Nobody is building affordable housing in Auckland right now, and hopes are resting on Labour’s KiwiBuild policy to help tackle this, the city's Mayor Phil Goff has said.
Speaking after meeting new Prime Minister Jacinda Ardern in Wellington Thursday, Goff said the previous government’s Special Housing Areas had not delivered the cheaper houses required. He hoped government could team up with the Council’s Panuku housing development organisation to work on building plans.
Meanwhile, Ardern said that while the latest QV figures indicated prices were now falling in Auckland, the average value was still above $1 million. The market was simply not working in terms of supplying affordable housing, she said.
Special housing areas not delivering
The previous government’s much-lauded Special Housing Areas policy turned villain towards the end of its term, with revelations that many consents issued under the legislation had not been built. Asked whether the Council and government were looking at a workstream to kick off building work, Goff said: “Special Housing Areas didn’t deliver. They didn’t deliver the houses that we need.”
“Nobody is building affordable housing in Auckland at the moment, and that is creating a crisis for lower-income families. The families that work in our hotels, that work in our service industries, that drive the busses and the cabs, can’t afford to live in the city,” he said.
KiwiBuild would make a massive difference, Goff said – noting that half of the 10,000 houses per year would be earmarked for Auckland. “It means that our property development company Panuku and the government’s Housing Corporation of New Zealand, will need to work together for regeneration to get those houses built.”
“What Council can do without government is incredibly limited,” Goff said. “What we can do together I think is more than the sum of the different parts.” Ardern added that establishment of a Housing Commission would help the parties generate the ability to work in partnership with the Council.
There is tremendous need for housing construction in Auckland, she said. “Despite headlines today that house prices are beginning to slow, we still have an average house price in Auckland over $1 million. We are not building enough homes in the affordable space, in the range that people are demanding. We have a crisis and the market’s simply not meeting that demand.”
Goff said he was pleased to see that the objectives of the government were aligned with Auckland Council’s priorities for the city. “It’s dealing with our massive problem of traffic congestion – 800 extra cars a week on the road; it’s dealing with a housing shortage and affordability problem, and it’ll make a huge difference to have KiwiBuild; and it's dealing with the problem…with water quality.”
The meeting between Goff and Ardern was also attended by Finance Minister Grant Robertson and Housing & Transport Minister Phil Twyford. In the small-talk photo-op session ahead of the meeting, Goff began saying that there were "big jobs ahead for..." before Ardern cut in: "...all of us". The Mayor and previous Labour Cabinet Minister continued: "And collectively," .
Read comments from Goff on light rail and value uplift tax here.
59 Comments
National Act created the Auckland Super City not Phil Goff & Labour Greens NZ1st
It was National Act that forced this atrocity of bureaucratic failure onto Aucklanders
Previously each local borough council had its own service teams which meant you actually received service in a timely manner. The Super City dispensed with these hands on workers and hired a plethora of extra “ consultants” to tell them to “out source council services” So you found Australian corporation Lend Lease flushing out the storm water system whereas previously local staff would do the job
There have been none of the promised cost savings and services have declined since the Super City
Heck there was a time a few years ago when the Super City failed to keep the grass cut for 6 months because it hadn’t sent out tender documents fast enough.
So if you wish to blame anyone blame National Act certainly not the new figurehead Goff he’s just picked up their mess
Dear Auckland ratepayers
Get ready because your rating system must change if Auckland is to climb out of its indebtedness
Anyone who lives in a really large city knows you pay land transfer tax upon purchase and your property tax is set at a similar percentage annually This way people actually must factor in the running costs of significant annual property tax to live in the higher end areas . In Auckland the higher end suburbs are subsidized by
the many middle and lower end suburbs. This has gone on forever in Auckland and this discount rating for the well off must stop.
You have spruikers here who live in Epsom Remmers who have middle income roles of employment
In other world cities they wouldn’t be able to afford to pay the property taxation to live in those areas.
The gross under taxation of pricier Auckland suburbs for decades has burdened the rest of Auckland with higher rates and a lack of revenue to build a rapid transit system a decent world class museum or downtown waterside parkway
A land transfer tax as well as an annual property tax?
Northern Lights' attitude reveals his deep and pathological hatred for the common man who has done well for himself. This is what a lot of the comments here are about. It's okay for those that have always been rich to remain rich and exploit the working class but a poor P&T worker to rise above his station?..that ain't right. It's infuriating that the Kulaks, the petite bourgeoisie, should get wealthy purely through being born at the right time and place.
Hell, NorthernLights has admitted on this very site that he has exploited immigrant, probably illegal, workers at the expense of poor locals but that pales in comparison to little hard workers like ZS and DGZ getting lucky.
Working in the Ak council must be like living in a large metropolis. Where there is a nice comfortable little narrow role to ease into each day (after coffee number one), a career path all set out, a job for life, regular above CPI pay increases, a large comms team, legal team and attack CEO ready to fight off any disruption from the media or outside forces. The mayor already well inducted into the way we do things around here and is now well on the way to becoming a lap dog....
@uninterested , yes , its quite unbelievable , you go there for am a meeting and get coffee , muffins , etc .
And everyone seems to be in a "meeting ', discussing what, I would like to know ?
About half the meetings I have ever attended were a waste of time.
The only thing the council produces , is a stream of seriously expensive motor cars out of its basement parking at 4.00 pm every day
Boatman if you think Auckland Super City bureaucrats are bad you should’ve seen life at the Auckland Regional Authority The ARC building was so expensive many departments couldn’t afford the floor space
I know many won’t believe this fact but it’s true
Chefs with hats would arrive with all their fine culinary delights before the Great Meetings
Meetings are a NZ tradition to be carried out over weeks and months upon which a report on the meeting occurs and more consultation before further meetings
Working in the Ak council must be like living in a large metropolis. Where there is a nice comfortable little narrow role to ease into each day (after coffee number one), a career path all set out, a job for life, regular above CPI pay increases, a large comms team, legal team and attack CEO ready to fight off any disruption from the media or outside forces. The mayor already well inducted into the way we do things around here and is now well on the way to becoming a lap dog....
Yes. It's very hard to erase the image of cardigans, slippers, hot cups of teas and espresso machines, scones and sushi, framed bone carvings, and team building activities.
I used to work for a CCO. If thanks to your askissing technique you're on the top brackets it's a sweet gig made of all you have said. If you're on entry or middle position you're F@-&-ed. No career advancement no CPI increase and your life depends on a 60 years old ass kisser.
Breathtakingly fascinating report on some small talk among politicians. An astonishing surprise that the chat among long time Labour cronies would be in harmonious agreement. What sort of coffees did they order ? - go on, tell us, we really want to know
Yes, breathtakingly.....superficial. Not really any need for them to be there in person. You could have mannequins designed in their image and hit play on the tape deck.
We should have staff hiring and structure for councils controlled by an external agency - perhaps run by central govt. To give monopoly providers (local govt) with unlimited ability to tax and borrow the ability to grow their empires at will to service internal agendas, and provide support for local govt politicians to 'control the message' is a fundamentally bad idea.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=119…
"Goff has said that communications costs should be cut by at least 15 per cent over the next three years, as recommended by a review".
Woopsie dooo.
“Nobody is building affordable housing in Auckland at the moment,"
This is the big problem. With low cost housing stock being swallowed up by investors over the last decade at an astonishing rate, and no new stock being built, low to medium income working families are being locked out of home ownership in Auckland.
Nothing work with the government stepping in when the private sector isn't meeting the markets needs.
Funnily enough, the private sector alone was not building enough affordable housing at points in the 20th century either, thus government encouragements, partnerships and even direct build activity was used to foster the creation of more affordable housing so Kiwis could have access to it.
It's sort of a forgotten history, when those who benefited from those efforts tell young Kiwis to "do it all on their own two feet, like we had to". They didn't have to, actually - they benefited from many efforts to create more affordable housing and increase the home ownership rate.
No, I'm actually meaning also up to and including the subsequent generations. It's not only the ones who built the houses who received the benefit of the assistance to get them, it's also the ones who followed immediately after and benefited from a market with an adequate supply of housing to making things more affordable and accessible.
Not withstanding the direct help many boomers did receive, separate to the above. E.g. cheap assistance through housing corp loans, free study and generous allowances that meant they faced working adulthood without a debt to pay off prior to buying a house, and even other measures such as a government ballot to build an affordable house with state assistance.
I know a couple purchased their first house in the last way. I also know a boomer couple who bought their first house while both studying to be school teachers - on the strength of a deposit borrowed from their parents and the income from their student allowances.
We face now a situation of undersupply caused by a few decades of neglect, rather than the adequate supply situation faced by boomers thanks to the decades before they got there.
Oh so they have suddenly found out what we knew all along !
Bloody Liars !
Land costs $2,000 per square metre in Auckland ( council administered costs account for a huge chunk of that ) ,so there is no way in hell that you will ever build a house for under 600k when the land alone costs more than an 'affordable" home .
Jacinda was lying to the electorate all along about this grandiose scheme, she knew well that it would never fly
Rick, that is the theory, but it does not work,.In practice, as Auckland gets bigger more people want to come.Like a black hole, or Phil Goff's budget, the bigger it gets the more it sucks in.It's an historically demonstrated long-term observation in Auckland.
Truly affordable houses are most unlikely ever to be built in Auckland.
You can't therefore ever fix the supply side, so you need to reduce demand.Maybe draconian rate increases to fix the infrastructure and simultaneously BANNING new housing development would fix it, (and save the environment!!)
100sqr metre terraced houses on 250sqr metres of land. If land was $1000 per square metre and build costs were $2500/ sqr metre you could get one of those for $500k. That would be larger than the average house in Norway which is a country people say we should be like. That would mean that for a couple both earning the minimum wage labour propose ($20/h) working full time, the purchase price would be 6x their income and if they had the 20% deposit the mortgage payments would be about $485 a week. This is far unaffordable and probably less than they pay in rent now. The problem is we don't build these houses. We will build a 250 - 350 sqr metre house on 400 to 600 sqr metres of land and then complain it is expensive.
Based on your numbers the house I bought last year for $1.165m would have cost me $1.24m to build.
In actual fact we investigated building and we would have been looking at $1.3m+.
This is why housing is expensive. When there is low demand existing stock is sold below replacement cost. When demand is high the price of existing stock increases to near replacement cost. It is basically like the second hand mobile phone market. The price someone is prepared to pay for a second hand iphone is mainly based on the cost to buy a new one. If apple start selling iPhones cheaper then the price you will get for a second hand one will be less. If the price of a new one goes up then people will be prepared to pay more for a second hand one (assuming they want one). In the case of housing, they need somewhere to live. If all manufacturers stop producing phones then you would expect the price of used ones to increase.
With housing, the ability to buy (interest rates, LVR's, credit critera etc) are key issues but they are not the root cause of the problem. Until the cost to build is addressed, everything else is just noise.
It's all a big worry.
Demographics and supply constraints will drive Auckland house prices higher.
A reasonable response is job creation in the regions through balanced regional development - value-added agriculture/horticulture, ICT and light industry. We can do much better!
As I've been pointing out, there are excellent opportunities in cities like Palmerston North "the hub of the Manawatu".
And you can buy a good 3 beddie there for $350,000.
See you there! (Or be square.)
Definitely - Feilding is an excellent bet. So is Levin "only an hour's drive to Wellington".
Not so sure about Shannon though.
Further north, Sanson and Bulls could be worth a punt.
Also, I believe there's upside in Whanganui - an absolutely lovely, picturesque city.
So much to choose from in Manawatu, Whanganui, Rangitikei and Horowhenua, especially if you're on a tighter budget.
There's no law that says you have to wrestle with Wellington/Auckland house prices - which are bound to keep increasing over time.
Nice to place emphasis on lifestyle, personal well-being and fresh air. Life is to be enjoyed!
Yvil. Given Twfords recently more tentative noises on the ability of the coalition to deliver their promised 100,000 houses, I suspect the reality of the squeeze between their grandiose, unachievable undertakings, and the resources available, is hitting home.
And Hipkins has worsened labour shortages by diverting 15% (at least) more young people away from availability to enter the workforce, into tertiary study, with Labours free education bribe.
Of course there isn’t and how could there be with all of the red tape involved in building. Once again clueless politicians that are shallow and out of their depth. More tax won’t solve a thing, banning foreigners won’t solve a thing. From someone who has developed before, the common person has no clue how tough it is. The amount of cost and red tape involved is extraordinary and makes developing so risky. Only a fool would develop now with all of the hassle involved, ironically if they got rid of policy and red tape then and only then will they actually aid first home buyers. But they are too dumb to realise this.
Agreed and well put Property KIng, no one knows how complicated and costy it is to develop ---
People think that it is as easy as adding land + building cost per meter = Price ...(•◡•) !
Why would anyone develop small units when it is guaranteed he/she will lose money. ??
Why build a 100m2 , 3 bdrm house when your 6 months concent time and costs, contributions, water and common expenses are pretty much the same as for a 300m2, 5 bdrm mansion ?? ...
the politicians know this , but they keep lying and misleading the clueless people who follow them blindly ... It will all be revealed in 12-24 months time and we shall all be here to hold them to task ...especially this Affordability Myth of 450K - 600K
The politicians keep mis-leading themselves most of all. The Special Housing Areas didn't provide affordable housing, surely no-one is surprised. Now Labour will try their cherished idea, probably without success too.
I don't hear sense, I hear delusion. Surely they could find somewhere that has actually solved these problems and just copy them. Yet I hear no reference to proven techniques, just like National.
Dear Phil Goff, its hardly surprising affordable housing hasn't worked.
The housing issue simply comes down to economics.
1) A very fast growing population in Auckland leading to increased demand. With a sticky supply curve the prices get bid up (along with ultra low interest rates worldwide at the moment)
2) Sticky supply curve – The many building and zoning restrictions mean that developers cant build fast enough to keep up with demand. The price of land gets bid up.
3) Also due to many building and zoning restrictions, developers cannot make money on affordable housing and focus on the middle and upper end of the market.
4) Government had pulled out of providing new affordable housing pushing up demand further for the housing that is available and shutting the poor and young out of the market.
5) Its debatable, given the building standards we require and the zoning restrictions, whether it will be profitable for developers to build affordable housing or whether the can build enough market priced housing fast enough that the bottom end of the market becomes available to the young and poor.
6) Given market failure due to the distortions above (zoning, land use restrictions, tax treatment) in the market Its pretty clear that government needs to step in and provide affordable housing.
7) Central government reducing the immigration rate will definitely help, as would a land tax, and replacing developer contributions with targeted rates.
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