Housing has been thrust into the limelight again. The growing rate of homelessness in Auckland is even making our rulers nervous. As house prices reach an average of $955,793 and the median rent exceeds $520 a week (Trade Me Property Rental Price Index, April 2016) the ability of people to find a place to live, even on a reasonable income, is becoming more difficult. More people are sleeping in converted garages and cars.
When questioned on the radio about what the government should do Prime Minister Key said that people should go down to Work and Income. It was pointed out by beneficiary advocates that many of the homeless did not qualify for assistance because they earned too much and those who did qualify could face a minimum two year wait on a list.
In response the Housing Minister, Paula Bennett, suggested people with emergency housing needs could be put up in motel rooms. This produced a derisive response when it was learned that those receiving this ‘help’ would have to pay it back. Thus, not only would a beneficiary have a place to stay that could only be temporary but they would be stuck with a huge debt to Work and Income.
Then Ms Bennett put forward a new relocation grant of $5000 for any Aucklander who was prepared to move outside of Auckland. Very few people would actually qualify for it. The homeless who earned too much would not qualify for it. The homeless who don’t qualify for social housing would miss out. Those who left their low paying jobs to take advantage of this offer would face a punitive 13 week stand down for voluntarily leaving their place of employment.
Her relocation grant suggestion was also met with derision from outside of Auckland. Throughout Aotearoa there is a critical shortage of social housing and the last thing the homeless in other parts of the country needed were Aucklanders competing for the same handful of housing in their communities.
Even Housing New Zealand and other social housing providers pointed out they simply do not have the housing that is desperately needed. Thus, it should not have come as a surprise that when MSD staff and the Salvation Army had gone around to ask what help they could offer they refused it (Newshub, June 3rd). It was revealed on June 3rd by the Salvation Army that the Prime Minister had lied (New Zealand Herald, June 3rd) about this as the Salvation Army and the MSD had not visited the homeless, let alone been told their help wasn’t needed.
In order to address the housing problem the government announced on June 2nd that they will be forcing councils to free up land to enable the construction of more housing. However, the problem isn’t the lack of housing but the lack of affordable housing. According to One Network News (June 15th, 2015) there are an estimated 22,000 empty homes in Auckland alone, many of them so-called “ghost houses” which have been built but never lived in or rented out.
In real estate terminology many of these properties are being land banked. That means the properties are simply bought so the owners can watch the value of the property increase. When the value reaches a certain point the owners sell and bank the money. At the rate these homes are increasing a property speculator could buy a house for $700,000 and sit on it for a few years (thus avoiding the property tax imposed upon homes sold within two years of purchase) then sell it for over $1 million.
However, the housing crisis is further aggravated by the number of landlords who will not rent to beneficiaries and low income people. There is a reason why households in South Auckland are charging rents of $500-$600 a week: it is to prevent low income people and beneficiaries from renting them.
The justification for not renting these properties to such people reveals how much low income people in Aotearoa have become outcasts. “I’m not going to rent out my investment to people who won’t pay their rent, manufacture P and trash the house” is a common sentiment heard among landlords despite the fact most of these claims are unproven, though very popular among the callers to radio talkback shows.
Many excuses have been churned out about why there has been a critical shortage of housing in Auckland and the government has laid the blame at “red tape” and the “lack of land”.
Labour and the Greens have claimed the blame lies on the government selling state housing and not doing enough to curb foreign investors from cashing in on the housing market. They have pointed out that far too many of the home buyers have been speculators who don’t even live here. In Otara alone over 45% of housing has been purchased by foreign property speculators and investors.
To address this problem Westpac and ANZ announced on June 9th that they would no longer give housing loans to foreign investors. Basically, only persons who are Australian or New Zealand citizens or residents who have a New Zealand address and a New Zealand income tax number will be allowed to obtain loans to buy housing. This might sound okay (assuming a person ignores the xenophobic implications of it) but the banks themselves concede that around 3% of those who get housing loans through them are foreigners (NZ Herald, June 10th). This is the first admission that even the banks are now getting worried at the possibility they will be hit hard with people defaulting on their mortgages and skipping the country if the Auckland property market crashes.
Despite this initiative on the part of the banks it is unlikely to make much of an impact as the majority of foreign property owners aren’t using home loans to buy homes. They’re bringing money in from their home countries and buying up property because property speculation is the most lucrative way to make money in countries like this one. When a person can double or even treble their investment within the space of a couple of years and avoid paying any taxes on it, what greedy person wouldn’t want to cash in on this? Though it’s worth making clear that the underlying problem isn’t the moral objection to certain people’s behaviour in itself, but the existence of a system that actively encourages and empowers such actions.
The problem that the government won’t address is that this property boom will not last. Politicians from all parties have cashed in on the housing market and made fortunes while pontificating hypocritically about the problems caused by this property boom. Some factions among our rulers, especially amongst the Labour Party, Greens and NZ First use populist xenophobic rhetoric if they see this as politically expedient, but none of this will achieve much that is positive.
When – not if – the property crash comes the impact upon the New Zealand economy will be as great if not worse than what happened in Spain and Greece in 2008.
Both countries went through a major property boom built around tourism. With millions of holiday makers travelling to these countries every year property speculators came up with the idea of building and renting houses to these tourists. It worked great until a major oil price spike resulted in a dramatic fall in the number of tourists flocking to Spain and Greece. Without the expected income from these homes their owners defaulted on their mortgages. The banks reacted by clamping on lending money and the result was the property market – and the Spanish and Greek economies – collapsed. The basic problem was their economies became too dependent upon a property market bubble that was fuelled by a tourism industry that was extremely fickle.
The invisible hand of the market is not at work here. What we are seeing is the law of the jungle where those who have the money and the property have profited handsomely while everyone else has been forced to either hand over exorbitant amounts of rent money to slumlords and property speculators or live in cars, garages and overcrowded homes.
A social revolution that includes the removal of slumlords and property speculators, combined with a political revolution that puts ordinary people in control of our daily lives, is the ideal we are working towards. This isn’t going to happen soon but there are some immediate steps compatible with these goals that could be taken, including:

• Seizing unoccupied housing and have people live in them
• Highlighting absentee landlordism through ‘name and shame’ campaigns
• Build enough affordable housing that people who need it can live in, not just the ‘deserving poor’ and the ones who are lucky or well connected.
• Using networks in the community including iwi, hapu, whanau, unions, community groups etc. to collectively build homes and then hold them on a communal basis
For too long the economic system we live under has treated housing and the people who live in them as commodities to be bought and sold as seen fit by the rich, speculators and the state. A person’s socio-economic status, family ties or connections must not be the deciding factors in determining who gets housing. Housing is a fundamental human right. It’s time we at the bottom got together and did something to make this right a reality for everyone.