KEY POINTS:
The Government's newest ministers, Shane Jones and Maryan Street, have been assigned its toughest task - to bring house prices back within reach of average incomes. The task would be easier if they could tackle the tax attractions of multiple home-ownership but property investment gains remain a politically sacred cow. So the ministers have announced several more subtle ideas. None are proving straightforward.
Ms Street's Housing Affordability Bill gives local government the power to require developers to include a certain proportion of cheap houses in new subdivisions or pay levies to finance the provision of cheaper homes elsewhere. It would also allow councils to use carrots rather than sticks, offering reduced service levies or allowing more dense development in return for some cheaper houses.
But councils have taken one look at the bill and backed away. Local Government NZ says it knows of no council prepared to use the proposed powers. They would push up the price of non-subsidised homes, ratepayers would be helping to subsidise the cheap housing through the levy and design concessions, councils would need to vet applicants for the cheap homes and the councils fear costly legal disputes at every turn.
The Housing Minister's other scheme involves equity sharing between first home buyers and the state or a state-approved agency. The buyer would not own the house entirely and have to share any equity gained on its resale. It is hard to see how the part owner would graduate to complete home-ownership without a substantial change in personal or market circumstances.
Mr Jones, Building and Construction Minister, proposes to relax consent requirements. Construction companies could build an entire subdivision with a single consent rather than requiring a permit for each house, and home-owners would be able to do some renovations - shifting a window or extending a deck - without a permit.
The idea sounds reasonable, as reasonable as the contention some years ago that the construction industry no longer needed regulation to ensure buildings were watertight. The leaky homes disaster has proved otherwise. But Mr Jones' idea should not be dismissed on that score. Regulations are necessary only to protect buyers from defects and safety risks they could not otherwise detect. Visible renovations should be fairly easy to check.
And the idea of a single consent for group housing has much to recommend it. National's housing spokesman warns that it would produce unsightly developments of identical housing while the minister believes companies would use several different designs in any area. But homogenous housing developments are common in other countries and need not be ugly. A multiple consent could take the overall appearance into account.
None of these suggestions are likely to have more than a marginal influence on the housing market, though, and one or two could push prices higher by increasing demand. A more effective antidote to rising demand could be a tightening of tenancy contracts, which Mr Jones reportedly also favours. He says its purpose would be to give landlords and long-term renters greater security, including a right to remain when the house is sold. But the result could be to make rental housing a less attractive investment.
With the market in a lull, the moment is ripe for measures that might keep prices from eclipsing income growth again. Home-ownership has been a New Zealand birthright. We must ensure it remains so.
