Auckland Council eyes using property development arm Panuku Development Auckland to help establish more affordable housing

Auckland Council may look to use property development arm Panuku Development Auckland to provide more housing on land the council owns and can access, says councillor Chris Darby.

Speaking on Radio NZ Darby acknowledged the Auckland Council and central government Housing Accord partnership has failed to deliver anywhere near enough affordable housing.

"We've seen the median house price go from some $530,000 to $817,000 in the period of the accord. That's a 50% increase in the median Auckland house price," Darby told Radio NZ.

"Affordability has definitely, without doubt, got away on us."

Asked what Auckland Council could do to address affordability Darby, who chairs the Council's Planning Committee, said there's scope to "gear up" Panuku Development Auckland, a council controlled organisation, to provide more housing on land the Council owns and land the Council can access.

"That agency we could put strategic outcomes in place that require it to specifically address affordability as well as financial outcomes, as well as good design outcomes. But specifically to ask it to address affordability. That's at our disposal. But we can't do this alone. We need to be doing this with a willing government as well," Darby told Radio NZ.

Under the Housing Accord he said just 98 "free-market affordable homes", or "relative" affordable houses, have been built. Put in place in 2013, Darby said under the Housing Accord there have been more than 47,000 consented dwelling sites with 3,400 consented as affordable sites.

The Housing Accord identified 154 Special Housing Areas. As at June 30 this year, the affordable house price to meet the Special Housing Area relative affordability criteria for a specified proportion of homes to be sold at 75% or less of the Auckland median house price was $618,750.

Interest.co.nz's latest Home Loan Affordability Report shows as of August mortgage payments were eating up 42.6% of a typical Auckland first home buyers’ take home pay. That's down from March when mortgage payments on a lower quartile-priced home were consuming 46.1% of a typical Auckland first home buying couple’s take home pay. Housing is considered affordable if the mortgage payments require no more than 40% of take home pay.

The video below comes from Auckland Council's Tuesday planning committee meeting.

At the meeting Auckland Council says the Committee requested Mayor Phil Goff’s Housing Taskforce Steering Group prioritise investigating its recommendation to "investigate other mechanisms to enable new tenure and ownership models that can fill gaps between social housing and market-rate housing…[and] identify whether and how these are feasible to implement to address affordability issues." Staff are to report back to the Planning Committee in the first half of 2018 on the Steering Group’s findings, including for example, the possibility of a Unitary Plan change to accommodate affordability.

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52 Comments

Gawd. What a horrible interview (and I'm not talking about the interviewer). The responses are as Kafkaesque as could possibly be. These people seem to have zero appreciation and ability to implement strategy, set timelines, and measure outcomes. It's all about meetings, task forces, and no doubt waffle and luncheons.

And pet projects

OMG, fully agreed J.C ... and some of these ".....s" are paid 6 figure salaries and 25 day holiday a year with the privilege of renewing their brand new company vehicle every two years ... this is just disgusting !! .... So for all the people of NZ ( outside Auckland) who still doubts how little and how late is, and has been, done in ACC re Uni plan and housing crisis - there you have a glimpse of the rort and wasting ratepayers and taxpayers money ... The Gov is not the only one to blame ... ACC carries a much bigger blame and Guilt.

ACC has discovered ( just dawned on them) that the cost of a 4 year accord has gone up by 50% ---- really,??? ... where did the difference go to?? .. Land price ...!!

As these houses are being built on SHAs owned by Gov ( or Council) Unless the sale contracts we flimsy enough to leave out any Land price future appreciation gains to the benefit of the developers ... So under which tree was the ACC and this committee sleeping during the last 4 years ??- Obviously there have no Shame....Hence while it is fashionable to cry with the Affordability Crowd and symphysis with the public .. it is the Gov or the developer who have pocketed the extra money as the market appreciated and the irresponsible useless watchdogs were having a nap!!

Oh and after the horses have all bolted, the ACC have waken up to the fact that they need to take this matter into their own hand ( it is all about control as that is the ACC culture) and now needs the Coalition of The Willing ( the Gov) lol ...what a shambles!!

6 figure salaries are hardly that uncommon these days.

All entirely predictable several years ago when SHAs were introduced....

Agree with Hulse for once.
Council should not get involved and put more ratepayers money into subsidizing housing. If it did so it would just have to borrow more and its up to its tits in debt already due to the rail tunnel. Sure a little can go into old folks tiny houses like it always has, but in a general sense, NO!

FYI, I've updated this article with some comment from the Auckland Council planning committee meeting & a video from the meeting.

Why is it Council's job to provide housing? Ask them how much progress they have made on their 41% ownership in the Tamaki Regeneration Project and what that has cost the ratepayers. Why not wait a few days and see immigration numbers cut - then relook at what ratepayers want - rubbish, watewater, Transport etc - you know the things that Council's are supposed to be providing.

The council should leave everything to the Government and free market because they care so much about Auckland?

I'm sure I heard in the interview on Radio NZ this morning that the government has asked for data on affordability (or similar) to stop being collected partway through the Special Housing Area initiative. Seemed odd.

Previous councils in Auckland must take a big part of the blame for this mess.
Did bugger all rezoning in the 2000s, with high population growth and bugger all zoning to enable housing - what do you expect will happen with house prices.
Having said that, central government equally culpable with immigration, foreign investment rules, and taxation.

In the 2000s we were still building housing much faster than 2010 onwards. If this council could raise its game to the barely adequate, somewhat chaotic and totally mediocre planning of the 2000s we would all be much better off.

Socialising the blame and cost for private builders' and designers' failure to build weathertight houses can't have helped the speed at which the council will perform.

Committee? But first things first:

  1. determine the membership needed
  2. determine the rates of remuneration for aforesaid members
  3. find the next calendar slot available to accommodate a meeting with aforesaid members
  4. determine the scope, diversity and cost of the catering for that first meeting
  5. determine a place for that meeting and the cost thereof
  6. determine the legal limits of the meeting's powers
  7. convene a prior working party to set the agenda for that meeting
  8. repeat items 1-5 for that working party
  9. draft ToR for the working party
  10. acquire secretarial and administrative assistance for both the working party and the committee proper
  11. oh bugger, forgot that wee need a budget for this, back to 1)...it's now mid-December, after Xmas then, toodle-ooh

Or AC could just buy 50 copies of the Productivity Commission's recent epistles on Land for Housing and Housing generally, give them to staff, set a test to make sure the brown cardies have Read them, and ya know, then actually Implement some of the findings....

Nah, it'll nevah happen. OK, lets start at Action point #1......

The committee is more important than strategic planning. Imagine having to spend your life working amongst this lot.

Some of The ACC planning and executing heads and shoulders are nothing but outdated rotten bunch of sleepy bureaucrats shoving paper around and passing time until retirement at our expense, They are experts in avoiding responsibility, afraid to shake any tree, while being absolutely useless and paid mega $$s - I had friends who used to work with this Mob for some time and left in disgust !!

Just imagine for a second if this meeting was conducted in a privately owned company !!

Just imagine for a second if this meeting was conducted in a privately owned company !!

Depending on the company, I doubt the meeting would last long. Something would give.

ACC is loaded with left leaning councillors so the last 7 years of the Super City has been a good example of how the whole country would be right now if Labour had been in power. Over staffed, over paid and out of money.

But doesn't have to be that way.
Put money and resource into front line services rather than paper pushing 'policy analysts'.
Left leaning policy does not automatically imply huge, inefficient bureaucracy

ACC is loaded with left leaning councillors so the last 7 years of the Super City has been a good example of how the whole country would be right now if Labour had been in power. Over staffed, over paid and out of money.

Whether the bureaucrats wear striped or plain underwear is beside the point. The idea of "left" and "right" in the modern suburban discourse is largely meaningless.

Yes, I fully agree , but they happen to be lefties supporting each other ( office politics) ... however, one cannot but doubt that the Lefties would be tempted to use any opportunity ( as they would possibly can) to make the Right Gov of the day look bad and have a hard time !! why would you like to make the opposition look good?? -

The Unitary Plan was a live example of dragging the chain for 5 years until the Hard Word was put down on them, and miraculously the whole Council changed gears in few milliseconds and few very efficient meetings !! ... this is how shameless they are!!

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Lefties to blame? And what about the right leaning central government that told us a property bubble was a sign of success, did nothing, and to rub salt in the wound abolished the position of housing minister? Seriously, this isn't a left versus right issue. This is a lack of leadership across the political spectrum to actually tackle the issue in a meaningful way like grownups.

Yep, left v right has nothing to do with it. Both sides kowtow to the land owner/developer class. Such an easy solution - a targeted rate (land value tax) on all unimproved residential zoned land holdings, i.e., develop, sell or pay.

If a city doesn't do enough development. Taxing development more is not going to help.

The way to hurt the land owner class and increase development is to open up the land around Auckland.

I'm saying tax non-development (land banking) - and yes, opening up even more land by designating it residential zone has the potential to collect even more tax on unimproved residential zoned land. So, no problem with that.

Yes, I fully agree , but they happen to be lefties supporting each other ( office politics) ... however, one cannot but doubt that the Lefties would be tempted to use any opportunity ( as they would possibly can) to make the Right Gov of the day look bad and have a hard time !! why would you like to make the opposition look good??

The fact that you even drag the "leftie" label out says more about you as a creature of the suburbs.

Those poor councilors, it's full off numbers. Just like The Thick of It except without Peter Capaldi. We need Peter Capaldi just for some of these councilors to have a taste of karma.
https://www.youtube.com/watch?v=i8VFb2wxolM

What was that whole Unitary Plan thing actually for anyway apart from a committee, lunches, and no doubt healthy fees.

Don't forget all the high cost whitepapers and hundreds of thousands in marketing and design.

Remember it was the government that forced the unitary plan as part of the super city...

It was also a cosy arrangement between Nick Smith, the supercity, and 'Independent' appointees.

It was also a cosy arrangement between Nick Smith, the supercity, and 'Independent' appointees.

An arrangement so cosy I seriously considered changing my vote from National to NZF when the appointees up-zoned my area without right of reply. When NZF go with Labour/Greens on Friday I hope that Smith is one of the first to be put out to pasture.

How do the Auckland Councillors who said there is enough housing supply not get it that the supply that is being made available is limited and is being land banked-so it is not affordable. In each part of Auckland -each subsection of the housing market -whether it be the few inner city sites where apartments can be built or the few new greenfield land sites- the owners of these sites having monopolistic pricing power and they are using it to jack up prices. How hard is that to understand?

We have two options -bring in a massive amount of competition by rezoning on a wholesale basis -allow the entire Isthmus to be up-zoned so that city suburbs can be gradually rebuilt with at least 3-4 stories high medium density housing. And remove urban growth boundaries so greenfield land can be accessed at affordable prices. Supply provided in this way will be affordable -there is any number of examples of cities overseas that have used some combination of freedom to build up and/or out to achieve affordable housing. This is not rocket science Councillors -stop make excuses....

If NZ is not prepared to allow competition to fix the problem. Then the second option is the government buys rural zoned land at rural prices using compulsory acquisition if necessary -rezones it for urban-use -provides the necessary infrastructure -including public transport and builds houses (or justs sells the sections to FHB at cost as is NZF housing policy). This is what the first Labour government did -we know it works.....

I think Auckland Council has an argument that they cannot afford to provide the infrastructure for rezoning -both up (requires a massive upgrade of stormwater/sewage systems to the failing Victorian era system) or out (transport infrastructure is already congested -more space efficient systems are needed). Auckland Council really is up against its debt limit -Mayor Goff is right about this. The government needs to come to the party with better local government/new development funding tools if it wants councils and a competitive private sector to do its part in fixing the housing crisis. Auckland Council needs to be honest with itself about this -not make excuses which make them look stupid.

Winston says addressing the housing crisis is one of his three policy priorities -so these supply options will be canvassed in coalition negotiations. Alongside demand options -like cutting back on immigration, stopping foreign buyers, taxation and monetary policy reform.

The following article -Yes, You Can Build Your Way to Affordable housing -in a very readable manner (maybe even the numpties in local and central government will understand it) describes how housing supply is an answer to housing affordability and there is in fact a number of options to choose from including;
-sprawling cities,
-environmentally friendly cities which have freedom to build up,
-cities built by the private sector,
-cities built by the public sector.

It is all possible -all it takes is political will.....

http://www.sightline.org/2017/09/21/yes-you-can-build-your-way-to-afford...
Written by a NorthWest US policy institute

If NZ is not prepared to allow competition to fix the problem. Then the second option is the government buys rural zoned land at rural prices using compulsory acquisition if necessary -rezones it for urban-use -provides the necessary infrastructure -including public transport and builds houses (or justs sells the sections to FHB at cost as is NZF housing policy). This is what the first Labour government did -we know it works.....

More or less what the Japanese govt did post-WWII. In the case where farm land was bought for the construction of train stations, the farmers more or less retired and got paid for the rest of their lives. They didn't really have any say in the matter. The Japanese are group oriented and nationally cohesive.

J.C, Tokyo is the biggest city on the planet, yet house prices are half of what they are in Auckland. They certainly are doing a lot right when it comes to managing cities. I have tried to do a bit of research on them, but I feel I have only just scratched the surface.
I have written an article on affordable housing in Tokyo
https://medium.com/land-buildings-identity-and-values/what-is-the-secret...
Another article on how Tokyo doesn't subsidise public transport and unlike NZ they do not have hidden subsidies for automobile dependency.
https://medium.com/land-buildings-identity-and-values/tokyo-does-not-sub...
I have a final long form article about spatial economics, but it has some very good graphs showing how the Prefecture of Tokyo has increased in population over the last 60 years and how the average amount of residential space per person has increased over the same time period.
https://medium.com/land-buildings-identity-and-values/successful-cities-...

Much of the farm land I am referring to was as close as 2-3 km from urban centers in major cities.

Tokyo doesn't subsidize public transport, but the JR Network was started as a public company before it was privatized. An express train from Osaka to Kyoto would be under NZD10. Quite incredible when you think about it. Furthermore, full-time employees are usually paid the cost of a monthly train pass from their abode to the work place. In a former life, I was a corporate animal in Japan.

Yes, you're right about population increase and density in Tokyo. People talk about Japan's ageing population out of context. The majority of the population lives in the main urban areas and there has been a massive shift from rural to urban over the years. An ageing population misses the point somewhat.

Furthermore, the Japanese public housing system is second to none. I had a colleague who rented a 2-bedroom, 70-square meter apartment from Osaka City near Osaka Castle for approx NZD1100 per month. In the scheme of things, that was quite a deal. The apartments are renovated to near new before each tenant starts a contract.

Fantastic articles by the way.

Much of the farm land I am referring to was as close as 2-3 km from urban centers in major cities.

They did the exact opposite of the Auckland Unitary Plan.

The UP bans construction on almost all land in the 2-3 km adjacent to Auckland City.

supply that is being made available is limited and is being land banked

Brendon, if you are right in that assertion, it really seems to me that the use of taxation as a disincentive to land banking is the way to go. And yes, remove the urban boundary - make all the land residential-zoned, and similarly, tax (via a targeted rate) all the unimproved land within the residential-zoned areas.

Make land-banking uneconomic in areas of high demand for residential housing.

There's plenty of reasons why house prices in Japan have stagnated. Many of them are nothing to do with planning.
Low household formation rates is a big factor. Birth rates are low, and many young Japanese live at home.
Another big difference is that it is quite common for companies to provide / build accommodation for workers.
Finally, due to huge economies of scale, building is cost effective.

I'd say the biggest factor is that they live in shoebox apartments in row after row, street after street, suburb after suburb, apartments built to withstand magnitude 8 'quakes and last 1000 years.

Skudiv wrong on almost every point. Tokyo residents have significantly increased residential space per person to over 30sqm. So a family of 4 would have over 120sqm -that is not a shoebox. In Tokyo most of the suburbs is 'missing middle' housing -townhouses, duplexes, row houses, 3-4 story walk up apartments -not high rise apartments (although they of course exist too). Finally Japan is famous for a culture of housing that prefers new over old to the point houses are designed for a short life and are frequently replaced.

There's plenty of reasons why house prices in Japan have stagnated. Many of them are nothing to do with planning.
Low household formation rates is a big factor. Birth rates are low, and many young Japanese live at home.
Another big difference is that it is quite common for companies to provide / build accommodation for workers.
Finally, due to huge economies of scale, building is cost effective.

Actually, the Japanese construction industry only got its act together after the collapse of the bubble when it became necessary to address the price-to-value ratio. It's not purely about economies of scale. Japan has probably the most advance building materials sector in the world (think companies with the expertise such as Sekisui), which is horizontally integrated with construction.

Auckland City bans development in:
- Greenhithe where there is existing transport, water and power infrastructure.
- Swanson where there is existing transport, water and power infrastructure.
- Takanini where there is existing transport and power infrastructure.

They do this, because they need to prevent affordable housing. They do this, because they want to make sure people have long polluting commutes. They do this, because they want to spend more money.

Auckland Council promotes development in:
- Huapai where there is very little infrastructure of any type.
- Warkworth where there is very little infrastructure of any type.
- Pukekohe and Orewa places at the furthest extent of existing infrastructure.

Good points. I've looked at the Unitary Plan maps and you are right. Huge swathes of land around existing urban area zone Countryside Living.
However, the problem as I see it, is that this land is highly fragmented. That would be a major barrier to large scale comprehensive development even if the land was rezoned.
So how is this addressed? I see a couple of options:
1. Have an Urban Development Authority with compulsory acquisition powers to acquire and assemble land; or
2. Have a different type of peri-urban zoning that allows for clusters of housing on existing sites (over a certain size, say 5 hectares - which might mean some site amalgamation). Under this model, on a 6 hectare site, if you allowed development to cluster within say 30% of the site area, then you could do development over 2 hectares, with say 30-40 homes. Under this approach it would certainly be more ad hoc, and wouldn't get the comprehensive gains of option 1. but....is option 1 politically tenable? ie. are people living in the Auckland hinterland going to accept that their lifestyle properties can be compulsorily acquire. That is pretty 'Big Brother'

Compulsory acquisition is beyond the pale for this purpose as the benefits accrue to a relatively small number of people. I'd rather see expressions of interest openly advertised for blocks of land and allow land owners to compete to sell. They could do so in clusters, just as the group of apartment owners in Sydney did to sell en masse to a developer, achieving an above individual sale price for each apartment. Allow the $ benefits of subdivision to flow to the original land owners and I think much of the opposition would melt away.

"...as the benefits accrue to a relatively small number of people."

Funny, when did this sort of thing start bothering you?

Using the power of the State to solve an issue for 30/40 people at a time is akin to using the proverbial sledgehammer to crack a walnut. The level to which the State influences my life is the core reason I could never vote left of centre. Everything I've seen here from the left seems to reinforce my belief that their core solutions are to legislate more and tax more.

Don't agree with that.
The bidding would likely elevate the land costs substantially, which has the potential to defeat the whole objective of supply and affordability.
Also takes an awful lot for a large number of landowners to agree. Many will simply not want to sell.

That is a non-problem. Or at least is not a problem relevant to the merits or otherwise of Auckland Council planning.

Auckland is incorporating the small highly fragmented blocks of a Viv Davie-Martin Drive (Warkworth) or Grace Hill Drive (Orewa) or Koraha Rd (Huapai) or Grace James Rd (Pukekohe) into the RUB. Whilst the area between Kumeu and Westgate which has relatively large title areas is banned from development.

Finally Councils come up with a solution -- Panuku to build affordable housing. Like the Tui advert--yeah right.
I sincerely hope this proposed solution gets stopped in its track straight away. Who is going to take unneccasary risks for the ratepayers?