Housing affordability is at the top of policy discussions in New Zealand. To counteract unaffordability, central and local governments have acted together to streamline land supply or to remove land use regulations that hinder new houses entering the market.

The purpose of this discussion paper is to evaluate a set of affordable housing policies through a matching simulation model that assesses the compatibility between the housing prices distribution and households’ incomes. The policies explored are as follows: the targeting of affordable houses to target population groups (to mimic inclusionary zoning or the retention of housing for affordable purposes), shared ownership schemes (SO), and the cascading (or release) of the retained affordable houses into the broader market after an initial ‘embargo’ period when they are only available to target population groups. The rationale is to mimic (and to preserve) the competitive nature of the housing market ensuring that developers remain profitable (and therefore willing to supply houses).

Results show that affordability policies can increase the number of house sales, thereby improving the market outcome with a housing mix that includes affordable houses.

Auckland Council discussion paper DP2019/005