crisis is also a Christchurch issue, albeit for entirely different reasons. They are quite different cities geographically – one the gateway to New Zealand, the other the gateway to the South Island; one struggling with the common problems that go with being in a location surrounded by salt water on a narrow isthmus, the other trying to rebuild after a major natural disaster.

There are several sets of causes. In Auckland and Christchurch there are causes for the housing crises in those cities that are specific to them. But there is also a set of causes that are part of a bigger, New Zealand-wide problem. To understand the context of the Auckland and to a lesser extent the Christchurch crises better, one needs to understand the causes of the New Zealand-wide problem:

  • New Zealand has – and shall continue to do so for the foreseeable future – a shortage of skilled labour to build the houses, which means there is a lot of demand for carpenters, electricians, plumbers, landscapers and so forth. In building a house one obviously wants competent trade staff, but they also want it to be affordable.
  • New Zealand is fairly generous in terms of how it permits non-citizens to buy and/or rent properties in New Zealand. Whilst I have no problems with this, I think every nation should put its own people first, which can be done without developing a xenophobia. In terms of New Zealand housing we are failing on both counts – we are not putting New Zealanders first, and xenophobia is developing because of that failure.
  • The Government is part of the problem. National and Labour’s preference for letting immigrants in without proper planning and thinking that New Zealanders can cope with the market changes has led to an ad hoc approach with no policy cohesion.

The causes at regional level are reasonably different too.

In Auckland, the major gateway to the country and the face of urban New Zealand to the outside world, land is at a premium. It is viewed by non New Zealanders who are able to take out 1% loans as highly desirable. Anyone who watched the auction on Tuesday night on TV One would have been amazed at the price ($896,000?)for a modest dwelling in Auckland, which could have purchased two decades ago something quite stylish. The problem with new housing estates is that where they go, other development inevitably follows, such as shopping malls, schools and so forth. Whilst the needs of the people living in the new developments has to be taken care of some how, they create planning headaches that the general public do not really understand.

The situation in Christchurch stems from earthquakes in 2010-11 which rendered thousands of people homeless, caused large parts of the Christchurch City Council social housing stock to be written off and rendered significant tracts of land unusable for housing. Although thousands left, nearly all of the many that stayed on had suffered varying degrees of damage by the time the last big tremors occurred. Although the land zoning can be solved, the resource consent planning for several new subdivisions on land to the west and south of the city centre cannot happen fast enough on one hand, but on the other needs to take due time to ensure it is not flawed. The influx of tradespeople from around New Zealand and overseas to help with the rebuild has added further pressure to available housing.

So, lets ask ourselves again, is there a housing crisis in New Zealand?

Yes there is!

2 thoughts on “Understanding the New Zealand housing crisis

  1. Rob…

    The problem is becoming the same everywhere, even here in The Netherlands, getting on the housing ladder is increasingly difficult. Without parental assistance (financial) even getting a big enough deposit is difficult.

    The banks want to avoid risky loans with too little deposit in an economy where “jobs for life”are now as rare as hens teeth. I understand the problem of the banks in some part but the extreme part is where house prices seem to be out of control and rocketing skywards at an ever increasing rate.

    Himself and I bought at the right time both in Christchurch NZ and here in The Netherlands, but that was down to sheer luck. We would have problems in both cities today.

    Due to our good fortune we will be able to help our children, many parents are not in this position so how the next generation will manage is beyond me.


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