Govt extends drive for housing power

Property

Housing Minister announces another eight regions to be included in Govt-controlled housing fast-track legislation

13th Dec 13, 8:33am by David Hargreaves

<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

The Government's moved to massively expand the reach of new legislation that theoretically gives it power to centrally plan regional housing developments.

Housing Minister Nick Smith says he's now included Christchurch City, Wellington City, Hutt City, Upper Hutt City, Porirua, Kapiti, Tauranga and Western Bay of Plenty as regions covered by the Housing Accords and Special Housing Areas Act.

These regions join Auckland, which was the region for which the legislation was ostensibly drafted, and which has recently signed up to the Auckland Housing Accord - an agreement between the Auckland Council and the Government.

The Auckland accord aims to get another 39,000 houses/sections consented within three years. Already "special housing areas" that would provide up to 6000 houses/sections have been announced for Auckland and Housing Minister Smith recently alluded in Parliament that another tranche offering the potential of at least as many houses again would be made before Christmas. The announcement will likely be made early next week.

The housing accords legislation was opposed by the major opposition parties. One of the perceived problems with the legislation was that in theory it gives the Government power to itself take over from local councils the role of designating special areas and approving housing developments - if it can't agree on a housing accord or breaks off an existing accord with a local council.

interest.co.nz analysis at the time the legislation was in draft form showed that very many regions within the country would fit the Government's criteria as having supply and affordability issues - and therefore could at a stroke be included in the legislation.

In explaining the decision to include another eight regions in the accords legislation, Smith said that New Zealand’s housing supply and affordability challenges "extend beyond Auckland".

"The Auckland Housing Accord is proving to be a successful tool and we are keen to explore how we can assist other councils to get more houses built more efficiently."

Smith said that housing costs in Wellington were most acute in the city, but the wider region of Hutt City, Upper Hutt, Porirua and Kapiti all also met the legal criteria as having supply and affordability issues.

"Our preliminary discussions with the mayors and councils suggest the best way forward with an accord is to take a Wellington-wide approach," he said.

The housing issues in Christchurch were "particularly challenging" with the damage of tens of thousands of houses to earthquake damage, the demand for temporary housing while homes were fixed, and the accommodation required for a burgeoning reconstruction workforce, Smith said.

"The work on a housing accord with the Christchurch City Council needs to be well coordinated with the new Land Use Recovery Plan and the work of the Canterbury Earthquake Recovery Authority."

Smith said the major housing challenge in Tauranga and the Western Bays was managing projected population growth of 64,000 people over the next 20 years.

"This will require an additional 1300 homes per year but only 800 per year have been built over the past five years, contributing to high house price inflation. The Government and councils favour a coordinated approach across both districts to address supply and affordability."

Smith said that the issues in each city were different and would "not automatically mean replicating the Auckland Accord’s focus on fast-tracking housing developments".

"We want to get officials from Government and council working on identifying the barriers to supply and affordability of housing and then putting in place whatever steps are needed to make improvements

"I am encouraged by the initial response from mayors and councils. There is broad agreement that homes have got too costly in these areas and that the Government and councils need to work more closely together to get house price inflation down," Smith said.

As currently enacted the accords legislation is set to have the major active parts in it in respect to creation and administration of special housing areas repealed as of September 16, 2016, with the whole act repealed on September 16, 2018.

There would, however, appear to be nothing to prevent the later removal of the repeal dates, meaning that the legislation would continue on.

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6 Comments

by Neville C | 13th Dec 13, 1:17pm 1386893844

Its hard to see where in Wellington there is cheap undeveloped land that can be forced on the market. Land like Athletic Park and Seatoun army base were quickly developed when they came available. The only options appear to be subdividing large properties. There is a big block of land with a large old house at 260 Tinakori Rd that could be forced to subdivide!

by Computer | 14th Dec 13, 12:08am 1386932939

There's plenty in and around the Northern Suburbs and out past Porirua that's mostly farm land:

Ohariu Valley
Between Woodridge and Horokiwi through behind Grenada North and right up towards Porirua East behind Tawa.
Camborne to Pukerua Bay
Pauatahanui area

That said, is lack of bare land the actual problem?

So pardon my ignorance of the property market as a would-be FHB, but my observation in Wellington at least is that while there is land available and being actively developed, it's availability has been artificially limited which then drives up the price, whether deliberately or otherwise. Any new land made available is likely to go the same way. Examples:

Both major subdivisions in the Northern Suburbs (Churthon Park, Hunter's Hill) are owned and run by the one company - they've pretty much got all the new subdivisions defined the council's growth framework and they will release stages to their own timetable. As they are a residential construction company they intend to sell house and land packages only, so no chance to play off builder and suppliers on cost and as you would normally do, and they will not approve any house plan that doesn't generate a good return on their investment. In short, if you want to build in or around the Northern Suburbs then you'll be at their mercy as to size and cost.
Woodridge, Newlands. From their website: "Woodridge is Wellingtons only fully controlled development where sections are not sold separately. The design process from earthworks, roading, services and reserves through to home designs and sections, sales and marketing are all controlled by Woodridge Developments. This avoids ad hock development where someone could build something totally out of character or value in the area." Again, gradual release of sections and if you want to build a new house in or around Newlands then you'll be doing it on their terms.
Aotea. While they will sell land on its own, again sections are being released a stage at a time and there certainly won't be any glut of titles to be seen. With the covenants in place the reality is that you won't see any properties built for less that $550k - well out of the reach of many.

I would suggest that any new land the government forcibly makes available is liable to be land banked rather than rapidly developed to promote affordable housing, and from a business perspective, why not? If you're a developer the last thing you would do is flood the market and drive down prices, and in fairness there may be few with the financial resources to develop and release sections faster than they are currently doing.

by Neville C | 14th Dec 13, 9:00pm 1387008035

I think all the areas you list (except for Ohariu Valley) are already zoned for housing. Ohariu Valley has the problem that the cost of creating access roads and bringing services over the hills would make the sections very expensive.

by Computer | 16th Dec 13, 12:29am 1387106952

Some is, definitely, but that tends to support my position that it isn't for lack of undeveloped land but rather the restricted supply of what has already been earmarked on district plans for residential use.

How to increase the supply of quality residential sections being offered to the market in order to level up the supply / demand equation and introduce some competiton to the developer community, without driving developers out of business?

by waymad | 13th Dec 13, 9:17pm 1386922645

"how we can assist other councils to get more houses built more efficiently."

Fire every planner for starters. They have demonstrably started off this whole awful cycle of price differentials, price diffusion, leading to generally untaxed CG's for everyone 'in the zone' and increased revenue streams for Councils on essentially zone-pumped valuations. They are economic ignoramuses.
Un-squiggle the maps. No need for zoning and spatial stuff: the essence of the RMA is to allow or disallow uses based on their actual effects, not their lat/long.
Remove the DC's, consent fees and other levies. They are simply a racket: defined as the raising of a threat, and the offer to mitigate it via a transfer of Munny.
Nationalise/centralise the issue of consents and permits. Having 89 consenting authorities in a long thin country barely the size of Melbourne is madness, the Peter Principle writ large.
Put all these displaced 'workers', and I use the term loosely, to productive work in house factories. They'll be under cover, there will be a cafe, and perhaps, if they can demonstate drug-and-mistress-free behaviours for a defined period, tea ladies. Or chaps. Or wallahs. Whatever.
Exempt houses produced in factories by certified suppliers from GST. Instant 13.04% saving on gross price.

Next problem?

by Matthew | 16th Dec 13, 10:34pm 1387186498

The Government's appointment to the Housign Panel for Auckland is not looking good in the case of Greg Hill. 13 years ago Greg authored a paper that said this in part:

Regional communities are now more knowledgeable about the “costs” of growth (economic, social and environmental) than in the past and are more inclined to oppose peripheral expansion. However, “anti-growth” sentiments need to be balanced against the economic realities of supply and demand whereby a scarcity of development opportunities can provide upward pressure on prices. This in part has fuelled the debate about the MULs and housing affordability. This is very complex issue, and supply side issues while relevant are only one part of that debate. Clearly, continued urban sprawl, can have huge costs, environmentally, socially, culturally and economically.

This in my opinion might make sense at first glance but environmental costswill be exacerbated by intensification because other research shows that intensified cities with more public transport actually slow down transit times to work. This causes more air pollution in a denser area, thus causing environmental degredation to people and the physical area.

Later on Greg stated that in 1999 the ARC said it would try and redevelop the urban area to try and relieve price pressure. Fourteen years later that policy has been an utter abject failure. How can the Government appoint him to comment on the Len Brown's disastrous Unitary plan?