Schemes benefit a lucky few

Tuesday 29 January 2013

Something that both the Green and Labour housing affordability policies have in common is that they are great for those in a position to buy houses through them. They are less good for everyone else.

By The Landlord

The Greens believe they can sell Government-owned homes worth $300,000 without the buyers having any need for a mortgage.

Each week tenants would pay $200 to meet Crown costs, $100 towards their share of the home and $50 for any extra costs - that's $350 dollars a week to own a home outright in 25 years.

For the tenants who will be getting a brand-new home for less than what a lot of people are paying in rent, it’s a great deal.

But the numbers don’t stack up: It’ll be other taxpayers who finance these low-income families into their homes.

That’s been proved by Labour’s recent backtracking.

The party seems to have come to the realisation that its KiwiBuild numbers don’t make sense. Leader David Shearer had been talking about building 100,000 new homes to be sold for $300,000 each.

So convinced was he about the affordability of the scheme, he said money left over from the sale of each swathe of homes would be reinvested in construction of the next year’s new housing.

Now he says it’s not possible to build a standalone house for that price in Auckland and that $300,000 is the national average. In Auckland, standalone houses will still cost about $550,000.

These policies aren’t sustainable or fair.

No one disagrees that more families owning their own homes is something to aspire to.

But why do we feel compelled to give these families brand-new homes, supported financially by every other New Zealander?

And are we expecting that those families helped into extremely cheap homes would then be altruistic enough to sell them on at less than market price in future? Or might they - quite reasonably - eventually sell their houses for exactly the sort of unaffordable price the politicians are trying to combat?

We need a sustainable solution that makes housing development cheaper for everyone. Not just lovely new houses for a select few.

Comments from our readers

On 1 February 2013 at 9:28 am mortgage owner said:
How can any scheme like this be fair? Its teaching bad money management. Lean back, be lazy and the 'government' will pick up the tab. (and where does the money come from?? the average working class kiwi). Its frustrating for those who have tightened the purse strings, and made an effort to save a deposit for a home, especially when the government keeps on handing out our hard earned tax dollars!!! and whats going to happen to low end house prices when there is a new demand?? thats right, they will be pushed up, putting them out of reach for the rest of us who aren't on the government gravy train.
On 1 February 2013 at 9:33 am John Heritage said:
Surely the answer is simple? Just include a clause in the purchase agreement whereby a percentage of the eventual profit must revert to the Govt. This could be on a sliding scale reducing over time.

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