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Out of the Woods – Issue 2

Minister Woods. Labour Party Politician with a focus on what a lot of us love to hate- Housing and Urban Development. If you want to own a house in the future then this is for you. And even if you don’t think you’re one for reading the Housing Market you’d be somewhat surprised by what this interview entails. This interview is for everyone so take a peak. 

 

James Shaw and the Greens constantly refer to my generation as the Rental

Generation. Is that Fair?

 

That’s not a term I would use. We know that there are many people who

would prefer to be buying their own home rather than renting, and how tough

it is for people, especially young people, to buy their first home. This is not a

problem that started recently. When we came into Government we inherited a

housing crisis where hardly any affordable housing had been built in the

preceding decade. So we’ve now got a situation where there is lots of demand

and not enough supply. Since we came into Government we’ve been working

on this issue, by increasing the supply of affordable housing – both through

KiwiBuild homes that are capped at affordable rates and encouraging new

supply through investment in infrastructure improvements for three waters

(drinking water/storm water/sewerage) and roading. Our commitment to the

biggest new public housing build programme in twenty years, with over 18,000

homes on track to be delivered by 2024 is playing a big part in this through our

Large Scale Projects. We’ve also got programmes to support people get on to

the housing ladder such as First Home Loans and Grants, and the Progressive

Home Ownership scheme that will help get between 1500 and 4,000 families

into affordable homes.

A fundamental belief of this Government is that every New Zealander should

be able to live in warm, dry, secure housing whether they are homeowners or

rent a home.

 

Is homeownership still relevant for Gen Z?

 

Absolutely, but we know it’s difficult, particularly following the dramatic surge

in prices in recent months. That was a big surprise as forecasts were predicting

the opposite as we were facing down COVID-19. So the economy has done a

lot better than we were expecting – because we all did so well with keeping

COVID contained. While that’s fantastic, the fact is we’re in a situation where

low interest rates has encouraged people to buy more houses, a lot of them

investors. So in recent months we’ve been reviewing how we can cool the

housing market by lowering demand from speculators who are adding more

fuel to the market. That’s why we are focussed on how we can enable the

building of more affordable homes and are preparing to crack down on

speculation on the housing market.

 

How are the changes to tenancy contracts going to impact students?

 

Our Government’s promise to rental reforms came into effect in February and

are there better reflect a modern-day rental environment. A key focus was to

improve security of tenure for tenants – including students – in a private rental

situation. Now fixed-term tenancies will convert to periodic tenancies upon

expiry, unless the landlord and tenant agree otherwise, the tenant gives

notice, or the landlord gives notice using one of the justified grounds. This

means students can stay in their tenancies the following year after their fixed-

term ends, if they want to. Tenants can also assign their tenancies so if

students need to leave a tenancy early, for example to undertake placement or

if they finish their course mid-year, they can avoid situations where they end

up paying double rent for a period of time. There are also new rules to ensure

tenants can make minor, reasonable, changes to their accommodation without

the risk of losing their bond, as well as further protections for tenants who are

successful at the Tenancy Tribunal over any tenancy matters, to get name

suppression. This means students can feel confident they won’t get blacklisted

by landlords when they’ve been successful in enforcing their rights

 

In simple terms, can you explain the present housing crisis and what that

means for young adults wanting to buy their first home?

 

There simply haven’t been enough houses being built at the affordable end of

the market for a couple of decades, particularly following the Global Financial

Crisis in 2008/9. So there is a shortage of housing but a lot of demand. That’s

been compounded in the last year or so, by very low interest rates and a host

of other factors which have made housing an even more attractive option for

investors. The prediction by economists last year as we were in the midst of

managing the response to COVID-19 suggested house prices were going to

take about a ten percent fall, so the upswing in house prices has been a real

surprise. But we’ve been looking at closely at what we can do to cool the

housing market and make it easier for people to buy their first home. So you’ll

be seeing announcements in the coming months about how we deal with the

demand side and how we can encourage more home building; for home

ownership as well as rentals to address that part of the market too. There’s no

doubt about it, it’s very tough to get into the market at the moment without a

decent deposit and we do have schemes available such as First Home Loans,

First Home Grants, KiwiBuild and the Progressive Home Ownership scheme

which can all assist people into home ownership.

 

Last year the median house price in Auckland reached $1 million along with

every region in NewZealand having record high medians. How are you tackling the high prices

and demand for

Housing?

 

As I’ve mentioned, we will be making announcements on what we will do to

tackle investor demand for housing and how we can encourage more supply of

affordable housing. But since we came into Government we have implemented

a massive programme of work on housing, apart from the big public housing

programme. This includes making major changes to the way councils consider

developments (National Policy Statement – Urban Development) that mean

more houses can be built and how they fund infrastructure for new housing.

We also did a review of the Resource Management Act and have committed to

its repeal with new legislation coming in to tackle the roadblocks to building

more housing, while ensuring we’re still looking after the environment.

Infrastructure is a really over-looked factor when it comes to building new

housing; it includes roading, accessibility to public transport and the all-

important ‘three waters’ (drinking water, storm water and sewerage) which

you need to put up new housing or intensify housing in existing suburbs. We

have been making a lot of effort and funding to improve infrastructure and our

public housing programme is key to this. As part of our commitment to deliver

over 18,000 new public and transitional housing places by 2024, we are

investing in infrastructure to support this and enable affordable and market

housing to be built. You can see good examples of this in our Large Scale

Projects which is transforming Auckland suburbs like Northcote, Mt Roskill and

Mangere among others, to host a range of housing to meet both public and

private housing needs.

 

Do you think the ‘New Zealand Dream’ of a quarter acre and a white picket

fence is still a relevant one? Is it a healthy dream to have?

 

I know that is still a dream for some people, but as you’d expect people have

to go further out from city and urban centres to get this type of property. A lot

of people are also keen to live in urban environments where they are closer to

work, school, public transport, places to bike and the amenities and lifestyle

you get in cities. Our demographic is changing and what people want from

their immediate living environment is changing too.

How do you take speculation out of the market?

We have been reviewing a range of advice on this and will have more to say on

this soon, but a key part of it is to ensure that the playing field is tilted less in

favour of speculators, so first home buyers get a good chance at getting into a

home.

 

Do you think that high-income families who own two or more (holiday)

houses is an ethical issue?

 

It’s not for me to say how people should spend their money. If holiday houses

are sitting empty in areas where there is a high need for that type of housing,

people could argue that is unethical. We simply need more houses in areas

where people want to live and work and – apart from Queenstown – that’s

probably unlikely to be in holiday hotspots where there might be holiday

homes that are empty for a period of the year.

 

Why is homeownership a racial, class, and now young adult issue?

 

At the heart of all of this is a housing affordability issue. We came into

Government knowing there is a housing crisis and we are determined to fix it.

We’ve laid a lot of important groundwork and that will bear fruit in the next

couple of years and beyond, but there is still more work to do and we will do

whatever we can to increase the supply of housing, whether that’s for home

ownership or for ensuring rental accommodation is more affordable. A key

priority for this Government has always been to ensure that New Zealanders

have access to warm, dry, secure housing whether they own their homes or

rent them.

 

The rhetoric from this government has always been geared toward lifting

people out of poverty and into homes, is that a reasonable attitude to have

with the current housing shortage and inflated market?

 

As I’ve outlined, we’re looking at how to increase the supply of affordable

housing and reduce speculative demand, and will have more to say soon. We

made good strides in addressing inequality in our first term, including the

Families Package which increased the incomes of low to middle-income

families, and increases to the minimum wage which goes up to $20 this year.

It’s a key priority for our Government to further our work in this area, and we

Is it really harder to purchase a house now than it was 20-30 years ago?

 

It’s difficult to make direct comparisons as there have always been some

people and groups who find it difficult to purchase a home because of all the

factors involved like housing supply and prices, household incomes, the

broader cost of living, inflation rates, interest rates and deposit requirements

etc. But we know i can be tougher for first home buyers and that’s why we’ve

got a range of programmes to help such as First Home Grants and Loans,

KiwiBuild and the Progressive Home Ownership scheme.

 

Is the decision to reintroduce LVR’s the end of opportunity for first home

buyers?

 

Not at all. The fact that LVR restrictions are higher for investors than owner

occupiers can open opportunities for first home buyers.  There are also two

important exemptions to LVR requirements which could also help first home

buyers – for those who qualify for First Home Loans (which are targeted at first

home buyers on lower incomes) and for new build properties (which increase

the supply of housing overall) and KiwiBuild properties which are targeted at

first home buyers.

 

In the USA they have economic controls that allow people to fix mortgages at

low interest rates for the entire term of the loan, is this market manipulation

something the Government would consider legislating?

 

Treasury has not investigated this as a possibility.

 

What are your opinions on Landlords monopolising multiple homes, does

that hinder the chances for first-time buyers?

 

Private landlords serve a really important role in providing rental

accommodation and most operate with integrity, charging reasonable rents.

What we need is a lot more houses being built in the affordable range of the

market, as well as more options for rentals. There are significant opportunities

to get landlords and investors to look at getting into the Build-to-Rent market,

which would add to supply of housing

 

Why did the government decide to give up on a capital gains tax?

 

Labour campaigned on this issue numerous times and after we couldn’t get it

through Cabinet last term, the Prime Minister made a commitment that it

would not be introduced.

 

How has Covid impacted the housing market?

 

In unexpected ways as I’ve discussed with the estimates that the market would

fall because of the economic impact we were bracing for that didn’t arrive.

 

Is the government considering a National housing solar panel scheme to

reduce costs of electricity and create a shared grid?

 

We are not looking at this but we are trialling two programmes to put solar

panels on both Maori and public housing. Applications are already in for the

programme for Maori housing and we’ll be rolling out the public housing

scheme soon. These will give us a lot more information about how solar panels

might make a difference to people’s electricity bills.

Finally, housing and tenancy are big issues for the student market but

successive governments have tended to look at them in isolation. 

 

The reality is that when they are compounded withstudent loans, a lack of student

allowance support, increased pressure on the postgrad student,a compressed

job market that has been flooded with over-qualified people, the increasing

strain on mental wellbeing (particularly at University), and the very real

chance that one day soon with fossil fuels and oil spills Hamilton will be

beachfront property what can we take away here?

 

These are very big questions, but what you can take away is that this

Government is determined to fix the housing crisis that was ignored for so long

under the previous government. We fundamentally believe every New

Zealander should have a warm, safe, secure home whether they are home

owners or renters and there is a massive programme of work going on in

changing the structural problems with not enough land, poor infrastructure

and planning rules that have favoured the status quo. We’ve made a really

good start, we’ve got new initiatives coming, but it will take more time. We’ve

secured better rights for tenants, more income for beneficiaries, we’re raising

the minimum wage and we are taking action on climate change with a plan to

reduce emissions and a commitment to decarbonising transport and industry

and having a 100% renewable energy electricity grid.

 

What is the message from the government that will restore our faith in

humanity and leave us with the notion that it will actually get better?

 

The fact that we are working on fixing what’s broken in terms of providing

more housing, investment in health and education to address the neglect in

those systems, that we look after our most vulnerable, while also making sure

we are as low-emissions as possible. I think COVID showed us what kind of

country we are when we all pull together to keep each other safe, and that’s

given me a lot of hope about what kind of place we all want New Zealand to