Is new low cost housing development the answer to New Zealand’s housing affordability issues?

By October 15, 2014News
Napier South & Te Awa, Napier

For many people the dream of owning their own home is a distant reality.

Housing prices in New Zealand are for most, far too high, relative to their income. So how do we create a greater supply of affordable housing? And is new low cost housing the answer?

Essentially, any new supply to the housing market has the effect of lowering house prices.

Low cost housing can likely be built quicker, having the effect of increasing supply faster, but is the ability to build housing fast enough the issue? Is the construction industry is working at full capacity?

I suspect that in many places around the country (including Hawkes Bay) that is not the case. So what if more housing of any type (including high cost) was encouraged, would that help? I believe it would.

If someone builds a fancy new house, they normally sell a more basic house. This will likely be bought by someone else moving up the housing ladder, who sells their lower cost property. And so on, until someone sells their ‘affordable’ home.

So perhaps, we should not be so focused on low cost construction, but on freeing up land and getting development underway generally for all types of housing.