Housing Minister Megan Woods is defending the Government’s housing package announced on Tuesday, amid commentary it could increase rent prices.
When asked by Breakfast host John Campbell whether the Government had considered the impact of the package on rent prices, Woods said “there’s contested advice”.
Campbell asked whether that meant the Government hadn’t costed the impact of their policies on renters.
Woods responded: “We have looked at what has happened in the past year when everybody said rents were going to skyrocket because we’ve done things like say we need to have healthy homes .”
But, she said monitoring by the Government had found rents had “only” increased about three per cent in the past year, amid rapidly-increasing house prices.
The move is intended to make homes for affordable to first home buyers, but could it result in a shortage of homes for rent? Geordie Rogers shared his insight with 1 NEWS.
It comes after an outcry from the likes of the National Party , the ACT Party , and property investors in response to the announced changes to mortgage interest deductibility rules, which they said would harm renters because it would drive rental prices up.
The change means property investors can’t offset the cost of the mortgage interest they pay against their rental income when calculating their tax.
There are also differing views among economists. Former BNZ chief economist Tony Alexander is also predicting an increase in rent prices.
Meanwhile, Infometrics senior economist Brad Olsen said rent prices were on the rise anyway because of the lack of supply in the rental market. But, Olsen said there was little in the Government's package for renters in the short-term.
Infometrics’ Brad Olsen says any meaningful change will emerge in three to five years’ time.
Woods said she wasn’t expecting a spike in rent prices because the Government had “comprehensive” housing policies which, for example, only limited rent increases to once a year.
She said the package would, in the long-term, make renting more affordable because it would increase the supply of houses and “we simply need more rentals built”.
The package’s $3.8 billion fund for councils to develop infrastructure was one thing that would help, she said.
“What we’re seeing with the package we released this week that hasn’t been done since the 1970s [is] the state accepting it has a role if we're going to have houses built. Not only in the actual houses, but in the land that lies beneath it.”
One woman on the Kapiti Coast whose daughter and son-in-law have moved back in with her because rents are too high is concerned for their future.
It would also start building houses on Government-owned land. Woods expected it would result in 18,000 houses being built.
“Some of this could be quite immediate. There are houses being built on that land now,” she said.
“We’ll be able to do further intensification in some of those areas.”
Some of those houses would include purpose-built rentals, a “missing piece in the New Zealand market”, Woods added.
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