Dream of young renters owning their own home 'receding further and further away into the future' - business expert

The Government is no longer guaranteeing 100,000 affordable homes will be built in 10 years and yesterday, Housing Minister Phil Twyford refused to comment on whether the target had been reviewed, leading to further questions over the viability of the initiative.

Your playlist will load after this ad

Newsroom Pro managing editor Bernard Hickey spoke to Breakfast about KiwiBuild’s supply problem. Source: Breakfast

Experts say so far, KiwiBuild is not "solving the supply problem", making the dream of owing a home recede "further and further away into the future."

"It's not solving the supply problem, and all around the country, young first home buyers are paying higher rents, they’re not getting as much on their term deposit, the house prices are going up and any prospect that a supply response, i.e. more houses on the market to start driving houses down – that just keeps receding further and further away into the future," Newsroom Pro managing editor Bernard Hickey said.

He said one of the myths addressed in his article was the myth that those over 65 would help reduce the value of homes to allow for young people to enter the housing market.

"That means, in many ways, stopping various policies to drive down land prices, in particular, but also the house prices, and that involves local government not investing in infrastructure because ratepayers are saying, ‘No, you can’t take on the debt to build pipes in the roads that you need for those houses’, and saying it’s fine for the RMA to stop houses being built in the city."

He said the answer to solving the housing crisis is to "address the wealth gap that's now opened up between over 65s and under 35s.

"Over 65s – their wealth increased by $500 billion in the last five years. Under 35s, their wealth falls flat, and to do that, you really need to tax the family home and land – a land tax," he said.

"Unfortunately, that was ruled out by the tax working group, but if you saw a changed political landscape where New Zealand First and the gold card generation weren’t blocking change, then you would look at things like a land tax on wealth.

"You really have to look at massive, massive building of new houses in the big cities."

He said a political change isn't coming "unless a couple hundred thousand young people jump up and vote for things like a land tax or changes to the Resources Management Act (RMA), or, actually, massive Government investment in infrastructure."

"One of the restrictions at the moment is the Government's self-imposed 20 per cent net debt taget and, you know, the Government, right now, could borrow tens of billions for under two per cent to solve that infrastructure crisis."