IT’S PRIVATE SECTOR WELFARE PIMPED-UP AS HOUSING POLICY.
There is ongoing conjecture about the ability of New Zealand’s residential building sector to deliver high quality and affordable housing that meets our future needs. In this context, there is a complete absence of any population or net migration strategy with pan-political agreement to inform projected or sustainable demand for housing (either new or existing). Rather than being deliberate and evidence-based, recent Government housing policy could be described as ‘seat of the pants’ based on political ideology or expediency. Each election cycle, the political slogan “we need more houses” has been promoted as a panacea for our poor housing affordability — manifested by the Sixth National Government’s ideological ‘Going For Housing Growth’ policy. It’s private sector welfare pimped-up as housing policy.
Seemingly standing in the way of the growth the Sixth National Government was so desperate to achieve, the Resource Management Act (RMA) became a convenient ‘whipping boy’ — blamed for everything from stymying land supply, housing affordability, infrastructure availability and mining and fossil fuel projects. The outcome, a frenzy of ministerial directives to municipalities to densify their urban areas, the ‘picking winners’ style Fast Track Approvals legislation initially shortlisting 149 projects (some of which had previously failed to meet environmental and other tests under the RMA) and reform (and soon replacement) of the RMA in the shape of the proposed new Planning Act and Natural Environment Act (both founded on the principle of private property rights). The absence of a sustainable population, spatial planning, or infrastructure strategy and funding to support the frenetic pace of change in planning and housing policy and law just didn’t seem to matter (or occur) to anyone. It was all about growth.
Two simple questions remain unasked and unanswered. Do we actually need more houses? Will more houses improve affordability? The answer to the first question is — it depends on what kind of houses you’re talking about. We certainly need more social and emergency housing for those most in need. You only have to walk around the streets in our biggest cities to see that successive parliaments (from both the left and right) have failed on that social objective. But what we don’t need is a whole lot more unaffordable housing at full market prices which is what we’re getting under current state policy and that answers the second question. More housing does not directly equate to improved affordability.
What is very clear is we don’t simply need more houses. We need more affordable, higher quality houses, more subsidised social and emergency houses for those who really need them, and new tenure models to expand the range of housing options (especially for lower income households renting). What is less clear is the composition of our existing housing stock — how it is used, why some is vacant (short or longer-term), the size, quality and age, how we can use land and build more efficiently, and how we can diversify market risk. We don’t know what an optimal mix of social rental, private rental and for-profit and not-for-profit owner-occupier housing should look like here (optimal in the context of providing a wider range of tenure and non-market options and improved and socially-diffuse housing outcomes). No politician or state agency is thinking about these issues. Everyone is focused on building more houses at full market prices.
Let’s briefly review the dwelling and household statistics for New Zealand for the period 1992-2025. The data indicates an excess of dwellings over households every year through to the first quarter of 2025 averaging ~74,500. The excess varies over the data series with a peak of ~99,800 dwellings in 2013 (Q2-3) and as at 2025 (Q1) it was sitting at ~74,600 dwellings (almost exactly the series average). Another way of looking at the data is the amount of population change in relation to the number of building consents for new residential dwellings. While the quantum of population change does not reveal the exact number of new dwellings needed at a particular place in time it offers a sense of whether the sector is keeping pace or falling behind. By way of expansion, change in population comes from natural population growth and net migration. All new inbound migrants (i.e. a single person or family) will need a home as soon as they arrive, whereas demand for a dwelling from natural population growth (i.e. = the fertility rate) won’t occur until some future time. Setting aside demographic and timing nuances, if we assume all population change creates demand for an additional dwelling at the rate of 2.7 persons per household (the long-term average rate) that represents a notional ceiling on demand for additional dwellings. Looking at the relationship between population change, new residential building consents (i.e. detached houses, apartments, townhouses) and the implied demand for additional dwellings between 1992 and 2024 we can see that new residential building consents have keep pace with net increases in population, generating a net surplus of dwellings over the period.
A further way to look at the data is at the total population level. If we look at the total number of dwellings implied from total population over the period at an average rate of 2.7 persons per household against both total dwellings and total households over the period 1992-2025 we can see that the total dwellings count has stayed ahead of the total households count since 1992 and residential building consents have (more of less) reflected net population change. Saying we need more houses is pure political theatre. Saying that freeing-up greenfield land to build more housing will improve housing affordability is just a textbook supply-demand theory unsupported by reality and promoted for political expediency. In short, it’s easier than dealing with the real issues which, for New Zealand, are housing affordability, housing quality, inadequate social housing and not enough emergency housing.
Let’s be clear, large-scale greenfield land development for housing is very time-consuming, costly and because of the risks involved implies a very high return on investment. If the minimum return on investment needed to add to shareholder wealth cannot be achieved the project won’t happen. There are a very small number of developers with the resources required to undertake large-scale greenfield land development (mostly listed or high net worth private entities) and they are not going to sell land cheaply simply because of a minister’s directives to make more land available for development. Developers will sell sections for the highest price possible — not at the price a text book theory says should happen with increased land supply. Notwithstanding raw land availability, property owners or investors aren’t going to deliver cheaper sections if they can’t develop land below a certain cost (because of construction or raw materials inputs), or the project doesn’t achieve the required return above the weighted cost of capital (equity/debt), or they can just ask for and get a higher price.
The blur of housing policies introduced since 2008 (the Fifth National Government) and 2025 (the Sixth National Government) and including the Sixth Labour Government terms in between, have all failed to dampen heat in the property market (prices) or improve housing affordability and instead have accompanied steep house price inflation and widening social inequality. These policies, especially the recent ministerial directives (more akin to decrees in a medieval Fiefdom), seem likely destined to usher in cascading and unplanned for environmental, infrastructure, urban character and fiscal negative consequences.
There is no population strategy to support the Sixth National Government’s growth agenda. There is no planning for or sequencing of the infrastructure to support growth and the funding required is expected to come from direct private sector investment or through public-private-partnerships (PPPs). There is no attempt to scope out the capability of the building sector to meet the Government’s growth agenda or scale-up human capital and physical resources through training schemes, fiscal incentives, increased competition in the materials supply chain, or innovation in new building systems such as off-site manufacturing (OSM). Furthermore, the reports that informed the densification policies do not attempt to measure the residential building sector’s capability to deliver the modelled increases in housing density or for that matter the availability or capacity of the required infrastructure to service the modelled increases.
What is not revealed from data discussed above is composition of our existing land and housing stock; occupancy/vacancy (short- or long-term) and why, the quality and remaining utility value of dwellings (to inform replacement strategy), how we can use land and build more efficiently, and how we can diversify market risk. We don’t know what balance of social rental, for-profit private rental and owner-occupier housing, and not-for-profit (third sector) housing would be optimal in the context of enabling (over time) a wider range of non-market housing options with improved and socially-diffuse housing outcomes (both cost and quality).
What is very clear from OECD data is that we need more affordable houses, more subsidised rental houses for those that need them and alternative housing options for the large cohort of New Zealanders stuck between public housing and housing at market prices. That is, those people who earn too much to qualify for public housing or a rent subsidy but too little to qualify for a mortgage on a property priced in the unregulated (open) market. We don’t simply need more houses. We need a political modus vivendi supporting a long-term housing affordability strategy.
The utility value and replacement horizon of much of New Zealand’s existing housing stock and density, form and function of future housing stock was the subject of a 2017 Auckland Council report titled ‘Arrested (re)development? A study of cross lease and unit titles in Auckland’. This highlights some of complexities inherent in any efforts to upgrade, or add to housing stock in our large urban areas — not found in the econometric models informing political decision-making (e.g. the Medium Density Residential Standards). In particular, complex land tenure constraints within the cross lease and unit title ownership systems which are highly likely to impact future housing (re)development.
That report followed release of the Auckland Plan — a key objective of which was a compact city to be realised through urban densification. Implicit in achieving increased urban density is the rezoning of land for more intensive development. Where any such urban land is fee simple (freehold) containing a single dwelling, any decision by that (or future) property owner to (re)develop the property more intensively is quite straightforward. Land that is cross lease or unit title comes with inherent complications arising from multiple ownership and legally binding consent/voting provisions. Leasehold land (of which there is a lot in Auckland) also comes with obvious complexities due to the freehold title being owned by one party (often a religious, charitable, municipal, or Iwi entity), and the leasehold interest in the land and dwelling on it owned by the occupier. Leasehold land is not the focus of the Auckland Council report however it should be noted that a substantial number of residential dwellings and unit title apartments are situated on leasehold land — adding a further complicating layer to the decision-making process.
Against this background, the Auckland Council report found that cross lease and unit titles accounted for ~31% of all titles in Auckland and that ~81% of the land parcels associated with those titles were zoned for more intensive housing development in the Auckland Unitary Plan (now expanded by densification directives). Further, the report noted ~44% of those titles contain dwellings nearing the end of their physical/economic life — with ~46% of dwellings on cross lease titles constructed in the period leading up to and including the 1970s (~23% in the 1950s-1960s and ~23% in the 1970s). Auckland is estimated to account for ~47% of all cross lease titles and ~53% of all unit titles in New Zealand — presenting a significant barrier to the objective of increased densification (whether as envisaged by the Auckland Unitary Plan or MDRS). The report concludes that “Cross lease and unit titles, and their complicated ownership structures, may limit redevelopment…” and “…it is likely that land assembly or ownership assembly must first take place. Land or ownership assembly is a constraint that can prevent development, but mechanisms, to agglomerate land and ownership, such as the use of urban development authorities, are a way of overcoming this constraint.”
Exactly how such “assembly” of private property would occur (e.g. via designation or compulsory acquisition under the Resource Management Act or Public Works Act, body corporate takeover, legislative reform or new legislation) is left unanswered. Constraints within our land tenure system represent significant and unplanned for obstacles confronting urban densification and housing stock up-grade or replacement strategies, ‘Fast Track Approvals law’ and the ‘Going for Housing Growth’ agenda.
Let’s face it the private sector will never deliver improvements in housing affordability. They’re in it to make a profit and that’s absolutely fine. What is not fine is state policy intended (as the Housing Minister Chris Bishop said) to “flood the market with opportunities for development” masquerading as policy to improve housing affordability. We need a serious housing policy re-think focused on ‘third sector’ housing solutions. It’s such a shame we’re now more than 60 years behind that same realisation in the many European countries now enjoying more diverse housing options and socially-diffuse housing outcomes.
© Níall Mayson