Would more social housing be enough to make homes affordable?

By SciBooks 16/10/2013

by Peter EllisHOMES

REVIEW: Homes People Can Afford: how to improve housing in New Zealand
Edited by Sarah Bierre, Philippa Howden-Chapman & Lisa Early

Steele Roberts Aotearoa  (for New Zealand Centre for Sustainable Cities, University of Otago), 2013

RRP $30

Homes people can afford is a timely contribution to the debate on what is to be done about housing affordability in New Zealand. The book forms part of an informal series on related topics from the same publisher and is based on presentations and debate from a workshop held at the University of Otago, Wellington in June 2012. It is aimed at non-specialists with an interest in public policy in this area, and priced accordingly. Specialists will find little new, but it forms a well-written and readable, if intentionally slanted, introduction to the topic for others.

There are three sections, focusing respectively on the case for intervening in the market for affordable housing; economic and policy analysis; and partnerships.

The shared platform of the book is the need for more collective intervention in the housing market, with an emphasis on “social housing” (whether provided by the government, councils or non-government organisations) as the primary tool.  A good summary of the history of social housing by Ben Schrader early in the book sets the background for this, accurately observing that for over a century housing assistance “has taken two main forms: the construction of state rental houses (favoured by Labour-led governments) and the provision of housing subsidies for private housing (favoured by National-led governments).”  The last third of the book focuses on how various parties can cooperate in the provision of more social housing, even to the extent of detailing particular physical design innovations.

State-supplied housing in New Zealand is priced below market rates (something that the book strongly approves of) and the supply is restrained by fiscal and political rather than market factors.  As a result a queue has formed for access to this (relatively) desired good.  An accessible chapter on the health effects of access to state housing provides mostly-convincing evidence of the impact on those caught in the queue – people forced into overcrowding and the low quality private rental market.

One of the strongest chapters is Sarah Bierre’s on the private rental market.  She rightly takes the Productivity Commission to task for its conclusion in 2012 that there is nothing to be done about New Zealand’s low standards for private rental housing other than moving people out – to either state-provided housing or owning their own home.  Her analysis indicates at least three areas for action could be further considered: allowing tax deductibility or other incentives for investment in improvements to rental houses; updating housing standards (most of which are based on the Health Act 1956) so they are in line with social and health expectations; and strengthening the enforcement of standards:

“If a landlord fails to repair a property and the tenancy is terminated by a tribunal, the tribunal has no jurisdiction to follow up with the property or to refer the landlord to local authorities… the house can be put back on the market without repair”

Unfortunately other contributors conform to the common tenure-bias – expectation that home ownership is the only solution to such problems.  Declining home ownership is repeatedly cited as evidence of a crisis rather than as simply a factor to take into account.

The most surprising omission is more substantive engagement with the findings of the Productivity Commission’s report on Housing Affordability, released in April 2012, just two months before the workshop on which the book is based.  The Productivity Commission laid much of the blame for current challenges on planning restrictions, observing that if Councils’ rules simultaneously restrict both sprawl and densification, increasing land prices and housing shortages are inevitable. The economic and policy chapters of the book could have been materially improved by presenting arguments against this analysis, in support  of the approaches favoured by its contributors.

The New Zealand building industry, which lacks economies of scale and produces highly customised individual housing units, has low productivity when compared internationally.  Several contributors explore how innovations in design or management might be used to address this, although a firm conclusion cannot be reached on the evidence presented.

In summary – definitely worth a read.  Though there is an over-emphasis on socially-provided housing and insufficient consideration of other economic and policy levers, particularly those dismissed as “neo-liberal”, the book forms a good introduction to the issues, and a welcome step back and (necessarily brief) overview of historical context.

Peter Ellis is an applied statistician and manager working in the public sector. Most of his career has been in overseas aid including as Director of Program Evaluation for the Australian aid program, and Counsellor Development Cooperation in the Australian Embassy in Dili, Timor LesteThe views expressed here are his own and should in no way be associated with employers past or present.