Improving housing stock in New Zealand

In the Fiscal Budget 2020 the Government talked about improving housing in New Zealand. It allocated $5 billion to Kainga Ora so that it could build 8,000 new social houses.

Is it just me or is $5 billion a lot for 8,000 social houses? Social housing should not cost more than say $400,000 per unit. Granted that some will need to be larger houses for larger families, unless this is including Resource Consent costs, land purchasing costs, then I would have expected that maybe 12,000 houses would be more realistic for that amount of money. All that said though, it is a welcome investment.

A couple of weeks ago an article in The Press talked about some of the ways that the Government could get people back to work. One of them was one I really liked, which would be substantially beneficial to New Zealand’s social housing, which was spending hundreds of millions of dollars on a large scale refurbishment of the existing stock, in addition to building new houses. There were numerous social and economic benefits attached:

  • Hundreds of tradespeople who might be struggling for work would be immediately needed
  • Work could start very quickly and could free up potentially thousands of houses otherwise underused in a short time, providing market relief

Another issue that was noted is the land banking that some large companies have done around established premises. In anticipating future growth in their businesses they have purchased land around them, which is fine if something actually gets built, but it also locks up that land to anyone who may build nearby and find a greater, potentially more immediate need for the land. Given that Palmerston North is a growing city and like many places in New Zealand has a dearth of affordable housing, this may be a potential stumbling block, and I wonder if potential time limits need to be put on land that has been secured for development, but which nothing immediate is planned for.

One reason that housing is often too expensive for New Zealanders is that developers have tended to go for bigger housing because the financial return is greater, whereas most of the market is for more modest housing. So instead of 2-3 bedroom dwellings that most New Zealanders would be looking for, developers tend to promote 4-5 bedroom units. They also have things that add value such as large windows, house facing a particular direction, decks and big garages.

I am not sure how one gets this to change, since the market is clearly focussing on something that many developers are not. However I would suggest that the volume of housing sales of smaller houses that can be afforded by people would make up for the relative lack of large house sales.

There are ways that other costs could be lowered. For example houses using prefabricated parts such as walls, roofs and so forth can be relatively quickly assembled on site. This helps to lower the labour costs because tradespeople are not on site as long.

N.Z. in lock down: DAY 36

Yesterday was DAY 36 of New Zealand in lock down as we fight the COVID19 pandemic.

But the economic environment that we need to move into post-COVID19 is not the old unsustainable, throw-away, biota demolishing monster of old. Not if the human world is to avoid early demise caused by inane decisions being made by powerful forces in spite of all the technology, all the knowledge and know how to the contrary. No. If the human world is to continue to grow and enhance itself the human’s that make that world possible much change.

Everything is there, except the political willpower to make that change. But it does not need to be like that.

The change I envisage is something that is not at all new in terms of what I espouse. I have long been a fan of green technology and know how. Whether it is hempcrete to replace concrete because the latter has a massive carbon footprint; the development of hydrogen as a fuel source for vehicles; the extraction of gold, palladium and other valuable metals from e-waste for re-use, the future is green technology.

But it is not just technology, though sustained investment in that will be very useful. The economic recovery will need projects that can be started quickly and get lots of people back to work in a meaningful way. One such thing would be a complete overhaul of the insulation in New Zealand’s social housing stock, which would create a trade boom. The number of houses ready for use in that inventory is nowhere near adequate and so there is a need for new housing projects – Christchurch has an abandoned saleyard at Addington which have not been used for decades; and could accommodate dozens of one/two/three bedroom dwellings quite easily.

There are large scale planting projects that could be getting underway to replant poor quality land that is not practical for farming, building or grazing. To that end I support the Green Party request for $1 billion, which it proposes to use for a range of community funded initiatives. Native forests are very effective carbon sinks and suck up huge quantities, but without intervention to stop possums and other animals from destroying new plantings and stripping foliage, they might become net carbon emitters.

Some projects will be longer term and are quite ambitious. Which is why it is interesting to note the Green Party also has a plan for a $9 billion investment in the New Zealand railway network. In line with New Zealand’s commitment to dealing with climate change, the Greens intend to promote railways as an alternative to the heavy investment in motorways. New Zealand has 1,067mm track gauges, which are similar to some used in Japan for fast trains that can reach speeds of 160km/h. Whilst expensive, the speed of the trains would enable people and goods to reach places nearly twice as fast as a vehicle obeying the 100km/h speed limit.

But as I said at the start, this all comes down to will power. The money is there – the Government has an unprecedented license to spend at the moment. The projects are there and some are shovel ready, whilst others are probably no further than back of the envelope calculations that look promising, and still more are ones that should have been done yonks ago.

So, who is going to give the go-ahead for these projects to get started and get New Zealand back to work?



N.Z. in lock down: DAY 13

Yesterday was DAY 13 of New Zealand in lock down as we try to fight the COVID19 pandemic.

As a result of the course work for my university paper, I have been doing some thinking about how what I have learned about urban planning in the last 48 hours could affect my own views. Having had a diverse range of people speak to myself and my class – economists, council planners, N.G.O. and government agency staff – I feel as though my whole understanding of housing policy and the challenges it poses has been revamped.

There is no simple or singular solution to the challenges facing New Zealand housing, but a combination of changes as laid out below will certainly be a start. They are an attempt to acknowledge the legal, economic, market, policy and societal needs. Understanding how they are interconnected and understanding what the ebbs and flows are in terms of how these needs output and receive input is important.

In terms of legal obstacles or challenges that I think are potentially significant is in the area of covenants on land. Many are well established, and place restrictions on the nature of the housing that can be constructed, such as perhaps requiring nothing smaller than a 4 or 5 bedroom home to be constructed. That excludes potential buyers who might have been wanting to have a 3 bedroom house and a big enough area that they could later subdivide. Covenants might also be used to keep the “riff raff” out – people who come from lower socio-economic classes, but who might have, through a combination of hard work and assistance, to know how to get some finances together and enter the market.

There might well be good uses of covenants as a legal instrument – I would be keen to hear them – but I think I have just demonstrated that something that has uses, also has abuses.

One of the notions that I am certainly not sympathetic to is the market idea that all houses need to be 4-5 or more bedrooms in size. Multiple speakers pointed out that there is now a glut of large houses and it also does not represent an emerging trend that is expected to grow of smaller families after 2-3 bedroom dwellings. Developers want their money’s worth, so they build bigger more complex houses, which may be beyond the ability of most New Zealanders to purchase, or their needs.

Developers, perhaps unwittingly or perhaps deliberately, through not sharing data they have with council planners make it quite difficult for councils to anticipate land use needs. Because of that land use zoning, which normally requires a plan change, public submissions and a hearing to determine the suitability of the change, sometimes becomes an unintentional snag.

It is not to say that planners are always correct as sometimes resource consent applications are not properly notified – i.e. the consenting council underestimates the potential adverse effects and goes for either a non-notification or partial notification. This is never a welcome outcome for a council because it means a now potentially hugely expensive hearings phase with public submissions, reports summarizing those submissions and so forth. And it does happen – Mackenzie District Council is currently facing a legal challenge over a proposed hotel in Tekapo that was not publicly or partially notified.

Coronavirus dangerous, but not New Zealand’s biggest medical threat

Around the world 62 nations, including New Zealand have closed their border to Chinese visitors as a result of Coronavirus (COVID19). The closures, which in the coming weeks will be reviewed, have drawn much criticism from China, upset that its nationals are being denied entry into other countries.

Whilst I believe, given the lack of Chinese government transparency around COVID19, these are the correct measures to be taking, it should be noted that other medical threats around the world with a much lower profile cause significantly more deaths per annum. In other parts of the world COVID19, despite the reputation it is building, still does not come close to their biggest medical threats to human beings. In Africa, Asia and South America combined 100,000 people each year die from snake bite, from snakes that are far more prolific than COVID19 cases. They include the Lancehead in South America, the Russell Viper in Asia, the Saw Scale Viper in both Asia and Africa and Cobras of various types throughout both continents.

In New Zealand, snakes are obviously not an issue. And so, the major killer is actually respiratory illnesses caused by poorly insulated housing. 1600 people die during each winter from respiratory illnesses caused by mould, by excessive moisture content in the house, by simply not having enough insulation in the house. And this is not a new problem either, but rather one that has been quietly working away in the background known by authorities and the public all along, yet somehow despite the significant annual spike it causes in the deaths per month, not viewed seriously by the Ministers (and their Ministries)of Housing, Health and Social Development.

So, what to do about it? Attempts have been made to address our substandard housing insulation standards, the Government will tell you, but those attempts fit with what I call “the best we can” approach of New Zealand Governments, which read correctly actually means “the best we can be bothered doing”. In these cases, the case exists for higher quality regulations, but in order to avoid offending those industries a watered down version often gets released instead.

I have not been in many rental properties, but the ones I have been in, I noted significant mould around the shower from condensation that has not been allowed to escape. At home, prior to having double glazing installed, I noticed that if one uses a scraper attached to a scope which doubles as the handle, on very heavy condensation days the scope might collect nearly a litre of water. And people talk about how frequently they have to empty the dehumidifier tray of its contents.

But how much of this could we potentially prevent if we got really serious and required insulation to reach say R7.0 in new homes and R5.0 in everything else? I suspect the death toll would come down significantly.

But is New Zealand prepared to tackle this quiet, low profile agent of death that lives among us on a day to day basis in our colder months? Are we prepared to demand law changes that require these new standards, or is another potential New Zealand killer, the “she’ll be right” attitude that makes “the best we can be bothered doing” an acceptable outcome going to continue its equally dirty work aiding and abetting such outcomes.

The choice is yours New Zealand.

Making housing affordable for New Zealanders

In January 2019 it emerged that New Zealand houses were some of the least affordable in property price:income ratios. Auckland was the worst, sitting at 9:1, whilst Christchurch was 5.4:1. In other words all of ones after-tax income for nine straight years would be necessary to buy a property on a given day, never mind the fact that in those nine years, the value has most probably increased; that you have day to day living expenses.

In 2002, in Twizel in the Mackenzie Basin of the South Island, a house and the land it sits on would set you back N.Z$90,000. Now the average price in the Mackenzie District is about $543,000, pushed along by the development of new subdivisions around Twizel and the terrace overlooking Lake Ruataniwha.

For me to buy a house now, I would have had to not spent a single cent of my after-tax income since the start of 2013, and even then it would not buy me very much. Maybe 1/3 of that house in Twizel, which would still be another 12 years away from owning – in other words not able to call mine until 2032.

I propose a range of measures that I believe would help to reduce the pressure on the New Zealand housing market.

  1. Reduce migration to 25,000 per annum – in 2018 more than 97,000 people moved to New Zealand, a rate that that cannot be adequately planned for by councils, social service providers or central government
  2. Give local councils the power to acquire properties that are abandoned and whose landlord is not living in New Zealand, and have them sold at their most recent valuation – in Christchurch for example this would enable the acquisition of the Addington sale yards
  3. Introduce a cap on the number of properties an individual can own, so that the market cannot be dominated by a few wealthy individuals or consortium’s
  4. End land banking
  5. Support tiny housing for those who want small houses with minimal floor area – not everyone wants to live in an average house and some tiny homes are quite stylish

However, I do not support the deregulatory approach that would be most likely adopted by the National Party. Every time this comes up, the methods are always the same:

  • Get rid of or substantially downgrade the Resource Management Act – no argument that the Act is in need of reform, but that is not surprising when the Act doubles in length
  • Remove the urban boundary limits, especially around Auckland that open up land to endless urban sprawl – are New Zealanders really that averse to living in apartments or in downsized properties
  • Loosen controls on speculation and quick sales

Housing in New Zealand is sort of our social achilles heal. But it does not need to be that way and the faster New Zealand addresses housing, the healthier our society will become.