Guest Editor - Affordable housing we can’t afford - Part One
By Ross Liggins.
I remember in the early seventies groups of young people starting communities by pooling resources and buying blocks of rural land. This was in response to the rising cost of housing in New Zealand, and rejection of the concept of going into debt to buy a house and spending the rest of time paying it off.
Ohus: Some groups, during the government of Norm Kirk, who thought disaffected youth could participate in the building of this country, were even leased marginal and often inaccessible crown land, using the ohu system, under which they agreed to live on, and try to make the land partly economically viable. Eight ohu were established, but met opposition and red tape from the Lands and Survey Department, local authorities and land owners. After the death of one of their greatest proponents, Norm Kirk, the scheme started to decline with the last ohu’s demise being around the year 2000.
Other communities with different ownership structures still survive. There are still several here in the Coromandel. I remember buying a share in one for $5000 in the 1970s. It wasn’t an investment as one of the rules was you weren’t allowed to re-sell for a profit. It encouraged commitment to the land and the lifestyle. In those days, if you wanted to be more independent, you could buy a half-acre section at Kuaotunu for $10,000. “Aahh, the good old days, I hear you say. You baby boomers had it good.” And we certainly did. Unfortunately however, as time passed and many became more affluent, they needed somewhere to stash the loot they had, so they bought real estate. As demand increased, so prices rose and with no capital gains tax, lots of people made a killing in land speculation.
Nowadays, you get very little change from $600,000 for the cheapest sections in Whitianga or its surrounding settlements. Add to that a minimum of $400,000 to build a dwelling and you’re up for a cool $1,000,000 to have a modest roof over your head. With NZ being a low wage economy, how is an average young wage earner ever going to afford that?
Between 1957 and the late 80s, a house cost between 2 and 3 times the average annual income. This ratio increased to 4 times in the 1990s and peaked at 6.5 times in 2008. It then dipped a little and today it is back up at 2008 levels. This, combined with rising interest rates, makes it very difficult for first home buyers. And as prices go up, so do rents, as landlords strive to maintain their rate of return on investment.
Empty houses, but a housing shortage: Here in Whitianga, our population is increasing, and evidently a lot of older retirees are moving here to live. Others are investing in real estate, with some I know owning multiple houses which lie empty most of the time, even though we have a rental housing shortage. At the same time, there are the young people who service our tourism-based economy who need places to live.
I don’t claim to have the solution. I will leave that to the experts. But perhaps it’s time for us to start thinking outside the box.
In addition to developers providing high end accommodation like the Waterways, or more middle of the road developments, why not consider options that our young people could afford. For example, developing Community Land Trusts or co-operative models. Information about these is readily available online, and they see land as being a community owned resource rather than its’ becoming a speculative asset. Land could be owned by a company, as is the case with some communities formed in the seventies and eighties, with shareholders being able to build dwellings and shared community facilities. Or a block of land could be divided into smaller holdings available for long-term renewable lease, for use by tiny house owners who have their house but nowhere to put it and can’t afford or don’t want to live on a 500 square metre section with neighbours on all sides. Being small dwellings, they could tap into common infrastructure like drinking water, sewerage, drainage and community areas like playgrounds, laundries etc. Leases could only be sold for the price they were purchased for plus inflation and improvements. Small ready-built homes on these leased areas could also be an option.
So, there might be solutions if all of us - developers, land owners, councils, government, and the public put effort into treating land more as a community asset as opposed to, or in addition to, the present system of regarding it as a commodity to buy and sell for profit. Let’s help our young people enjoy the same privilege of home ownership that we of older generations enjoy.
References
stuff.co.nz
Wikipedia: foreveraffordablehomes.co.nz,
Stats NZ, teara.govt.nz