Page 1982 - Week 06 - Wednesday, 25 June 2008
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five years. Statistics suggest that 45 per cent of this increase was attributable to the house component.
This is where the modelling gets tricky. Having looked at this modelling, I was not able to see anywhere where it actually drills down on some of these growth figures. If we look at the growth in house prices, as opposed to land prices, over the past few years a number of factors have gone into that. It is unclear to me whether Treasury has taken account of all these different things, and I will give an example.
Houses are generally bigger now than they were five years or 10 years or 20 years ago. Are we saying that the price of a 12-square home is more now than it was five or 10 years ago, or are we saying that the price of an average home, which is now 15, 18 or 20 squares, is more than it was five or 10 years ago? That is unclear to me. Perhaps the Treasurer can enlighten us in his speech by actually drilling down on some of those figures.
It certainly is of concern to me to be given these figures that say the house will depreciate. We know that land is always the better part of the equation—they are not making any more of it. We know that houses get run down over time and cost money to maintain and are, in real terms, in terms of growth, worth less than land. So they are either going backwards or, depending on what we read into this Treasury analysis, going forward very, very slowly. We do have a real concern with that aspect.
There are two real problems. The modelling suggests that it is only going to help a tiny number of people. That in itself is not a problem, but if we have got a scheme that helps a tiny number of people and then potentially puts a number of people into negative equity, then that is a scheme that is very difficult to support because we may well get more harm than help out of this scheme. That is our concern. Certainly the projection that only 20 land renters will graduate to full land ownership after five years suggests that it is only a small number of people. These depreciation figures lead us to suggest that under this scheme a number of people may go backwards.
We recently heard in the news that New Zealand has a form of land rent that has worked for years. We have looked up that New Zealand scheme. There is such a scheme. The Papakainga lending scheme provides loans in respect of houses on Maori land, but not in respect of the land. There are similarities to what Labor is proposing, but there are also important differences. The Housing New Zealand Corporation is the only organisation that will lend for Papakainga housing because no bank in New Zealand is prepared to lend. The HNZC loans are underwritten by the taxpayer. I have here a New Zealand cabinet minute from 2008, which states:
The Papakainga programme of lending for houses on Maori land provides access to finance for Maori to buy or build houses on Maori land. Other commercial lending products are not available.
I also have an extract from the latest published annual report for the Housing New Zealand Corporation. That report states that there were only 10 such loans on Maori land in the 2006-07 financial year. Even for a taxpayer funded scheme, that is a pretty poor take-up.
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