‘Generation frozen’: New Zealand house prices skyrocket despite government reform | New Zealand
As the average New Zealand house price nears $ 1 million, a generation says it is shut out of the market – and that the frosty impact of government reforms could come too late, if it turns out to be. product.
“It’s urgent,” says Isla Stewart, 20, a housing activist living in Auckland, New Zealand’s most expensive city. âThe government’s failure to resolve the housing crisis quickly could lead to a generation’s block of the housing market. Disconnected from their communities, living in substandard and unstable housing.
Six months after a series of announcements of government reforms aimed at cooling the market, the surge in house prices in New Zealand shows no signs of abating. The average price of domestic homes hit a record high NZD 937,000, according to real estate analysis data firm CoreLogic, while data from the Real Estate Institute shows there has been a 31% increase over the past year. year until July.
Experts say it is still too early to say definitively whether the government’s housing reforms have failed. But even if the reforms were successful in stopping house price growth in a few years, it will be too late for a generation of young New Zealanders, who envision a 50% price hike in the years to come. , based on summits that are already stratospheric.
Stewart says there is a lack of urgency on the part of the government. âThe problems of the housing crisis can sometimes be moot for those in power,â she says – these are people who usually own their own homes. âI think that makes the actions more difficult for them. “
“We are already feeling the negative impacts, on the quality of our housing, on the security of the housing – of course it affects, you know, every facet of our health,” she says.
“The story of inequality in Aotearoa is the story of the housing crisis – and how it plays out both in homeownership but also in rental inequalities,” said the Auckland Central MP ChlÃ¶e Swarbrick.
Basically, the government did not want to see prices go down and their policies take that into account, she said. But if prices do not fall and rents are not controlled, young and old will remain excluded from the market. Prime Minister Jacinda Ardern has said on several occasions that she wants to see house prices “stabilize” but not that they should fall. If this remains the government’s approach, it would mean that price increases over the next few years are likely to remain anchored.
âWhen we talk about generations excluded from the housing marketâ¦ when we have built our whole economy on the assumption that everyone is going to have this asset in old ageâ¦ and that is not something that is achievable for a number of people, then you have systematic inequality, âSwarbrick says.
Forty years of political neglect
CoreLogic’s Semi-Annual Housing Affordability Report shows average home value has increased nearly eight times annual household income, which is well above the long-term average of 5.8 times. , and places it at its worst level in 18 years.
And while property values âârose 15% in the first six months of the year, average gross household income rose by a measly 1%.
“You’re probably better off calling it the unaffordability report,” said Kelvin Davidson, chief real estate economist at CoreLogic, adding that the average time for a first-time buyer to save for a home is now 10.5 years – three years older than the long-term average.
Meanwhile, those lucky enough to own a home spend more than a third of their income on mortgage payments. While this is considered average by the OECD, current mortgage rates are low and the real strain will be felt when they change, Davidson said.
âWhen mortgage rates rise over the next two years, that number will be above average. “
The situation will get worse before it gets better, and it will take several years to return to some kind of normalcy, he said.
The government’s political announcements in March are the latest in a series of measures designed to address the crisis, but some have yet to bear fruit, including overhauling laws on land use and the environment, the Resource Management ACT (RMA), which has not yet had its first reading in parliament.
The number of new builds approved is improving – up 20% in the year through July. But global supply delays and domestic labor shortages place limits on what can be achieved, said economist Shamubeel Eaquab.
The government is pulling a lot of levers, but it hasn’t pulled them hard enough or fast enough, he said.
âEverything is going in the right direction: RMA reforms, financing reforms, reform of rental policies, credit policies, but they are not biting yet. The proof is in house prices, they are still booming.
The government is trying to cope with 40 years of political neglect, and it’s hard to catch up quickly, he said.
These pressures are felt above all by those who are both excluded from the market and cannot afford rent. The number of households awaiting social housing has reached 23,000 and more than 4,000 children live in motels, but the government’s commitment to create 18,000 new social housing units by 2024 is not sufficient to respond. on demand.
Last year, UN Special Rapporteur on the Right to Adequate Housing Leilani Farha visited New Zealand and called the housing situation a “human rights crisis” and “a dark shadow. hovering over the country â. In August, the country’s own Human Rights Commission said it was launching a nationwide investigation into the problem.
Renters United spokesman Robert Whitaker said that with more people than ever before, the government must introduce a cap on rent prices and ensure their rights are protected.
“The reality is that all the other interventions they do for tenants are blunted by the fact that rents will continue to rise.”