Election 2020 announced what are the big issues?
The announcement that the election will be held on 19 September has signaled the start of the campaign trail. The relentless electioneering has started and the coming months will be dominated with claim and counterclaim about past achievements or lack of and policy direction for the future. The media will no doubt focus on the novelty of the accompanying referendum on legalising cannabis and euthanasia. But what are the important issues for voters in your customers who have an eye on all things impacting the housing market? In this article, I give a personal take on the big issues.
The election date for 2020 has been announced, what are shaping us as the major issues for housing?
The ‘Housing Crisis’ label was used heavily in the 2017 campaign being heavily reported by the media off the back of encouragement from Labour and the Greens. Now in government It's interesting to see a relative lack of aggressive rhetoric regarding housing possibly due to the coalition government’s KiwiBuild bombing badly.
Despite some challenges in this area the government will point the ramp up in state homes being built, which is one promise they have delivered. Unfortunately this hasn't moved the dial significantly for those under severe housing stress, with most key indicators continuing to slide, including emergency housing spending and wait lists.
The result is the issue is still a festering sore on the face of the political debate and will be a key election talking point and policy driver with flow on impacts to the rest of the housing market.
So for in the campaign, both the main parties have been surprisingly quiet on major housing announcements, saving ammo for later on the campaign trail.
For ordinary Kiwis, house prices continue to grow faster than wages which means affordability remains a major issue. The recent Demographia international housing affordability survey found that housing in New Zealand is now more than seven times the median income. This phenomenon is observed throughout the regions as well as the main urban centers. Home ownership, especially for many middle and low income earners, remains out of reach.
It’s a similar story in the rental market. The cost of renting is increasing nationwide, even outside of the big cities. And at the same time, the supply of available rentals is getting smaller with most coalition government policies being picked on by market commentators for actually exacerbating this issue rather than alleviating it.
The ambitious Zero Carbon Bill garnered broad bipartisan support despite National being critical of several areas and outlining 7 key changes they would make if elected. While there is a good general agreement among most sectors on needing to take action, farmers are feeling less than enthusiastic around the targets methane reduction.
Relentless media coverage of the recent bush fires in Australia, Southlands floods and the north's drought has kept a sharp focus on climate change issues among voters on either side of the debate.
Regardless of the shape of the next government there will be continued steps taken to decarbonise the economy and these will add costs to certain sectors and reduce profits of others. While there are opportunities to be had for those at the forefront of low carbon and new energy technology many sectors will be negatively impacted post election.
In housing there has been strong critique leveled at our construction methods with a brand new kiwi home on average emitting five times as much carbon dioxide as it can afford to, if the world is to stay inside the Paris accords level of warming.
This means there will be pressure on the industry to use more energy efficient construction methods and design which might add to the cost of construction.
Despite low business confidence and a negative response to many recent government policies such as the minimum wage changes and the banning of oil and gas exploration, the economy is in relatively solid shape.
Interest rates and unemployment are low. And consumer confidence has been holding up well.
However, the Corona-Virus crisis may yet have a more serious impact on the New Zealand economy. The Reserve Bank announced the official cash rate will remain unchanged and was tending to underplay the economic effects of the outbreak predicting that the worst would be over by July. However with the tourism industry already reeling from the reduced Chinese visitor numbers and exports starting to suffer as well, there are many aren't offering as rosy a prediction.
National has announced a lightly detailed commitment to lower taxes and less regulation including indexing tax brackets to inflation which will be popular. Will the historically tax fond coalition partners respond in kind or pin their hopes on large social and infrastructure spending programmes?
A strong economy is a key driver for the housing market however a strong housing market can also hold up a slowing economy. With growth returning to the Auckland market and strong regional price increases, the wealth effect on homeowners will have them tending towards having more open wallets which should boost domestic consumer spending.
One certainty is that the Resource Management Act as we know and love it is up for change no matter what colour the next government is. Both parties have announced proposals to significantly change the current system. Unwieldy, slow and overly complicated, reform of the resource management act is long overdue. Whatever political party gets into power in September, hopefully the changes will result in a simplified system that supports urban development.
Probably of more immediate concern to voters, however, is the government’s carefully timed announcement of a $12b boost to infrastructure projects nationwide. With transport, road, rail, school and hospital projects earmarked for support, this move is likely to be popular with voters. But after delaying many projects for two years only to re announce them, will it be a case of too little, too late?
One thing for sure though is that the worldwide trend towards populism evident in the UK and US, in particular, has not yet reached New Zealand in any meaningful way. Jacinda Ardern’s response to the Christchurch killings won admirers at home, but even more so abroad. Ordinary Kiwis, however, will take a far more pragmatic view and how they will assess her government’s performance will become all too clear in the coming months.
All the polls indicate a very close race with New Zealand First possibly holding the key to the outcome and Northland will no doubt be in for quite a few lollies to try get Shane Jones over the line there.
Hold on tight, it’s going to be an interesting ride on the campaign trail!