Infrastructure bonds for housing

The New Zealand Initiative says Phil Twyford's infrastructure bonds are a workable policy that could solve the funding problem that is choking off housing supply in New Zealand's fastest growing cities.

Labour Housing spokesman recently announced a policy that would allow homeowners to pay off the core infrastructure over the life of the asset using bond financing.

“We've been advocating for this policy since 2013," says Dr Oliver Hartwich, executive director of the NZ initiative.

"As long as councils are a monopoly provider of water pipes, roads and core infrastructure, the ability of our cities to grow is always going to be held back by their funding constraints.”

“Given how tight these debt limits are, it is hardly a surprise that core infrastructure expansion is being trickled out. This feeds directly into house prices in fast growing regions, where supply has no hope of keeping up with population growth.”

Hartwich says these types of arrangements are the bedrock on which major urban expansion has been built in the Southeast of the United States, where house prices have largely remained flat for decades after adjusting for inflation.

“Although the details around where the bond funding comes from are still open to debate, the merits of breaking the infrastructure bottleneck are clear. This is not radical thinking, but a practical and sensible policy if we want to put housing within reach of first home buyers again.”

Housing affordability is one of the Initiative's key research streams, and the think tank has published five reports on the topic. These include: Priced Out: How New Zealand lost its housing affordability Different places, different means: Why some countries build more than others Free to Build: Restoring New Zealand's Housing Affordability Up or Out: Examining the trade-offs of urban form Empty nests, crowded houses: Building for an ageing population  


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