Māori Housing Policy Round-Up: Labour Party

Two weeks ago, Labour announced their Māori Housing policy at South Auckland's Ngā Whare Waatea Marae. The question is, will it work? And will it make a difference for Māori? Te Matapihi provides a perspective.

 

Labour’s newly announced Māori Housing policy[i] largely builds on previous general housing policies.[ii] Mostly focusing on the impact of these broader policies for Māori in relation to the overall population (such as first home buyers), it does include some targeted initiatives, like the establishment of a Māori Housing Unit (within the Affordable Housing Authority), and the reform of Kāinga Whenua.

 

We’ve focused our analysis on housing availability and affordability. We will not be discussing housing quality and security – whilst important issues, these have been discussed at length by others.

 

Table 1. Labour’s Housing Policies – Summary

 

Outcome

Policy

Driver

Type of intervention

Availability 

Cracking down on speculators

Demand

Taxation

Kiwibuild (including partnering with hapū, iwi and Māori orgs)

Supply

Direct provision, subsidies

Establishment of an Affordable Housing Authority (including establishment of a Māori Housing Unit)

Supply

Regulation, direct provision, subsidies

State Houses: People over profit

Supply

Direct provision

Growing the building workforce (trades training)

Supply

Subsidies

Remove barriers that are stopping Auckland growing up and out (removing the rural-urban boundary)

Supply

Regulation

Affordability

Programmes to Assist Māori into Home Ownership (including reform of Kāinga Whenua)

Demand

Regulation, subsidies, better information

Quality

Investing in warm, dry homes and requiring all rental homes to be warm, dry, and healthy

Demand

Subsidies, regulation

Security

Taking serious action to end homelessness

Demand

Regulation, subsidies

 

We’ll be limiting our discussion to four key policies, which we think have the potential to make a difference for Māori. These are:

 

1.    Kiwibuild

2.    Establishment of an Affordable Housing Authority

3.    State Houses: People over Profit

4.    Programmes to Assist Māori into Home Ownership

 

For each of the selected policies, Te Matapihi have asked ourselves two questions – will it work? And will it make a difference for Māori?


Kiwibuild

 

Labour has an ambitious plan to deliver 100,000 affordable houses over ten years for first home buyers through their Kiwibuild programme. Half of these will be built in Auckland.

 

Will it work?

 

An estimated 200,000 additional homes will be required nationwide over the next decade to meet demand created by population growth,[iii] approximately 65% of which will be in Auckland.[iv]

 

The provision of 100,000 homes through Kiwibuild (half of which will be an Auckland) could be an achievable and appropriate government-led building target – pending further detail – if combined with other interventions such as taxation reform and market incentives.

 

Given the emphasis on first home buyers, it is reasonable to assume that Kiwibuild homes will be targeted at the intermediate housing market[v], which can be defined as working households who are currently renting in the private market, are ineligible for social housing, and cannot afford to buy a house at the lower quartile price under current standard bank lending criteria.[vi]

 

The intermediate market is estimated to be made up of approximately 181,500 households nationwide[vii]  (10% of all households, and 31% of households that rent[viii]), with approximately 85,400 located in Auckland[ix] (18% of all households and 73% of households that rent[x]).

 

By our calculations, the income range of the intermediate market in Auckland is $37,076[xi] - $131,507 in Auckland, and $37,076 - $65,050 nationwide. This means, to be accessible to the intermediate market as a whole, affordable houses would have to be priced between $216,168 - $650,000 in Auckland, and between $216,168 - $352,500 nationwide.

 

Table 2. Household income required to purchase a home at the lower quartile house price

 

National

Auckland

Median house price

$529,000

$850,500

Lower quartile house price[xii]

$352,500

$650,000

Deposit (20%)

$70,500

$130,000

Mortgage

$282,000

$520,000

Weekly mortgage payments[xiii]

$382

$704

Weekly net income required (take home pay)

$955

$1,760

Annual gross income (before tax)

$65,050

$131,507

 

Table 3. Affordable house prices based on annual income for the intermediate market

 

Annual income

40% net (annual)[xiv]

40% net (weekly)

House price[xv]

Social housing register upper income threshold

$37,076

$12,184

$234

$216,168

National – income required to purchase lower quartile house

$65,050

$19,864

$382

$529,000

Auckland – income required to purchase lower quartile house

$131,507

$36,608

$704

$650,000

 

According to Labour’s Kiwibuild policy, the stand-alone KiwiBuild homes in Auckland will be priced at $500,000-$600,000, with apartments and terraced houses under $500,000.[xvi] Outside of Auckland, prices are likely to range from $300,000-$500,000.

 

For 100,000 Kiwibuild homes to be affordable to roughly the upper half[xvii] of the intermediate market, homes would need to be priced from $407,000 - $650,000 in Auckland, and $276,154 - $352,500 for the rest of the country.[xviii] At this price point, Kiwibuild could provide affordable home ownership options for 50,000 households earning $99,950 - $131,507 in Auckland, and 50,000 earning $48,650 - $65,050 nationwide.

 

Will it work? Yes – for the upper half of the intermediate market. It will not make a substantial difference for the bottom half of the intermediate market, i.e. working households on lower incomes.

 

Will it make a difference for Māori?

Labour’s Māori housing policy states that they will house 20,000 Māori families through their Kiwibuild programme.[xix]

The Māori intermediate market is more difficult to quantify, but based on intermediate market income range (as defined above) and tenure type (calculated using ‘not owned’ as a percentage of all tenure types), we estimate that 25,692 Māori households may fall into in the intermediate market in Auckland, and 20,457 nationwide.[xx]

Table 4. Estimated number of Māori households within income range for intermediate market

 

National

Income range[xxi]

Number of Māori Individuals

Estimated number of Māori Households[xxii]

Estimated number of Māori households within income range for intermediate market

Estimated number of Māori households within income range for upper Intermediate market

$20,000 or less

52,815

24,855

N/A

N/A

$20,001 - $30,000

44,358

20,875

N/A

N/A

$30,001 - $50,000

89,127

41,943

27,117

1,831

$50,001 - $70,000

86,472

40,694

10,077

10,077

$70,001 - $100,000

106,116

49,938

N/A

N/A

$100,000 or more

146,691

69,033

N/A

N/A

Total (excl income ‘not stated’)

525,579

247,338

37,194

11,908

Auckland

Income range

Number of Māori Individuals

Estimated number of Māori Households

Estimated number of Māori households within income range for intermediate market

Estimated number of Māori households within income range for upper Intermediate market

$20,000 or less

11,223

5,282

N/A

N/A

$20,001 - $30,000

8,388

3,947

N/A

N/A

$30,001 - $50,000

17,763

8,359

5,404

N/A

$50,001 - $70,000

16,995

7,998

7,998

N/A

$70,001 - $100,000

24,792

11,667

11,667

20

$100,000 or more

51,807

24,380

24,380

24,380

Total (excl income ‘not stated’)

130,968

61,633

49,449

24,400


Table 5. Māori renters – National and Auckland

 

 

Total No. of Māori households

Not owned

% of Total

Private rental

% of Total

National

568,584

312,666

55%

212,088

37.3%

Auckland

136,185

78,774

57.8%

N/A

N/A

 

Table 6. Estimated number of Māori households within the Intermediate market based on income range and tenure type

 

Intermediate market income range

Māori households (all tenure types) within income range

Māori households (renters) within income range[xxiii]

National –

Intermediate

$37,076 - $65,050

37,194

20,457

National –

Upper intermediate

$48,650 - $65,050

11,908

6,549

Auckland –Intermediate

$37,076 - $131,507

44,449

25,692

Auckland –

Upper Intermediate

$99,950 - $131,507

24,400

14,103


For the upper intermediate market (calculated using the same methodology), there are approximately 14,103 Māori households in Auckland, and 6,549 nationwide. Building 20,000 Kiwibuild homes could provide affordable housing for around half of all Māori households in the intermediate housing market.

This suggests that Kiwibuild will make a difference for Māori overall – but less so than for non-Māori, with greater benefits likely to accrue to Māori at the upper end of the intermediate market. To be most effective, targeting may be required, and complementary policies developed to meet the lower end of the intermediate market.

 

Establishment of an Affordable Housing Authority

As part of Labour’s Housing policy, an Affordable Housing Authority will be established to drive the delivery of the Kiwibuild programme. A Māori Housing Unit will also be established within the Affordable Housing Authority to ensure housing policies are tailored to meet the specific needs and aspirations of Māori.

 

Will it work?

 

An urban development authorities’ proposal is currently being considered by government, and is in the early stages of consultation. The proposal would allow nationally or locally significant urban development projects to be built more quickly.  The proposal would enable powers that could be used to streamline and speed up large scale projects, such as suburb-wide regeneration.[xxiv]

 

The Affordable Housing Authority proposed by Labour is essentially an urban development authority. Given the coordinated approach and extensive powers proposed, we see huge potential for urban development authorities to address housing supply and affordability, nationwide and particularly in Auckland. The scale of UDAs (nationwide, by island, by regional Council area, by major urban area, etc.) remains to be determined and will have implications re: consenting and other powers currently held by other geographically defined entities.

 

The Māori housing unit proposal has precedence in the Social Housing Unit (SHU), a statutory unit within MBIE that was established in 2011 as part of the government’s social housing reform programme.

Some of the functions of a Māori housing unit could include; operating as a landing place for all current and future investments for Māori housing outcomes (and administering in a coordinated manner), leading strategic implementation of He Whare Āhuru, He Oranga Tāngata – The Māori Housing Strategy, and developing Māori housing policy.

Will it make a difference for Māori?

In Tāmaki Makaurau, housing affordability is at crisis point. With a number of Tāmaki Makaurau iwi achieving or approaching settlement, there are emerging opportunities for iwi to develop their land returned or purchased through settlement for housing.

The Urban Development Authorities (government) / Affordably Housing Authority proposal (Labour) presents significant new opportunities for Māori. Practically, this could see iwi taking on governance roles within the Urban Development Authority, as lead development entity, or participating in development consortia.

The experiences in Glen Innes, which has a high proportion of Māori and Pasifika families on low incomes, has highlighted the issues associated with displacement of existing communities in the regeneration process. As areas selected for regeneration often include a large proportion of State housing, there are opportunities to support state housing tenants to transition to home ownership through rent-to-buy programmes for existing HNZC tenants. This would need to be carefully considered in relation to existing or future RFR provisions under Treaty settlements.

The advantages of establishing a Māori Housing statutory unit include an ability to give effect to He Whare Āhuru (currently owned by MBIE), a degree of relative independence, and the ability to have a direct reporting line to the Ministerial portfolio holder. If designed well, this could make a real difference for Māori, providing greater certainty in decision-making and funding continuity from our Treaty partner.

 

State Houses: People over Profit

HNZC in its current form is a crown-owned entity, set up under the Housing Corporation Act 1974, and amended by the Housing Corporation Amendment Act 2001. It is governed by an independent Board of Directors, who report to the Minister Responsible for HNZC (currently Hon Amy Adams). The Minister, through the Board, sets both social and financial performance indicators for HNZC.

 

Although retained in public ownership, the main difference between the previous structure (within a government department) and the new structure (as a statutory corporation), is the requirement that HNZC secure an agreed rate of return on investment to the Crown (i.e. return a profit).

 

This policy essentially seeks to reverse the corporatisation of Housing New Zealand, reinstating HNZ into a Ministry structure and removing the requirement to return a dividend to government. Labour is also aiming to increase state housing stock by at least 1,000 homes per year.

Will it work?

The original rationale behind the corporatisation of HNZ is that the market can deliver more efficiently than the public sector. It is unclear to what degree the corporation of Housing New Zealand has delivered on its original intentions.

 

The government has been heavily criticised for requiring New Zealand’s largest (and only publicly owned) social housing provider to return an annual dividend. If HNZ were not required to return a dividend, there would be more pūtea available with which to undertake currently deferred maintenance and repairs, improve tenant services, and most significantly, reinvest into the construction of new social housing.

 

There are currently 5,353 applications on the Social Housing Register.[xxv] Though not explicitly stated, based on the goal of transitioning 2,500 (all) Māori off the social housing register, we assume that Labour aim is to transition all applicants off the social housing register and into housing with a defined timeframe (not stated). We have modelled 3, 5 and 10 years.

 

Table 7. Changes in the Social Housing Register and HNZC Stock Levels 2012 - 2017

 

 

Jun-12

Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Social Housing Register Applicants[xxvi]

 

 

4630

3352

3877

5353

 

 

 

 

-1,278

+525

+1476

 

 

 

 

-27.6%

+15.7%

+38.1%

HNZC Stock[xxvii]

69,500

68,710

68,229

67,245

64,408

 

 

 

-790

- 481

-984

-2837

 

 

 

-1.1%

-0.7%

-1.4%

-4.2%

 

 

Table 8. Estimated new builds required to transition all applicants from the social housing register into housing – 3, 5 & 10-year projections

 

Current social housing register (no increase)[xxviii]

New houses required p.a.

Social housing register @ 8.7% increase p.a.[xxix]

New houses required p.a.

3 years

5,353

1,784

6,875

2,292

5 years

5,353

1071

8,123

1,625

10 years

5,353

535

12,327

1,233

 

It’s possible that existing state housing tenants could be transitioned into home ownership through Kiwibuild, however based on the houses prices set out under the current policy, these will not be affordable for state housing tenants on a benefit, or workers on very low incomes.

Labour does not currently articulate a role for Community Housing Providers in its policies, therefore we have assumed that supporting applicants into newly built HNZC properties will be the only option available to reduce the social housing waiting list to zero.

Assuming demand continues to rise at a rate of 8.7% on average, Housing New Zealand will need to build new homes at a rate of 2,292 per year over 3 years, 1,625 per year over 5 years, and 1,233 per year over 10 years. This exceeds the 1,000 new state houses (minimum) per year set out in Labour’s housing policy. Should there be no increase in demand, and no further stock divestment, 1000 houses per year would be sufficient to eliminate the waiting list within 5 years.

This could work – provided state house building targets are increased.

Will it make a difference for Māori?

On the social housing register, 2357 are Māori, an increase of 43% compared to the same time last year (from 1648).[xxx]

Additionally, many Māori households living in housing deprivation may not be represented on the social housing register, due to living in poor quality owned homes (generally in rural areas, generally on whenua Māori), and specific policies will need to be developed to address this issue.

Labour’s Māori Housing policy states that they will house 2,500 (all) Māori on the social housing waiting list, although no specific timeframe is stipulated.

Will it make a difference for Māori – yes, provided there is no further stock divestment, and a Labour-led government commits to significantly increasing building of new state houses and/or articulates a greater role for Community Housing Providers.

 

Programmes to Assist Māori into Home Ownership

Labour’s Māori housing policy includes several home ownership support programmes to assist Māori into home ownership.

These include:

·         Invest an additional $20 million over four years in NGOs and Māori providers who deliver supported home ownership services such as budgeting advice

·         Reform the Kāinga Whenua and Welcome Home Loans schemes so Māori are able to access home loans on an equal basis to other New Zealanders whether the land has one owner or is part of a whānau trust with multiple owners

·         Work with financial institutions, iwi and Māori organisations to enable iwi and Māori organisations to access mortgages collectively on behalf of their members

·         Investigate the option of shared equity and rent to buy for KiwiBuild houses with iwi

Will it work?

The Māori home ownership rate has steadily declined to 28.2%, whereas the ownership rates for the whole of New Zealand are almost 50%.[xxxi] If the goal is to transition more Māori into home ownership and achieve parity with non-Māori, trends indicate that targeted interventions will be necessary.

Shared equity and rent-to-buy schemes have been successful in supporting households in the intermediate market into home ownership, both in New Zealand and internationally. Further technical work is needed, but the reform of Kāinga Whenua is a useful first step, combined with the the development of alternative mortgage and development finance options.

Will it make a difference for Māori?

Given the issues of affordability and low rates of Māori home ownership, targeted home ownership support programmes could make a real difference for Māori if delivered by iwi, hapū and mataawaka organisations in partnership with Government through urban development authorities.

Financial incentives, such as reduced development contributions and consent fees, or provision of land, may be required to enable developers (which could be iwi or iwi-led consortia) to provide a percentage of retained affordable or affordable rental homes targeted to Māori and other low-income families.

This is the second article in Te Matapihi’s Māori housing election year series. Each of the subsequent articles will tackle a political party’s housing policies, with a focus on what these all mean for Māori. The series will conclude with a ‘scorecard’ comparison of what works, what doesn’t, and what’s likely to make a difference for Māori.

 

 



[i] New Zealand Labour Party. (2017). Better homes for Māori. Retrieved from http://www.labour.org.nz/better_homes

[ii] New Zealand Labour Party. (2017). Our plan to start fixing the housing crisis. Retrieved from http://www.labour.org.nz/housing.

[iii] Based on medium National household projections, by household type, in Stats NZ. (2015). National Family and Household Projections: 2013 (base) – 2038. Retrieved from http://www.stats.govt.nz/browse_for_stats/population/estimates_and_projections/NationalFamilyAndHouseholdProjections_HOTP2013base.aspx.

[iv] Based on medium urban area population projections, by age and sex, 2013(base)-2043, in National Family and Household Projections: 2013 (base) – 2038.

[v] The intermediate housing market is defined as private sector renter households with at least one member in paid employment who are unable to affordably (using no more than 30% of their gross household income to service mortgage expenses) purchase a dwelling at the lower quartile (the price point at which 25% of sales are below and 75% above) house sale price. Smith, N. (2008). The Intermediate Housing Market in New Zealand. Retrieved from http://thehub.superu.govt.nz/project/intermediate-housing-market-new-zealand.

[vi] Currently a 30-year mortgage, 20% deposit, no more than 40% of the household’s net income paid into mortgage expenses, and a 2 year fixed interest rate.

[vii] Livingstone & Associates. (2015). Can Work, Cannot Afford to Buy the Intermediate Housing Market. Retrieved from https://www.branz.co.nz/.

[viii] Household estimates by tenure in Stats NZ. (2017). Dwellings and Household Estimates: June 2017 quarter. Retrieved from http://m.stats.govt.nz/browse_for_stats/population/estimates_and_projections/DwellingHouseholdEstimates_HOTPJun17qtr.aspx

[ix] Livingstone & Associates, 2015.

[x] Auckland Council (2013). Auckland Dwellings and Households – Initial results from the 2013 Census. Retrieved from http://www.aucklandcouncil.govt.nz/EN/planspoliciesprojects/reports/Documents/aucklanddwellingshouseholdsinitialresults2013census201405.pdf

[xi] Based on social housing register eligibility requirements, maximum income of $585.30 a week (after tax) for people who have no partner and no dependent children, calculated with 3% kiwisaver and no student loan.

[xii] Calculated using data from interest.co.nz (2017). Home loan affordability report June 2017. Retrieved from

http://www.interest.co.nz/property/home-loan-affordability.

[xiii] Calculated using interest.co.nz mortgage calculator, assume 20% deposit, 30-year term and 5.8% interest rate p.a.

[xiv] Have assumed kiwisaver at 3% and no student loan.

[xv] Calculated using interest.co.nz mortgage calculator, assume 20% deposit, 30-year term and 5.8% interest rate p.a.

[xvi] Apartments and terrace houses will generally require a higher deposit – this could potentially take the form of a government subsidy for first home buyers.

[xvii] The 100,000 homes that are to be delivered through Kiwibuild are equal to around 56% of the intermediate market.

[xviii] This range may be slightly high, as it is based on data for the whole country – including Auckland. An ‘Auckland and the rest’ comparison would be useful, but there was insufficient data to complete the analysis. Note that this is an average overall, and accounting for markets such as Wellington or Queenstown may explain the $500,000 upper figure in the Kiwibuild policy.

[xix] Elsewhere, the policy states that “Based on their income we have modelled that over 17,000 Māori renters will purchase KiwiBuild homes”. This appears to assume the $2,500 or so Māori on the social housing register will be assisted into Kiwibuild homes. Based on our modelling, Kiwibuild will not be affordable to those on very low incomes, so we have used the full 20,000 figure.

[xx] Te Puni Kōkiri. (2013). Household income rohe profiles. Retrieved from http://tpk.idnz.co.nz/tpk/household-income.

[xxi] TPK, 2013.

[xxii] Household income ranges derived from national and regional individual incomes using a ratio of 0.4706 (total population : total no. of households nationwide, 3555 : 1673). This does not take into account possible variations in Māori household composition, no. of dependant children or no. of adult earners.

[xxiv] Ministry of Business, Innovation & Employment. (2017). Urban Development Authorities - Discussion Document. Retrieved from http://www.mbie.govt.nz/info-services/housing-property/consultation/urban-development-authorities.

[xxv] Ministry of Social Development. (2017). Housing Register June 2017. Retrieved from http://housing.msd.govt.nz/information-for-housing-providers/register/housing-register.html.

[xxvi] MSD, 2017.

[xxvii] June 2014, 15, 16 figures from http://www.hnzc.co.nz/publications/annual-report/.

[xxviii] Assume no further divestment of stock.

[xxix] Social housing register @ 8.7% increase p.a., assume no further divestment of stock.

[xxx] MSD, 2017.

[xxxi] Stats NZ. (2013). 2013 Census QuickStats About Housing. Retrieved from http://www.stats.govt.nz/Census/2013-census/profile-and-summary-reports/quickstats-about-housing/home-ownership-individuals.aspx.