David Farrar: Does the state need to own houses to help families?

A good report from the NZ Initiative that looks at whether ownership of state houses is the best way to help low income NZ families with housing. Some key extracts:

• Kāinga Ora manages over 77,000 homes valued at $46.7 billion, housing 198,000 people, representing 3.8% of New Zealand’s population.

• From 2017 to 2023 KO debt had surged from $2.3 billion to $16.5 billion in 2023/24 and operating deficits went from a $76 million surplus to a

• $722 million deficit.

• The report calculates that KO’s operating costs per housing unit accounted for around 88% of its market-related rental income, compared to a private sector benchmark of 50%

• This indicates that state rental housing might be costing taxpayers around $2.2 billion annually or $29,000 per unit.

• The UK transferred 1.7 million council homes to housing associations and tenant ownership, resulting in improved maintenance and tenant outcomes.

That $29,000 per unit estimated cost is not the cost of income related rents – they are the same regardless of whether the state or charities own social housing. It is an estimate of the greater costs KO incurs in building and operating houses.

The recommendations are:

1. Asset ownership should follow function, not ideology

2. More diverse ecosystem of providers creates resilience and innovation

3. Fiscal sustainability requires bolder action

4. Underutilised land for housing represents a lost opportunity

5. Housing assistance needs to target those in greatest need better than currently

6. Care for those receiving housing assistance should be coordinated with care other agencies are providing though non- housing welfare assistance

7. Shift in emphasis from ownership to vouchers should better harness competition, choice and capabilities.

8. Measures to reduce the multiple barriers to new housing developments

David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders.