On the margins of our housing market

By Nicola Eccleton

Murdoch_RemovalMen

Image: Sharon Murdoch (Twitter: @domesticanimal) “The Removal Men”

The people I encounter are on the margins of our housing market. Usually single, usually with children, usually with very little hope of owning their own home in the short to medium-term, they rely on being able to rent a home from private landlords in a post-earthquake Christchurch in which public housing is a pipe dream. Private landlords who have the choice to rent to young professionals on a good wage or a mother with three preschool children, a limited income and a chequered credit history will, nine times out of ten, choose the professionals. When the mother is finally offered a house with mouldy curtains and mould on the walls, she thanks her lucky stars and pays the extortionate rent knowing that she can get foodbank parcels or Work and Income vouchers for food. This is the market in action.

We know it’s not working. The government spends millions propping up demand through subsidies (both directly e.g. Accommodation Supplement, and indirectly e.g. Working for Families), as well as entering the supply side in the form of public housing, yet we remain hell bent on maintaining the market as our primary mechanism for providing houses. Property remains an attractive investment for those wishing to make a quick buck by providing someone a home, with less requirement to provide a decent product than the local restaurant. We invest heavily in a system that is not providing adequate returns.

The narrative needs to be overhauled as much as the policies do. “Government can’t touch this because people will lose their equity” needs to read “Government is already touching this” and “You over-extended in a market you knew was over-valued and it is not the role of government to guarantee your risk.” This sounds really harsh. Maybe it is. Yes I am a homeowner. But the current narrative is based on a market that works only one way; it should be left to its own devices because it is the best mechanism for determining value, however we need to ensure values don’t slip. Landlords are not the same as home owners – the difference between requiring a house to live in and requiring a house to provide a return, is a key driver of price increases.

I’m a sucker for some genuine turn-it-on-its-head type thinking; expanding and exploring as many different ways of doing things as we can. Can we learn from Singapore, minus the benevolent dictatorship? What can we learn from the Netherlands where in some cities, a form of social housing comprises more than half of the total accommodation? We have a fairly successful model of parallel provision in healthcare – maybe this could offer some insight into how Government and the private sector provides both rental properties and properties for sale? This is not a specialty area for me, but from what I know about policy-making, this has all been discussed before. The trouble is, we haven’t figured it out yet. Many successive governments have failed us with their substandard policies. Labour’s Kiwibuild is closer to the type of re-think that we need and was, in my opinion, the standout policy from Labour’s last campaign.

When we require the existing level of state subsidies, we should stop pretending that the property ‘market’ in its current form, is not just an elaborate charade. When our most vulnerable are suffering at the margins, we should stop stalling and start being genuine about our commitment to the solution.

 

 

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