31 March 2011

Westpac welcomes Government’s focus on affordable housing

Westpac welcomes the Minister of Finance's announcement today that affordable housing will be one of the areas of research for the newly formed Productivity Commission.

For more and more New Zealanders the option of owning a house is moving beyond reach. House prices rose faster than incomes during the 2000’s with the average house price now more than six times the average household’s annual disposable  income. In 1990 the ratio was closer to three times.

David McLean, Chief Executive of Westpac Institutional Bank, said affordable housing is also more than just about income and the ability to service debt, it is about understanding the varied needs of New Zealanders.

“Government assist those in need but a change in the current model of state housing will really make a difference. The nature and scale of the social housing problem demands we do so,” McLean said.

“New Zealand needs more houses in the right places. It is hard to build new houses when thousands and thousands of houses in the existing stock need to be rebuilt.

“New Zealand now has a once in a generation opportunity to make a difference. There are two new ways of making this happen – public private partnerships (PPPs) and not for profit initiatives using Government capital and or stock transfers.”

Westpac has experience in social housing PPPs through its role in the Bonnyrigg project on the outskirts of Sydney. For 25 years, Bonnyrigg was known as a troubled housing estate. In 2009, a $1 billion redevelopment began that was a partnership between the NSW Department of Housing, a not for profit and a group of private companies led by Westpac. The 18 stage project includes replacing over 800 existing state houses with approximately 2,500 new homes and providing on-going management, maintenance and up keep for 30 years.

“Using the Bonnyrigg model, PPPs could be hugely beneficial in quickly addressing the issue of affordable social housing in New Zealand. The problem is significant and we welcome the Government’s focus on it,” McLean said.