Opinion piece by Kevin Atkinson, Chief Executive of Generation Homes
Published on 28th April in www.stuff.co.nz
Covid-19 is handing the Government a one-time opportunity to address the country's housing crisis and get more New Zealanders into warm, dry homes.
This can be achieved by the Government taking an active role to ensure people can access mortgages in the post Covid-19 environment. This could be through such measures such as Government-supported suspensory home loans, or subsidised loan schemes - anything that reduces reliance on banks, which are likely to be much more risk averse post Covid-19.
If the Government provided assistance to new homeowners wanting to pull together their initial deposit, they would then be well-placed to take advantage of New Zealand's current low mortgage interest rates. Moving from renting to home ownership would be beneficial for the homeowner, create long-term social benefits and also arrest New Zealand's declining rate of home ownership.
There have been many years of debate about our housing crisis and multiple attempts made to address it, none of which have made a significant impact. Ironically, the current pandemic now offers the Government an opportunity to address the housing crisis at the same time as it focuses on kick-starting our economy.
Covid-19 is unleashing its devastating impact on economies throughout the world and, while many people are lauding our Government's "go hard and go early" response to the crisis, this approach can't completely protect our economy from worldwide events.
Right now it is uncertainty that is affecting business confidence. Which businesses will survive? How many of their staff will they be able to keep? How high will unemployment figures go? What are the most important steps needed to get recovery under way?How long will recovery take and what will that look like? How many people will default on their mortgages as a result of losing their jobs?
The Government is already taking decisive action that it says is based on acting swiftly, improving cash flow and confidence, and acting in coordination to secure and support our financial and business sector.
It acknowledges the role the construction sector will play in getting people back to work and stimulating the economy focusing on vertical and horizontal construction – roads, bridges and 'public good' buildings such as hospitals and schools buildings. But, so far, we have seen little discussion about stimulating the third construction sector – residential.
This sector employs a lot of people, including sub-contractors such as plumbers, carpenters and electricians. What is encouraging is Finance Minister Grant Robertson's comment last week that the Government is working "to bring forward projects that will drive not only jobs, but also deal with our long-term housing issues".
If this crisis is teaching us anything, it is that we need to look at different ways of doing things.
We know we need more housing and more jobs, and we need to do all we can to support our economy. We now have the opportunity to take action that will address the housing crisis and at the same time stimulate the residential construction sector – which is geared up and ready to get back to work.
Why should the Government step in to the mortgage market?
Ensuring ongoing mortgage availability will enable more people to take advantage of the extraordinary post Covid-19 changes to the housing market by moving into their own home and freeing up more long-term rentals for those currently struggling to find a home to rent.
People who need to sell for financial or family reasons will be able to find buyers more easily.
There will be stimulation of the residential construction sector with more jobs created for construction workers (including apprentices), employees in supporting industries, and employees of businesses where the direct and indirect workers spend their wages.
The residential construction sector is more than ready to take up the challenge and get back to work in alert level three. With smaller numbers on each residential construction site, the sector is perfectly positioned to respond to the health and safety challenges that level three will present. These requirements present little change from what is already standard practice on most residential building sites.
Combining the existing housing crisis with everything that we are experiencing with Covid-19, what emerges is a unique opportunity for the Government. It can step in and help more New Zealanders into home ownership and rentals. At the same time, this will provide a significant boost to our economy.
These are unique times and they require us to look at new ways of dealing with the challenges we face.
Kevin Atkinson is the chief executive of Generation Homes