Housing Minister Megan Woods fires up when quizzed on lack of property shortage figures

Housing Minister Megan Woods fired up in Parliament when quizzed by National on why the Government can't say exactly how many properties New Zealand is short of. 

When Dr Woods' predecessor Phil Twyford became Housing Minister in 2017, he was given figures by officials showing there was a property shortage of 71,194, with 44,738 houses needed in Auckland alone. 

National's housing spokesperson Nicola Willis asked Dr Woods in Parliament why the Government can't say how many properties New Zealand is short of today, when it was able to in 2017. 

Dr Woods said there's "a very simple answer" for that. 

"The figure that appeared in the 2017 briefing to the then incoming minister was an extrapolation of the 45,000 dwelling shortfall that had been provided to the previous [National-led] Government before the change of Government." 

By extrapolation, Dr Woods meant it was an estimate by officials based on the assumption that existing trends would continue. 

"Under the previous National Government there was no formalised forecasting, but actually officials did start doing some modelling to try and convince that previous Government that we did indeed have a housing crisis."

Dr Woods said the advice she's received on the current gap between housing supply and demand in New Zealand is anywhere between 28,000 and 200,000 homes, based on a range of estimates by banks and property experts.

"Rather than just using a crude national figure, the advice that I have received is, actually, we look more at place-based assessment," she said. 

"We have already undertaken these in Rotorua, Gisborne, Northland, and Hastings so we can understand not only the housing shortfall in a given geographical location but we can also understand what the shortfall is in terms of rental properties, what the shortfall is in terms of homeownership, what the shortfall might be in terms of public housing.

"What the information tells us is actually what is required in a given place."

Housing Minister Megan Woods.
Housing Minister Megan Woods. Photo credit: Parliament TV

Dr Woods acknowledged there is a significant housing shortage in New Zealand, which she attributed to the 8.6 percent annual increase in rents across the whole country.

"We know housing supply continues to be an issue, and that's why we're looking at a range of additional measures, including in the rental market, such as via build-to-rent, and we'll have more to say about all of this in the very near future."

What is the Government going to do?

The Government is expected to announce housing policies within the next month aimed at increasing supply, after receiving advice from Treasury and the Reserve Bank about how to cool housing demand. 

"We're still working through that," Finance Minister Grant Robertson said on Thursday. "There's a lot of interactions, obviously things you do on the demand side can affect the supply side, and vice versa. We'll keep working on it." 

Robertson hasn't ruled out making tax tweaks to ease demand. Prime Minister Jacinda Ardern has already ruled out a capital gains tax as long as she's leader, but changes could be made to the bright-line test - the tax on investment properties. 

The bright-line test means if a property is sold within five years, capital gains are taxed at the owner's income tax rate. The family home is exempt. There is speculation it could be extended beyond five years. 

National's housing spokesperson Nicola Willis.
National's housing spokesperson Nicola Willis. Photo credit: Parliament TV

Real Estate Institute data released earlier this week shows median house prices across New Zealand increased by 19.3 percent from $612,000 in January 2020 to $730,300 in January 2021. Auckland's median house price is now $1 million.

Robertson wrote to the Reserve Bank in November seeking advice on how to help stabilise house prices with interest rates at record lows. The Reserve Bank stressed the need for a single agency to coordinate the Government's response to rising house prices. 

The Reserve Bank has since announced plans to reinstate tightened loan-to-value (LVR) restrictions from March, meaning property investors will have to stump up a 30 percent deposit for a house, with first-home buyers needing 20 percent. 

The Government could also tweak KiwiBuild, which has already gone through various changes, since it failed spectacularly to deliver on its targets. The underwriting scheme still exists, but KiwiBuild has been expanded to support progressive home ownership too.

So far, 788 KiwiBuild houses have been built and 855 are under construction.