Simpson Scott: Questions for Oral Answer — Questions to Ministers Questions to Members 
Text is incorporated into the Bound Volume 
Simpson Scott: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Sitting date: 23 October 2012. Volume:685;Page:6034. Text is incorporated into the Bound Volume.] 
3. 
SCOTT SIMPSON (National—Coromandel) 
 to the  
Minister of Finance 
: What steps are being taken to improve housing affordability as part of the Government’s wider economic programme? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The Government will shortly outline a multi-pronged work programme in response to the Productivity Commission report on housing affordability. This year’s annual  
Demographia International Housing Affordability Survey 
 showed that the cost of a median-priced house in New Zealand is 5.2 times median income and in Auckland it is 6.4 times median income. Any ratio above 5 is considered unaffordable. We share the Productivity Commission’s view that the housing market is not working properly. For example despite demand for low-cost houses relatively few are being built in part because of the very high cost of land particularly in Auckland. Constrained supply and high prices for housing in turn force high levels of household borrowing which are detrimental to households and the economy. 
Scott Simpson 
: Why is affordability an important issue for householders and for the economy? 
Hon BILL ENGLISH 
: For a number of reasons. First less affordable housing means that New Zealand has high levels of private sector debt to foreigners. We are ranked along with the heavily indebted European countries when it comes to that measure. Secondly housing loans comprise 93 percent of household liabilities meaning that New Zealand’s investments are skewed towards housing. And thirdly as rents rise they push up the cost to the Government of income-related rents and accommodation supplements. For instance income-related rents are forecast to rise by 30 percent over the next 4 years which will cost the Government around $200 million per year. There are also the benefits from well-priced quality long-term housing for those who live in those houses. 
Scott Simpson 
: What recent reports has he seen on trends in housing affordability? 
Hon BILL ENGLISH 
: Massey University produces the  
Home Affordability Report 
 which shows an improvement in affordability in the last 12 months in all regions except Auckland. I note that Massey University says that the reason prices are increasing faster in Auckland than in other regions is because of an imbalance of new housing supply to meet demand from an increasing population. The latest Quotable Value report shows that house values were up 1.8 percent in the last 3 months and 5.3 percent over the past year. These reports confirm that even in a slow economy housing affordability remains a deep-seated complex and serious problem. There are no quick fixes but the Government is determined to follow up on the Productivity Commission report and make progress. 
Hon Annette King 
: Has he seen the comments by the Auckland mayor Len Brown who stated that their council currently has enough land to build 18000 new homes right now but needs a partnership with central government to provide upfront capital to build affordable homes; if so does his Government intend to put its money where its mouth is in its work programme and help get these new homes built as soon as possible? 
Hon BILL ENGLISH 
: The Government is working closely in partnership with the Auckland Council around getting some progress on the Tamaki redevelopment which is the largest opportunity for brownfield redevelopment within Auckland City. It is a novel suggestion that the Government would provide capital for property development on the fringes of Auckland. We are working with the council to answer the question of whether the availability of those sections is sufficient to enable actual sections to be available for people to buy. This is part of the complexity of the issue. The Government is making sure it understands it properly by working closely with the councils. 
Scott Simpson 
: What existing Government policies are helping improve housing affordability for New Zealanders? 
Hon BILL ENGLISH 
: In the first place our policies have helped to maintain growth in the economy which means that in a relatively rare instance among developed economies New Zealand on average has had increases in after-tax wages over the last 4 years. A responsible and balanced fiscal policy has helped to take pressure off interest rates. Compared with 2008 a family with a $200000 mortgage is now paying $200 less a week in interest which is a considerable saving across a year. As the Massey University report noted the increase in average wages and the decrease in average monthly mortgage rates over the past quarter have actually offset the small increase in the national median house price.