About us
Part 1: Key housing issues in New Zealand
The key emerging issues for New Zealand housing can be broadly summarised as limited housing supply and declining housing affordability and quality. Addressing these issues requires a coordinated approach from a number of government agencies. The Corporation is a key provider of social housing but it cannot do it alone.
The key housing issues in New Zealand, and how the Corporation aims to address them over the next three to five years, are discussed below.
Limited housing supply
The growing, ageing and increasingly diverse New Zealand population will require more housing to meet current and future needs. In Auckland alone, projected population increases indicate the need for 80 percent more housing in the region within the next 25 years.
How the Corporation aims to address this issue
The Corporation currently houses 195,250 people and has built, bought or leased 7,400 extra homes since 1999. The Corporation will continue to increase its housing stock to meet housing needs, and consider how to use existing housing more effectively. The traditional three-bedroom state house is no longer appropriate for many applicants on the waiting list. The Corporation is reconfiguring its portfolio to better meet the needs of smaller and larger families who require state housing.
Increased housing demand and reduced land availability, particularly in Auckland, has prompted changes to the way the Corporation works. The Corporation now takes a more active property development role to secure land and/or redevelop appropriate housing at a reasonable cost to meet demand. Development of higher density housing is one way the Corporation is responding to changes in the types of housing required. The Corporation will consider the social, economic and environmental sustainability of these housing types.
The Corporation works strategically with a broad range of social housing providers, including local authorities, to supply social housing. This ensures existing social housing is retained to strengthen the community. The social housing sector is small compared to the wider housing sector, as shown in Figure 1. The Corporation, local government and community-based organisations are the main providers of social housing services in New Zealand.
Figure 1: The New Zealand housing sector based on Statistics New Zealand Census 2006
household and dwelling survey results
Declining housing affordability
There are two aspects to declining housing affordability: rental affordability and home ownership affordability. Affordability of home ownership is influenced by a combination of factors including household income, household debt levels, residential property values and the cost of housing finance. The main rental affordability factor is the rent-to-income ratio.
Increases in house prices over the past five years have outpaced rises in average household income. This makes housing unaffordable for many people, particularly first-home buyers in cities such as Auckland, Wellington and Queenstown. Because fewer people are able to buy a home, they rely on the private rental market and social housing to provide suitable accommodation.
Individual investors with short-term goals dominate the private rental market in New Zealand. The absence of larger institutional investors limits the supply of affordable and secure housing for long-term tenants. Low- to modest-income, long-term renting households will be faced with variable housing costs and long-term housing insecurity. This has implications for social and health outcomes such as security in old age, the ability of elderly people to stay in their homes, and retirement income.
The Government provides assistance for low- to modest-income earners to meet housing costs in the private sector through the Accommodation Supplement. This is administered by Work and Income. Tenants on low incomes pay no more than 25 percent of their income in rent up to the low-income threshold. Tenants with incomes exceeding the low-income threshold will pay progressively more than 25 percent of their income in rent up to the maximum of market rent for the property.
How the Corporation aims to address this issue
The Corporation will provide strategic and operational policy advice to support the Government's affordable housing agenda including home ownership and lending policy options and advice on supply of affordable housing.
The Corporation also has a range of current and planned initiatives to help aspiring home owners buy their first home. These include a number of government-funded initiatives such as the Welcome Home Loan scheme and the Shared Equity pilot scheme. These initiatives aim to help increase the supply of affordable housing. The Corporation also offers an education programme to provide people with the skills and knowledge they need to buy and own their first home.
The Shared Equity pilot scheme is specifically targeted to assist people who have saved a deposit for a home but cannot purchase their first home due to increasing house prices. The Government will provide an interest-free loan on a house of 5 to 30 percent of its value. The pilot is limited to those with a household income of between $55,000 and $85,000 who meet certain criteria, and is restricted to regions with the highest house prices: Auckland, Wellington, Nelson, Christchurch and Queenstown. The Corporation also provides the Welcome Home Loan scheme, a product providing insurance to lenders who offer low- or no-deposit home loans to first-home buyers.
Another way to influence the price and cost of housing is through creating opportunities to develop sustainable, mixed communities in areas of high social need. Through the integrated urban development projects in Hobsonville, Tamaki, Weymouth and Papakura, the Corporation is aiming to provide affordable homes for first-home buyers and will create a mix of tenure types including state and private housing.
Quality of the Corporation's housing
The nature of housing demand is changing. New Zealand's increasingly diverse population will see more people needing houses of the right kind and quality to support the changing nature of household structures and housing needs. Understanding future demand as well as reconfiguring the housing portfolio is an issue for the Corporation. There is an expectation that houses are safe and healthy places to live.
The state housing portfolio is ageing. To meet present and future needs, ongoing maintenance and modernisation of the Corporation's portfolio is necessary.
How the Corporation aims to address this issue
Investing in good quality housing provides communities with a range of benefits including improving social cohesion, safety and security. The Corporation needs to balance its investment within available budgets to ensure the right mix of acquisitions, maintenance, modernisations and reconfiguration of existing houses to meet changing needs.
Modernisation and maintaining the houses to an adequate standard are immediate priorities. This will improve the energy efficiency of housing and reduce pressure on natural resources and the environment.
The Corporation will help improve social, economic and environmental sustainability by installing energy-efficient features to improve the heating and ventilation of homes through its energy efficiency programme. It will also help to reduce the risk of infectious diseases associated with crowding, and improve housing conditions in areas of high social need through its Healthy Housing programme.
