Kainga Ora's modular development at the Great North Rd/ Point Chevalier Rd intersection. Photo / Jason Oxenham
Kainga Ora's modular development at the Great North Rd/ Point Chevalier Rd intersection. Photo / Jason Oxenham
Opinion by Otago University Associate Professor Anaru Eketone
OPINION:
A few years ago I started to get despondent at the emerging housing crisis.
As a social or community worker, whatever problem you are helping others with, it is always intensely magnified when a family is struggling with housing.
It can happen to vulnerable people when their rent skyrockets, or they lose their employment, or the landlord wants to sell the house. Bringing any form of housing insecurity into the mix complicates things. Moving is expensive and may seem insurmountable if you are elderly, disabled or have ill health.
If you have to move you may have to leave behind schools and support systems such as friends and family. If you move somewhere cheaper there may be reasons why it is cheaper, such as high crime, poor public transport, isolation etc. This can make even the prospect of having to leave your home in this rental and housing market incredibly stressful. That is if you can even find a house.
This housing crisis has been a long time in the making.
In the early 1990s, I was interviewed on an Auckland radio station with Campbell Roberts from the Salvation Army. He was talking about the terrible housing crisis in South Auckland then.
I had been a youth worker there for nine years and I was thinking “I haven’t seen that, what on earth is he going on about”. Then it dawned on me, that because I was so accustomed to people living in garages, I thought that is what garages were for. At the time, we had also just converted the back of our garage and had four teenagers sleeping there.
A housing crisis is really a financial crisis, because the financially secure can nearly always find somewhere relatively comfortable to live. Not so for those on low incomes or are beneficiaries and this is exacerbated further for those with young families, the elderly, disabled, or those facing long-term or terminal illness. It can be stressful and discouraging.
It's no coincidence that the rise in gang numbers is at the same time as a housing crisis.
It can be no coincidence the numbers of gang members in New Zealand has gone up by two-thirds at the same time as the critical shortage in housing where money has become tight because of it.
I don’t think any young person grows up initially wanting to be a gang member. That only tends to happen once hope is driven out and gang life tragically becomes the only way they think they can make some of their dreams become a reality.
This housing crisis has become a bit of a boon for landlords. The lack of social and affordable housing means the market is booming for rentals with huge well-documented increases, with many people struggling to pay. Interestingly, the National Government’s plan is to lower rental costs using good old trickle-down economics, facetiously referred to by some as “pissing on the poor”.
The Government has announced a tax break for landlords on the interest they pay for mortgages that they “hope” will be passed on to tenants. Where are the Tui “yeah right” ads when you need them?
Prime Minister Christopher Luxon has stated “we’re delivering … relief to landlords. So they can put downward pressure on rents”.
When asked directly whether he would lower his rents he said “It won’t make any impact for me at all”. He said that he wouldn’t put his rentals down because his properties were mortgage free and the tax break was for those who could deduct interest on mortgages from their taxes.
This directly contradicted what he had just said about the purpose of the tax breaks, namely to create downward pressure on rents. That is, the whole rental market would be affected, not just those rental houses with mortgages.
So here he is admitting he expects the tax breaks will not actually create lower rents overall, because if they did, then he, too, would have to lower his rents to remain competitive.
Yes, there will be downward pressure on rents, but that pressure will be valiantly resisted. Luxon has no expectation of lowering his rents because I think he knows that these tax breaks will go straight into the vast majority of landlords pockets and why wouldn’t they.
The vast majority of landlords are not in the housing market as a social good, they are in the market to make money, and they must make an awful lot otherwise it would be in the bank earning a healthy 6 per cent interest.
As more landlords come onto the market, it will also increase house prices for first-time buyers. I hope this Government can come up with pragmatic solutions to the housing problem, because at the moment they seem more intent on putting their ideology first, rather than what is good for society.
Anaru Eketone is an associate professor in social and community work at the University of Otago.
