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Welfare agencies are concerned about the worsening housing crisis, soaring homelessness and inequality.
New Zealand’s pandemic-inspired policies have translated into cheaper mortgages, allowing affluent “kiwis” to upsize their homes and build up portfolios of rental investment properties, fuelling a further surge in house prices.
“Inequality was always growing, but COVID-19 is the proverbial straw that broke the camel’s back,” says Wellington City Missioner Murray Edridge.
He says the number of people seeking emergency housing in Wellington has tripled in the last year. Rents have hit record highs and the pandemic disproportionately impacted lower-earning jobs.
New Zealand is experiencing what economists call a ‘K-shaped’ recovery, in which those on top benefit while those at the bottom see their prospects deteriorate.
It’s a global phenomenon, with the well-off using cheap access to capital and government coronavirus stimulus spending to scoop up assets from stocks to art and property.
New Zealand’s pandemic-inspired policies have translated into cheaper mortgages, allowing affluent “kiwis” to upsize their homes and build up portfolios of rental investment properties, fuelling a further surge in house prices.
Around the country, New Zealand’s worsening housing crisis is seeing about 4,000 children and their families living in motels and other emergency housing.
Karen Hocking, General Manager for Housing at the Ministry of Social Development says the Ministry prioritises finding these families accommodation quickly.
The housing crisis is also seeing many are unemployed and living on the streets, says Edridge.
“It’s all just about housing here. No one will employ me while I live on the streets, but I can’t get a home,” one street dweller says.
His situation contrasts strongly with that of wealthy New Zealanders.
“The explosion of wealth inequality in New Zealand’s context was related to the housing boom,” says ANZ Chief Economist Sharon Zollner.
She says housing owners’ increase in wealth “has been extreme.”
This is because pandemic-inspired government policies have provided cheaper mortgages. These have enabled the affluent to upsize their homes and invest in rental properties, fueling a further surge in house prices and rents.
First home buyers and low income earners, however, are locked out.
A 2019 Organisation for Economic Co-operation and Development (OECD) report found costs were 45 percent of income for households in the lowest fifth for income distribution.
It says New Zealand has the most unaffordable housing in the OECD.
Indigenous Māori, who have largely backed Ardern’s leadership, are most affected as they are less likely to own property and less likely to be accepted as renters, says Ali Hamlin-Paenga, the chief executive of Kahungunu Whānau Services, a Māori social housing provider.
“Māori are in a housing crisis. There are profound inequalities, and we are always forced to fight the system.”
Housing Minister Megan Woods says a raft of measures was launched in March targeted at taxing property investors and discouraging speculators, however, critics dispute the effectiveness of these measures.
As a result of these moves around sixty per cent of domestic landlords have reportedly said they will increase rents.
The 24% year-on-year increase, on top of a 90% rise in the preceding decade, has locked out first home buyers and low-income earners.
“The need for further action is clear,” Prime Minister Jacinda Ardern says. “The last thing our economy needs right now is a dangerous housing bubble. But a number of indicators point towards that risk.”
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