Given the headlines around the recent findings of the ‘independent’ review of Kāinga Ora by Bill English, you might assume this post will be about social housing, Kāinga Ora’s most prominent role. While that is indeed something that requires defending, I want to talk about the other core purpose of Kāinga Ora – its role as an Urban Development Authority (UDA).
As the board of Kāinga Ora noted, the review didn’t even look at its role in urban development.
Why am I homing in on Kāinga Ora’s role as an Urban Development Authority?
Because of something that seems to have fallen under the public radar: calls in the recent review to narrow the scope of Kāinga Ora to just social housing. For example, this is Recommendation 5, emphasis added:
To ensure that Kāinga Ora has the leadership and mandate to effectively implement the
recommendations of this review, responsible Ministers:A. refresh the Kāinga Ora board with a focus on the skills to implement the recommendations of this review
B. issue simplified government expectations and direction to Kāinga Ora
C. report back to Cabinet with options to narrow the scope of Kāinga Ora activities to social housing and ensure it has the leadership and governance expertise to deliver effectively, including repealing the Kāinga Ora – Homes and Communities Act 2019 and designating Kāinga Ora as a Crown Company under Schedule 4A of the Public Finance Act 1989 with social and financial objectives.
While parts B & C were not part of the recommendations initially accepted by Cabinet, in the Government’s media release on the report, the Minister of Housing Chris Bishop said:
“The other changes proposed by the review, including moving to a model where the government becomes an active purchaser that takes a social investment approach to cost-effectively improving housing outcomes, will be considered in the coming months. At first blush, the recommendations align with our broader social policy objectives, so we will be looking at them closely, as well as considering broader housing funding settings.”
So although it’s not a certainty, it leaves the possibility of a “simplified” Kāinga Ora open, if not likely.
What actually is Kāinga Ora?
Kāinga Ora was formed by the Sixth Labour Government (2017-2023), by merging a few different government entities:
- Housing New Zealand – the government’s social housing landlord, which built public housing.
- Homes, Land, Community – a subsidiary of Housing New Zealand, and its urban development arm
- Kiwibuild – which operated under the Ministry of Housing and Urban Development
The purpose of this consolidation was to integrate all of the government’s housing capacity into one entity and develop a national Urban Development Authority. As it was formed in the wake of Kiwibuild, its urban development side was framed around addressing the problems that were perceived to have caused that programme’s failure – chiefly, planning constraints and construction costs.
The consolidation was a significant undertaking, implemented in two pieces of legislation, the Kāinga Ora–Homes and Communities Act 2019 and the Urban Development Act 2020. Together, these married the Government’s social housing arm to its development side, and formed New Zealand’s first national UDA.
The Urban Development Act in particular gave Kāinga Ora considerable power, including:
- the means to enact compulsory land acquisition
- and the ability to override local planning instruments via the creation of ‘specified development projects’ (SDP).
The SDP process is likely to be best suited to complex projects that are unable or unlikely to be delivered or developed optimally under existing processes. It works to overcome barriers that have often stopped projects from getting off the ground, such as large areas with multiple landowners, funding constraints, or complex planning challenges.
Additionally, the legislation gives Kāinga Ora a wider mandate. This has meant it has sought to improve the wider housing and construction sector, and has used resources to advocate for changes at the planning level. A good example is in Auckland, where it’s submission on Plan Change 78 pushed for upzoning and intensification, including in special character areas.
Because of these statutory objectives, Kāinga Ora has interests beyond its role as a public housing provider. This includes a role as a landowner and developer of residential housing and as an enabler of quality urban developments through increasing the availability of build-ready land across the Auckland region.
I would argue that this represented one of the most significant steps in recent history towards direct Government intervention in New Zealand’s housing mess.
While Kāinga Ora can certainly be improved, and is not beyond criticism – in fact, I spent over a year critically analysing its legislative development for my Masters thesis – I would very much argue that the Government dropping this urban development role would be a catastrophic step backwards for addressing the housing crisis. Especially in Auckland.
Why would it be catastrophic for Government to drop Kāinga Ora’s development role?
New Zealand’s housing affordability has not been good. Often, this is attributed to restrictive planning regulations preventing the construction of new homes by not producing sufficient land supply for development. A good example would be the prevention of high-density housing typologies in our inner cities – such as Auckland’s ‘villa belt’ or previous restrictions in Wellington that were thankfully recently changed.
That’s one of the reasons Kāinga Ora was given the ability to override restrictive planning rules through the creation of SDPs. It is also what the 2020 National Policy Statement on Urban Development (NPS-UD) and the (formerly bi-partisan) Medium Density Residential Standards (MDRS) were aiming to address.
National pulling away from the MDRS by making it optional for councils is a shame. And, while the NPS-UD would be a good thing for Auckland if it’s finally implemented, dealing with restrictive planning its only part of the solution to New Zealand’s housing crisis.
In fact, I would argue that changing planning laws to increase land supply is not necessarily sufficient by itself to improve affordability or build more homes. The previous National Government (2008-2017) implemented Special Housing Areas to override local planning laws in order to free up land for construction of affordable housing. But these areas had no meaningful effect in producing affordable housing, in part because there were no incentives to actually build. (Just as, to give an overseas example, planning policy in England that was predominantly concerned with producing a 5-year supply of land resulted in land trading and speculation – and not increased housebuilding).
And what was the new Government’s condition for opting out of the MDRS? Immediately zoning enough land supply for 30 years of housing growth, which in Auckland would likely mean more greenfield development, aka sprawl, and less intensification in areas already well provided with infrastructure.
The point I want to make here is that merely freeing up land does not mean houses, especially affordable ones, will be built. I am not saying that increasing land supply shouldn’t happen, or that more permissive planning isn’t necessary or beneficial – particularly when it comes to intensification, for example, the Unitary Plan was positive for Auckland.
But these need to happen in conjunction with a variety of other measures – because the outcome we want is more affordable housing, not just more developable land.
Why do we need Government to build housing?
Building to increase housing supply is an essential step to producing more affordable housing. I’d put the emphasis on “an” there, because construction can’t be the only step (this book is an excellent read on the whole picture).
However, for construction to have a meaningful effect, it must be sustained over the long term. Now, I’ll happily shill for private developers building awesome things, residential or otherwise (such as the planned downtown carpark redevelopment), but they are private businesses concerned with making money. And this presents a problem when it comes to producing enough housing supply to create affordability.
A good example of this issue is how standard calculative practices used for property valuation and development feasibility lock in house prices. To quickly explain with a simple example, let’s say you’re a developer and you expect a house on a given piece of land would sell for $1,000,000. It costs you $300,000 to build, and you would like to make 20% profit off the sale ($200,000). This means the value of the land to you is $500,000. So, you buy that land and start building! Good for you.
But what happens if the Reserve Bank raises interest rates to deal with inflation, increasing the cost of a mortgage for customers?
What happens if construction costs rise due to a shortage of key building materials in a monopolistic market? Or a shortage of workers?
What happens if there’s a recession, and the economy slows down from boom to bust meaning people hold off on making major purchases?
For you, the developer, maybe people can afford a higher price, so you can increase the sale price.
But what if they couldn’t, and house prices started dropping?
If you’re lucky, you might only lose a bit of your anticipated profit. But if you’re unlucky and have to sell, you’d have to take a loss.
This is the ‘lock in’ effect of these practices, where your minimum viable price is set by the valuation of the land when you purchased it. So instead, you might choose to hold the land and wait. And this is what developers do. Take Ockham Residential co-founder Mark Todd’s comments in September 2023 when “The Feynman” apartment project – a planned 165-unit complex on Great North Road in Grey Lynn – was paused, due to not having enough pre-sales:
The general consensus across the property sector is also that house prices have finished falling, he said. That should have a positive impact on the newbuild market, as making pre-sales in a falling market is notoriously hard as customers hold out in the hope of lower prices, Todd said.[…]Big projects like The Feynman typically need to be launched in stronger markets so the large pre-sales targets needed to make them financially viable can be met, Todd said.He said it is “frustrating” to hit pause on the project – which now sits as a large bare block on Great North Rd – but that’s the way the industry cycles go. “We’re passing north of $20m invested in buying the land and getting a resource and full building consent for the project,” he said. “But I’ve been in property development for 27 years now and this just happens.” Nevertheless, Ockham remains confident it can relaunch the project soon, perhaps in 2024. “We’re definitely not selling the site,” he said.
Or take this quote on the slow selling of studio apartments in Ockham’s ‘Greenhouse’ development.
“It seems like they are willing to wait the market out to get a premium price.”
I want to be clear, this is not to disparage Ockham’s actions; their apartments look amazing, and Auckland is lucky to have them. Their choices are perfectly rational for a business.
But there is a really, really, important question that we need to talk about more.
What happens if house prices start dropping due to supply outstripping demand?
There is no incentive – in fact it’s actively detrimental – for private developers to just keep on building enough new housing to cause prices to drop. You can’t run a business on a loss.
This is where the Government and Kāinga Ora come in. Governments can take on risk, raise debt cheaply, and can afford to make a loss. Why? Because it’s not really a ‘loss’. Why? Because housing has an effect on all aspects of society. In fact, a decent home is a right in New Zealand.
That’s why Governments can eat any financial loss: because all the other benefits of good affordable housing make up for this subsidy. This is the core argument for why government needs to provide social housing. And when construction starts slowing down, as is happening right now? This is precisely when government needs to put significant investment into building housing, to ensure the housing supply continues to go up – and so companies don’t fold, reducing the capacity of the sector.
Kāinga Ora is the largest residential landlord and largest solicitor of residential building services – and, as a UDA, it has the power to enact enormous complex developments through SDPs. It is supposed to lead or co-ordinate the urban development and construction sector by “supporting innovation, capability, and scale” to deal with the major issues plaguing the sector.
With its powerful development tools, access to the government’s coffers, and nationwide focus, Kāinga Ora has both the capacity and potential to ensure that the construction sector doesn’t falter, and that we continue to increase our housing supply to address the housing crisis.
And yet, Kāinga Ora has recently cancelled or paused a fair few developments across the country and Auckland – not only public housing developments, but also those with a mix of tenures, like affordable housing and market-rate housing.
So what happens now?
Truthfully, I don’t know. As I said at the beginning, the Government hasn’t accepted the review’s specific recommendations to back out of that development aspect. But based on ministerial comments on Kāinga Ora and its financial situation, it’s not a big stretch to assume they’re looking at doing so. Even Kāinga Ora’s board, while concerned by the report’s failure to address its urban development role, and the lack of insight into what change might look like for these functions, did support simplified expectations and direction.
There are valid criticisms to be made of Kāinga Ora, and any organisation – especially one that is attempting relatively new things in New Zealand – is sure to have problems.
But as Bernard Hickey recently said:
…it’s “magical thinking” on the part of both the government and voters to think the government could increase the number of homes and not take on extra debt.
Addressing the monumental housing crisis in New Zealand will require significant investment from the Government. If we want to have a conversation about improving Kāinga Ora, great, let’s have it. But if you want to build housing, the answer cannot be to stop Government investing in housing construction.
Especially not now, when the industry is slowing down.
And especially not in Auckland.
Header image: Kāinga Ora development at John A Lee Corner Pt Chevalier as viewed from south of SH16 Carrington site (Photo by Jolisa Gracewood)
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Kainga Ora’s redevelopment of Northcote has been and will be truly transformational.
Density done well that hopefully puts the naysayers arguments to bed
The reality is that Auckland Council has plenty of land zoned for intensification for the foreseeable future, but developers prefer to create subdivisions on land where they can make the most money, typically greenfield sites without services where ratepayers are expected to pay for these. I laugh when I see people advocate destruction of buildings that contribute to our heritage and character to create ‘affordable housing’ and see the new townhouses in places like Herne Bay selling for $2.5-3 million each. Same thing happened with the Wynyard Quarter: the Generation Zero lobby naively submitted that intensification instead of parkland or marine related activities there was going to create apartments that 20 year olds could afford. Unrestricted migration, currently at 260k pa with most headed for Auckland is unsustainable, unaffordable and clearly hasn’t resolved gaps in skills over the years.
BAM! There it is – no NIMBY comment can go past without some anti-immigrant sentiment, and right in the last line.
That isn’t anti immigrant. It is anti immigration. Immigrants are people, immigration is a government policy designed to make it look like the economy is growing even when GDP/person might be declining. It is perfectly reasonable to question whether NZ should have an open door at a time that people already living here don’t have a home to live in.
How can precluding future would-be immigrants from improving their lives not be anti immigrant?
People don’t cease to exist if you ignore them.
It’s perfectly reasonable to criticize anti immigrant takes when all of the issues cited are purely self inflicted choices. Not enough housing? Let people build it. Not enough infra capacity? built it leveraging the future tax revenue from the additional taxpayers. Not enough GDP per capita? sounds like something innovative motivated newcomers could help with.
Of course, “let them eat cake”. It isn’t our job to lift the living standards of the rest of the world. It is our job to lift the living standards of people in NZ. Housing is expensive in large part because wages are too low. Yet as soon as there is upward pressure on wages our governments or all colours flood the labour market with more people. The demands of people growing zucchinis to be able to find workers at minimum wage seems to trump any desire to raise wages. We only have a labour shortage because wages are never actually allowed to rise. Market forces are only allowed to benefit the employer, never the employed. We need some immigration but it should be balanced with an increase in housing stock to accommodate them.
Is your implication that I am saying let them eat cake?
Closer comparison would be “repeal the housing corn laws”
Housing is expensive in large part because we make it too hard to build, prioritise landed middle class vibes over basic accommodation, and place unfair excess tax burden on workers over land owners.
Its a non-starter trying to argue we will be able to restrict our way to prosperity.
A restriction on labour must raise the price of that labour and increase the returns to labour. Given that most people have to sell their time that seems like a good idea. Ruth Richardson tried the low wage approach and all we got was poverty and the diseases of poverty. Rather than investing in capital equipment it was easier for businesses to focus on low cost low wage outputs.
“It isn’t our job to lift the living standards of the rest of the world.”
Who said it isn’t our job to help lift the living standards of the rest of the world? This is a choice we can make. Sure I think mainly lift the standards of NZ’s but I think we have a responsibility as a global citizen to help the rest of the world too.
So you want to raise some other country’s living standards by taking away their best and brightest?
1) Immigration puts upward pressure on wages over the medium – long term. As you understand (but apparently selectively apply) immigrants increase demand as well as supply of labour.
2) immigration is good for both countries involved, often people return to their birth country with new skills, new connections, and considerably more money. Improving connections between countries increases foreign investment.
3) people aren’t the property of their birth countries and don’t exist to be tools of that state. Like some kind of neo feudalism. cmon man.
Immigration reduces wages. That is why governments do it. It enables businesses to avoid paying for training and avoid competing when labour is short, that is why businesses demand it. One of the basic stylised facts of development economics is that higher population correlates with lower GDP/person. There is a dilution of capital when population increases. The only times immigration has resulted in high growth is when there is a surplus of land coming into production or a surplus of other capital goods such when colonial powers took land from subsistence populations as occurred here or the whole manifest destiny crap in the USA.
Immigration was seen as a means of equalising countries but that was before capital became as mobile as it is now.
At its most basic if food were scarce we would allow more people to arrive. Currently housing is scarce so we should apply the same caution. People on lower wages are the ones who suffer. We need a few skilled people to fill gaps because successive governments have not paid market wages to nurses, teachers and police. But we don’t need an influx of low skilled people just to make life easier for low value businesses.
If you want New Zealand to become a third world country, why not just move to one?
Right so you’re saying development won’t happen in inner suburbs because developers will just build greenfields, and that they will also build a lot of infill development and change the feel of the street*?
All additional housing supply, even new townhouses in places like Herne Bay selling for $2.5-3 million each improve affordability across the market. It removes demand from elsewhere. You can go read empirical studies on it, the mechanism is called filtering.
https://stephenhoskins.notion.site/Liang-Kindstr-m-2023-Does-new-housing-for-the-rich-benefit-the-poor-On-trickle-down-effects-of–982d9cca809b475b86faca56f131a99b
summary:
https://x.com/GeorgistSteve/status/1740933623103238186
*(change being the political driver of complaints here, not heritage or character as much as advocates try to hide behind that)
Well if it removes demand from other areas how come New York, London and Sydney are still expensive in the suburbs. They are building apartments everywhere.
You realise New York, London and Sydney are all examples of cities that build relatively few dwellings per capita right?
I did notice the other week that some nice places slightly out of Sydney suburb had cheaper rents than out of Palmerston North! Admittedly the Palmy places were a bigger section.
The board of Kainga Ora has many questions to answer. There are good reasons they’ve attracted review:
-Kāinga Ora annual operating expenditure has grown from $1.5 billion in 2019/20 to $2.5 billion in 2022/23
-Deficits forecast to grow from $520 million to $700 million
-Debt expected to grow from $12.8 billion to $23 billion. by 2028
-Cash deficit of $21.4 billion forecast over next four years, or $4,000 per NZer
-Redevelopment costs $35,000 more per home than private developers
-Rent arrears have increased from $1 million in 2017 to $21 million
Most of those would be explained by the fact they are building a lot more houses now. Of course that costs money!
This is a shocker though: Rent arrears have increased from $1 million in 2017 to $21 million
Is that not because homes are being allocated to homeless, unemployed people? Which is a good thing, so that they are no longer living in their cars, and that they need housing the most – but that therefore might come with an accompanying side effect: tenants who can’t pay the rent.
Is that it?
Possibly – however I thought we had a social welfare system that gave those people money, and they should then give some of that money to KO.
Covid. Climate. Wars. What do we expect to happen to the costs?
Related question: AFAIK the Labour government had a budget of something like $400 million to improve transport in Mt Roskill and Mangere due to the state housing build. Am I right, and if so what did they spend it on (it seems to be invisible), or did National cancel it?
Building a $300,000 building on a $500,000 piece of land, and then expecting a profit that is 2/3ds of your building budget, seems ridiculous. It always seemed obvious that, if land prices were not going to reliably rise by 10–20% per year anymore, almost all development would become infeasible.
For those villa belts, that would be what, a $400,000 building on a $2,000,000 piece of land? How many of those villas are in managed decline right now?
Why is land ‘worth’ that much? Only because someone could finance enough debt from the moneylenders to buy it for that in the first place. Or, for those that bought it cheap, they can pocket a huge, barely taxed, windfall.
Alternative could be to have central control over prices of land. It is the opposite of our neo-liberal, free-market basis for our economy, but it could be engineered to have an immediate effect.
We allow unlimited freedom in setting prices of housing – and then we wonder why our housing costs are so high. What if that piece of land, previously valued at $500,000 is now only allowed to be sold for a maximum of $200,000 ? Surely, housing prices will go down?
I think people will find a way around it. This happened before, eg. with large music festivals with fixed ticked prices but with more demand than tickets. Some grey or black market will arise where tickets are on-sold for higher prices.
Rates based on land-only value would help, if they don’t make use of the land it’s a high price to pay for no return.
Yes, two particular things in this city…Northcote done well, and Te Mātāwai, a beautiful apartment in a city centre loaded with ugly versions.
We do need more apartments, as OCKHAM knows well, and does well. It is amazing that Kāinga Ora can do the same as an amazingly private developer. This is what our cities need, a public apartment builder and a private apartment builder, fighting to build the coolest apartments. Then we can call ourselves a city, not just a big town, donkey town, one storey town. A city with shining apartments and happy people. That is just a dream (R.E.M. to be exact!).
Simplicity is focussed on long term rentables, which is OK, but not what we need. We need to rent to own, and mortgageable for us, the current renters, who have the right to own, and deserve the chance to own.
Mark Todd is an amazing public speaker, and OCKHAM deserves to be successful in what it has offered in Onehunga, and will offer in ex UNITEC space. They are our best private apartment constructors, and Kāinga Ora are our best public apartment constructors. We need them both!
bah humbug
Is that Te Mātāwai finished?
Yes, Resido at Sylvia Park first to offer long-term rentals (or on any sort of scale?) in Auckland.
KO has one major issue they need to solve, tenant management.
If they gave tenants 3 strikes, then moved, 3 strikes, then moved, then 3 strikes, then given an option of living with other providers/renting/buying their own home, or moving to an area with other repeat offenders and a lot of extra resources to support them until they’re at a point where they’re suitable to live beside others. It’s not a prison, because they’re free to go anytime, just it’s a way of getting the bad apples away from tainting by association the vast vast majority of good KO tenants.
People are against KO homes because NIMBY and bad tenants. You’re never going to fix the first, but the second is totally within KOs power.
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Re this review, KO has been too effective at providing housing, so they’re gutting it so that less competition, so higher house prices.
Yes, pandering and coddling the problem tenants had poisoned the entire state house building program. It’s a classic case of the tail wagging the dog.
hmm, that may work, you sure would need good support where there are several offenders together.
The only way NZ will get affordable housing is if the Government builds them (as it did in the 1930’s ) or funds them (as it did in the 1950s and 1960’s. It is not the role of the private sector to create affordable housing. It never had and it never will.
Which is what Kāinga Ora is doing right now, right?
I think it is ludicrous to expect Bill English to put forward an unbiased report into KO – he was the very person who, when he was in power, point blank refused to say the words “housing crisis” – denying the very issue that was right in front of his face. He was the politician whose answer to a shortage of state housing, was to sell it off. His answer back then was always to copy the British Tory party, even if it was 10-20 years too late.
Ko will never build enough houses, they couldn’t even get Kiwi build to work, what was the target again 100k houses in 10 years. Funny how they had to retract on that
I think you mean the previous Labour Government.
KO exists whoever is in power. They don’t set the policy goals.
NZ needs Urban Development Agencies, whether KO or Eke Panuku, with the scale, authority and finance to transform land into housing for all. KO is managing Crown Estate land for this, but needs to be able to accumulate decent sites from public and private ownership, as can be seen from the fragmented ownership pattern in the former social housing estates. Private and Association build partners are a necessary part of this process, but it does further break up the Crown Estate land, making future change much more difficult. Getting subdivision of that land right first time for a long future is not easy.
HLC, cutting it’s teeth on Hobsonville Point, gave KO a real head start on achieving this. It is questionable that shifting that structure and activity into MHUD or, worse yet, disestablishing it, will do any better than leaving it with KO Board governance and improving the board. Or is this just another swing of the wrecking ball?
Heh, the ‘how a private developer makes their profit’ model set out in this article is pretty much the same as that put forward by Cameron Murray and Tim Helm.
Absolutely the state is the logical and best resourced body to build heaps of social/first home/affordable houses in good community settings.
The Ministry of Works had that role in the past.
Kainga Ora was set up with that role – but has it had enough time yet to build up the institutional knowledge and skills to consistently do a top job?
Good post, thanks Simon.
I have taken an interest in a property development company ,joe blogs up your way who have been working in beach haven ( I was trying to help my daughter and her partner get into a new home for under $1m ! ,but they have now decided to do their OE ) ,Joe blogs are buying 800m2 plus sites for $950-1.3m , , taking off the house , subdividing and building 8-9 apartments and selling them for $900-1m each for 80-110 m2 various … so pay $1m , sell for $8-9m , and I wonder what the numbers might be in terms of build costs and profit ! but they are selling out ,and so why cant KO do the same ,have a dual business , and use the profit from selling to the $1m buyers to fund the costs of building low cost homes for others ..(.um this took me about an hour to work out by using homes.co.nz !!! not years ………
Yes we need Kāinga Ora to continue to build. We need all the housing we can get.
Unfortunately some of the arguments used here reveal a lack of economic literacy.
“There is no incentive – in fact it’s actively detrimental – for private developers to just keep on building enough new housing to cause prices to drop. You can’t run a business on a loss.”
This is misleading in two ways.
First, developers are not monopolists. There are far too many of them. Whether any individual developer chooses to build – or not – does not affect house prices.
Second, up-zoning allows developers to earn profit even as prices fall because it dramatically reduces the cost of the most expensive component of a dwelling – land.
Rupert, do let us know where we should be studying up. Is it a particular university’s Economics course or is there a Youtube series?
Intermediate microeconomics typically covers monopolies, competition and market power. I am sorry, but I do not know of a youtube resource.
As for the point about land: Under low density zoning, a developer would have to purchase say 600m2 of land per dwelling. Under medium density they need say 100m2 per dwelling. That is a dramatic reduction in input costs*, allowing the developer to sell medium density housing at a lower price than low density while still making a profit.
*Land zoned for medium density will be priced higher, but not 600% higher. This is also why widespread medium density zoning is better, since the price differential will be smaller.
“Whether any individual developer chooses to build – or not – does not affect house prices.”
Maybe his comment wasn’t quite right, but looking at yours above: If prices are coming down developers would likely collectively choose not to build until they can time it right with a rising or risen market. ie they may just hang on to undeveloped land.
This is why it’s important for the government to keep on, or even more so, build houses for anyone while the private developers aren’t so much. Then we would truly have more supply and prices should ease.
I agree that there is some price level below the current market price at which developers would stop building. But to get there, developers must first expand supply *by building a lot of housing*.
“Timing it right” works both ways. If prices are coming down, then it may be optimal to accelerate building (certainly it is optimal if you think the price reductions are permanent). Hanging on to undeveloped land in the hope that prices will recover has a substantial cost.
I agree that state built housing plays and important role, particularly when uncertainty rises. But OP leaned into some populist arguments by implying that developers constrain supply to keep prices high.
If KO hadn’t been so dismissive of community concerns about the more ‘high needs’ (dangerous) tenants on their books, then maybe the popularity needle would not have swung quite so far against them.
The author is right to point out the state’s important role in increasing housing stock, but nobody can seriously pretend that the organisation cack-handedly made a rod for its own back.
There are many people in (or formerly in …) that organisation who ought to feel shame for the parts that they played.
there’s alot of people homeless and can’t afford to rent. what’s the solution?
KO is the largest builder in Nz. I agree we need more social housing and the way to get this is from government builds. Some issues with KO is they are not growing the construction industry they are consuming it and in turn this pushes house prices in Nz up. Secondly government ministers set Ko annual targets and if they dont meet them by about March the acquisition team go to the market and buy 1million $ houses on the open market to meet their quota. Again this pushes house prices up.
In my view there are ways to achieve as many houses as we need by different mechanisms but it’s too in depth for this forum.
A good Guest Post?
It’s certainly not letting in another 253,000 people immigrate into the country like we did last year.
Even adjusted to a net figure of 133,000, there is no way we can simply build enough accommodation to … accommodate … these people.
It’s a bit of a balancing act that I’m sure they are always working to get right. If all 133,000 were builders perhaps we would be fine 😉