GUEST BLOG: Damon Rusden – Housing in Auckland – Nick Smith’s terrible legacy



Housing crisis? What housing crisis?


Auckland’s housing bubble – there was been recent wall-to-wall coverage of the crisis, and all I’ve seen in response is a train wreck in the form of Housing Minister Nick Smith.

To kick it off there is the $1.6 million to an investment banker who has brokered lucrative contracts with both government and developers. Why pay one man so much money for near simple logistics: build as many houses as possible and see who is willing to invest in a project with guaranteed dividends.
Yet primarily there is the terrible conflicts that have arisen because how unprepared Smith is. Not only is he not communicating well with Key he’s irritated journalist Duncan Garner to call him cold (after he said that a man who died through a lack of insulation in winter was nothing new) and to continuously hound him. Props to Garner for calling it as it is. He’s also threatened journalist Brook Sabin for reporting the train as it crashes. The government is going to court with Ngati Whatua. The pointless thing about it is that the Iwi are willing to work with the government to develop houses – in fact they do, Key just doesn’t believe they need to be consulted. This is dog-whistle politics.

The wording regarding the housing itself is also disingenuous coming from Smith, who claimed that any housing is “affordable” simply because it will “be affordable to somebody.” ‘Affordable’ housing in policy terms is housing that is developed by investors and contractors, to be leased as normal. Which is at a profit for the owner. ‘Social’ housing is with a partnership and state subsidized. Here’s Smith’s numbers as a justification: “….In previous cases where Crown land was converted into private housing, 10 to 90 per cent of it had been affordable.”
The land dispute is simply one between historical grievances and the commercial production of land. I imagine the courts will go with the former. Key is spouting dubious legalities surrounding right of first refusal and uses, through his insistence that it is government land and that they can keep it for as long as necessary, at least two historical precedents (Wi Parata and Bastion Point) which were both an atrocious abuse of power relations between Iwi and government. This does not bode well.

Smith has also revealed an accidental dominance of central government. Parcels of land shown to reporters as special housing areas to be developed are also partially owned by Auckland Council. On RadioLIVE he admitted having issues with the council, citing the piece of legislation he can use to overrule local government. He seems to be strong arming, purely by flexing his muscles, local government into land usage, when they are reluctant as they may have to pick up the cost of infrastructure. While it is good that are happy to help out, and communication between tiers of government are necessary in an emergency, it’s a sign of toxic relations. I’m certain in no small part to Smith’s negotiating tact.

And now here is my pet peeve of Smith’s; his desire to gut the RMA for rapid development and the fact there is 220,000 thousands empty “ghost” houses in Auckland right now. There is no great red tape the RMA is conceived to bring. It only takes a few weeks of consent to begin building, and you can package the application with large swaths of land and divvy it up between contractors. As for the empty homes – allowing 220,000 empty homes (some purposefully it seems) in the middle of a bubble is just stupid. Empty houses + increasing amount of homeless = a housed populace. Yes, I’m aware there are plenty of externalities to consider. It just seems logical and simple and we have entire agencies to balance the externalities and produce solutions. If they are, Smith isn’t conveying this well. If at all.

TDB Recommends

My recommendation; a rent cap. Germany has capped rent to the average local price with a 10% leniency. It’s sensible and now we have a global model we can rely on. It would also solve the perpetual problem of parasitic landlords abusing the market.
A Warrant of Fitness for Housing New Zealand homes and all future homes would be the creme de la creme while builidng in Auckland, but sadly it seems this important issue in the media recently has been rolled under the weight of Smith’s crashing.

Damon Rusden is a  journalist and law student with an avid belief in civic education and accountability.


  1. Those who say there are only two sure things in life, death and taxes, should add a third sure thing: realtors and stock market mavens will deny there’s a bubble even when it’s obvious to everyone the bubble has already reached insane levels of overvaluation.

    And so here we are yet again, with housing and stocks both hitting price levels that make no sense in terms of traditional measures of value. And since these pesky metrics make it impossible to claim there’s no bubble, those benefiting from the bubble have to claim that this time it’s different.

  2. ” 220,000 thousands empty “ghost” houses”

    IT IS 22,000. Not Two Hundred and Twenty Thousand.

    If only the government had interest in reducing the housing costs…

    One possible way would be to complete an audit… But it would probably cost too much… Just change the flag instead.

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