THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, AUGUST 31, 1935 CITY HOUSING SCHEME

New Zealand Herald, Volume LXXII, Issue 22202, 31 August 1935, Page 12

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, AUGUST 31, 1935 CITY HOUSING SCHEME

Ratepayers will note with apprehension that the Citj T Council has added to its heavy borrowing proposals the sum of £200,000 for housing. They are bcund to ask themselves what call is there for the council to set up on a more extensive scale as housing landlord, a business in which it has already burned its fingers, and what will be the effect on rates, and on the values of existing small houses? These are questions which ratepayers will do well to ponder quietly, because the last word on the housing scheme will rest with them; before any loan can be raised, their sanction must be obtained by poll. The first question that should be asked is whether there is any real need for a municipal scheme. At present houses to let are not easy to find, although the scarcity cannot be described as acute. Landlords still find it difficult to obtain payable rents, ,and for years letting property has been a dead loss. It may be said, then, that demand has barely overtaken supply. So much for letting. As for buying, there are still far more houses for sale than there are purchasers. The mai-ket is improving, the recovery has been fairly rapid in recent months, but it is still decidedly a buyers' market. In face of this position, there appears to be no reason or excuse for the entry of the council. It has itself proved from experience at Grey Lynn that fair-looking housing schemes tend to become a liability rather than an asset. The Government has had the same experience on a far larger scale, as the taxpayer knows to his cost. It would be folly to tread the same path again, unless the need were acute and there were no other means of meeting it. It has already been shown that there is no abnormal demand, and the report placed before the council demonstrated that the needs of a growing population have been /and are being supplied by private initiative. During the period 1928 to 1935 housing accommodation in the City of Auckland increased by 8.56 per cent, while population increased by only 7.69 per cent. That means that supply outpaced demand at a time of severest depression, when capital expenditure was at its lowest ebb. In attempting, to explain away its own figures, the official report says they make no allowance for depreciation. Yet it seems that allowance is made, because it is the net increase of housing that is shown, the difference between gains and losses. On the other hand the report does not allow for the fact that it is dealing with a period in which for years building was abnormally slack. In normal years it would seem that the increase in housing would have outpaced population in larger measure. The number of housekeeping units in those seven difficult years increased by 2230, including 1720 new singlefamily dwellings. In the last two years the rate of increase has risen sharply, and in normal years it seems abundantly clear that housing needs will be fully supplied by private initiative, without any intervention by a~ public body. At present residential building is proceeding briskly in several suburbs. Every encouragement is held out to those who wish to build for themselves. If their capital is small, liberal loans are available at low interest rates, building is still cheap, and several organisations offer assistance with advice and plans. The speculative builder is also resuming his activities. By these means, current needs are being fully J met. If the council were to enter the business at this stage, it would either frighten out private capital for new work and depress the existing property market, or help to create a boom, forcing up costs against itself and private builders, and bringing about an inevitable reaction. Nor would the reaction be long in arriving, since the rate of population increase has declined to a very low figure in recent years. Let it be supposed, however, that ratepayers sanction the council's entry into the house-owning business on a wholesale scale, what would be the effect? If it is going to Cost over £7OO a house and over £BOO a flat, plus ground rent, and the scheme is to be self-supporting, rents cannot be low when all charges are met. In that case the council may be setting out to supply a demand that does not exist and the present propertyowners will have to pay for its miscalculation out of rates. The result will be the same if an uneconomically low rent is fixed. In any case the council's scheme will depreciate the values of all existing small houses. That is not a pleasant prospect for workers who have painfully increased their equities in their own homes. Equities were reduced to vanishing point, and often below it, in the depression. Now that values are moving their way again, workers will not thank their representatives on the council for producing a scheme that will again depreciate their assets and perhaps become a burden on their rates as well. Ratepayers should also note that, although the council has approved a loan of £200,000, it has not yet de-

cided upon any particular scheme. Ratepayers have not been informed of where the houses or ilats are to be built or which of the many proposals submitted has been approved. What kind of businesses it that decides to ask for a loan of £200,000 on such slender grounds, and what hope is there of such blind methods making a success of a housing scheme? No responsible man in his private affairs would decide to borrow heavily until ho had all the details before him, costs sot down to the last penny, and a close estimate of returns. Public business should be transacted in the same exact way. But even without these necessary details before them, ratepayers may well conclude that they cannot sanction a civic housing scheme for the simple but sufficient reason that it is not needed.