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'We're building houses for rich folk' - Economist says NZ is building the wrong types of property

An economist says, despite increasing rates of building, New Zealand isn’t building the correct types of houses to effectively tackle its housing crisis. 

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Even though building rates are up, the country isn’t supplying houses where the need is highest, Shamubeel Eaqub says. Source: Q+A

Speaking on Q+A’s panel this morning, Shamubeel Eaqub said there were two key areas that needed to change if the new Government wanted to make inroads on the issue.

The first was to stop lending money to investors. Eaqub said the Finance Minister should signal to the Reserve Bank that access to credit should be equitable. 

He said it wouldn’t encroach on the Reserve Bank’s independence because the bank had a mandate to maintain financial stability, and controlling where credit went was part of that. 

The second was to build more community and rental housing, because it didn’t matter that New Zealand was building quickly if there wasn’t a targeted effort to build where the need was the highest, Eaqub said. 

“We’re building houses for rich folk. We’ve got to be building houses for the bottom half of New Zealanders who are missing out.”

Eaqub said, in some suburbs, houses with more than five bedrooms was the norm. 

“The demand is from poor people and one to two bedroom households.”

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Property Council CEO Leonie Freeman, who joined Eaqub on the panel, said it was a common misconception that the country simply needed to increase its “housing” stock, and think of it as a single thing. 

Freeman said housing was a continuum, with transitional, emergency and social housing on one hand, and market housing on the other.

She said adequate supply needed to be available at all points of the continuum. 

“A lot of that supply is on that market housing.”

Part of the issue was that those who were trying to tackle the housing crisis were often operating in silos, Freeman said. 

She said a “collective impact” approach was needed instead, which would bring together iwi, community, private developers, and central and local Government to work towards a single target. 

A target should then be agreed on together, she said. 

“The question with me with these targets is not ‘Can we get there?’ It’s ‘How do we get there because we must?’ That is the difference.”

But, no silver bullet solution existed, she added. 

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CoreLogic’s Nick Goodall says buyers are taking advantage of low interest rates. Source: Breakfast

Eaqub said people could be “very cruel with the failures” when Governments tried to set targets. 

But, he said he was happy the conversation had moved on and there was now a wide agreement that there was a housing crisis, rather than debating whether one existed. 

Should house prices drop?

Freeman said building more affordable housing didn't mean “saying crash the market”, because it was about making different types of homes available for people.

She said she didn't want to see house prices fall because it would be bad for the economy and for homeowners.

As for a capital gains tax, which Labour has ruled out, Eaqub said: “The purpose of a capital gains tax - it would make it a fairer tax system. It wouldn’t solve our housing crisis. So, it’s a different conversation."

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Opposition parties are having a go at the Government, and even a former Labour finance minister is chipping in. Source: 1 NEWS

He said it was better to focus on getting policy gains elsewhere that the Government had not ruled out. 

“We should stop focusing on prices and focus on what the outcome we’re trying to achieve.

“It’s about giving people secure shelter that is healthy and safe. We are failing in that. This is a fundamental human right, and we suck at it.”

This meant Governments needed to focus on policies that helped house people, rather than look at it from the lens of house prices, he said.