Housing Corp, policy criticised

Press, 28 July 1987, Page 8

Housing Corp, policy criticised

National’s plan to cut the State’s role in housing may create a vacuum, says the Real Estate Institute’s president, Mr Peter Cook.

Mr Cook, who is also a director of the Housing Corporation, said yesterday that the National Party’s policy which pledged to privatise housing finance would see the organisation most suited to housing low to middle income earners taken out of the game.

"There is a valid role for the Housing Corporation to play in the mid to low-income market. The corporation is the only institution that can balance the social implications of housing,” he said. National’s policy could see the demise of the corporation, he said.

National had given no reasons to remove the corporation’s role in housing finance and turn it over to private enterprise. A housing vacuum resulting in many more homeless families could result, Mr Cook said. Rental housing was not now attractive for investors and there was a “certain amount of disinvestment in rental property.” Without the State involved in home finance, with high interest rates, and fewer and fewer landlords to provide rental accommodation there would be more people without homes, he said.

The Minister of Housing, Mr Goff, attacked also the Opposition’s housing policy. ~

“It will spell utter disaster for first-home buyers and families renting their homes,” said Mr Goff.

“The policy would effectively deny middle and low income earners the right to buy their first homes. It would mean also the end of innovative new housing policies like equity sharing, sweat equity, and lending on multiply-owned land,” Mr Goff said.

More than 10,000 families are assisted into their own home each year by the corporation. That number unable to buy homes would place “a much higher demand for limited rental accommodation in the private sector.”

Mr Cook praised National’s pledge to guarantee mortgages up to 90

per cent of property values. That would allow people to borrow up to 90 per cent of a house’s value. The. corporation would guarantee repayment above the institution’s lending limit, for example a limit of 75 per cent of the value would see the lender borrow 90 per cent, and the corporation guarantee the remaining 15 per cent. This would make houses a lot more affordable, he said, but the institute would not like to see "artificially inflated prices arising to take advantage of the system.” Mr Cook wanted to see a continuation of the Government’s “flexible” home financing schemes. “The existing Government has been very good in the housing field. It has done an excellent job, in 4

providing finance but there needs to be more done to encourage investment in housing.” The stock of State rental homes stood at 60,000 — the highest on record — but there was still a shortage of rental accommodation. More homes needed to be built in “pressure points” such as Auckland.

“The Government needs to direct its attention to areas where there is pressure on rental accommodation — the Auckland suburbs where there is a big population increase.

Grants, supplements, equity schemes, and diversification of housing finance was needed.

“It’s absolutely critical that interest rates are reduced as well.”