House prices and home ownership: Has the Labor Party kept its promises?

By Eva Corlett of RNZ
It was to be a transformative government that promised to tackle rising house prices and help buyers step up the ladder. But has anything changed during the term of the Labor coalition government?

It was advertised as the “worst house on the street.”

Sold As Is, Where Is It: A decaying 1920s railroad cabin in Wellington’s suburb of Ngaio heritage area.

There is no insurance, the building materials may have been asbestos and it needs a lot of work.

It was for $ 700,000.

Real estate agents report hundreds of people approaching home visits, record low listings, and multiple offers on properties that would typically get only a few.

Across town in Brooklyn, Tommy’s real estate agent Nicki Cruickshank takes me through the development of 42 new units.

The two- and three-bedroom units sold all plans for approximately $ 695,000 a couple of years ago. Now they can resell them for approximately $ 900,000 each.

Cruickshank said there is a desperate lack of supply in Wellington.

“Last week we had less than 400 properties for sale in the Wellington region, which is the lowest I have seen in 10 or 15 years.

“The moment supply improves, prices will go down. They won’t particularly go down, but they should stabilize a bit.”

For the first time since registrations began, last year saw a record 10,000 consents issued for new units, apartments and townhomes.

Cruickshank said that developers are responding to a change in demand from buyers.

“These developments, with the townhomes, first-time buyers love because they require little maintenance.

“Wellington houses need a lot of work on everything.”

Dazzling prices aren’t just a Wellington story.

Data from Real Estate.co.nz shows that the national median sales price increased 11.5 percent from last year.

Auckland’s median home sales price is now over $ 1 million, the highest it has ever been.

Two years ago, RNZ spoke with Auckland social worker Tammie Stretton, who was looking for a home.

In 2018, she and her partner applied for a KiwiBuild home, and at the time, she was optimistic for the future.

“We feel hopeful and excited, we believe that eventually we will get something and it will be the right fit for us,” he told RNZ.

But the couple missed a KiwiBuild property, so they went back to hunting in the private market.

“It was really very competitive to go to an open house, 100 people would go to see a house and every house you look at already has an offer.

“It was very fierce and competitive, but also quite out of our price range.”

After two years of searching, they gave up, saying it “destroys the soul.”

“We found it really disturbing that as middle-class people we won’t be able to find a home. There will be so many people who have a lot less than us and they must be really struggling.”

The overheated market has been the failure of successive governments, Stretton said.

In the last election, the Labor Party campaigned to ban foreign buyers, extend the bright line test, and introduce a capital gains tax, a tax the party had campaigned for during three elections.

Then last year, Prime Minister Jacinda Ardern announced that the capital gains tax was dead.

“Under my leadership, we will no longer implement or campaign on a capital gains tax. Not because I don’t believe in it, but because I don’t think New Zealand will,” he told the media at the time.

Not everyone was happy about this, especially Green Party co-leader James Shaw.

“The last question we should ask ourselves is ‘can we get re-elected if we do this?’ The only question we should really ask ourselves is ‘do we deserve to be re-elected if we don’t?’ “He said at the time.

So has the Labor foreign buyers ban, the bright line extension, and other measures worked for affordability?

No, according to economist Shamubeel Eaqub.

“We have not achieved more affordable housing.

“KiwiBuild failed, the foreign buyers ban and the bright line test were implemented, but they were not very effective.

“They increased the state housing stock, which is good, but demand has still outstripped supply.”

On the capital gains tax, he said it is not a panacea, and that the government was not willing to “move the boat.”

Eaqub said there are no short-term solutions to such a big problem, but that any party wanting to form a government must consider the huge increases in the social housing stock and construction schemes for rent.

CoreLogic real estate figures show that investors continue to dominate the market, with first-time home buyers ranking second.

Kelvin Davidson, a senior real estate economist at CoreLogic, said low interest rates are driving demand from both owner / occupiers and investors.

He said people are looking for alternative assets and considering whether to invest in a term deposit or a home.

“At the moment, term deposits are not looking that attractive, so we are seeing the money flowing into the housing market.”

Davidson said that if a buyer can get a joint deposit, it will be easier to pay off a mortgage for years to come.

But quantitative easing ultimately benefits asset holders, he said.

“The [Reserve Bank] He has opined that this is the path he least regrets and that they will try to protect jobs and income now and worry about that wealth distribution factor later. “

Eaqub added that there must be better regulation of banking, so money is directed to productive businesses, rather than buying and selling houses from each other.

Escalating house prices and a lack of supply have also raised rental prices.

Figures from Stats NZ show a 3.3 percent increase in rental costs in the year through July.

Robert Whitaker of the advocacy group Renters United said the government has kept its past electoral promises, including ensuring healthy homes and changes to the Residential Leasing Act.

“They have done well, but there is much more to do to bring the rental experience closer to the experience of owning a home.

“Right now the prices are still out of control.”

Rent increases should be linked to inflation or rent caps could be introduced, Whitaker said.

National Party leader Judith Collins said that to stimulate residential development, the Resource Management Act must be abolished.

If the National Party enters, it will replace the act.

Labor Party housing spokeswoman Megan Woods denies that the government has failed on affordability.

No government wants to see the housing market crash, he said.

“What KiwiBuild and the market are showing is that there is a lot of room to build on the affordable end of the market, without fundamentally driving down house prices.”

The Labor Party pledges to continue funding progressive rental home ownership schemes and to continue to partner with Iwi and Maori housing providers to alleviate affordability issues.

– RNZ