Minister's Speech Reveals Woeful Ignorance of How Housing Markets Work.

His Proposed Housing Policies will make Australia even more Attractive.*

"Housing Minister Chris Carter's speech at 'Architecture Week' on housing 
affordability simply confirms that he does not understand why housing is out of 
the reach of first home buyers in New Zealand", said Owen McShane, Director of 
the Centre for Resource Management Studies, today.

"The major reason our housing is among the least affordable in the world is the 
restrictive zoning which local councils have applied to land in most of our main 
cities. The /Demographia/ survey of housing markets in America, Australia, 
Canada, Ireland, New Zealand, and the UK,  found that the 25 most unaffordable 
cities, with Median Multiples between 6.6 and 11.4, had *all* adopted the 
policies of “Smart Growth”, involving city governments placing tight 
restrictions on the availability of residential land. By contrast, *none* of the 
39 cities with the most affordable housing, with Median Multiples between 2.0 
and 3.0, had adopted such policies.  Until local councils drop their restrictive 
zoning, nothing the minister says or does will make any significant difference," 
said Mr McShane.

Mr McShane, referred to an earlier release from the the Centre's Chairman, Dr 
Brash, in which the former Governor of the Reserve Bank said:

"Quite frankly, Metropolitan Urban Limits and similar restrictions should 
simply be outlawed, no ifs or buts.  And Parliament should establish an RMA 
Regulatory Review Committee to ensure that all rules, regulations and levies 
imposed by local governments are consistent with the RMA.  I have no doubt 
that these two measures would do more to improve the affordability of housing in 
New Zealand than anything else policy-makers could do. 

"Mr Carter's list of "solutions"

<http://www.scoop.co.nz/stories/PA0710/S00289.htm> 

instead promotes a range of 
interventions that would force builders and developers to provide "affordable" 
housing as a percentage of all homes they build, and face fines (levies) if they 
don't. Overseas experience shows that forcing builders to supply a percentage of 
"affordable" homes simply requires the builders to charge more for all the 
others, further rising the price of housing overall."

"The real problem lies with excessive regulation, compliance costs and 
development levies. Mr Carter's proposals for more regulation, higher compliance 
costs, and even more fines and levies will only make the problems worse. Mr 
Carter seems to think Government is the solution whereas Government is actually 
the problem," said Mr McShane.

"Mr Carter should look to his Labor Party colleagues in Australia who are 
endorsing proposals to release huge areas of land around Australian cities to 
increase supply and hence reduce price."

A Recent Media release in Australia

<http://www.news.com.au/adelaidenow/story/0,22606,22594353-5006301,00.html>* 
tells us:*
*Labor Leader Kevin Rudd has outlined a plan to release potentially billions of 
dollars in Commonwealth-owned land, to solve the housing affordability crisis.  *

"Furthermore, the Australian Government has announced plans to cut council and 
state levies on developers. (See PDF file below.)

The Australian Federal and State Governments, and the Labor Opposition are 
attacking the problem of unaffordable housing by proposals to free up land and 
reduce compliance costs and levies.

Mr Carter ignores these causes, and instead proposes to force more 
interventions, increase compliance costs, and impose more levies, all of which 
will actually reduce overall supply, increase overall costs and hence drive 
house prices up even further."

Mr McShane points out that "Australia already offers New Zealanders the 
"carrots" of higher wages, and lower taxes. Soon it will also offer cheaper 
housing."

"We should not be surprised if even more young New Zealanders migrate to 
Australia to enjoy those greener shores" he concluded.