Free to build: restoring New Zealand’s housing affordability

Executive Summary: New Zealand’s housing market needs urgent reform. For too long, the rate of building has fallen below what is needed to keep up with household formation and demographics. It is difficult, costly, and time consuming to build a new house or dwelling. Rather than tinkering with demand-side stop-gap solutions, nominal subsidies, and bit-part changes to the Resource Management Act, even if some of them are desirable, long-term supply-side solutions are needed to fix New Zealand’s housing crisis. The central government’s new policies seek to reflect this reality but do not go far enough. The New Zealand Initiative’s three-part series on housing offers solutions to restore some of the freedoms that have been stripped from property owners over the years, such as the ability to do what they like with their own property, provided they adhere to basic building regulations. This third report draws on the Initiative’s previous two housing reports: Priced Out and Different Places, Different Means. Those reports examined the ways in which government and council regulation has become more centralised and the effect, combined with higher expectations, this has had on the housing market. With many councils complaining about the high costs of new development, incentives to local government also need to be improved. The three reforms suggested in this report can help free up the housing market and augment the supply of new homes.