Phil Twyford
Photoshopped image Credit: Pixy

During the election campaign, Labour promised to build 10,000 houses a year, all for low-income families who had been ‘locked out’ of the housing market. They made it sound easy as if the previous government had simply been remiss in failing to do anything about the worsening housing crisis. Labour was going to save the day. Labour was going to solve the problem for low-income families.

One year in and the government has now realised how hard it is to do that.

The truth is, as many of us knew during the election campaign, houses cannot be built quickly and cheaply here in New Zealand at all. Drastic changes, such as an overhaul of the Resource Management Act, will be required to do that, and this is very unlikely while Labour is joined at the hip with the Greens.

The problem is that the only people who can afford Kiwibuild houses are people who could afford to buy houses on the open market anyway. Let’s face it, at $650,000, Kiwibuild properties are not exactly cheap. Those that can afford them can probably find better houses elsewhere within the market.

Stuff reports that the scheme is basically a failure. quote.

Kiwibuild’s “plummeting popularity” could spell out Kiwibust for the Government’s flagship policy.

There are only 338 pre-qualified Kiwibuild applicants, while contracts for 3375 houses have been signed off by the Government. It was forced to push out the Kiwibuild ballot deadline in Wanaka, after receiving just 20 entries for 10 homes. end quote.

Now that the rules have been relaxed around renting out Kiwibuild properties, these houses will be snapped up by buyers in Wanaka who will be able to rent them out on AirBnB. So much for those low-income families, huh? quote.

National Party housing spokeswoman Judith Collins said it was time to question its financial viability.

“If Mr Twyford can’t sell the houses he has bought off the plans, the Government will be forced to pay this money. This will easily blow his $2 billion budget and cause the whole scheme to come crashing down,” Collins said.

The policy was a “complete shambles”, she said.

“Houses are too expensive and too small. The minister isn’t building enough houses, he isn’t selling enough houses, and those few that are sold aren’t going to the people that need them.” end quote.

Spot on, Judith. Yes, they are too small for the price. Someone who has $650,000 to spend on a house can probably find a larger option somewhere within the general market. This is the trouble. quote.

A spokesman for Kiwibuild said while 338 people had completed the ballot process, a further 6648 applicants had begun the pre-qualification process. end quote.

Some of those going through the qualification process will buy houses elsewhere. After all, the qualification process is much the same for buying any house. The buyer simply has to be able to raise the money to buy. quote.

The number of ballot entries varied from place to place.

“We are satisfied with the ballots so far, which have already resulted in the 33 families buying their Kiwibuild home. Another 53 Kiwibuild homes are currently being balloted – a mix of completed homes and ‘off the plans’ houses that were still being built,” he said. end quote.

The numbers really are very small. A drop in a bucket in fact. Where are the 10,000 houses a year we were promised?

Let’s take a look at the Kiwibuild tracker.

So by the time they have been in government for almost 2 years, they will have built 1000 homes. See what I mean about it being a drop in a bucket? quote.

Economist Shamubeel Eaqub said low ballot figures did not point to any likelihood of loss on unsold homes. At worst, the Government would on sell a home at the price it paid for it, and to buyers who may not have originally qualified for Kiwibuild.

Official advice showed it was always going to run out of buyers: building different kinds of homes, to lift home ownership rates was the original goal, he said. end quote.

If they were always going to run out of buyers, why are we doing this? Why put $2 billion of taxpayer’s money into a scheme that nobody wants? quote.

“We don’t build these modest style of homes any more. We tend to build them grand and expensive so they can only be bought by those in the market already, or the rich.” end quote.

Wasn’t that what Kiwibuild was supposed to be all about? Modest housing for low-income families ‘locked out’ of the housing market?

Jacinda says that this government will be measured on their success with housing at the next election. If she is counting on Kiwibuild to get her re-elected, she’d better start looking for another job really fast.

Photoshopped image credit: Pixy

As we head into Christmas, A newspaper reports that consumer confidence is at its lowest since 2012… which, you may remember, was the end of the GFC. quote.

Consumer confidence dipped in October as people fret about the future.

The ANZ Roy Morgan consumer confidence index fell to 115.4 in October from 117.6 in September. People’s optimism about their present situation lifted slightly to 122.0 from 120.2 but the future conditions index fell to 111.0 from 115.9, the lowest since late 2015.

“Consumers are feeling good about the here and now, but concerns about the future are clearly growing. Consumers haven’t been this pessimistic about their own and their family’s financial outlook one year ahead since mid-2012,” said ANZ chief economist Sharon Zollner.

Perceptions regarding the next year’s economic outlook fell 5 points to a net 1 per cent expecting conditions to deteriorate versus a net 4 per cent expecting an improvement in the prior survey. The five-year outlook fell 4 points to positive 14 per cent. end quote.

This is the effect of fuel prices. The prime minister simply cannot get away with claiming that petrol companies are ‘fleecing’ motorists with fuel price hikes when the government’s fuel taxes are such a big part of the price rise. And now that price increases are being seen everywhere, and inflation ticks upwards towards 3%, we are on a downward slide. Wait until interest rates start to rise. quote.

A net 11 per cent say they were better off now than a year ago versus a net 12 per cent in the prior survey. A net 20 per cent expect to be better off financially this time next year, down 7 points. end quote.

I don’t think many people will be better off in a year’s time. This downturn is starting to bite. quote.

“A key question is whether this growing concern about the outlook will lead to consumers reining in their spending. However, encouragingly for retailers, the proportion of respondents who think it’s a good time to buy a major household item increased and is at a level consistent with solid growth in spending,” Zollner said. end quote.

Or might it be a good idea to buy a major item now because they are only going to get more expensive? If you need a new fridge, buy it today. quote.

Inflation expectations were a tad higher with prices seen rising at an annual pace of 3.5 per cent during the next two years, up from 3.4 per cent in October but down from 4 per cent in August.

Zollner said ANZ’s confidence composite gauge – which combines business expectations and intentions with overall consumer sentiment – suggests a slowing in economic growth by year-end. end quote.

Economic growth is slowing already. The September quarter figures were not too bad, but they didn’t take into account the fuel price increases. Wait until we get the December quarter figures, at the end of January. We will start to see a very different picture then.

There is considerable evidence that people are deliberately using their cars less than they did. This can only be a result of spiralling fuel prices. Fuel prices affect everything. If people feel unable to use their cars, they will spend less everywhere. They may not go on holiday. They may not take the kids out for the afternoon. This means the discretionary spending will dry up… which means the hospitality industry starts to struggle. Which means fewer jobs for people with no qualifications and on it goes. The downward spiral has already started and ordinary people are already beginning to feel it