The “housing continuum” has become an important idea in NZ policy. Here’s the image used by Auckland Council in their Auckland Plan 2050, and Community Housing Aotearoa has written a good summary of what it all means:

Emergency housing: The only short-term housing category, defined as stays of up to 12 weeks but often intended to be much shorter than that. Emergency housing is for people who (quoting C.H.A.) “have nowhere else to stay or are unable to remain in their usual place of residence”, e.g. those who were formerly homeless, or who are escaping domestic violence. There can also be a need for short-term housing after events like natural disasters: the government set up three temporary housing villages after the Christchurch earthquakes. There are more than 2,000 emergency housing places.

Social housing: in NZ, this is mainly provided by the government through Kāinga Ora (formerly Housing New Zealand). There are also a number of Community Housing Providers such as the Salvation Army, who are part-funded by the government to provide social housing. There are more than 80,000 social homes.

Assisted rental: rents which are set at below-market levels or are subsidised by the government’s Accommodation Supplement. This supplement is paid to more than 290,000 people across New Zealand although researchers like the Child Poverty Action Group argue that it is badly designed, fails to meet its intended goals and needs a major overhaul. I suspect most economists would agree with this, and Treasury says it’s “not fit for purpose”. Still, it’s estimated that 25-30% of renting households receive the supplement, or around 150,000 in total.

Assisted ownership: support for people to buy a home. This is often targeted based on household income or other criteria, and subsidies could include rent to buy, affordable equity and shared ownership – none of which are widely used in NZ, although organisations like NZ Housing Foundation do exist: they’ve supported more than 800 families to become homeowners in the last 20 years.

Private rental: there are over 570,000 renting households according to Stats NZ estimates, the majority of which (400,000+) don’t receive any Accommodation Supplement.

Private ownership: there are over 1.15 million households who own their own home, 64% of all households in NZ.

So that’s a quick summary of the housing continuum as it’s understood in New Zealand. Some categories are much bigger than others and some are tiny (emergency housing, assisted ownership). The numbers in each category could be changed by the whims of government policy – e.g. they could change the Accommodation Supplement criteria, launch an assisted ownership scheme or sell off state homes – but there’s an underlying idea that some people or households need greater housing support, some might need only a little, and some don’t need any. The support is largely coming from government, whether they’re directly providing the housing or funding others to do it, and this effectively forms part of our welfare system.*

There are different versions of the continuum overseas; I like this one from the US which puts private rentals and ownership on the same level; renting should be as good an option as owning your home, even if we haven’t had it that way in New Zealand.

Different countries may decide on different support structures, or differing levels of involvement. Our 80,000-odd social homes might sound like a lot, but relative to our population it’s less than we had in the 1990s – is that a good or a bad thing? And for a completely different scale, in Sweden 15% of people live in state-owned housing.

As we’ve seen from the numbers above, “assisted ownership” is not big in NZ, but there’s broad support from the community housing sector for it to be expanded. The “Kiwibuy” website was set up by Community Housing Aotearoa, the Housing Foundation (as mentioned above, they’re the biggest organisation in this space), Habitat for Humanity (also involved) and Salvation Army. And a post I wrote in 2018 quoted from the head of Monte Cecilia Housing Trust that “KiwiBuild is great for middle class New Zealanders with higher household incomes [but] we are missing the middle part of the housing continuum – affordable rentals and affordable home shared-equity ownership packages”.

The ‘housing continuum’ is just one framework for looking at housing issues, and despite wide adoption in NZ it does need critical review too. One challenge came from the Kāinga Strategic Action Plan programme (developed by Māori; more on that in another post), which put things in more binary terms between housing which is safe, secure and empowering, and that which is not:

The left hand side meets the NZ definition of ‘homelessness’, whereas the right hand side provides safe and secure experiences. A large number of NZ households fall in between; this model is an intentional challenge to the continuum that implies an easy progression and gradations between levels. “The gap in the middle is intentional and represents – in Auckland – both an income and opportunity gap between those in safe and secure housing and those not”.

They also argue that “the linear progression presented in the use of arrows in other models is an inherent part of the financial continuum model and adds an unrealistic and insensitive compulsion to ‘move along the line’ which leads to financial nirvana… [the continuum is] laden with tenure and this leads to stratification based on wealth or income, which is unreasonable and fails to reflect or promote the true social function of housing”.

Perhaps the key critique of the housing continuum is that it’s a very top-down view, for a government (or councils, or community housing providers) who are trying to understand where to allocate support. It’s useful for that, but doesn’t give much understanding of the needs and wants of the people, families and communities being supported. We might not all want to ‘climb the housing ladder’ or even buy our first home, but we all want a safe and secure place to live.

* The word “welfare” shouldn’t carry any stigma in 2020: we all end up on NZ Superannuation at some point and most of us receive benefits at other times in our lives, including the unprecedented situation recently where most workers (indirectly) received the Covid wage subsidy.

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  1. Thanks John. That intentional challenge and reframing offered by the Kainga Strategic Action Plan to the housing continuum is one of the best things I’ve seen in housing thinking for a long time.

    1. Thanks, I agree! A really good reminder to ourselves to challenge our thinking and frameworks. All models are imperfect and the fundamental thing argued here – as per the earlier ‘housing as a human right’ post – is that everyone has the right to “adequate housing”, i.e. warm, secure, safe.

      Beyond that there’s plenty of room for debate on what the goals are and what role government/ councils should play, but it sets a line in the sand as to what the minimum standard is.

  2. Private rentals are also subsidised by landlords being largely exempt from a capital gains tax and by landlords being able to claim interest as an expense on an appreciating asset that is largely the land value. Private homeowners exert considerable political pressure to keep rates low, and a tax on land or home equity and taxing capital gains on owner occupied housing ‘s (including John Key’s mansion) completely off the political agenda. In some countries (Australia, the United States) there is a large literature on the economic distortions these policies create.

    1. Yes. Also the accommodation supplement is largely priced in by the rental market, meaning it ends up benefiting landlords not renters.

      1. The accommodation supplement is a massive housing fail. Dating back to Ruth Richardson time. It costs $1.5 billion and rent inflation has meant it benefits landlords not tenants. But if it were to be dropped tenants wouldn’t get a reduction in rent. Making it useless yet painful to get rid of.
        The best that can be done is to freeze the accommodation supplement whilst building many thousand assisted rentals to deliver affordable homes and to provide competition that contains private sector rent inflation.

    2. It isn’t tax or a lack of it that is the problem. Taxing property is hardly likely to result in more houses being built- probably the exact opposite. Planning rules that restrict the supply are the problem. A whole bunch of well-meaning people who say they are anti-sprawl have managed to limit housing supply and drive up land values. Thank you anti-sprawlers you have made me more money than traffic engineering has. But the downside is housing is unaffordable and people are homeless. Unfettered immigration hasn’t helped- expect that to get even worse as thousands more flood in or back in due to Covid19.

      1. “Taxing property is hardly likely to result in more houses being built- probably the exact opposite. ”
        We’re not talking about taxing any construction. We’re talking about taxing the capital gains on the values of property that people own (or mortgage).
        Especially if it’s more than one residential property.

      2. ‘Planning rules that restrict the supply of housing are the problem’.
        Ah, straight out of the neo-liberal textbook.
        It’s claimed, like you have done, as *the* dominant causal factor. It’s a factor, but only one factor of many…

        1. The concept of supply and demand has been around since Ricardo, it wasn’t invented by neo-liberals. But if you think the Council can restrict land for residential uses and that isn’t going to result in higher housing costs and a reduced supply then go right ahead and set out your theory for us. We would genuinely like to know how that is possible.

        2. If you read my comment you would note that I acknowledge restrictive planning rules are a factor, just not the overarchingly dominant one, as you suggest – which is very much the neo-liberal rhetoric.
          So please refrain from ascribing to me things that I have not said.

  3. The reason NZ has less state houses/assisted rental housing than Sweden is NZ doesn’t have a political consensus re social housing. Labour when in power builds. National then sells them.
    What Labour should do is use the non-profit community housing provider sector to build up the assisted rental housing stock. That way National when in power cannot sell them.

    1. What would also help is, when Labour is building state housing, that the designers are not directed to ensure that the apartments are set up to be sellable as individual units, too.

      Shared facilities and amenities keep costs down and done well, assist community building. If a direction to include shared amenities and facilities hinders National selling the units later, that’s a bonus.

    2. To me state housing is a big part of the problem. The government are predictably terrible landlords, they have a whole lot of state owned properties in good locations in Auckland that have crappy small houses on stupidly large sections. The private sector would have subdivided them long ago. And they probably would have built high density housing long ago if the government/council had allowed them to.
      I personally think they should sell the whole lot, and all in one go. Flood the market which will bring prices down. Imagine what would happen to house prices in Auckland if the government auctioned off 20,000 state houses at $1 reserve all at the same time on TradeMe!

      1. I agree, although they have done some in Mt Roskill: terrace/town houses in May Road and Duke Street, and they demolished two state houses next to Countdown Three Kings to build a small apartment building. They just need to do a whole lot more of them.

    3. That’s only partly true. National was starting to build quite a lot of social housing before it lost the election.
      Under the Clarke government, social housing construction was not that significant.

  4. The housing continuum is a major reason why KiwiBuild failed. The vast majority of renters are not in a position where they can buy an owner-occupied house -even at KiwiBuild prices. The government should have switched to building more Housing First (tick), State houses (tick) and other types of assisted rental housing (no-tick).

  5. Matthew, are private rentals subsidised by the lack of a capital gains tax, or by the lack of competition? The rules that restrict the provision of housing artificially limit supply – so people looking for housing are not able to turn down poor quality, as it is that or nothing. If they had a real choice, landlords would have to up their game to get tenants.
    And that restricted supply of land for housing is exactly why many who can buy a rental unit – guaranteed asset appreciation. Again, would different rules limit the appreciation factor and therefore the interest in housing as a superannuation scheme for landlords?
    There is an argument that how you choose to finance your business is up to you and shouldn’t confer tax advantages – taking out money (equity) and loading businesses with debt has been an issue outside housing. That could be resolved by making interest expense non-deductible for tax purposes.

    1. I suspect the rationale that “how you choose to finance your business is up to you” works might be something to consider if we had the luxury of a market with a level playing field. We don’t have that. To achieve a level playing field, at the minimum you’d need to internalise all the externalities of sprawl, which is one of the biggest reasons for our housing unaffordability problems. That will include carbon, three waters, biodiversity, public health, restrictions on the freedoms of non-drivers, and poor land use.

      When you refer to “rules that restrict the provision of housing artificially” but then mention “that restricted supply of land for housing”… were you meaning a narrow consideration of rules that restrict the provision of housing artificially as just those rules that restrict land supply, or by “land supply” are you somehow including rules around intensification, too?

      Providing more land in an already-too-sprawly city, where transport solutions are resisted because “we’re different, we’re a low density city” is insane. We can actually *plan* how and where to build – following our compact city strategy – and we can put the billions of public dollars that’s being spent on sprawl infrastructure into infrastructure we need for intensification instead. In fact, since there’s likely to be a fair bit of money left over, it could be used to actually develop TOD.

      Tweaking rules to try to get the market to provide this intensification at a pace to provide competition in the housing market, and bring both prices and rents down is important, and it works – as can be seen in places like Minneapolis but it won’t be sufficient to solve the problems in Auckland fast enough.

      The rules certainly don’t need tweaking in the direction of supplying more land to a sprawled city.

      1. A word to the wise Heidi. You should never ever mention TOD in an application for a resource consent. Even one casual reference to TOD brings out the worst in ever Council officer. They all start immediately demanding changes to the design because they have been waiting for years to stick their oar in and design what they consider to be a true TOD. They will demand significant changes without any consideration of the cost of those changes and without a care for whether or not the market actually wants what they are asking for. By the time they have finished the whole project will be so expensive and so stuffed that the owner isn’t ever going to build it. High pitched sounds make dogs bark. Saying TOD makes council officers get crazy expressions and start sketching.

        1. Ha ha. This sounds like the sort of pent up frustration that only the small councils have been able to allow to blossom under the Innovating Streets programme… Maybe the Ministry of Housing and Urban Development should offer an Innovating, um, well, Streets programme to Councils in the same way.

          All those poor planners who’ve been kept in a shoe box in the dark all this time, just itching to get out…

      2. Heidi, in this case “supply of land” actually encompasses both – we have had a system that stopped new land being used to house humans and stopped existing housing land being redeveloped to house humans. And humans did this to themselves…
        What is TOD?

        1. TOD = Transit Oriented Development. The only kind of development Auckland should be pursuing at present, and only in brownfields areas.

          The problem with referring to both making land available for greenfields development, and ensuring intensification is straightforward when discussing rules around “supply of land” is that they have been lumped together by economists in an unuseful way. They don’t have the same effect on housing affordability. And since their effects on our climate response are opposite, to talk of them in the same breath continues a mythology about Auckland’s appropriate climate response.

        2. Heidi the Council has been trying to get people to build TOD in brownfields for 25 years. They have tried limiting land supply, they have tried offering bonuses, they have tried making rules against other activities and against other sites for residential. We have a housing shortage in part because of their failed attempts.

    2. The absence of a capital gains tax encourages landlords to invest in rental housing. It also probably increases the supply of rentals, albeit at the cost of increasing the cost of houses for those looking to buy their own first house. However, the absence of a capital gains tax (on rental properties held for more than 5 years) and also allowing interest costs as an expense are not the most efficient way of encouraging the supply of rental accommodation as some of the benefits flow to landlords. It would be better to tax capital gains and use the revenue to build new houses, and also to make interest deductions contingent on landlords building new rooms and houses rather than just land banking. The requirements on landlords are relatively low considering that some of their activities are lightly taxed and the government is subsidising consumption by low income earners.

      1. There’s no capital gains on any forms of investment in NZ (ie shares or businesses), so the fact there is no capital gains tax on residential property is not a distortion or an incentive, it’s just the way our tax structure is. Claiming interest costs as a tax deduction also applies if you borrow money to start a business so once again, simply a level playing field. The issue with expensive housing is the difficulty in supplying new product to the market (Kiwibuild had supplied less than 400 pre lockdown). The time and cost to consent development is prohibitive while a labour supply shortage in construction means costs are getting pushed up from all sides.

        In a nutshell tax will not solve housing affordability, increasing supply will. Unfortunately, while this government had good intentions on this front, like many things they promised, they found the delivery side of the bargin more difficult than the rhetoric that got them elected.

        1. The Government and Councils don’t just restrict supply directly, they also increase construction costs which further reduces supply. Some men went down a coalmine full of methane and it blew up so now we have to put scaffolding right around every house during construction. It adds thousands. Some twit wants rain gardens and stormwater treatment. Instead of doing a benefit cost assessment to figure if it is a good use of money the councils just impose it, as they don’t have to pay. Meanwhile they tip shit straight into the harbour when it rains. Council’s are full of well-meaning people who don’t understand the impact of their daft policies. If we took the view that things should only happen if the benefits exceed the costs, we could reduce the cost of building and increase housing supply. Instead Council staff look only at the cost to the Council, not the overall cost that others have to carry.

        2. Generally the absence of a capital gains tax is a distortion. The property market also has unique features (such as government subsidies for low income earners to rent properties and being low risk) that distinguish it from other investments.

        3. “Generally the absence of a capital gains tax is a distortion. ”

          Yes. If income is taxed, it should include income from capital gains. This is a direct bias towards those wealthy enough to have capital to invest at the expense of those who earn their income from working. It’s not a level playing field.

      2. I mostly agree with this. Housing and building prices are related to the cost and competitiveness of their provision. The market needs to be better regulated with a far better understanding of spatial planning and spatial economics. I would though support rates (a tax) switching from taxing all of capital (land +buildings) to just taxing the land. That would help urban form by removing the tax on the height and bulk of buildings.

        1. I should have said -I mostly agree *with Mathew the Democrat*.

          It is also disappointing that so little attention is given by the public into the workings of the housing market and how housing integrates with transport because housing in New Zealand is a key driver of poverty, unproductive urban labour markets and failing to adapt to climate change.

  6. Given that home loan repayments are much lower than rents, the government should introduce a major new “game-changer” policy of largely replacing assisted rental with assisted ownership. It would cost taxpayers a lot less and get a lot more people into home ownership, which provides people with a higher quality of life, and better health and security.

    The accomodation supplement is basket case in terms of fairness. Someone paying board of $200 a week in Auckland gets twice as much as someone paying $200 a week in Wanganui. That makes no sense, it should be the same rate everywhere.

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