New Zealand

How New Zealand’s acclaimed COVID-19 response helped the housing crisis

Murray Edridge, head of the Wellington City mission to assist desperate families and individuals looking for food and shelter, can be found in Wellington, New Zealand in this dateless handout.Wellington City Mission / Distribution via Reuters

For many, life in Wellington, New Zealand’s capital, is largely back to normal. The windswept streets are crowded with maskless shoppers and office workers, the bars are full and the economy is booming.

At the unique “Beehive” Parliament Building, Prime Minister Jacinda Ardern and her government received lavish global praise for controlling the failed COVID-19 pandemic by many other leaders.

But across the city, Wellington City mission staff have seen a surge in homelessness and inequality as the pandemic and government response has ignited what was already one of the most affordable housing markets in the world. I’m having a hard time dealing with it.

“This is a crisis,” says Murray Edridge, head of a charitable trust that is a member of the Anglican Church. “Inequality has always been growing, but COVID-19 is the proverbial straw that broke the camel’s back.”

The number of people seeking emergency housing in a city of 211,000 has tripled in the last 12 months as rents hit record highs and pandemics disproportionately affected low-income jobs.

Throughout the country, motels and other temporary boarding facilities that have been converted into emergency housing are increasingly packed with desperate families seeking shelter, and currently about 4,000 children are staying in such states. I’m in the facility.

“Most of the cases that come to my desk are breaking our hearts,” said Edridge of City Mission. “This summer, I met two children and someone who had been in an emergency housing for 15 months.”

Karen Hooking, general manager of housing at the Ministry of Social Development, admitted that motels are not particularly ideal housing for children.

“Families facing the homeless are in a vulnerable position and we aim to find accommodation soon. After the family’s urgent accommodation needs have been addressed, we We look for more suitable options when they become available, “Hooking said.

Others are also having a hard time. Sean lost his job as an agricultural worker four months ago and moved to Wellington in search of a new start.

The 27-year-old woman is still unemployed and living on the street because the rent is not affordable and she has been waiting for emergency housing for a long time.

“It’s all about living here. No one hires me while I live on the street, but I can’t go home,” he asked Reuters not to use his surname. ..

“K-shaped” recovery

New Zealand is experiencing what economists call a “K-shaped” recovery. In this recovery, the top people will benefit and the bottom people will have a worse outlook.

This is a global phenomenon, a wealthy situation in which cheap access to capital and government coronavirus stimuli are used to scoop up assets from stocks to art and property.

New Zealand’s pandemic-inspired policies have been transformed into cheaper mortgages, allowing wealthy “kiwis” to expand their homes and build a portfolio of rental investment real estate, further boosting home prices. I’m fanning.

The 24% year-on-year increase has locked out first-time homebuyers and low-income earners, in addition to the 90% increase over the last decade.

Instead, funded investors have become the largest real estate buyers-about 40% of homes purchased in the final quarter of 2020 were from multiple real estate owners.

“The surge in wealth inequality in the New Zealand context was associated with a housing boom,” said Sharon Zorner, ANZ Chief Economist. “The wealth growth of those who are lucky enough to own property, and those who are brilliantly lucky to own more than one, has been extreme.”

Rents are rising nationwide, inspired by years of underinvestment in new homes and a strong immigrant heritage.

According to the 2019 Organization for Economic Co-operation and Development (OECD) report, housing costs were at least 45% of household income, at least one-fifth of the income distribution, even before the recent surge.

Five million people in the South Pacific are currently at the top of the list of the most affordable homes in the OECD.

Political risk

Increasing inequality fueled by the housing crisis is arguably the biggest political challenge facing Ardern’s centre-left government in his second term.

The 40-year-old’s popularity soared in response to a pandemic that reduced the number of nationwide incidents to just 2,500, leading to a victory in last year’s Labor elections.

However, subsequent polls show that her support is declining as housing shortages and rising real estate prices undermine New Zealand’s egalitarian self-image.

“Ardern still has a clear lead over his rivals, but at risk of losing moral authority and losing a lot of trust from his side,” said Bryce Edwards, a political analyst at Victoria University of Wellington. Has been done. ” “Housing is one of the core issues of the left, and it’s amazing to see Labor failing to do this.”

When Ardern came to power in 2017, housing and inequality were already big issues, and she vowed to tackle both.

However, her government’s flagship product, the Kiwi Build project, was created, and over-promoted projects such as the “Wellbeing” budget have had little impact on the scene.

Ali Hamlin Penga, CEO of Maori social housing provider Kahungunu Fanau Services, said the indigenous Maori, who greatly support Ardan’s leadership, could own property. He said he was most affected because it was low and unlikely to be accepted as a lessor. Wellington.

“Maori are in a housing crisis. There are serious inequality and we are constantly forced to fight the system,” said Hamlin Penga.

Housing Minister Megan Woods said the government is catching up after the previous administration reduced the amount of public housing available.

“No one in our government thinks that people living in motels are in an ideal situation, but it’s better to have shelters and beds than to sleep in rough or crowded situations. It’s good, “she explained about the public housing program. By 2024, there will be more than 18,000 new public and temporary housing locations, making it the largest of its generation.

Policy conundrum

The government and central banks have supported the economy through a combination of means that will allow the economy to recover quickly after the virus has been eradicated.

The Reserve Bank of New Zealand (RBNZ) has revitalized the economy with record low interest rates, a NZ $ 100 billion ($ 70 billion) quantitative easing program, and mortgage payment leave for homeowners.

The government’s NZ $ 50 billion pandemic-ready package saved jobs, but added fuel to home-price fires.

Brendon Blue, a geographer at Victoria University of Wellington, said the government’s attempts to stimulate the economy primarily included measures to boost home prices rather than significantly increasing spending on infrastructure and welfare.

“There was an unfortunate consensus in New Zealand’s politics that it was better to push up house prices than to help the poorest people in the country,” he told Reuters.

Under pressure, Ardern launched a series of measures in March aimed at taxing real estate investors and discouraging speculators.

So far, these measures have had little impact on the housing market and the government has promised further measures.

“The need for further action is clear,” Ardern said at a press conference last month. “The last thing our economy needs right now is the dangerous housing bubble, but many indicators show that risk.”

($ 1 = 1.3998 New Zealand dollars)

Our criteria: Thomson Reuters Trust Principles.

How New Zealand’s acclaimed COVID-19 response helped the housing crisis

SourceHow New Zealand’s acclaimed COVID-19 response helped the housing crisis

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