Building houses for poor people in 1912 and 2012

The New Zealand Government was concerned about the cost of living/housing, and directed Commissions to investigate the issue. One of the conclusions of both Commissions, a century apart, are remarkably similar. Industry does not build housing for “working-men” (1912 language) or the “lower quartiles” (2012 language).

One real estate agent told the Royal Commission on the Cost of Living, in a statement which the Commission said “epitomises the whole case”:

“Capitalists do not now generally build cottages to let to working-men, because of the unprofitableness of that class of investment. For working-men’s cottage property, the outgoings are, I estimate, from one-fourth to one-third of the rent for vacancies, loss of rent, sanitation, legal expenses, rates, and incidental repairs. The discontinuance of building that class of house, and the consequent scarcity, has led to keen competition for renting cottages, and thus helped to make them dearer”  (“Report and Evidence of the Royal Commission on Cost of Living in New Zealand,” 1912, p. xx).

One of the points made by the Productivity Commission’s report on housing affordability is:

“A distinctive feature of residential investment in New Zealand is that new supply has tended to come in the form of large and relatively expensive houses… Since [the 1960s]… the share of new dwellings with values greater than the upper quartile value of the existing dwelling stock has steadily increased from around 10% to around 50%. Conversely, the share of new dwellings in the lower quartile has fallen from around 30-35% to 5%. As such, the majority of new dwellings built in Auckland and the rest of the country are currently not targeted at the affordable end of the market. (Productivity Commission, 2012, p. 43)

An old problem that we still haven’t figured out.

cost of living photo-page-001

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