The Productivity Commission completed its inquiry into housing affordability in New Zealand and presented its final report and recommendations to the Government. The final report, summary material, government response, submissions and evaluation reports are available below.
Housing affordability is essential for the wellbeing of New Zealanders. It can also have significant ramifications for the wider economy as housing comprises the main share of both household assets and debt, and the scale of the housing industry and its employment is significant.
In our brief the Government asked the Commission to evaluate the demand and supply factors influencing the affordability of housing and examine potential opportunities to increase housing affordability.
Key findings & recommendations
The Commission found that there are a range of factors getting in the way of affordable housing. Chair of the Productivity Commission, Murray Sherwin, explains the key findings and recommendations from the final report in the following short video:
- The Commission found that taxation was not a key driver of the recent housing boom.
- Containment policies such as ‘Smart Growth’ and Auckland’s Metropolitan Urban Limit were found to have an adverse effect on housing affordability by limiting the availability of land for housing.
- Pressure on land prices needs to be reduced and there needs to be an immediate release of new land for residential development in high demand areas such as Auckland and Christchurch.
- Councils should ensure they aren’t putting up barriers to development and should take a less constrained approach to urban planning. There needs to be a review of regulatory processes with the aim of speeding up and simplifying consent processes.
- We can construct quality, affordable homes, but it will take councils and developers to work together so that sections can come to market quickly at a price that allows the building of homes at an affordable price.
- Current social housing reforms should be reconsidered. The social housing sector will need considerable assistance if it is to scale up to the extent required, and do so within a reasonably short timeframe.
In response to our inquiry recommendations, the Government commenced a comprehensive work programme, including follow-on work for relevant government agencies. The Government agreed in full, or agreed in principle, to 21 of the 33 inquiry recommendations. Of the remainder, the Government considered 4 were adequately in-hand through current initiatives and the remaining 8 were the subject of ongoing reforms or further policy review work.
More generally, our work stimulated discussion and debate on affordable housing in New Zealand and has been widely referred to by media, government agencies, Members of Parliament, academia, overseas agencies and policy commentators. It prompted Ministers and their agencies to take a more holistic view of housing affordability – and to do so more urgently – and laid the foundation for significant policy reform and ongoing policy work.
Insights into local government
The learnings from this inquiry informed a Local government insights report. Understand the major challenges for both local and central government, what they need to get right, how to do things differently and the benefits of making these changes - read the report here.
This report brought together the learnings of five of the Commission's inquiries into local government performance: Local government funding and financing (2019); Better urban planning (2017); Using land for housing (2015); Towards better local regulation (2013); and Housing affordability (2012).