15 June 2016

The Budget - Housing Fix or Failure?

Labour Housing & Construction spokesperson Phil Twyford labelled the Budget initiatives “a spectacular failure”. But MP for Auckland Central Nikki Kaye says the Government is well on the way to delivering more houses.


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As the Government throws another $100 million into the pot to free up more land to fix Auckland’s housing crisis, Labour Housing & Construction spokesperson Phil Twyford labelled the Budget initiatives “a spectacular failure”.

But MP for Auckland Central Nikki Kaye says, with the just released National Policy statement on Urban Development, the Government is well on the way to putting pressure on the system to deliver more houses. And it looks likely housing construction will gather significant pace by the end of the year.

Twyford criticised the Budget, saying we need “big policies that make a difference instead of these drip feeding measures’. “Without the big step changes Labour and others are calling for, we’re likely to continue to see an overheated Auckland market where there aren’t enough houses to meet demand.” Twyford says, the policy falls woefully short to make a difference to the housing crisis.

“It’s just tinkering at the margins. The Auckland shortage is getting worse by about 30,000 and 40,000 a year. Auckland needs big policies to make a difference.”

One of his main criticisms is the lack of genuine reform of the restrictive land use rules that choke off supply of affordable housing. “There needs to be a national policy statement around the RMA (Resource Management Act) to direct Auckland Council to free up these rules that stop the city going up and out. We’ve been calling for this for more than four years.”

Labour Housing & Construction spokesperson Phil Twyford

Labour Housing & Construction spokesperson Phil Twyford

LABOUR’S HOUSING POLICY TO FIX AUCKLAND’S PROBLEM:

1.Build 100,000 homes over two years by borrowing cheap finance and partnering with the private sector
2.Crack down on property speculators running riot in Auckland
3.Reform the restrictive land rules in the RMA

Yet MP for Central Auckland Nikki Kaye counters, saying if there was a single bullet or vehicle for transformation, politicians would have delivered it a long time ago. After looking at other cities with similar infrastructure problems, she says the high cost of land is a major reason for high prices.

“When you break down the costs of housing and the lack of houses built, it’s pretty clear the major issue or the transformational piece is land supply, combined with onerous planning rules and poor utilisation of space.”

“We have been delivering a range of initiatives to get more houses into the system and improve affordability. 154 special housing areas are being signed off, freeing up crown land, increasing first home grants and changing certain planning rules.”

But it is the slow momentum of construction producing a backlog that is the main challenge for Auckland. To facilitate action, Kaye says the $100 million in last week’s budget was designed to increase the pace of housing development and put greater focus on producing more affordable housing. 

It is an approach they used in Christchurch, where five blocks of land were bought for $13.9 million – a purchase that will deliver 420 homes. The programme was extended to Auckland in last year’s budget, with contingency funding of $52 million, resulting in agreements for 20 parcels of land. Kaye adds the Government is also due to release a National Policy Statement on Urban Development. This will direct councils to adjust their plans to allow for more development if necessary. “We plan to have legislation in place by the end of this year, possibly early next year.”

Twyford says both Ashley Church of the Property Institute and Kim Campbell of the Manufacturers Association criticized the Budget for not offering positive initiatives to encourage private construction of new homes. Labour wants to use the Government’s ability to borrow cheap finance to launch a massive building programme by partnering with the private sector to build high quality affordable homes for first home buyers.

“To help move things along, the Government has invested heavily in the education and skills sectors and it is ensuring New Zealand’s immigration settings are right to assist with this.”

But Kaye explains the Government is already progressing measures to make a positive difference to encouraging private construction with the Special Housing Areas, which allow for fast-tracking developments and the potential for more than 56,000 homes.

But will opening up more land produce the tens of thousands of houses needed? The answer, sadly is no. “We need the council to pass the Unitary Plan,” she says.

Hon. Nikki Kaye, Member of Parliament for Auckland Central.

Hon. Nikki Kaye, Member of Parliament for Auckland Central.

“We are currently building 9,500 houses a year, up from 4,000 in 2012 – a build rate which has more than doubled since the Government introduced Special Housing Areas. Residential building consents totalling $4.1 billion for the year ended 31 March, 2016, up from $2 billion before the Housing Accord.

“We expect the number of houses being built to significantly ramp up with more special housing areas coming into fruition, the national policy statement being implemented, additional crown land being freed up and improving planning laws and rules that help intensification and better utilisation of space.”

So what is the future of Auckland’s property market? Twyford believes the housing crisis will spiral out of control – unless, of course, Labour comes to power. Yet Kaye is more upbeat. She says depending on factors like supply and immigration, Auckland will continue to be a desirable place to live so housing prices will remain competitive. But with the scale of delivery over the next five years, we could see reduced pressure in some areas.

“The reality is, we are dealing with significant legacy issues that cross successive governments over decades.”

Not only have there not been enough houses built but the planning system has been choked. The National Policy Statement on Urban Development will see councils adjust their plans if necessary.

 

“This is another significant step in putting pressure on the system to deliver more houses from a planning and consenting perspective.”

 

 

 

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