Speeches 

The theme of this forum: decent, affordable, secure housing is at the heart of a civilised, inclusive society and a globally competitive economy captures perfectly why this is such an important issue that warrants action.
This is the impetus behind the government initiatives that I will highlight briefly today.
The Australasian Housing Institute poses the question: Do we have a rental affordability problem in New Zealand? If so, what can we do about it?
The answer is yes we do have a rental affordability problem in New Zealand and I will provide some statistics that back this up.
I will answer the second part of that question by speaking about the government's work on encouraging the growth of not-for-profit providers of housing for the intermediate market and the role of state housing in particular.
My colleague Building and Construction Minister Shane Jones will focus on other initiatives the government has underway to address the issue.
As I have acknowledged in my previous speeches, the government cannot address the housing affordability issue on its own. Our work with partners such as you, local government, community groups and non-government organisations is crucial.
Housing affordability is not only an issue for people wanting to buy their first home. It is an issue for renters as well. Renters have become a more diverse group, including households with children and older renters who will increasingly out-compete the single-parent and single-person households that have traditionally relied on the rental sector.
Without affordable rental options, households are spending too much in rent and there is less left for other essential living costs, including saving a deposit to buy their own home.
As your theme notes, a lack of suitably-located affordable houses has economic and social consequences. People live further away from work and have to spend extra hours commuting, at a cost to families and the environment. Without a range of house types within neighbourhoods, people have to move out of their community if their housing needs change.
Tenants and landlords in New Zealand have traditionally viewed the private rental market as a means to home ownership. For tenants it has been a stepping stone while saving for a house or a flexible housing solution during periods of mobility. For landlords it has been an investment. However it is predicted changing market conditions will result in quite a different rental market in the future, reflecting the growing size and diversity of the renting population and the greater number of long-term renters.
Over the last 10 years proportionately fewer young people are flatting away from home, more older people and families with children are renting and there is greater cultural diversity within the renting population.
Private renters increased from about 160,000 to 300,000 households in the 15 years between 1991 and 2006. Above average increases occurred in Auckland, and for families with children. Single parents with children increased from just under 17,000 to 45,000 between 1991 and 2006, and couples with children increased from 29,000 to over 66,000.

While modest falls in house prices are occurring, they have risen by 80 per cent since 2002 and a return to those prices is not expected. Home ownership rates have decreased as a result. There are now an estimated 55,000 households in Auckland who can no longer afford to buy even the cheapest of homes.
For all these reasons, New Zealand now faces the prospect of more housholds remaining in private rental accomodation throughout their lifetime.
In contrast to rapidly increasing house prices and mortgage interest rates, rents have generally increased in line with incomes in recent years. This has tended to cushion renters over the past few years. The CPI in the year to March 2008 shows rent increases of three per cent, matching three per cent inflation over the same period.
However, tenancy bond data shows rents for new tenancies are increasing more rapidly and rental affordability is now estimated as a problem for roughly one-third of Accommodation Supplement recipients. The median private rent for March 2008 was $295 compared to $280 in March 2007.
Given the private rental sector's growth and the high degree of tenant movement within the residential rental market - the average duration of New Zealand tenancy is 18.5 months - a better understanding of its dynamics is required.
Security of tenure is important for many tenants, particularly those with school-aged children, for elder people who have social and support networks to maintain or for those who may be vulnerable or at risk.
The government will support a sustainable balance between the needs of investors and landlords, tenants, and the wider community. The government initiatives my colleague Shane Jones and I will briefly highlight today will demonstrate how this will be achieved.
The first initiative is Housing New Zealand's role in building up state house numbers and ensuring the rents are affordable.
The government provides direct housing assistance to nearly 70,000 households in the form of a state house coupled with an income-related rent for those households who qualify. Households who qualify, and the vast majority do, for an income-related rent pay no more than 25 percent of their income in rent up to the level of the New Zealand Superannuation payment.
The government will continue to build up the state housing stock to reduce waiting times for families in need, particularly in Auckland. At the end of last month Housing New Zealand had increased its portfolio to 68,813 properties, 38 more than the previous month and the average rent paid by tenants sits at around 44 per cent of the average market rent.
Since 1999, when we inherited a state housing stock depleted by 13,000 houses, we have built or acquired some 7600 more homes, but we haven't yet fully recovered what was lost.
I was asked at a community housing forum in Porirua last week what would happen to housing policy under a National government and I had to say I didn't know because it's just one more area of policy where no plans have been unveiled.
I'm pleased National has finally given up on the disaster that was its market rents policy and agreed to support income related rents. But there have been no commitments to continuing to rebuild the stock, just a statement about replacing the state houses they will sell to those tenants who can afford them.

We need to do more and we are doing more to address the issues of housing affordability, including rental affordability. But the provision of sufficient state housing for our most vulnerable citizens is the first and most fundamental step.
The second initiative is encouraging the growth of not-for-profit providers of housing for the intermediate market. Not-for-profit housing is expanding in many OECD countries facing similar housing trends and pressures to New Zealand's. The not-for-profit sector is seen as a way of delivering the benefits of homeownership to a growing number of long-term renters via not-for-profit providers.
A contributing not-for-profit sector would achieve three broad outcomes: firstly, increased tenure choice for the intermediate market (which essentially consists of private renters and boarders) in areas under stress; secondly supply more affordable rental and owner-occupied housing for the intermediate market and thirdly, that benefits normally associated with home ownership, such as tenure stability, should be extended to the intermediate market.
Of course some of the country's territorial authorities play an important role in the provision of low-cost, not-for-profit housing. The government has committed $220 million towards an upgrade of the Wellington City Council housing stock in Budget 2008 - a funding injection which will ultimately provide improved accomodation to some 4000 long-term renters in Wellington.
There are several other initiatives underway including a review of the Residential Tenancies Act. There are being carried out under the direction of the Department of Building and Housing and Shane Jones will detail these when he speaks.
Thank you for your time and I look forward to the discussions!

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