FOR HOUSING AFFORDABILITY WE NEED TO THINK OUTSIDE THE MARKET

We’ve long been sold the notion here in New Zealand that to get ahead in life we need to own property — idyllically celebrated in the 1960s book ‘The Half-Gallon Quarter-Acre Pavlova Paradise’. For this to make financial sense, particularly for first home buyers, it requires a very big deposit, regular high income, a large bank loan (at a stable low interest rate) and continually escalating house prices. But as has been playing out in real-time since mid-2021, interest rates can rise rapidly over a short period, incomes can quickly disappear with redundancy and property values can go sideways and fall. It’s a fragile model fuelled by growth and debt.

Notwithstanding a stagnant economy, as at March 2026 the average New Zealand house price reported by QV was ~$909,500 and the average price in our biggest city Auckland was ~$1,372,000. So even with say a 20% cash deposit a buyer would require a ~$727,600 bank loan to purchase at the average New Zealand house price level and an eye-watering ~$1,097,600 bank loan to purchase at the average Auckland house price level. Obviously buyers who already own property will be transacting with a higher level of equity and require a smaller bank loan and some will be mortgage free. But based on mid-2025 Canstar data the average mortgage loan across all New Zealand was ~$588,500 and in Auckland is was >$700,000 (lifted by a higher number of +$1m loans). Based on house prices and loan servicing costs (before even paying the loan back) it’s unsurprising that the overburden housing cost for low income owner-with-mortgage households in New Zealand is among the highest in the developed world, or that the rate of home ownership here is trending downward.

The traditional dream of debt-funded property ownership is simply not sustainable for everyone — especially low and middle income households — and for many people the aspirational ‘Pavlova Paradise’ dream of property ownership is simply out of reach. That is why ~34% of households here rent. They are the ‘missing middle’, those who earn too much to qualify for public housing and too little to qualify for a bank loan. To get ahead as a society we need to do much better than relying on property ownership and unearned capital gain to get ahead. We need to lift the financial wellbeing, productivity, wages and living standards of all New Zealanders. Improving housing affordability and access to secure, quality housing, is going to need some reflection on the primacy of conventional property ownership — especially given the continued certainty of high land and building costs. We need to rethink our policy focus, challenge our traditional ownership norms and widen the tenure options.

Perversely, virtually all policy efforts to improve housing affordability over the last 25 years or so — opening up more and more greenfield land on which to build more and more housing — have relied on the for-profit sector. If the objective has been to improve housing affordability — for sure it’s failed. If the objective has been to enable large-scale subdivision and development opportunities for market actors, record house price inflation and social inequality — then you’d have to admit it’s been a stonking success.

Norway, which exhibits similar population density and urban living metrics to New Zealand, abandoned greenfield land development as a spatial planning strategy for enabling housing over 30 years ago — concluding it was ecologically and socially unsustainable. It has also avoided infill housing (in existing suburban and green areas) and instead prioritises transformation of brownfield land (under-utilised or former industrial sites) into mixed-use communities — with key site selection criteria being access to high capacity public transport (e.g. light rail). Spatial land policy here is still prioritising bulldozing through the countryside on a relentless quest for growth. We need a major housing policy rethink prioritising third sector not-for-profit housing on re-purposed state and other brownfield land.

Public sector housing policy focused simply on growth or incentivising private actors to deliver affordable housing (usually a very small component of housing stock in new developments that eventually finds its way into the market anyway) needs to be called out for what it is — corporate welfare pimped-up as politicians being seen to be doing something to address affordability.

Housing growth and the continued reliance on the for-profit sector will not reduce housing costs. If it’s a not-for-profit (e.g. cooperative) housing system, the commercial (capital and rental growth) objectives are swapped-out for a shared common values philosophy aimed at delivering secure, good quality housing at the lowest possible cost for the largest number of people. Bringing together a disparate group of individuals to meet a common need, whilst at the same time upholding personal responsibility and democratic involvement.

The language our elected politicians too frequently use in relation to housing issues is unhelpful. Typically they conflate housing affordability with legislative roadblocks, a shortage of land to build housing on, municipalities preventing development and labels such as ‘nimby’ and ‘housing crisis’. The shallow rhetoric fuels the current political agenda which is focused on policies to “flood the market with opportunities for development”, mainly for private sector actors, whilst diminishing the state and municipal legislative and institutional ‘checks and balances’ that previously guided such urban and greenfield land transformation.

We do not have a housing shortage or a housing crisis. We do however have an acute housing affordability crisis and an acute shortage of social and emergency housing for those households whose financial and other circumstances require this. The level of state social housing here in New Zealand, at ~3% of total housing stock, is shamefully low in comparison to many other developed countries and which current social housing policy has now effectively capped.

Diminishing the provision of social housing for those parts of society on the lowest incomes, or with special or emergency needs, whilst ignoring the causal factors of market dysfunction which led to the need for such social housing in the first place, guarantees the long-term demand for such social housing. In reducing the role of the state in the provision of social housing and at the same time promoting market opportunities through its growth agenda, the Sixth National Government is both signalling exactly where its priorities lie and failing our historical international commitments to “…recognize the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing and to a continuous improvement of living standards”.

It really comes down to a simple public choice about what kind of society we want to live in. If we wait for the market to provide solutions to housing affordability we will all be long dead. Thomas Piketty said it more eloquently in his book Capital where he described the idea of equality emerging from the free market as an “illusion” and, that, “real democracy and social justice require specific institutions of their own”. For housing equality that institution is the not-for-profit 'third sector’.

The sociological discourse on these issues including social cohesion, equality, improvement as a separate idea to growth, and new systems to challenge the status quo go back thousands of years and highlight the ever present challenge of adequately providing for low income members of society lacking status or capital. Alternatives are there in plain sight — we just need the collective wisdom to make them happen. Rather than a delicate Pavlova, think of the housing ecosystem more like a multi-layered Tiramisu!