Affordable housing in Auckland A snapshot report about the need and initiatives to increase low cost housing, assisted rent and assisted home ownership.

Introduction:

In recent years housing affordability has been the number one issue for Aucklanders. Central government and Auckland Council have been pursuing a range of interventions to increase overall housing supply and bring down development costs. To complement this Auckland Council commissioned two pieces of work focused on more targeted “affordable housing” policies:

1. A Snapshot report introducing the problem, key themes from the literature, international experience and current and planned Auckland initiatives.

2. A Position and Role Report providing the results of collaboration with stakeholders, including an intervention analysis, options and advice on council’s potential position and role in affordable housing.

These policies aim to increase lower cost housing and assist rent and home ownership. They include:

 Planning requirements

 Programmes like Kiwibuild,

 Build-to-rent schemes

 Regulation of rental quality and tenure

 Rental subsidies like the Accommodation Supplement

 Rent-to-buy, shared equity, co-housing and Papakainga.

What is “affordable housing”?

This report defines affordable housing as “a home that a household could occupy for less than 30 percent of its income whether purchasing or renting”. It is a definition that is commonly used by housing researchers worldwide.

The “intermediate” housing market and affordable home products:

The intermediate housing market is a subset of the households who struggle to afford housing. It is defined as working households in the private rental market who are ineligible for social housing but could not buy a lower quartile home without paying more than 30 percent of their income to service a mortgage. This is based on a UK concept where this group fits in the broader “housing market continuum”.

Auckland’s housing affordability problem:

Housing affordability has been deteriorating globally for several decades and is a particular problem in growing cities. New Zealand, especially Auckland, is seen as having a particularly severe housing affordability problem right now because house prices are so high relative to incomes. New Zealand’s house “price-to-income ratio” has increased the most of all OECD countries since 2011.

People are delaying household formation, or crowding:

There has been a long-term trend towards smaller households in developed countries including New Zealand. This reflects changing household structure, an ageing population and higher average incomes that allow people to buy more space. But in Auckland household size increased slightly between the 2001 and 2013 Censuses, a reversal of this trend. Young people are leaving home later and some households are living in crowded conditions to minimize housing expenditure.

There is a sharpening divide between renters and home owners:

The rapid increase of house prices has magnified inequality, both in discretionary incomes and wealth. Those who purchased a home in Auckland before 2015 have benefitted from increasing house values – which has increased their wealth and financial choices – and very low interest rates. Meanwhile, renters have less discretionary income and diminishing prospects of accessing the traditional source of wealth accumulation in New Zealand – property. Tenants are also more likely to live in poorer quality homes, with less security.

Conclusion:

Auckland has a significant housing affordability problem. The Government and Auckland Council are addressing many of the broad brush settings affecting overall demand for and supply of housing that contribute to this problem. At the same time, the Government provides some $3 billion in social housing subsidies and assistance targeted at the lowest income households.

This report has reviewed a range of programmes targeted at this “intermediate housing market” in other countries. They are designed to:

 Increase the supply of low cost housing, including by the market

 Provide assistance to rent

 Assist partial ownership or pathways to full ownership

Also Read: Urban subsidized housing in Spain: heritage on the outskirts of Zaragoza (1939-1961)