Resolving Housing Issues in New Zealand

Running head: RESOLVING HOUSING ISSUES IN NEW ZEALAND
Resolving Housing Issues in New Zealand
Name of Student
Name of University
Author Note

1
RESOLVING HOUSING ISSUES IN NEW ZEALAND
Introduction:
In terms of building construction and accommodation markets, New Zealand is one of the
most expensive places of the developed countries. According to surveys, it has been found that
the people of the country are facing significant problems regarding the scarcity of houses.
According to studies done in 2017, almost 9,000 New Zealanders are in need of new houses
(Norman, 2014, p.20). As a result, scarcity of housing is a major issue amongst the citizens of the
country. Moreover, the places that are available, are beyond the level if affordability for the most
the common people. As a result of this, people are being forced to opt for the accommodation
that are unsuitable and are of poor quality. However, it is known that every year the government
spends a huge budget of $129 million to resolve the problem (Inland Revenue, 2014). Still the
issues regarding housing and accommodation cannot be solved. This report aims to highlight the
problems related to proper and quality accommodation. In addition to this, the report also
includes few recommendations as well as possible solutions.
Problems:
1. Inadequacy of suitable Accommodation
As the country is witnessing a surge in population as a result of increasing migration,
New Zealand is failing to cope up with the increasing demands for new and suitable
accommodations. According to the report, the rate of accommodation scarcity has risen to 9%

2
RESOLVING HOUSING ISSUES IN NEW ZEALAND
approximately within a timespan of 6vyears, starting from the year 2001 (Statistics New Zealand,
2017). Moreover, the Official Statistics Researches has shown that the number of people having
no proper accommodation has increased significantly in Auckland. According to the reports, in
the year 2006 the number of homeless people have risen alarmingly around 44% (the University
of Auckland, 2015, p. 8).
2. Increasing Cost of Housing
As a result of the ever-increasing demand for new accommodations, buying new houses
in the country is becoming more expensive. Along with the scarcity of the accommodations, the
prices of the new houses are also increasing around 12% each year (Bassett & Malpass, 2013).
Moreover, the immigrants are flooding the country. Hence, it is obvious that these immigrants
have lo buying capacities. Hence, housing and their increasing prices are big problems to these
people. In addition to that, the New Zealand Productivity Commission has pointed out that due to
the scarcity and the unaffordability, more number of people are becoming tenants. As a result of
this, over the year the number of tenants has increased to 35% (Bassett & Malpass, 2013).
3. Poor Quality of Accommodations
The next issue that should be highlighted in this regard is the poor quality of the houses.
As the cost of construction has also increased along with the rising demand, the quality of the
constructions have started to decrease. During the years of 2002 to 2005, the cost of construction
has heightened to 30% (the New Zealand Productivity Commission, 2012, p. 174). Monitoring
the market strength and its incapability to opt for costly options, the builders are not willing to
spend more on the construction cost. In order to sale the accommodations in a comparatively

3
RESOLVING HOUSING ISSUES IN NEW ZEALAND
cheaper price, they are opting for low cost and hence substandard materials. In addition to this,
the Ministry of Business, Innovation and Employment have pointed out that the households are
dealing with higher electricity bills as a result of improper insulation set up.
Solution:
In order to solve the issues of improper housing, the report points out few possible
solutions to consider. They are as follows:
i. Revising the Residency Tax Rate
In order to cope up with the dearth of accommodations, the government should revise the
non-residential house taxation policy. It will curb foreign ownership of the housing in New
Zealand. For the non-resident owners, the tax should be increased from 3% to 15% (Gordon,
2016, p. 34, p. 38). Example of Canada’s success can be taken as an example in this regard. This
strategy will have its two-way benefits, as it will generate more revenue to the government as
well as discourage non-residential foreign buyers.
ii. Introducing Tax Credit for Low-income Households
To address the issues of increasing homelessness, the government should play a
supportive role. To control the problems, the government should incorporate the tax incentive
laws to encourage purchasing for the weaker section of the country. A similar program has been
incorporated in the United States from the year 1986, where the residential owner can claim
credits of the tax return (Office of the Comptroller of the Currency, 2014, p. 1, p. 2). This law
has been successfully implemented in the USA hence, can be followed by the New Zealand
government as well.