Generation Rent revisited

There’s no denying it — houses have become even less affordable. Over the past five years, New Zealand house prices increased by 45%. Rents rose by 26%. Average weekly earnings increased by just 15%.

When my wife and fellow economist, Selena, and I wrote Generation Rent nearly five years ago, many still denied there was a housing crisis. Now, there is a broad consensus and the disagreements are about what must be done to fix it. Admitting there’s a problem is the first step to recovery.

The housing crisis has been many decades in the making. The reasons home ownership in New Zealand has been sliding since 1991 are many and varied: we don’t have enough homes and most of the ones we do have are expensive and not very good quality; land supply is slow; finance is more readily available for existing houses than building new homes; funding for infrastructure is limited; social housing is underfunded; construction sector productivity is poor; the Building Code is decades behind places like Canada; and renting is still a precarious housing option as there aren’t enough rental properties and landlording is still largely a cottage industry.

So it’s easy to be gloomy. But many recent policy initiatives are heading in the right direction. They will take time, and more needs to be done for better housing outcomes. Rental reforms and increases in state housing supply are positive but both could go further. Longer-term reforms of land and infrastructure supply are critical, but still being worked