Lessons on the housing crisis from across the Ditch

CIS urban economics research director Stuart Donovan said the New Zealand experience showed that Australia’s federal and state governments could improve housing affordability in the face of opposition from councils which often sought to stymie increased density.

He said the policy changes had benefited younger people by making housing more affordable, but they could also lift wellbeing and productivity levels across the country.

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“More time is needed to know whether these recent changes in relative housing outcomes are sustained, but even current outcomes represent a significant change from the historical trajectories for housing in New Zealand vis-a-vis Australia,” he said.

While both major parties have promised money towards helping local councils release more land for housing, the Coalition has pledged to allow people to access up to $50,000 of their super to buy their first home.

The policy, similar to one it took to the 2022 election, has been criticised by economists and analysts for potentially driving up house prices.

Analysis by the Super Members Council, released on Tuesday, examined a similar policy that has been used in New Zealand.

Since 2010, New Zealanders have been able to borrow all but $1000 of their KiwiSaver retirement savings account to buy their first home.

According to the Super Members Council, the policy was one of the reasons behind a surge in New Zealand house prices which between 2010 and 2024 grew by 134 per cent compared to 86 per cent in Australia.

More than three-quarters of Kiwi first-home buyers dipped into their retirement savings. Retirement savings levels have fallen, the average size of a first-home loan has almost doubled while the proportion of first-time buyers taking out a high loan-to-value mortgage has climbed from 25 per cent to 75 per cent.

Council chief executive officer Misha Schubert said the lived experience of a super-for-housing policy was that it lifted house prices and the level of debt carried by first-time buyers.

“If you want to see further rises in house prices and falling home-ownership rates, New Zealand shows introducing a super for house policy leads in that direction,” she said.

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“If you want to fix the housing crisis, then the answer is building many more new homes to expand supply, rather than telling young people that raiding their super is the answer.”

Schubert said the research also showed that not only did house prices increase and young people have lower retirement savings, it reduced the overall returns of super funds.

She said New Zealand funds had to hold more cash and other liquid assets, reducing their overall investment returns. Australian MySuper products had outperformed comparable KiwiSaver investments by 1.16 per cent, on average, per annum over the past decade.

If that lower return was replicated in Australia, a 30-year-old worker would be $132,000 worse off at retirement.

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