Government acts to make housing more affordable
Helping more New Zealanders to buy their own home is not just about making the Kiwi dream of owning a quarter acre paradise more achievable, it is also about improving their wealth and prosperity. That is why the Government’s announcement that it plans to tackle housing affordability should be welcomed. Although I’m not entirely up to date on the research, it seems to me the proposal is a good idea.
In response to the Productivity Commission’s inquiry into the issue earlier in the year, the Government has adopted the main thrust of the Commission’s recommendations. Land supply will be increased and it will become easier for more new houses to be built by streamlining regulation, such as by reducing delays for developers caused by the Resource Management Act.
That should lower the cost of building a house, and therefore make housing cheaper.
This is important because when people own property, it gives them an asset which grants them a degree of independence and provides a source of wealth. For example, some households which current rely on state housing for a place to live might not need a state house if it easier to buy their own home. Owning a home which rises in value also increases a household’s wealth which, over the course of a lifetime, it may draw on, by selling their home and using the proceeds to provide for their own needs or to grant an inheritance to others. Reducing house prices should also reduce New Zealanders’ current high levels of indebtedness, as they will not need to borrow as much money. They will also not need to spend as much of their income paying off their mortgages, leaving them with more money to invest, save or spend on more productive activities.
Some wonder whether the Government’s plan is too timid or whether local authorities will cooperate to free up land and reduce red tape. If done properly, the moves ought to make housing more affordable could be a part of improving New Zealand’s productivity and prosperity.