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State Houses and Social Housing (part 3)

State housing, or “social housing” more generally, is often in the news for one reason or another. Governments over the years have all had their own policies. In this post series, I won’t really be looking at the pros and cons (at least not much) – I’ll mainly be looking at some of the numbers. Here are parts one and two of the series.

Part 3: Was State Housing ever a big deal?

My last post looked at state housing over the years – with the government building 2,000 homes a year over four decades (the 1940s-1970s). Some state homes were sold off, but the number had still reached 60,000 by 1980, and peaked at 70,000 in 1990.

Those are big numbers. But New Zealand had 400,000 homes in 1940, and 1.6 million today. State homes are a pretty small share of that. Were they ever a big part of the overall housing ‘stock’, or of home construction?

I’ve had to smoosh some different data together to answer this question. Firstly, the number of homes in New Zealand (technically, “total occupied dwellings”) as recorded in each census. Secondly, figures on the number of state homes, and the number built.

Firstly, a graph showing the percentage of all homes which are owned by the government:

percentage-of-state-owned-homes

The government never owned more than about 7% of the total housing stock in New Zealand, but for many years it owned around 6%. The ‘absolute’ number of homes owned kept growing until 1990, as above, but the percentage stayed pretty stable. In the 1990s, the government of the day sold off more than 10,000 homes, and the percentage (and absolute number) fell. Today, state homes make up just over 4% of all homes in NZ.

The next graph shows the percentage of all homes which were built by the government:

percentage-of-state-built-homes

For many years, the government was a bigger player in home building, building as many as 20% of all the new homes between 1945 and 1951, and at least 10% of homes for many other periods. The last gasp was with the Lange government; ever since, state home construction has been quite minimal, especially compared with the amount carried out by the private sector.

It’s interesting to compare this with another country – Patrick managed to find the following chart for England:

social-homes-uk

It’s obviously hard to compare the UK with New Zealand – it has 14 times the population, and is growing at a proportionately slower rate. The welfare and social policies are quite different.

In the UK, it seems it was “local authorities” rather than the central government which did most of the building. They carried out the lion’s share of all home construction in the post-World War Two years, and remained a major force into the 1970s. Over those three decades, councils delivered about half the new homes built in England. “Housing associations”, which are also non-profits, made a smaller contribution in the postwar period, but have picked up some of the slack from councils since the 1990s.

What changed? Thatcher’s government came in and enacted a “right to buy” law in 1980, so tenants would have the right to buy their homes, and at a big discount to market value. But the councils weren’t allowed to reinvest much of the proceeds in housing (and, in fact, they didn’t even get all of the proceeds themselves). As a result, the number of council homes fell, as did the rate of council home building.

One last comparison: in 2015, the UK completed 2.6 new homes per 1,000 people, and 0.6 of those were social homes. New Zealand completed 5.9 homes per 1,000 people, and 0.2 of those were social homes.

9 comments to State Houses and Social Housing (part 3)

  • In addition to state houses, there were also government department staff houses – by the tens of thousands. In some cases, entire towns, like Mangakino and Turangi, consisted of state owned homes, and of course every settlement along the railway had railway houses for the railway staff. Same with Ministry of Works towns etc. If you worked for the government, you were virtually guaranteed a home.

  • Brendon Harre

    Interesting report Peter, lots of really useful facts. Is it possible to have the building completion rate per 1000 for different parts of NZ and also for places overseas with high growth? Say Australia and the US?

    • It’s possible, but it’d be time-consuming so I won’t be doing it for this post series! For different parts of NZ, I can do it back to 1990 very easily, but the vast majority of state homes were built well before that, so you’d need to go back to historic census data really. Someone would have to spend a bit of time in a library…

  • Guy M

    Having lived in both the UK and NZ, I have to say that the housing situation in the UK is far more politicised than it is in NZ. The provision of UK social housing by the local authority becomes a highly politicised football, and I guess the rise in growth of Housing Associations is one way to manage that. I had the luck (or misfortune) to live both in one of the most left-wing boroughs in England (Hackney), and then also one of the most right wing boroughs (Westminster). Ludicrous extremes on both sides, especially around the right to buy scheme. Luckily, NZ seems to have escaped that extreme contrast, and perhaps the centralised provision of housing by the state in NZ has helped avoid those extremes.

    Thatcher’s “right to buy” scheme was also a means to buy votes – especially in Westminster, where the local leader of the Council (Shirley Porter) essentially got caught out by making sure that Labour voting residents were moved to other boroughs, and just the Tory voting residents could buy their own house, at a ridiculously low price, just to get rid of the housing stock. Bill English’s half-cocked efforts to rid the NZ gov of its troublesome state housing portfolio by trying to sell it off to the Sallies has notoriously backfired, but he will keep trying until he succeeds. What I find interesting is that nowhere do the Nats seem to show any sign of selling the houses to the residents themselves. Despite the abortive mess it made in Britain, it would seem to me to be a far more equitable way of turning over state housing, than to sell it to overseas based housing providers. That’s just politically driven madness.

    • Worth noting, too, that NZ had ‘rent to buy’ schemes in place in the past – a lot of those earlier Housing NZ sales were to the occupants.

      I think the sales to “overseas based housing providers” have now been pulled off the table, due to it being a bit of a PR blunder, but it does appear that the push to sell state homes is continuing. I’ll have more on that in the next post.

      • Bigted

        John the ‘push’ as you put it is actually the selling of houses in areas where there is little or no demand for them. The selling in high demand areas like Auckland is about getting rid of the expensive houses to buy/build more cheaper ones or selling large sites (like is currently happening around Glen Innes) with the condition on the developer that there are houses built for the state among the development, so more houses not less.

        • Ted, that’s not quite correct. I don’t think anyone has a problem with the government selling state houses where they’re not needed, and investing where they are. That approach makes sense. But a lot of a noise from the government has been around reducing their overall role in housing provision. As I say, I’ll look at that in the next post so let’s have the discussion then 🙂

          • TimR

            These figures illustrate how the governments role has now been reducing for many years. Dropping from around 6% to 4% of the stock might not sound like much change, and the relatively stable absolute number suggests to some people that things are still as they were.

            However, I believe HNZC’s remit is now to cater only to those in most dire need, and this is in part a reflection on the (now) limited state housing capacity. This policy, while perhaps understandable with limited means, increases the stigma of state housing. Ultimately it’s a really unwise business model; it’s not good for tenants, assets or communities. That 2% drop over time is now a 30,000+ affordable rental shortfall, based on the 1.6M total housing stock, that really hurts social outcomes for the country. As Auckland has around 50% (IIRC) of all HNZC stock, it’s a big problem for our city. Imagine what another 15,000 regulated rentals could do for the local market and people’s needs…

  • GTP

    The point is that a government does not necessarily need to own the social housing stock in order to provide housing to those in need. The deliberate change of strategy in the early 90’s to market rents and provision of the accommodation supplement in theory meant the government no longer needed to keep building state houses in order to provide “social” housing to those in need.

    Whether you agree with the strategy or not, it’s no surprise that state home construction dropped from then onwards.

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