'What we are doing about Auckland's housing crisis'

Property

Auckland Council releases an action plan covering twelve priority areas to address the affordable housing crisis in the city. Your view?

1st Feb 13, 11:06am by Len Brown

"It is projected that, by 2040, only around 30% of households will be able to afford a house over $400,000"

The following is the foreword to Auckland Council's Housing Action Plan - Stage 1, released online today. A copy of the full 36 page .pdf document is here »

We have just received this document and we ask for readers assistance in analysing its contents. Post your findings in the comment section below (you need to be logged in to do this).

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By Len Brown*

Next to transport, housing is the biggest issue that Auckland faces.

It has become a problem of such scale that the Auckland Plan refers to it as a housing crisis, and calls for a housing action plan to be developed and implemented urgently.

Most people know that there is an affordability problem in Auckland and there has been extensive media coverage recently.

We know that house prices in Auckland keep on rising, the median price currently being more than $500,000.

We also know that there are many hard working families and people who simply cannot afford to buy a house.

Yet we may not always appreciate the depth and scale of the problem.

It is projected that, by 2040, only around 30% of households will be able to afford a house over $400,000. Another 30% (around 120,000 households) will need a house in the $275,000 to $375,000 price range, and there will be 40% (around 160,000 households) who probably cannot afford to buy a house and will need affordable rental accommodation.

This is not a situation that supports the stable families and communities that are so important for a healthy society.

Auckland will need around 400,000 new dwellings over the next 30 years.

The market – our developers and builders – will deliver the bulk of those.

I believe that once the economy recovers, the market will respond accordingly, but perhaps still not sufficiently.

There is particularly a shortage in the lower end of the price range - $300 000 to $400 000. To create the communities we want, and to make Auckland the world‟s most liveable city, this gap in the market must be addressed.

We have to find ways to deliver more homes and more affordable homes.

Central government has responded to the Productivity Commission‟s investigation into housing affordability with a programme of its own, which focuses on the supply side of housing.

The Council‟s Action Plan looks at the role that the Auckland Council can play in both the broader issue of housing supply, as well as the role it can play in affordable housing – the tools and levers the Council can use to influence housing.

The matter of land supply is not dealt with in this Action Plan, but rather through the Unitary Plan currently being developed.

This Action Plan will also be followed by a second phase that will look at the broader housing market beyond the Council‟s control, and what additional levers can be used to positively influence the market.

Aucklanders must be housed in a way they can afford.

It is estimated that we are already short of between 20,000 and 30,000 homes.

Now more than ever, Auckland‟s housing issues have to be addressed.

We clearly have a leadership role and the Council can and will play its part in achieving the goal of housing our people.

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Len Brown is the Mayor of Auckland

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54 Comments

by rp | 1st Feb 13, 11:28am 1359671286

So currently there is no plan for improving land supply in Auckland.... "Unitary Plan currently being developed"....Unbelieveably poor!

Len you've been voted in mainly by low income voters in South and West Auckland. These are the people that are being hurt the most; least able to afford a house....

by raegun | 1st Feb 13, 11:30am 1359671422

NON-RESIDENT FOREIGNERS NEED NOT APPLY.

Guess I shouldn't hold my breath

by rp | 1st Feb 13, 11:38am 1359671893

you keep telling them Raegun...hopefully the message will start to get through

by raegun | 1st Feb 13, 12:10pm 1359673805

Listened to Nick Smith on the radio last night, just flat out denying that foreigners are skewing the market, honestly if I could've reached through the radio and throtlled him, I would have. Did you know that no proper records are kept of where owners of property that doesn't come into the whole OIO (or* OORSO as I prefer to call it).

He said that was going to speak to people in the real estate industry about it, oh yay, that's a good idea, get a view from an industry with a vested interest in the status quo continuing, yep that should do it

I have heard so much anecdotal evidence that I can only conclude it is the tip of the iceberg and I believe it deserves a proper and thorough investigation

It is not just for the sake of something to do that Aussie, Singapore and Canada are applying the brakes to this, and what result for us could that be. (No prizes for guessing I'm afraid)

* Overseas Ownership Rubber Stamping Office, at it again with another job lot of farms selling to foreigners

TENANTS IN OUR OWN LAND!!

by raegun | 1st Feb 13, 12:16pm 1359674165

Oh and Smith made my blood boil so much I emailed him to tell him as much. Will everyone concerned about this, please do the same

by iconoclast | 1st Feb 13, 12:43pm 1359675781

When you have one of the political elite telling you

it's not happening
there is no crisis
it's just not so

then

it must be the party line, and
they dont have their ear to the ground, or
there must be another cause, and
they don't read the daily press, and
they don't read the comments here on interest.co.nz

conclusion: you are wasting your breath

by KH | 1st Feb 13, 2:12pm 1359681120

Unbelievable ! No information on who owns what and what where they come from !! I pay so much tax and would have thought there was a department of something for that. Silly me. I suppose they are having so many powhiris. And H&S consultations about paper cuts they just didn't get to the work.

by Basel Brush III | 1st Feb 13, 5:34pm 1359693276

Personally for rental ownership rights, I would even distinguish betwen citizens and residents by restricting the numbers of rights to ownership for residents as an incentive to get them become citizens within a prescribed time.

I would also restrict companies owning residential property to either being a public company or if private having a maximum 24.9% non-citizen ownership.

Maybe radical but at least the rules would be clear and the penalties for flouting them would be substantial.

by Interested | 1st Feb 13, 11:52am 1359672752

What on earth is a local council getting involved in this? "Council could act as a guarantor for a pilot housing bond to facilitate start up loans for first home buyers."

Please spend my rates on infrastructure and stay out of social policy experiments.

by Boatman | 1st Feb 13, 2:38pm 1359682716

@interested , you have expressed my sentiments more precisely than I could have .

Auckland City Council has no business acting as gaurantor for homeowners with ratepayers money , whoever thought of this nonsense is not grounded in reality .

As for the document .... what a load of leftwing bull$&)^ t

by bigblue | 1st Feb 13, 11:54am 1359672881

Have read the full document - what a pointless pile of drivel. Nothing constructive will come out of that. House prices will have increased another $100,000 before anything is done under this plan or the yet to be released Unitary Plan. Expect to see very little new house constructin over the next three years. In central Auckland all they need to do is change Res 6a zone and Res 5 zone to minimum lot size of 250m2 and that will instantly create thousands of subdivisible properties. At the same time permit 3 level construction ie 11 metre height restriction and reduce car parking requirement to one car per lot and remove the reverse manouvering requirement - that will allow higher density and encourage use of public transport.

by bigblue | 1st Feb 13, 11:55am 1359672944

Wonder how many million was spent on preparing that report?

by Mike B | 1st Feb 13, 11:57am 1359673069

By Len Brown*

Next to transport, housing is the biggest issue that Auckland faces.

WOW, can you believe it?

No wonder there is a housing crisis.

Len Brown believes, acording to the above comment, that being able to drive about in your car is the MOST important thing and having a place to live comes second.

What a bunch of @&%$ running this country.

by kin | 4th Feb 13, 10:11am 1359925917

:Next to Housing "....it is clear that Len Brown has not finished playing with his train set yet.

Perhaps he can do it up quickly so that homeless Aucklanders can live in those train carriages while travelling to work as well ??

Pity the South Aucklanders who voted mostly for Len. Not only is the Council's policies costing them in rentals and mortgages, they might soon find themselves out of a house when Len's train set takes their property to built his train set !!

I still remember Len Brown marching with South Aucklanders on Queens Street on a "Affordable Housing" rally a few years ago ....What Hypocrisy !!!

In a democracy we deserve what we voted for !!!

by Mike B | 1st Feb 13, 12:03pm 1359673431

Hey Len, here is a good idea. Why don't you demolish more house so you can build more motorways - Stuff the homeless

by starfish1 | 1st Feb 13, 12:06pm 1359673615

Too little too late !

by Ricardo | 1st Feb 13, 1:14pm 1359677654

The obvious solution to the Auckland housing crisis (for National) is this:

Once the Unitary Plan is notified, the Govt needs to identify areas of potential high density that won't be subject to the appeal process....these areas should be quickly rezoned by Auckland Council and then purchased by the Govt....the Govt will then build high density housing to be sold to the public (essentially a Kiwibuild initiative).

The above solution will mean supply is increased within 18 months, rather than waiting four years for the Unitary plan to be finalised (+ market response on top)....also, although National believe releasing supply will solve everything, another problem is that the market for development finance is more dead than alive, which adds further weight to the need for a a Govt intervention.

If National carry out the above...they would have stopped Labour's momentum on this issue...and be laughing at the next election.

Who agrees?

by Chairman Moa | 1st Feb 13, 1:21pm 1359678060

Can we start with small steps;

- why does it cost 4-5 grand just to get a permit to build a tiny extension and 8 weeks application period?

- A subdivide can take up to 6 months and up to 100K in fees

- The building consultants at ACC - stop acting like a bunch of Nazis

by Gummy Bear Hero | 1st Feb 13, 1:48pm 1359679723

Well excuse me , but who voted Len Brown in as mayor , huh ? .......

...... Aucklanders only got themselves to blame ......

You could've had Banksie in charge ! ..... time for a cuppa with John , methinks ...... ahhhhhhhhhhh !

by Chairman Moa | 1st Feb 13, 2:03pm 1359680583

I didn't - worked in manukau and know what he's like.. Just a big PR man.

by Boatman | 1st Feb 13, 2:23pm 1359681804

Its time to rid Auckland of Len Brown , this man is utterly incompetent in running a city

by Wolly | 1st Feb 13, 2:23pm 1359681812

Let market forces decide the matter. Them what cannot buy will rent. So what!....Auckland is welcome to its orrible growth and all the nasty consequences too.

by Gummy Bear Hero | 1st Feb 13, 2:42pm 1359682947

I'm a comefuddled wee Gummy Bear , Wolly , 'cos I've flown into & out of Auckland Airport recently , and noticed heaps of available land around the city ...... shit loads of it , in fact .....miles upon miles of near vacant rolling hills , beaches , glorious bays ......

.... why the " crisis " ....... there is no shortage of land ....

As Hugh Pavletich pointed out , lifestyle blocks themselves occupy a combined land area 4 times greater than that of all the towns and cities in Godzone ....

by iconoclast | 1st Feb 13, 2:57pm 1359683844

Probably right. No shortage of land. See Boatman's post from 2012

There is no shortage of land in and around Auckland. I did the prelimary work to subdivide my 6700m2 site where I live in Chester Ave in Greenhithe, and the red tape and council costs are so onerous that I canned the idea. At my age I am not interested in incurring the financial risk, I would need to raise a Mortgage just to pay the council levies and charges to get this done, its nonsense. So thats about 5 to 7 sections that will never come onto the market.

by bob | 1st Feb 13, 3:01pm 1359684113

When Len Brown said there was plenty of sites available he did point out they were in places like Flat Bush - he never said they were in places people wanted to live.

by steven | 2nd Feb 13, 9:29am 1359750587

Im sure many ppl would like to live in the expensive areas of Auckland....like and can afford dont match for most.

regards

by notaneconomist | 1st Feb 13, 3:15pm 1359684914

Iconoclast - thanks for posting Boatmans comments. I know numerous people in the same position. I also know of several who have taken the plunge and some of these people are actually facing severe financial issues directly because of the RMA process. What should have been straight forward applications for Consents has been severely hampered by submitters who maintain there will be affects. Submitters are forming Societies to fight these applicants in the Court. People not even affected by the applicants proposal can join the society. The Societies are a method which saves the submitters any costs.

by iconoclast | 1st Feb 13, 3:39pm 1359686371

There was a similar example given by Keriwin up in KeriKeri last year giving a blow-by-blow description of the costs he faced.

by iconoclast | 1st Feb 13, 3:42pm 1359686547

And Bob, above, gave a detailed example of the impossible costs of simply dividing a large section into two.

by Wolly | 1st Feb 13, 4:52pm 1359690776

"comefuddled".....! you were into the drinks cabinet on the jets weren't you Gummy Bear...we know...

Jaffas are going up in the world Gummy Bear...vertical slums...Think of the investment potential....You could reside in the Len Brown Towers...haha.

by Gummy Bear Hero | 1st Feb 13, 5:05pm 1359691552

Or you could reside in a tower block dedicated to our late Sir Paul , the " Holmes Homes "....

...... can you imagine the elevators ........anytime you push a button , a voice-over would ask " do you really want to go there , do you think that's wise ? " ....

by jh | 4th Feb 13, 3:32pm 1359945126

Recently Connell Townsend of the Property Council criticized the council position on it's developed and ready to go subdivisions, saying that these, while serviced, needed more servicing and this would have to be added to the cost, making them unaffordable.

The government appointed savings working group say we have a low wage population which is unable to pay for the extra infrastructure an increasing population requires without borrowing offshore. This has an effect on businesses as investment in capital which is needed to increase productivity and wages is crowded out (among other things).

Somebody get Hugh Pavletich to explain his creative infrastructure financing in detail.

by Spider | 2nd Feb 13, 6:32am 1359739948

What would the effects of something like this be: central government (IRD, reserve bank)to introduce a 5% stamp duty on any residential property purchase that is not the primary residence of the purchaser, and is not purchased with the intent to sell/profit from? It would apply to all trusts; companies; and individuals buying their second, third etc residential property.

This would give ‘first home buyers’ a leg up in the bidding war, but presumably there are also downsides?

The reality is property investors are not paying tax on their capital gains, despite there being tax legislation in place to catch the property ‘traders’ (re intention rules). Very few are in truly property for the dividends at these P/E rates, we all know it, and it has distorted markets for a long time. A stamp duty cannot be avoided through the intention rules, so it would level the playing field somewhat. In fact, instead of trying to level the tax playing field, why not make the stamp duty 20% (punitive) until all the speculators are driven out and we return to reasonable price to income multiples.

Perhaps the reserve bank can control the stamp duty rate with some upper limit, and they can use it to independently cool or promote the housing market. Interest rates can be adjusted in the other direction, should it be necessary for say cooling the FX rate…

Thoughts anyone?

by Boatman | 1st Feb 13, 2:33pm 1359682385

I have just downloaded and read the 32 ACTION points , and what a load of codswallop.

Its an ill -concieved list of nice -to haves with a whole lot of 1970's socialis tundertones and rhetoric.

by bob | 1st Feb 13, 2:50pm 1359683411

That's not an action plan to make affordable housing.

It's an action plan to increase council revenues.

"Point 5: If we rezone land so it's cheaper to develop then we can increase the tax on it"

etc. etc.

by skudiv | 1st Feb 13, 3:10pm 1359684654

Aucklands population is growing too fast. Simple as that really. A bit of a taboo subject though, and ignored by the report. It's not a shortage of supply per se but a longage of demand. Supply is growing at x rate and demand is growing at x^3. Growth in a finite system is unsustainable, Auckland is really a sideshow prelude to this reality.

by bob | 1st Feb 13, 3:12pm 1359684774

One of the biggest obstructions to affordable housing is the attitude that every house must be a absolutely wonderful place to live with every amenity imaginable.

If I want to pay $60,000 less to live in a 62sqm dwelling Council will say NO - you must pay $60,000 more to live in a 70sqm dwelling because we have arbitrarily deemed that is the minimum size a poor person should be allowed to live in.

If I want to convert an old office building into an apartment and just upgrade the fire safety systems (like one could before the latest Building Code amendment) Council will say NO - you must upgrade absolutely everything to the same standard as a new building plus pay $35,000 development taxes (even though all the infrastructure already exists).

It goes on and on and on. You are not allowed to compromise on anything to get a more affordable house. With the Unitary Plan everything that makes housing affordable will no doubt be a Discresionary Activity so that Council can say NO. Expensive housing is so easy to consent. Affordable housing is almost impossible.

by Wolly | 2nd Feb 13, 7:52am 1359744776

Bob....best to just say no. Refuse to invest in building or converting a sodding thing in Auckland. Let the problem become a crisis. When a heap of angry Jaffas storm the council building and occupy the mayor's grand office, corridors and stairways....and the police are battling to remove them and the phone lines are chocka and the website is spammed to death.......

Then you will see the start of an end to fathead red tape.

The developer's weapon against red tape is to organise and mobilise.

by FYI | 1st Feb 13, 9:24pm 1359707077

Unfortunately Basil B the more you bang on about restricting who purchases what, the less anyone is going to take any notice of your suggestions.

As I've said in other posts here the simple solution is a stamp duty on non resident purchases. It's a major win win and your not tampering with peoples rights etc. The JK led free market thinking would never tell anyone they can't buy something.

Stamp duty = market coolant + (for example) better educated kids + no tax increases for hard working kiwis.

by Dale Smith | 1st Feb 13, 9:44pm 1359708281

Priority area 5:

Value capture through a betterment levy to enable infrastructure or affordable housing

ACTION 16.

Investigate the opportunity to capture part of the windfall gain made by landowners resulting from the public decision to re-zone land to urban or to substantially upzone land in order to fund infrastructure or affordable housing. (R)

Value capture through a betterment levy Hahahahahahahahahahahahhahahahhahahahahah……………..

Public decision to re-zone land Hahahahahahahahahahahahahahahah………………….

Substantially upzone Hahahahahahahahahahahahahahah……………………

Who writes this stuff?

by Wolly | 2nd Feb 13, 9:21am 1359750117

More HS!...."A 12 per cent annual increase in the price of Canterbury houses has prompted the governor of the Reserve Bank to offer the strongest hint yet that action is needed to ease the pressure on New Zealand's "booming" housing market.

Speaking yesterday to business leaders in Christchurch, Graeme Wheeler said the bank was keeping a very close eye on the housing market and its impact on inflation." Press

Fact is any increase in the ocr will take many months to kick in...

Wheeler has been in the overpaid job how long and he is already looking through the open gate at the rear end of the horse galloping away....

by steven | 2nd Feb 13, 9:24am 1359750277

Yes, it looks like he's set to destroy our productive economy.

I mean like duh chch is exceptional and should be ignored.

Such comments will send ppl into 2+ years fixed....and then oh we need to drop the OCR to 1.5% as we just buggered our economy.....

If he's "successful" he wont I hope survive the 2014 election.

regards

by kin | 4th Feb 13, 10:03am 1359925439

"The reality is [the governor] will respond at some point in time which will make it more expensive to service the debt, but start to put a lid on the price."

The real meaning of the above sentence is that the RBNZ will only intervene to stop prices from getting too high is when " it is more expensive to service the debt".....meaning when the situation threatens the banks.

Please clear all delusions that the RBNZ is in for the interest of house owners in NZ. The interest of the RBNZ lies in the stability (ie profitability and sustainability of the Banking system) of the financial system.

It would be ironic and derelic of the RBNZ to allow another housing implosion in NZ affecting the Banking system so soon after the Finance Comapany debarcle. Having said this I personally believe the RBNZ is a little too late into the bubble to stop the next housing debarcle. Housing prices will implode and take a few banks with it as well.

by steven | 4th Feb 13, 10:48am 1359928135

I suppose its when, clearly he'd like to raise it now or this year at least even though the CPI is 0.8% and everything else is suffering. So he will he fall into the trap that previous countries RB's did and have to back off/out later as the economy implodes. First time around I'd suggest its a learning thing, but when other RB's have done it and screwed up, to repeat it again is gross incompetance IMHO.

He could well indeed go down in history as the RBNZ that sent NZ into the worst recession since the 1930s.

regards

by steven | 4th Feb 13, 10:50am 1359928255

Agree, make it so that the illegal chinese money has to exit, house prices tumble as they sell to exit. I really dont quite understand why this is so hard a thing.

regards

by iconoclast | 4th Feb 13, 11:06am 1359929201

Very good snippy ... whom does the grail serve ??

Parzival leaves the castle, to begin his quest

The gate was open and the drawbridge down. He galloped across, but when he got to the end of the drawbridge, someone yanked the cable so abruptly that Parzival was nearly thrown, horse and all, into the moat. Parzival turned back to see who had done this to him. There standing in the open gateway was the page who had pulled the cable, shaking his fist at Parzival. "May God damn the light that falls upon your path!" the boy cried. "You fool! You wretched fool! Why didn't you ask the question?".

What do you mean? .. Question? Parzival shouted back at the page. "What question?"

by Mozart | 4th Feb 13, 7:26am 1359916003

So the plan is... to have a plan. And yes, it does need to be a good plan. And yes, it does need to explore the problems, we certainly see that.

In fact, it is critical that the plan, when it eventuates, fleshes out all the possible options available to us. We actually think we're going to need several plans. That is why we have to spend a lot more time planning what various elements go into what plans.

It's so important that I think we might need to start thinking about pulling together some plans for the preliminary pre-planning meetings. But we'll need a project group for that kind of thinking.

Ok, so this is all a bit comedic, but it is worrying that from the outside, nothing much seems to be happening. I actually met John Key and Mr Len Brown yesterday in Hobsonville Point, where they opened a new Ferry Service and talked about the development happening at Westgate, Hobsonville Village and Hobsonville Point.

They had a bit of banter, which was nice. They opened the Wharf and Ferry Terminal and talked about how it will help open up Auckland and deliver a new way of living for people in this area.

All true - but let's not over-state it guys. There are about 50 families currently living in the new Hobsonville development - the new primary school opens today with around 30 kids in it. This year another 200 homes will be developed, that's all - it will be years and years, maybe a decade or longer, before the planned development is complete and delivering value to a meaningful number of Aucklanders.

In the meantime, second hand values in this development are spiking. Completed houses are changing hands for 10% more than book-price merely months after completion. Each new phase increases the book-price significantly. I live here and there are "cruisers" - vehicle's loaded with curious, eager families - prowling the newly completed streets and parks on a daily basis. The demand for decent housing with access to good schools, parks and services is insane.

Don't get me wrong - there's nothing wrong with what they're doing in Hobsonville. It's fantastic. The problem is that it's not happening anywhere else - in isolation, it's not enough to soak up demand, just enough to spark interest and push prices even higher.

So.... don't hold your breath people. This housing crisis isn't going away anytime soon.

by Frostwind | 4th Feb 13, 12:41pm 1359934894

Let's all speculate in the property market, quit our jobs to become estate agents.

what's wrong with that?

by notaneconomist | 4th Feb 13, 3:39pm 1359945571

SL - having the same problem here too. It says your logged in but then when you type up your post and hit enter you get that "not authorised" note.

Are you on Firefox or Google Chrome????

by notaneconomist | 4th Feb 13, 4:15pm 1359947759

SL - I've only had the "not authorised" problem since I started using Google Chrome all the time. Never had the problem using Firefox.

I Hear what your saying about the drivel.

by steven | 5th Feb 13, 8:55am 1360007742

I get it on Firefox, Windows or Linux....get other odd things not seen on other sites so I think its this sites software, either its buggy or its overloaded.

Try flushing cookies et al and re-login, usually works for me.

regards

by iconoclast | 4th Feb 13, 2:31pm 1359941499

How to finance construction of 10,000 homes. It can be done. Easy

The former head of Iran's central bank, Tahmasb Mazaheri, has been found in possession of a cheque worth 54 million euros ($A71.18 million) by German authorities. Mazaheri, in charge of the central bank until 2008, was searched by customs officers at Dusseldorf airport on January 21 after arriving aboard a flight from Turkey. The cheque, with a value of 300 million Venezuelan bolivars, was discovered in his hand luggage. The German customs office is investigating whether the cheque was part of a money-laundering operation.

Mazaheri said the cheque was to finance the Venezuelan Government's construction of 10,000 homes.

http://www.smh.com.au/world/former-bank-chief-detained-at-airport-with-70-million-cheque-20130204-2dtkw.html

by Gummy Bear Hero | 4th Feb 13, 2:38pm 1359941886

We should fly that genius out to New Zealand ..... that's only $NZ 8700 per home ...

...... solved our housing affordability problem ...

Sweet !

by iconoclast | 4th Feb 13, 3:00pm 1359943246

and .. pure coincidence .. Venezuela .. Chavez

Post from Bernard's week-end Train-Wreck article

Every time one of these articles appear, the thought occurs that we should get Hugo Chavez down on secondment before he is unavailable, or we could get Sitiveni Rambuka, coz he has just retired and is now available for secondment.

http://www.interest.co.nz/opinion/62964/bernard-hickey-says-he-can-remember-same-rhetoric-rbnz-decade-ago-about-same-housing-a