Call for urgent review of accommodation support as rents contribute to mega inflation

As rental prices rise beyond people's ability to pay, an urgent review of social housing support is needed, the Salvation Army says.

Stats NZ released its quarterly Consumer Price Index for the three months to June today, revealing inflation had hit 7.3 percent, the highest figure since 1990.

The increase was largely driven by rising rents and construction costs, helping to make the current cost-of-living crisis even worse.

Salvation Army social policy and parliamentary unit director Ian Hutson told Checkpoint the Ministry of Social Development's accommodation supplement needed to double in many regions to meet spiralling housing costs.

He said any review by the Government would need to take into account significant variances in crippling cost-of-living and rental increases across regions throughout the country.

It was particularly difficult for those in transitional housing as rental prices were out of reach, Hutson added.

Accommodation supplement payments were based on rent data about six years out of date, and people in its transitional housing programme were finding it increasingly hard to get into long-term rentals, he said.

"They just can't afford the rental costs," he said.

"A lot of the people that come to us for other reasons such as food, or we've got financial mentoring programmes as well, and sometimes people come there also because rent has become such a big part of what people's budgets are. And that's shown up in the figures that came out today."

Some of the people who used the services had lost work, or did not have access to social security benefits, he said.

"The people that come into our transitional housing, often we're able to get them sorted and everything, but then it's quite hard to get them into the next level.

"When you look at how many people are waiting on the Housing Register, and the gap between what people can afford and social housing, and the private market, is huge."

The government's free or subsidised transport initiatives, subsidies in petrol costs, winter energy payments and cost-of-living payments were helpful, but more focused help was required, Hutson said.

"One of the things that we've been advocating really strongly for is the accommodation supplement to be updated. It is now based on rents that are about six years out of date," he said.

"In some places the rents have gone up double ... so now people are having their income completely swallowed up by the housing costs. The good thing about the accommodation supplement is that it's means tested, so it means really the people that need it, get it, not just everybody in a general kind of way."

Regional differences in costs had to be factored in when increasing government help because people were being impacted in different ways, he said.

In some regions, costs had doubled within the past six years, which meant support should at least double too.

"That might not be seen as feasible, but it does need to be increased and done in a regional way, because people are being impacted significantly differently in the different areas.

"Take Queenstown as an example. I know that the council there has been really trying hard to address this boundary set about 13 years ago - on one side of it people are getting extremely different and less accommodation supplement support. And yet the rents now are more or less the same across an artificial line."

Construction costs through the roof

Meanwhile, house construction costs are continuing through the roof.

Today's inflation figures revealed the price of a new build home went up by 18 percent from the same time last year.

Registered Master Builders chief executive David Kelly told Checkpoint the cost of delay was a key factor in the inflation of construction prices.

"There are a whole lot of delays in the system, whether it's products, or consenting, or customers trying to get approval for loans," he said.

Prices went up during the time projects were delayed, while developers did not have the cashflow but still had to cover those overheads, Kelly told said.

He also said New Zealand was not innovative enough with building.

"I don't think that we're particularly productive as a sector, and I put that in both residential and commercial.

"We don't standardise to the same degree that many other countries do. Partly that's an issue of size of the market. But traditionally, people tend to want to customise the home so we don't have a lot of standardisation."