Housing affordability – we all want to solve it

By Professor Graham Squires.

Last week the new Housing Minister Megan Woods sat on a panel with property industry experts to discuss the ever-thorny issue of housing affordability. At the event run by The Property Foundation, the Minister debated the topic with representatives from local government, the private sector and industry bodies.

Although each stakeholder group brought to the table their own perspective, there were some clear themes that everyone agreed on. While there’s a public perception we need to find a “silver bullet” for the problem, the expert commentators advocated a range of preferred solutions.

But if the debate was anything to go by, the solution is likely to involve regulators, funders, suppliers, consumers and wider society. Either way, discussion needs to turn away from single answers to the development of shared solutions over the longer term.

Property Council chief executive Leonie Freeman captured the sentiment of the debate with her reference to the need for a “collective impact” approach to housing, which has delivered housing solutions overseas and locally. This includes the People’s Project in Hamilton, which takes a collective impact approach by managing collaboration across the agencies dealing with homelessness.

Minister Woods, a historian by background, noted that in New Zealand’s post-war period, and into the 1960s when major housing supply initiatives were led by Government, these were not Ministry of Works delivered projects, but were achieved through private sector group builders. She said the Government shouldn’t work in isolation of the construction market.

Housing affordability is not a short-term issue

The panel agreed that housing affordability needs to be viewed as a medium to long-term issue, one that spans political and economic cycles and the tenure of decision makers within the agencies that are critical to delivery. Professor Chris Leishman from the University of Adelaide noted the current situation has developed over time and that a solution that does not involve a correction in house prices will require significant time to remedy. 

The Minister agreed, saying housing issues go well beyond the three-year political cycle and need to be treated with a non-partisan approach like other wider societal issues, including nuclear disarmament and the environment.

Bindi Norwell, chief executive of the Real Estate Institute NZ, outlined how her industry has seen a shift in the “changing psychology of housing”. She noted we have gone from traditional, detached housing to apartments, co-living and rental tenure, reflecting changes in demographics and person preferences. She said we need to consider what we want from our housing stock collectively, as a country, and respond to this change with data-driven innovation. This will need to be supported across the sector, for example rent-to-buy, fractional ownership, and the recent Westpac loans targeted at prefabricated housing.

The complex interaction of changing housing needs and society was reflected on by Professor Leishman. He raised the role of housing within society, our values, social justice, social cohesion and the impact of poorly planned housing growth on congestion, workforce mobility and how this can stifle growth for businesses. Ms Freeman noted that as we intensify and have more people living in less space, we need to ensure that we retain good communities.

Capability and capacity constraints

Steven Selwood, chief executive of Infrastructure NZ and Peter Cooney of CBC Builders both raised the need to ensure that capability and capacity constraints are resolved, such as the need for scale, material supply chains, skilled labour, land and infrastructure. None of these things can be remedied overnight, nor easily mandated by Government. 

Capacity and capability building requires the streamlining of regulation and regulators need to provide the frameworks that allow the industry to innovate and deliver on scale. Mr Selwood and Mr Cooney also said industry would also need to understand the medium to long-term intent of local and central government if it was to prudently invest to meet this demand.

Perhaps the most surprising outcome of the event was how it was framed as a debate, proceeded as a healthy discourse, and concluded with strong commonality. The group agreed about the need for a shared approach to developing and delivering a solution; that the solution needs to be integrated and long-term; and that innovation will be required to respond to changing needs.

So, where to from here? Perhaps turning this collective vision into a blueprint by continuing the open discussion. We next need to identify the innovative building and tenure solutions for our changing demographics, along with the structures – governance, funding and regulatory – that will enable an integrated approach to be delivered over the long term.

Professor Graham Squires is the head of Massey Business School’s property programme and the chief executive of The Property Foundation.