O'Rourke Denis: Housing Accords and Special Housing Areas Bill — Second ReadingText is incorporated into the Bound VolumeO'Rourke Denis: Housing Accords and Special Housing Areas Bill — Second Reading[Sitting date: 22 August 2013. Volume:692;Page:12788. Text is incorporated into the Bound Volume.]DENIS O’ROURKE (NZ First):The National Government’s housing policy and the Housing Accords and Special Housing Areas Bill are a totally inadequate response to the housing crisis in New Zealand. There are severe housing shortages especially in Christchurch and Auckland and first-home buyers cannot afford to buy a house. In a home-owning democracy which New Zealand has always been this is a national disgrace. The Government waited for several years while a housing crisis developed and now it blames local government and pretends that with the introduction of housing accords and special housing areas it can solve the problem. In fact the problem is much bigger than that.The Government’s policies overall are to blame. Over the last 5 years the Government has allowed a housing price bubble to emerge in Auckland by its inept immigration and housing policies. Only a comprehensive housing strategy designed toaddress both demand and supply factors as advocated by New Zealand First will make housing affordable for home buyers. New Zealand First supports a broadly based housing policy that will again make homeownership a reality rather than a dream for working New Zealanders. Although New Zealand First has no problem with the concept of housing accords and special housing areas they will not be enough. In Auckland there is already a housing deficit of well over 30000 houses and it is growing. The Government’s plans are unlikely to result in more than 10000 to 12000 houses per year but we do not know how many because the Government will not say. It will not choose a figure and in fact it does not know. Anyway it will never catch up on that basis.The Government’s plan is obviously a failure. To make matters worse the hopes of first-home seekers have now been well and truly killed off by the Reserve Bank’s limiting of the quantum of high loan-to-value ratio mortgages that the trading banks can make by introducing an 80 percent loan limit as a ratio of the total property value. The Reserve Bank wants to restrict high loan-to-value ratio mortgages to reduce demand. This is a flawed policy that will do great damage to the proper expectations of younger people to access loans to buy a family home and this Government has done next to nothing about it. In any event the Reserve Bank strategy is a second-best strategy. Normally it would raise interest rates and it may do that as well despite raising an already overvalued dollar and inflicting all sorts of damage on the New Zealand economy. In addition the Reserve Bank’s housing policy is Auckland-centric. In Christchurch and elsewhere in New Zealand people face different housing issues and the results of Government policy and Reserve Bank policy are therefore likely to be patchy and inappropriate for much of the country.Another problem not being addressed by the Government is that it is doing nothing to deter overseas property investors and speculators who have been buying up Auckland property and who have ample equity. They of course are not hurt by the Reserve Bank’s loan-to-value ratio restrictions. Some can get cheap overseas loans and outbid Kiwis who are trying to buy a family home. The Government does nothing about the migrant flows which have been concentrated in Auckland. It does nothing to tighten immigration policy in areas such as parental reunion which have added significantly to housing demand in Auckland. Lastly and most important the impact of Government and Reserve Bank policies will fall most directly on first-home buyers. It is not the first-home buyers who are driving the bubble especially in Auckland but they will be the sector most heavily penalised by the limits on high loan-to-value ratio lending. Perversely that policy will encourage them to seek the extra funds they now need from potentially risky sources such as finance companies and loan sharks. This will add even more risk to the system. The Government’s response has been pathetic. It is allowing easier access to KiwiSaver savings for home purchases. There is nothing wrong with that in itself but it is not nearly enough. Most first-home seekers will still not be able to raise a 20 percent deposit with or without access to KiwiSaver—and by the way that should be preserved for retirement purposes.Therefore New Zealand First’s policy to assist first-home seekers is this: firstly to establish a new State agency to acquire land and create a land bank in areas where demand clearly exceeds supply. These are currently Christchurch and Auckland. The agency would sell residential sections of modest size on the basis of long-term agreements for sale and purchase up to 25 years to first-home buyers. This reduces the upfront capital cost of a new home by about one-third. Interest rates would be highly concessionary at 2 percent for an initial period of at least 3 years. Purchasers would build their own homes using normal bank financing and would have title to the section transferred to them with the amount owing to the agency secured by way of a second-ranking statutory land charge. Under that policy the 20 percent deposit problem simply does not arise.The Government’s special housing areas are not enough and its policy along with the Reserve Bank’s approach will kill off the hope of a home for most of New Zealand’s first-home seekers. New Zealand can do a lot better with New Zealand First’s policy on housing. It is very disappointing to see that this Government is willing to put up with the fact that first-home buyers will not be able to buy a home in this country for some considerable time. It is doing considerable economic and social damage by not doing enough on this problem. Everybody in this country knows it is not doing enough and yet Government members sit there today telling us that this bill and their policies will be sufficient to solve the problem. Everybody knows they will not so let us get real. Let us do something genuine about it such as some of the policies that Opposition parties have been advocating. The Government would do very well to listen to some of those. For those reasons New Zealand First will certainly oppose this bill.