Housing failure a ‘perfect storm’ says Salvation Army

Press release: In a post-election briefing provided to the Minister of Housing the Megan Woods The Salvation Army has likened New Zealand’s housing situation to the perfect storm.

It noted five factors which it believes are driving this storm:

  1. Historically low interest rates and monetary policy management of the Reserve Bank, which has allowed a sudden spike in house prices to emerge in the middle of a recession.
  2. The sudden increase in the numbers of people living in New Zealand as a result of the COVID-19 border closures – an increase of 160,000 people for the year to June 2020.
  3. Inadequate levels of new house building to cater for past population growth and to replace the existing housing stock.
  4. A private rental market which appears to have stalled so is no longer able to meet growing demand which in turn is contributing to rising rents and growing social housing waiting lists.
  5. The rising cost of housing support without an appreciable increase in the stock of social housing which is both a symptom and a cause of rising rents.

“We have several coincident forces which have created the perfect housing storm for low-income and vulnerable New Zealanders,” says The Salvation Army’s Social Housing Director Greg Foster. “This storm is entirely the creation of poor housing policies of the past as well as related monetary and fiscal policies of the present.

“We cannot see an end in sight and expect things to get worse – at least for the next 12 to 18 months. Rents and the price of affordable housing are likely to continue to rise faster than incomes, and the social housing waiting list will grow longer still.”

In its briefing to the Housing Minister, The Salvation Army suggests that the Government needs to act urgently and comprehensively to end this perfect storm. It offers eight proposals for policy reform which include:

  1. Addressing the impact of the Reserve Bank’s monetary policy and bank prudential management on house price inflation
  2. Running a more measured immigration policy which is aligned to New Zealand’s capacity to build housing and infrastructure
  3. Addressing growing wealth inequalities through some form of capital gains or wealth tax.
  4. Encouragement of innovation in alternative housing tenures like progressive ownership, private housing cooperatives and institutional investment in private rental housing.
  5. Partnering with NGO’s to provide more social and emergency housing.
  6. Reviewing the operational and financial sustainability and effectiveness of the Government’s housing provider Kainga Ora

“Right now we face a serious risk that a generation of younger New Zealanders will be scarred by their current experiences of poor and inadequate housing,” says Foster.

“The Salvation Army has built over a 100 social houses in the past 12 months and will be building more in the next 12 months with the support of the Government, and nonetheless, I feel that they need to do even more to support the sector to build more social and affordable housing at this time.”

Download the full report here.