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Social Development prices social housing liability at $16.4B, sees increase

Wednesday 28th June 2017

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The Ministry of Social Development has released its first valuation of the social housing system, part of the government's "social investment" approach to data collection and analysis.

The valuation, which covers users of social housing from July 2014 to June 2015, is the first of its kind. It found that the lifetime housing cost of adults in social housing or on the social housing register was $16.4 billion, with roughly 85 percent of the cost relating to future income-related rent subsidy (IRRS) payments. There are around 63,600 households in social housing, and 3,900 households on the register.

With this valuation as a baseline for measuring change, the ministry hopes to release the 2016 data in the next quarter. Emergency housing, which MSD became responsible for midway through 2016, won't be included, but it plans to do so in the future.

That $16.4 billion liability can be expected to increase as more social housing places become available and low-liability users move out of the system to be replaced by higher-liability users, MSD says. The average lifetime cost per household is $230,000, and they're expected to spend 17 more years in social housing, though this varies wildly depending on the grouping those households fall into and where they are in the country.

The top decile, which typically includes people on jobseekers benefits living in expensive areas like Auckland, have an average liability of $480,000, while the lowest decile, such as pensioners living in less expensive areas, have an average liability of $50,000.

Auckland, where about 35 percent of New Zealanders live, accounts for 61 percent of the total lifetime costs, MSD found. The country's biggest city also has the longest waiting time for a house, at a year on average, compared with the national average 0.7 of a year, and the average household liability is 80 percent higher than the rest of New Zealand.

Maori and Pacific people are respectively five and seven times more likely to use social housing, and Maori are more likely to exit due to poor social outcomes such as prison or having their contract terminated. 

The ministry says it is difficult to deal with over- and under-use of dwellings on the social housing register, with just 45 percent of social housing places occupied by households who have the right number of bedrooms. Some 80 percent of the housing portfolio has two or three bedrooms, but less than half of current households need two or three bedrooms, with more need for one and four-bedroom houses.

The housing liability would be $500 million higher if those in overcrowded houses were moved to larger places, and $1.4 billion lower if those in underused houses were moved somewhere smaller, MSD said.


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