Why New Zealand's largest city is paying its citizens to leave

In the midst of a housing crisis, Auckland's government launches a plan to pay low-income families to relocate.

Housing authorities in Auckland are taking a dramatic step to address a housing crisis in the city of 1.5 million, New Zealand’s largest.

Officials announced that they will now offer families up to NZ$5,000 (about $3,500 US dollars) to relocate to another area of the country.

The relocation grant is specifically for Auckland residents who meet the low-income requirements that make them eligible for social housing, or the city’s subsidized public housing program. The move comes at a time when there are more than 3,500 eligible people in the city waiting to be matched to a home. Forty-two percent of those people identified as Māori, according to the city's most recent quarterly statement.

"For those people who may want to move to cheaper regions where they may have family and other support networks, this grant will remove the cost barrier that may be preventing them from making the move," New Zealand's Social Housing Minister Paula Bennett said in a statement, noting that it was one of many solutions that the government was working on.

Auckland is home to one of the world’s more expensive housing markets. Property prices have increased 77.5 percent over the past five years, reports the Guardian. The soaring prices have left hundreds of families living in cars and garages as the Southern Hemisphere winter approaches.

“A few years ago people in this situation were largely unemployed or on very low-incomes. But consistently now we are finding people coming to us who are in work, and have their life together in other ways, but housing is alluding them,” Campbell Roberts of The Salvation Army told the Guardian.

The proposal also comes with the idea to allow people to relocate to find work in areas where there is more affordable housing. Earlier in the year, when the proposal came up for discussion, Ms. Bennett told Radio New Zealand that “we’ve got empty houses around other parts of New Zealand where we know there are employment opportunities.” She said that the potential policy could allow people to “build a really solid foundation and start a new life.”

Critics of the proposal say that the program has been set up without the appropriate supports in place.

“It’s setting up families to fail unless the Government moves to a model, like they do with refugees, where there are additional wraparound services with church groups and social services,” Bernie Smith, chief executive of the Auckland-based emergency housing agency Monte Cecilia Housing Trust, told the New Zealand Herald.

Others who are against the idea include mayors of towns that would potentially be welcoming the relocated urbanites. Mayor Andrew Judd of the coastal town of New Plymouth, told the Taranaki Daily News that there needed to be more communication between the government and the regions that they are hoping people will move to, especially when it comes to sussing out where the job prospects are.

"It's a sugar hit and not a good strategy at all – if they're going to incentivize anything, they should incentivize employers to move here,” he said.

The government announced that it already had 130 people interested in the grants, which became available on Monday.

And while Auckland’s solution is gaining global press for being unorthodox, the city is far from the only one facing housing crisis and mounting pressure to find solutions.

Similar challenges exist in the US when it comes to creating subsidized, affordable housing to meet demand. For example, that issue has been fueling the ongoing battle between short-term housing rental platforms like Airbnb and the city of San Francisco, where there is a severe housing shortage. The city recently imposed restrictions on short-term housing rental platforms to open up more housing. 

“People are already leaving the Bay Area and Los Angeles, these cities are losing lots of low income families just because they can’t afford to stay anymore,” Paavo Monkkonen, an assistant professor in the department of urban planning at the University of California, Los Angeles, told The Christian Science Monitor. And while this is not due to a specific government policy, as in the case of New Zealand, he says that “they are doing it without stating it. There are a lot of different policies that we are not changing, and so effectively we are pushing people out.”

Discussing the housing problem as it has evolved in the US, Alexander von Hoffman, senior fellow at Harvard’s Joint Center for Housing Studies points to the essential challenges of having state-subsidized housing in urban centers:

“The problem, in my view, is two-fold, one is created by the fact that people with a lot of money are moving into certain urban markets and bidding up the cost of housing. It’s a 20-year trend, that has picked up momentum in the last 10-15 years and now it's reached point that can’t be ignored,” he tells The Christian Science Monitor. “The second problem is that the cost of building what we consider certified housing is quite expensive – the largest element of that is the land price, which has to do with the bidding up, but the labor and the materials are very expensive as well.” Those costs, he notes, are higher in urban areas than other places.

This is a conundrum that echoes around the world, where housing prices in different regions have been on the rise post-recession. But is the solution relocation?

Dr. Monkkonen, referencing a term used by urban planning expert George Galster, says that having a “social mix” is important within a city, and that means making urban centers open to as many people as possible.

He points to the possibility of zoning solutions for expensive urban areas, such as building upwards or creating more housing arrangements in neighborhoods filled with only single-family homes. 

There are answers, he says, not least of all because the housing crisis “is a thing we’ve created.”

Given the global nature of the problem of affordable housing, solutions will likely be found worldwide, including in Auckland, where mayors and city planners elsewhere will be watching how the relocation grants work.