“After 40+ years of urban development experience across Australasia, I’m directing my energy to learning about not-for-profit cooperative housing systems and policy interventions, how those have contributed to improved housing outcomes — especially for people where conventional property ownership or market pricing is out of reach — and how such systems can be enabled to positively disrupt our housing ecosystem.”
— Níall Mayson
Why we need to re-think housing policy.
Dysfunction within the New Zealand housing sector relating to market stability and affordability is starkly evident. It’s disingenuous for anyone to contend that house prices, annual price growth, overburden costs and building costs are sustainable. OECD house price data for the period 2000-2023 shows nominal house prices here increased 395% compared to 330% for Australia, 177% for all OECD countries and 113% for Euro area countries. During the same period real house prices here increased 209% compared to 148% for Australia, 62% for all OECD countries and 37% for Euro area countries. Housing affordability, measured by price-income ratio, has worsened 98% over the period, compared to 77% for Australia, 22% for all OECD countries and 21% for all Euro area countries. Further, the housing cost overburden here for households in the bottom quintile of income distribution (i.e. share of population spending more than 40% of household income on housing costs) is the 2nd highest in the OECD for owners with a mortgage (54%, 21% for Australia) and the 3rd highest for private renters (57%, 26% for Australia). Ideology based ‘quick-fix’ policy favouring greenfield and backyard subdivision to build low density houses has failed to produce improved, socially-diffuse, housing affordability. What it has ushered in is market instability, a boom in ‘for-profit’ residential investment property, rapid price and rent growth and expensive housing — especially for low income households. Politicians on both the left and right have been unable to implement the policies needed to achieve long-run housing market stability and improve housing affordability and other outcomes. Our residential property market unnervingly resembles a fragile house of cards — which the estimated 66% of property-owning New Zealanders (and especially residential property investors) have a big financial interest in keeping pumped-up.
The unrestrained price growth we’ve experienced here in New Zealand and the somewhat laissez-faire political attitudes that accompanied it, have been ascribed by some to free market ideology. Maybe that’s true and OECD statistics certainly highlight the stark reality of that thinking for lower income households. Essentially the poorer you are here the more you pay for your housing. What is very clear is we’re never going to subdivide our way to better housing outcomes — only growing social inequality. Just as clear, based on a review of approaches taken by countries achieving better market stability and improved and more socially-diffuse housing outcomes, is that we will need (more) proactively involved state and municipal sectors and a long-term policy agenda with pan-political buy-in. Any notion that the state should step back and leave it to the market to deliver more affordable and better quality housing is not supported by the evidence. The recent housing policy initiatives aimed at improving affordability for lower income households have been a complete failure. So if we value socially-diffuse access to good quality and affordable housing, as a foundation for a well-functioning society, it is time to re-think our housing sector policy approach. Diversifying our housing tenure options to enable wider access to secure, better quality, affordable housing is an easily implementable option. Our housing policy intervention strategies need to be longer-term and, as such, they need to be better integrated and transcend political party ideology or agenda. After 40+ years of urban development experience across Australasia, I’m directing my energy to learning about not-for-profit cooperative housing systems and policy interventions, how those have contributed to improved housing outcomes — especially for people where conventional property ownership or market pricing is out of reach — and how such systems can be enabled to positively disrupt our housing ecosystem.