Fixing the housing issue

Nigel Tutt
Chief Executive of Priority One

Readers will no doubt have seen the government announcement a couple of weeks ago on steps to address New Zealand’s runaway housing market. This included methods to curb investors alongside ways to ramp up supply. We can turn ourselves to thinking how these changes might have an effect on Tauranga’s housing market.

I have written about the poor state of Tauranga’s housing market before, we have the worst statistics of any major New Zealand city for housing and rental affordability, and provision of social housing.  Our house prices increased by 15 per cent last year, a little above the national average of 13 per cent. Housing affordability is not just a New Zealand problem, house prices in Sydney increased by 12 per cent last year, Melbourne by 11 per cent, but we get it a little worse here, causing a number of issues in the community. The government housing package recognises the dire state that we are in, and has made a number of changes to attempt to get better outcomes. While some of those are about tipping the balance to first home buyers, it is hard to see this making a useful difference unless availability and price is looked at (our median price is now just under $900k).

The $3.8B in the housing acceleration fund is a big number and where we need to focus our thinking.

So what would make a difference in the Tauranga housing market? In this area it is all about creating supply. As a rough rule of thumb we need 1000 new dwellings per year to be able to keep up with population growth. Subdivisions are the traditional way to do provide more supply, but these generally need heavy duty infrastructure to be put in first. Infill or intensification is preferred, but there are no guarantees about a market response to planning changes or whether this could provide enough dwellings, fast enough. Provision of social, transitional and affordable housing is also really important – through the likes of Accessible Properties, Te Tuinga Whanau, and Kainga Ora.

The state that we are in demands that we throw the kitchen sink at getting more supply, which means using all of the methods above. We need some of that government acceleration fund to unlock well planned, transport network friendly, subdivisions - this is generally for roading connections. We need more apartment blocks and townhouses in key areas, such as the CBD, and we need government departments to help transform availability, particularly at the lower end of the market so that affordability can improve.

This might seem drastic, but we ignore our current problems and future population growth at our peril.  Urgent action and a good chunk of that government funding are needed for better housing outcomes in our community.



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