"A culture of despair": How the NZ property dream became a nightmare

"A culture of despair": How the NZ property dream became a nightmare
Shamubeel Eaqub says he isn’t an angry economist, but talk to him for a moment about property prices in New Zealand, and you may beg to differ.

The principal economist at the New Zealand Institute of Economic Research says that we’ve created a housing market impossible for young people to enter, a society one step away from a landed-class system, and a culture of despair. Renting, says Shamubeel Eaqub, is basically the only option for too many people – and he doesn’t like it one bit.

To that end he’s just written a book on the subject with economist and wife Selena Eaqub, Generation Rent: Rethinking New Zealand’s Priorities, where the pair break down the collapse of the New Zealand housing market. They also propose a series of corrections and improvements to that market, but warn there is no magic bullet, and that those solutions, if they do appear, are definitely long term proposals.

“We wrote the book because we are both renters,” says Eaqub, speaking from his (rented) Auckland home, where he is currently on paternity leave.  

“There’s an expectation in this country that if you rent, somehow you haven’t ‘made it’. There seems to be a second class in this country, an underclass of renters, and we wanted to explore that with this book.”

Image: Authors of Generation Rent: Rethinking New Zealand's Priorities, Selena and Shamubeel Eaqub

While New Zealand views itself as, first and foremost, egalitarian, Shamubeel says, when it comes to access to housing, “it simply isn’t true”.

“Houses have become less and less affordable to the point that now you can only afford a house with the help of mummy and daddy. The way that house prices are trending, if we don’t take steps, by 2023 a typical family mortgage will consume all of a typical family’s income. That’s insane.”

Help, at least for renters, may be at hand however. Eaqub says recent innovations – online accommodation and feedback service Airbnb for example – might be the way torward a better deal for renters and improving the renter/property owner relationship.

“First off we need to create more rights and more responsibilities for tenants. That will give us the best impact right away, and provide a huge benefit for the largest amount of people, without pointing the finger at landlords,” he says.

“Technology is going to become a very important part in their mediation processes, because the current model—using property managers—simply doesn’t work. Because, currently, you just don’t know what you’re getting into yourself into. If your landlord doesn’t want to fix something, there’s no way to record or express that. Using [a user-feedback and rating system] technology could create an open and transparent model for this and provide some relief to renters.”

Secondly, radical improvements in the way most homes are constructed—such as prefabrication—could provide a high standard of housing quickly and cheaply for those looking to enter the market.

“Prefab housing, because it’s done offsite, has economies of scale that you don’t get with traditional methods of construction,” he says. “It’s high quality, and in terms of building technology, better quality buildings bring down the cost to owners.”

But although solutions are out there, Eaqub says current property owners are often reluctant to sacrifice their own lifestyles and personal equity to the greater good.

“With large regions of one and two storey buildings right next to the [Auckland] CBD and a lack of density around transport corridors, we simply don’t use the land well and that has to change,” he says.

The way that house prices are trending...by 2023 a typical family mortgage will consume all of a typical family’s income. That’s insane

The ‘Nimby’ [‘not in my backyard’] class and their equally stubborn brethren, the ‘Notes’ [‘Not over there either’], as the chief cause of Eaqub's frustration.

“We’ve got ourselves into a situation now where we can’t go ‘out’ and we can’t go ‘up’, but population continues to increase. We need to manage these increases in population density somehow, but the Nimbies are just too powerful.

“I think you’re going to see a lot of vested interests taking up their clubs when we start talking seriously about these areas,” he says.

Fundamentally however, Eaqub feels it is a failure of policy, not character, that has led to the crisis.

“Ultimately it’s the role of government to change policy, but until we can make a strong and clear case that something needs to change we are not going to see our politicians respond,” he says.

For someone who doesn’t describe themselves as angry, Eaqub's frustration with the way things are is apparent.  

“I don’t know if I’d describe myself as angry, but I should be,” he says. “Because the situation we are creating is unacceptable. We’re creating a sense of resignation in our young people. These young people are coming out of university with huge debts and are going into a completely unaffordable housing situation and it’s not fair.”

“And it does make me angry that our political leaders, across the spectrum, aren’t recognising this problem. We need spirited action to address it and that’s just not happening.”

"Generation Rent" by Shamubeel and Selena Eaqub, is published by Bridget Williams Books, $14.99 (paperback), $4.99 (ebook).

Affordable options

While politicians may be slow to react to the housing issues facing the country, New Zealand innovators are doing their small part on the ground level however. Here are three trends—the quick, the small and the tough—that may offer something of a way out of the New Zealand’s current property nightmare.

Prefab tech

For people looking to build affordable homes quickly, modular prefab design offers distinct economic advantages, including—for a three bedroom home—being up to $100,000 cheaper than their onsite-built equivalents with a 50 per cent reduction in construction time.

One prefab business, Wellington’s Matrix Homes, is taking advantage of the demand, having opened its factory this February, and looking to churn out up to 500 houses a year, rain or shine.

The company says they can produce a one bedroom home starting at $89,000, four bedroom homes for under $200,000, and can build and deliver, virtually complete in as little as twelve days.

Images via Matrix Homes

Small is good

Compact doesn’t have to mean cramped, as typical Smarter Small Home’s two-storey, four-bedroom home, which sits on a tiny 65 sqm footprint, attests. Coming with an equally diminutive $300,000-$350,000 price tag, the Creative Arch-designed homes are an affordable step away from increasingly square space-hungry designs of recent years.

Image via The Drawing Board

Container homes

Necessity is the mother of invention and the Christchurch rebuild has provided it in staggering amounts. Perhaps the most conspicuous of all the creative-dwellings that grew out of the destruction is the container home, something of the new normal for small, economical, but ultra-rugged dwellings, perfect for the extreme conditions.

'Build' your own container home online with the Container Builder app available at the ContainerCo website.

Image via ContainerCo