The recent furore over the slow rollout of the progressive home ownership scheme offers just a hint of the public pressure the Government faces to fix the overheated housing market, Sam Sachdeva writes.
Moving 12 families into home ownership in six months, as part of a government initiative that will eventually cost $400 million, does not, on the face of it, seem like a success worth trumpeting from the rooftops.
So it was unsurprising that Housing Minister Megan Woods’ decision to put the number front and centre in a social media post about the Progressive Home Ownership scheme last week attracted some derision, from both the Government’s critics and those more inclined to back it.
Perhaps it was an effort to get on the front foot after Woods shared the figure with MPs at a select committee earlier in the day, but if so it was not particularly successful in that respect.
Grilled on the low numbers by National’s housing spokeswoman Nicola Willis during Question Time the following day, Woods went on the counterattack as she criticised a “snide and mocking” approach and insisted the scheme remained a game-changer despite the low numbers, given the complex needs of those it was targeted towards.
“This is not about finding a house on the internet, deciding you want to purchase it, going to the bank, getting a mortgage, and moving in. This is often about families having to deal with high levels of debt, rebuilding credit history, establishing savings history, and then getting themselves into a position where they can purchase a home.”
It is a reasonable point, and there are in fact 133 families who will move into homes during the first phase of the scheme (costing about $39m so far).
But that does not override other reasonable grounds for criticism.
Firstly, while the scheme was indeed only launched last July, it had been a government commitment through Labour’s confidence and supply agreement with the Greens since October 2017 – begging the question of whether there was sufficient urgency earlier in the Government’s last term, the Covid-19 crisis notwithstanding.
The broader concern is that the Progressive Home Ownership Fund is by design targeted at only a small sliver of the numerous New Zealanders who are finding the housing market increasingly out of reach.
The full $400m scheme is designed to help between 1500 and 4000 families, with the final number likely to sit far closer to the lower end of the spectrum if wraparound services like those provided to the 12 families housed so far take priority.
The very real benefit the initiative will provide to those families cannot be sniffed at, but tens of thousands more could find themselves in a dire position if the more systemic, wide-ranging deficiencies within the housing market are not swiftly dealt with.
Woods has been, and remains, one of Ardern’s more capable ministers, yet even she is not immune from the immense pressure that led to the downfall of her predecessor, Phil Twyford.
Of course, she could argue Twyford’s failures in KiwiBuild and other parts of the portfolio have made her job that much harder upon taking over – but equally, the latter may feel some degree of vindication to see Woods also struggling to get on top of the problem.
Of course, progressive home ownership is not the only government policy in play.
The new National Policy Statement on Urban Development and planned redesign of the Resource Management Act should in theory help on the supply side of the equation, while on the demand side there has been talk about a further extension of the bright-line test and other initiatives to curb speculation.
Then there is Finance Minister Grant Robertson’s polarising decision to require the Reserve Bank to take housing prices into account when making its own policy decisions.
Addressing the Auckland Chamber of Commerce on Friday, Robertson said rising demand for property had “blown…out of the water” projections that prices would in fact fall in the wake of the pandemic, with the nationwide median house price rising by 19.3 percent in January compared to a year ago.
“That is not sustainable, and it’s why we have said we will roll out a package of further measures over the coming weeks to address both supply and demand issues.”
Exactly when we will see those measures is far from clear.
The announcement has already been delayed once following the emergence of the Papatoetoe cluster, and the latest Auckland lockdown may well push Cabinet decisions back further; speaking to Newshub Nation on Saturday morning, before the latest community case had come to light, Prime Minister Jacinda Ardern appeared to suggest no decisions on housing policy changes had yet been made.
In the scheme of things, a further delay may not seem a significant problem, particularly compared to the importance of preventing a major Covid-19 outbreak.
But while the Government’s handling of the coronavirus pandemic propelled Labour to an outright majority at the 2020 election, it was the party’s pledge to fix the housing crisis which played a major role in its surprising rise to power in 2017.
We will eventually come out the other side of Covid-19, with vaccinations rolling out around the world – but there is no such guarantee with our housing crisis unless the Government shows a similar level of urgency.