Affordable housing (2): why can’t we control it?

by Ian Apperley
Why can’t we control affordable housing? The problem is that no one central authority controls house affordability. It needs the co-ordination of groups that are often at odds with each other and with the citizens of New Zealand as well.

Imagine a system that managed housing. It would have a series of inputs and feedback loops. How many houses on the market, wages, location, transport, interest rates, reserve bank policy, private bank policy, cultural attitudes, land availability … the list goes on and on.

Local government is trying to deal with a series of situations that are fluid, where problems change and continually affect each other. It’s a “mess.”

Unaffordable housing, roughly by definition, is housing that people cannot afford to buy or rent because what they earn is not adequate. Affordable housing should then be provided by central and local government along with private companies. But these private enterprises, trusts, and other third parties are motivated by one thing only. Money. Which is what helped get us into the mess in the first place.

One of the answers is to build the affordable housing. The Wellington City Council owns a great deal of affordable housing, invests in it well, and is preparing to build more.

On a national level, Housing New Zealand is tasked with the same problem and is doing a poor job in my opinion. HNZ has reduced its housing stock by 20,000 since the nineties, and stock has remained static for the last decade while wage disparity increases. The government’s attitude to this has been to deny it, in a rather post-truth Trump-like way. This gives HNZ permission to continue with their less than effective policies. Worse, emergency housing, in some cases costing over $1,300 a week, is expected to be paid back by beneficiaries, dooming them to debt for the rest of their lives.

Let’s get that last point straight. It is the government’s responsibility to provide emergency housing, and when they can’t, our most vulnerable are forced into motels and have to pay the bill back? There’s a constant demand from people who cannot afford to live themselves. They are the ones who are living in cars or jammed into garages on top of each other.

Affordable housing will not change either rents or house prices, though there is a myth it will.

Despite the view that house prices drop where affordable housing is built, home prices still increase, and so does rent.

The problem in Wellington is where to build affordable housing. Every time the words are mentioned we get a huge community reaction from people who are ignorant of the facts. Grenada has been the latest case of this, as reported by the DomPost:

Residents of a northern Wellington suburb are “appalled” by plans to build 150 homes in the area, saying affordable housing could ruin the character of the suburb. In a community newsletter, the Grenada Village Residents’ Association said the planned development would lead to an “extraordinarily large concentration of budget housing” that would be “unacceptably out of character with Grenada Village”. “Not only will all our property valuations be affected by this, but the long-term effects of such an extensive clustering of cheap housing could be disastrous for obvious reasons,” the association said.

The Association is wrong. Such myths about affordable housing have been roundly disproved. Affordable housing has zero effect on house prices, and what on earth does “disastrous for obvious reasons” mean?

Opposition to affordable housing comes from mainly white, older, more affluent, communities. Ignorance fuels it. Concerns about losing local green areas are often used as a fig leaf to cover prejudice.

Another issue is what is affordable? The Mayor and his Deputy seem to have set this figure at less than $500,000. Now, there are a couple of problems here. The first is that the Council is driving towards people owning their house and the second is that $500,000 is a lot of money, and not realistic.

We need to realise that the dream of owning a house is over apart from the wealthy. People can’t afford to save $50,000 then pay $600 a week for a mortgage plus another $200 a week for rates, insurance, maintenance, and the like. Plus, the moment a property is built for $500,000 it’s going to increase in price. On last year’s figures, a house completed in 2015 for $500,000 would be now worth $610,000.

In my next article, I want to look at solutions. If you have some ideas, I’d love you to comment so I can include them.

Read also:
Denials of housing crisis are lies

 

9 comments:

  1. KB, 26. January 2017, 14:44

    My house in Mount Cook is built on less than 120sqm of land – why must new builds in the suburbs require such big sections? Small 2 bedroom 2 storey houses in all suburbs can be built on 100-125 sqm sections, meaning a 3-4x increase in housing on many streets where 400sqm+ sections are standard. And these smaller new builds would be much closer to $350k than $500k if using standardised plans and using prefab portions. I think existing residents are much more accepting of individual freehold housing (even if small in size) than they are of multi-unit developments.

     
  2. Michael Gibson, 26. January 2017, 16:21

    Hopefully the new Council can reverse the stupidity of the last Council on housing e.g. when it voted to spend $500,000 of ratepayers’ money to rezone perfectly zoned residential land in Curtis Street into commercial land. Kow-towing to businessmen is no excuse for a continuation of this sort of behaviour.

     
  3. Ian Apperley, 26. January 2017, 17:37

    It’s a good point KB. Where land borders transport corridors, say Broadway in the Eastern Suburbs, the rules are quite different and allow denser housing.
    Karori, Kelburn (from memory), and other more affluent suburbs are vigorously fighting those rules being introduced in their areas. Because “disastrous for obvious reasons” no doubt.

     
  4. CC, 26. January 2017, 22:52

    Ian, those in more affluent suburbs, like most people, appreciate the chance to discuss options for local planning, as opposed to being talked at by planners under the guise of consultation. A significant proportion of those living in more affluent areas have knowledge and experience of living in high density areas all over the world. They also have an assertiveness backed by the ability to use the Court processes to threaten poorly conceived propositions of dubiously qualified city planners. Notably, the Council had the opportunity to convince a packed Khandallah Hall that they knew what they were doing but failed miserably. Hopefully the recently engaged head of planning has the skills, knowledge and ability to engage with communities and seek worthwhile solutions, as obviously, most people realise that there is a need to accommodate larger populations within smaller confines, but without compromising the standards of local living environments. Fortunately, there are a few examples of how this can be achieved in Wellington, in addition to the practical knowledge contained within communities. Of course, there is the problem of some developers who only know how to maximise their returns, producing plans for questionable developments. Unfortunately, they have also developed skills for screwing the Council to meet their needs. On this point, it is instructive to sit in on resource consent hearings and EC appeals to observe how the Council and developers are able to work in concert using hired ‘experts’ to subvert the district plan.

     
  5. Laidbackchap, 27. January 2017, 10:46

    the way I see it is there are two different problems here. I believe the 60s kiwi dream of working buying your own home and growing vegies etc is no longer applicable. People are being told it’s disastrous that you can’t afford to buy your own home. But no one is actually asking people if owning their own home is something they want to do. Most people who desire to own their own home would probably make that work. So maybe rent control measures could be a more appropriate focus on private landlords if that’s a problem. The next problem is the ‘not in my backyard’ mentality. Which is driven by the men and women over the age of 55. They will say things like I wish housing was more affordable so my kids could buy them and in the same sentence say as long as it’s not in my backyard. My take on fixing affordability is that one must look at how we are living. Yes it is time for higher density housing in ALL suburbs of Wellington, not just the council-chosen ugly cousins ones. There is not only a need there is also a demand. If the media is to believed we are so time poor these days then why would I want a quarter acre dream or even a house with a lawn or garden. Isn’t it easier to come home to my unit and not worry about gardening and lawn mowing. Can’t we make the local playgrounds and parks our green spaces or backyard when we want to free the shackles of the concrete jungle. Nothing will change as the same narrow minded people who will stay in power at all costs are involved. Most of them only consult with themselves or a handful of supporters.

     
  6. Ian Apperley, 27. January 2017, 13:55

    CC you hit on a very local problem. That is that the WCC has zero credibility when it comes to “consultation.” That means that any moves by the Council on anything are basically perceived as “bad” from the start and viewed with great suspicion. How they solve that issue is anyone’s guess, but so far this term, nothing has changed in that respect.

     
  7. Splanned, 28. January 2017, 20:57

    The district plan doesn’t allow for denser housing along transport routes in the eastern suburbs – it allows for medium density around kilbirnie shops and that’s about it without onerous consents. check it at http://eplan.wellington.govt.nz/.

    I agree it should allow for denser housing along transport routes, this corridor approach makes it easier to retrofit the infrastructure the development needs, and the bigger building mass shields development further back from the increased traffic. But that’s not where the council’s planners are at.

     
  8. Anabel, 29. January 2017, 7:31

    As you have no control over the money supply or the govt, how can you control a problem stemming from financial and govt actions? There is no “rule by the people”…Those you believe work for you actually do not. The very govt that helped create the housing bubble has no interest in doing anything. But it will use the “crisis” / cutting public housing/not enough affordable shelter/not enough homes for the middle class and poor. It will line the pockets of its favorite foreign corporations, developer cronies and investors that will build more expensive homes for wealthier people and investors opening up now protected land.

     
  9. Ian Apperley, 29. January 2017, 8:39

    Hi Splanned, I may have got my facts wrong there. Certainly medium housing and I am thinking back a few years ago under Kerry Prendergast when they changed the rules on the “transport corridor.” That being the CBD to airport mostly. So, through Newtown, Kilbirnie, Miramar, and Strathmore on the bus routes. Those rules allowed higher residential buildings, softened rules around the style, and changed the amount of outside land (think garden) required for each build, I *think* there were also rules around parking.

    The idea back then was to boost those transport routes and put more people right on them. All of that has collapsed under the former two Council terms and this current one.

     

Write a comment: