Updated: May 2
The real success of Kiwi-build is that its initial implementation failure has kept us firmly focused on the need for a workable solution to a real problem, to the extent that focus on the housing crisis has changed kiwi thinking about the problem and potential solutions forever. The issue is now beginning to rise above partisan politics in the public mindset and great things are happening now. But it will not always be this way, election and economic cycles roll on regardless of any crisis.
The private sector is now building more houses than current demand requires since March 2019. It will still take at least 10 more years to eliminate the current deficit. When the economy turns bad and the private sector ceases to invest in private housing, the Govt must step in to (a) keep the building industry afloat, and (b) keep the momentum going until we have built out the deficit. To do this, Govt should accelerate State House Building.
What about existing substandard housing stock?
To resolve the other major factor in the NZ Housing Crisis (existing substandard housing stock), the Govt needs to keep raising standards for rental properties while at the same time subsidising first home buyers, low income buyers, etc, for upgrades in insulation, solar energy, double glazing when buying discounted existing substandard housing stock. Landlords and others can quit substandard properties and reinvest in suitable standard properties relatively quickly. First home buyers get a bargain with a property that has lost value due to overdue maintenance requiring price discounting, making it more affordable. The net result is the same people will live in the same houses to start with, but now as owners, they can invest in solving the problems their landlord or other previous owners let slide, with some government help, because they get the return on invest in the form of improved lifestyle and an enhanced investment asset. By helping convert the large quantity of substandard housing to a livable standard, the government will benefit from a healthier workforce, lower state healthcare costs and children who can focus at school. It will take decades to complete, so a long term bi-partisan approach is required, or it just won't get done.
In summary, watch the private sector house building rabbit run, while it can, then pump the state housing build programme when the private sector withdraws, help the poor buy and fix up substandard properties and increase funding for this programme too, when the economy falters. Health, education and employment will all improve, when we ALL live in a warm and safe environment.
By Matthew Ensoll Editor, The New Zealand Building Economist (NZBE).