TriCountry Housing Conference

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Tri-Country Housing Conference

• Housing New Zealand Corporation
• Julian Silver

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Presentation structure

• New Zealand context
• The provision of social housing in New Zealand
• The functions of Housing New Zealand Corporation
• Demand and supply trends
• Policy issues and key developments

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New Zealand Context

• Population 4.28 million (1.3 million in
  Auckland)
• Age median age 35.9 years
• Ethnicity European 67.6, Maori 14.6,
• Pacific Peoples 6.6, Asian 9.2, other 0.9
• Urban Rural Profile 72 in main urban areas,
• 1 in highly remote rural areas
• Unemployment 3.9 of labour force
• Labour force participation rate 68.6
• Average wage NZ 910.08 per week
• Median Family Income from all sources
  
  NZ 59,000 per annum

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New Zealand Context

• Homeownership Homeownership rates fell from 74
  to 67 between 1991 and 2006
• Disparities in Homeownership Maori and Pacific
  Peoples continue to have much lower levels of
  homeownership than European (45.2 of Maori and
  36.7 of Pacific Peoples own their own homes)
• Household expenditure In 2007, 26 of households
  spent over 30 of their disposable income on
  housing costs
• Household crowding 10 of households in 2006
  required one or more additional bedrooms
• Sector of the landlordPrivate person, trust or
  business 82, Local Authority or City Council 3,
  Housing New Zealand Corporation 13.6 and other
  private sector 1.6
• Size of social housing sector 5.5 of total
  stock

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Government intervention in the housing market

• Income-Related Rents Low income tenants in HNZC
  properties pay no more than 25 of their income
  on rent. At present, 60,000 Corporation tenants
  pay Income Related Rents
• Accommodation SupplementAssists low income
  households in private rental or homeownership
  with accommodation costs. The supplement provides
  a subsidy of 70 on accommodation costs to New
  Zealand households that meet certain critera, and
  whose accomodation costs exceed an entry
  threshold
• Small scale HNZC programmes that
• -Assist households into homeownership including
  Shared Equity, Welcome Home Loans and Kiwisaver
  home deposit subsidy
• -Support providers of social and high needs
  housing via the Housing Innovation Fund and
  Community Group Housing
• Tax system implicit assistance for homeowners
  and providers of rental housing through
  non-taxation of capital gains

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The Housing New Zealand Corporation

• HNZC is New Zealands largest landlord owning
  69,000 properties, 44 located in Auckland
• The Corporations underlying purpose is to
  provide access to decent homes, and to help New
  Zealanders manage their own circumstances and
  contribute to community life
• HNZC is a Crown Entity. The Corporation is
  responsible to the Minister of Housing and a
  Board of eight members is responsible for the
  overall governance and management of the
  organisation. The Chief Executive is responsible
  to the board for the efficient and effective
  operation of the Corporation

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Principal functions of HNZC

• Providing state rental housing to families and
  people in need of housing
• Building the capacitiy of individuals and
  communities to manage their own housing
• Advising the government on housing sector policy
  and identifying issues and trends in the housing
  market
• Providing access to a variety of housing
  assistance initiatives targeted at reducing
  housing inequalities
• Establishing partnerships with community,
  business and local government to achieve the
  governments vision for housing

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Demand-side trends

• Population Growth Increase of 8.4 between
  2001-2006
• Increase in net migration and decline in the
  number of departures
• Changes in household size and composition
• Up until recently, growth in real incomes, low
  interest rates, increasing availability of credit
  and rising investor interest
• A period of historically low unemployment, but
  forecast to continue to increase
• New Zealanders preference for homeownership
• A tax system that has encouraged investors into
  housing and has placed further pressure on house
  prices

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Supply-side trends

• Escalating house prices have contributed to a
  sharp decline in homeownership affordability.
  Real house prices increased by 80 between
  2002-2007
• A surge in demand lifted house prices and while
  the number of occupied dwellings has risen in
  line with population, the cost of supplying new
  dwellings has increased sharply
• First time buyers and modest incomes households
  are feeling the burden of a decrease in the
  number of entry level homes being built

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Drivers of the cost of housing

• Three components of total cost the cost of land,
  building and infrastructure

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Costs of building a house

• Comparison of the cost of section and building
  
  
  Construction costs
• costs to median house prices
• (building cost based on 145 sq metre since 1999)

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Impact on costs and tenure choice

• Growing concentrations of low-income households
  in areas where housing is cheap, but socially
  vulnerable
• Shift in the types of housing required indicating
  changes in average household structures
• Rising housing stress for the growing group of
  private renters not eligible for HNZC assistance

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Impact on social outcomes and on community
housing

• Health outcomes Increasingly large numbers of
  houses are no longer providing the standard of
  housing that society has come to expect as a
  basic requirement
• Rising wealth inequalities those households that
  do not own property have not experienced large
  increases in wealth
• Standard of living in retirement Homeownership
  associated with higher standard of living in
  retirement. People who own their own homes
  generally have lower accommodation costs in
  retirement
• Community outcomes Concentrations of
  modest-income households have encouraged
  polarisation of deprived areas
• Community housing previous housing policies
  tailored to suit prosperous economic conditions
  have meant community based housing is still
  largely undeveloped

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Massey Affordability Index
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The intermediate market

• The intermediate market refers to the growing
  group of New Zealanders who can work, but who
  cant afford to buy a house
• Between 1996-2006 the number of households in the
  intermediate market is estimated to have
  increased by 117,000
• Key groups in the private rental market

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Policy Response

• The House Price Units report House Price
  increases and Housing in New Zealand (February
  2008) identified a range of policy options
  designed to increase choice, reduce costs and
  increase the supply of affordable housing
• Homeownership assistance
• Shared equity A form of homeownership assistance
  where homebuyers can apply for a loan to bridge
  the gap between the maximum amount they can
  borrow and the amount they need to buy a
  house.The scheme aims to improve homeownership
  affordability for modest-income households living
  in moderate to high priced locations
• KiwiSaver A government sponsored work-based
  savings initiative that aims to increase New
  Zealanders level of savings and assets. The
  scheme includes a deposit subsidy for first time
  homebuyers that assists people in buying and
  paying for their home
• Welcome Home Loan provides insurance to lenders
  who offer low or no deposit home loans to first
  time buyers

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• Reducing the compliance costs of building
• Improving the efficiency and regulatory process
  of housing construction through the application
  of smart technology
• Facilitating the supply of modest homes by
  simplifying consent and product certification
  processes
• Uncovering suitable land for development by
  undertaking a land audit of publicly owned land
• Establishing a land supply survey that more
  accurately measures the size of land available
  for development/redevelopment

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• Development opportunities
• Investigating a range of tools to encourage
  sustainable urban development, including urban
  development organisations
• Continuing Crown led developments incorporating
  mixed communities and private market, affordable
  and social housing options

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• Increasing the supply of affordable homes
• Affordable Housing Enabling Territorial
  Authorities Act 2008 Increases the supply of
  affordable housing and improves tenure choices by
  enabling territorial authorities to require
  developers to allocate a proportion of their
  developments to affordable housing
• Investigating the role of institutional
  investment and not-for-profit providers in
  growing housing choice and affordability
• Encouraging the benefits associated with
  homeownership through security of tenure

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The Corporations priorities

• The Corporations primary role is to ensure the
  provision of decent homes to the people most in
  need of housing assistance
• Its secondary role is to assist the governments
  provision of affordable housing through lowering
  supply costs and better utilsing available land
• The emphasis of policy work has been on
  intervening at the level of the tenant and the
  dwelling, however there is now an increasing
  focus on community intervention
• In accordance with the House Price Units work
  programme and the Corporations role to assist
  affordability, policy work has shifted towards
  more supply side initiatives designed to provide
  affordable and quality housing, strengthen social
  frameworks and improve tenure choices for all New
  Zealanders

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Contact details

• My email Julian.Silver_at_hnzc.co.nz
• HNZC website www.hnzc.co.nz
• DPMC House Price Units report
  www.dpmc.govt.nz/dpmc/publications/hpr-report