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Record Auckland house prices mean more land needs to be released to help younger generations buy homes, ACT leader John Banks says

Record Auckland house prices mean more land needs to be released to help younger generations buy homes, ACT leader John Banks says
John Banks.

More land needs to be released around Auckland so younger, 'tenant' generations facing housing affordability problems have a chance to buy, ACT Party leader John Banks says.

He called on the government to heed advice from the Productivity Commission, which said in April the quickest way to deal with unaffordable housing in New Zealand's biggest city was to release more land for new residential builds. The Auckland Council attacked the recommendation as "narrow minded." See our article on the Commission's investigation into housing affordability here.

House prices in Auckland rose to a new high in June, according to figures released by the city's biggest realtor Barfoot and Thompson earlier today. Barfoots said a tight supply of properties to the market was pushing up prices. See Barfoots sold 994 houses in June, highest June since 2007; average price up 1.2% to record high NZ$589,251; listings lowest in 7 years.

The new high for house prices in Auckland meant a new low for housing affordability for Generations X and Y, Banks said on Wednesday evening.

“Today, the average house price of NZ$589,000 - as reported by Barfoot and Thompson - is over ten times the average Aucklander’s income,” Banks said.

“It’s a recipe that is creating a tenant generation. The proportion of 35-44 year olds renting has doubled since the mid-1990s. If New Zealand is to offer opportunity for its younger citizens, then they must realistically be able to buy their own patch of it," he said.

“Unaffordable housing creates a society of haves and have nots, where only those with wealthy parents or high incomes can get into the housing market.  Renowned geographer Joel Kotkin has called this situation ‘neo-feudalism.’

“This cost is a drag on the entire New Zealand economy. As Kiwis bid against each other for a limited supply of housing they must pay additional mortgage interest, reducing the amount of disposable income they have to spend elsewhere," Banks said.

Central and Local Government needed to heed the advice from the Productivity Commission’s Housing Affordability Inquiry, which found that ‘Constraints on the release of new residential land create scarcity, limit housing choice and increase house prices,’ Banks said.

“Rather than restrict land, local government should be looking to make new suburbs by freeing up land for residential housing," he said.

“ACT is committed to reforming the Resource Management and Local Government Acts to do just that."

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22 Comments

Totally agree. The Council may have grandiose plans that we should all live in cardboard boxes. I like many think that's nuts. Open up some land get development costs down and get on with it. If the Council really wants to get public transport working put the infrastructure in and the rest will take care of itself in time.

These are good comments by Banks....but there is a problem with this issue - what about the loose lending policies used by our banks??  The productivity commission has ignored the effect of high LVR lending...yes supply is a problem..but so are the banks!!!!!

Spoken like a person who has no grasp of the limits to growth. Where does you land come from? Somewhere over the rainbow, perhaps?
 
Banks would be better outlawing landlording - those folk all live somewhere now, presumably, and they'd be better off if the profit margin was removed. They'd be better off too, because that would reduce the competition for, and thus the price of, existing housing.

PDK What a load of crock! So prices continuing rising exponentially until the whole thing collapses around your head. Law of supply and demand guv. No supply. prices keep rising. Christ prices fell away 30% in the States. they have only just started clawing back some lost ground now. That speaks volumes. NZs property scene is a total jack up. Prices are being manipulated by supply constraints. That cannot continue indefinitely. Build more houses at lower cost. This will dissuade the property investor as capital gains are effectively removed.

Yes let us increase density zoning in epsom first.

PDK, I don't know what you are on about.  "Where does the land come from?"  It's all around us!  NZ is one of the least inhabited countries I'm aware of - there's land everywhere.
 
As far as Auckland is concerned there is plenty of land out West, plenty down South, plenty over on the shore, there are even stretches of completely undeveloped land with huge "FOR SALE" signs up along the motorway near the Western Springs turn-off.  
 
Land supply doesn't seem to be the problem to me.  The problems are excessive land prices, excessive cost/red-tape when it comes to zoning for residential developments, excessive building costs and a lack of infrastructure to support outlying developments, meaning that everyone wants to live CBD.
 
Why oh why are most of the motorways only 2-lanes?  If the North-Western for example was a 4 lane highway from start to finish in each direction, Massey would be a 15 minute commute into the CBD and it becomes a much nicer option for city workers, cheaper on the petrol as well.
 
A huge issue though is just greed.  Let's just say a new tract of land opens up somewhere for development in Auckland.  How on earth are you going to convince the developers that what they really need to do is build a nice little community with properties for sale around the $350K mark?
 
They will go where the money is - building exclusive luxury properties with all the amenities, prices start in the $600K's and head north from there.  People will buy them - granted, it's the priviliged ones - and the developers make significantly more profit.  
 
I can't really see a way out of it, short of flooding the Auckland market with so many new residential developments that SOMEBODY has to address the "first home buyer" end of the market and deliver value-for-money.  Even then, they'd probably all get snapped up by wealthy investors looking for rentals.
 
Sigh.

Generally developers make more money out of cheaper houses.  You don't need to convince developers  - you need to convince council to allow them to get built.
Likewise land cost is often not even an issue - council development tax per house can be higher than land cost per house.

De-centralisation, so that people don't have to jam pack themselves into Auckland to work: madness. Get the work back into the provinces so population can spread round
A capital gains tax on these rental properties in Auckland would be good right now
No foreign landlords.
We must accept that if we have to move heaven and earth to get people owning their own homes again, then that is what we must do. Home ownership is a cornerstone of a decent society, certainly not the NZ rental market

It's not land that's the main problem - it's being allowed to make reasonable use of it.
Typical recent true story:
Developer in discussion with council about building 300-400 2,3and4 bed houses to sell for $300K- $500K close to public transport/motorway in Auckland Ithsmus.  Developer suggests that they work closley with council to develop scheme that is fully to councils satisfaction.  In return they need project to be non-notified so that it can happen.  Council's response is that it will be notified - even if density complies - even if it fully complies - even if there's only 1 house proposed on the site (because they have decided it will be a 'key' site).  Council will want full notification, community involvement, focus groups, years of hearings and consultation.  A process that could take 5 or more years and millions invested before the developer can have any idea of what they can build.  Developer walks away.  Site remains unused.  House prices increase.
 
 

PDK you need a reality check mate ,There is no shortage of land in and around  Auckland . I did the prelim 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.   

Boatman - agree, I to have land and looked to subdivide, the council costs involved are to high to even 1/2 a section - let alone put it into 4 sections. And then as I live on the shore, the council charge a development contribution on top of normal council fees to anyone who wants to build on the land of around $25k per build. There is no way I could afford to undertake this. If more sections came on the market, the section price would fall (more supply), and builders would be willing to put smaller (less extravagent) buildings on the land - hence bringing new homes onto the market at a good price. Maybe the coucil should look at re-zoning the land past Albany that stretches up to Red Beach

i predict that once the hamilton to auckland hiway is finished and you can bypass huntly and taupiri and ngaruawahia little 2 acre blocks all along state hiway 1 will pop up.
the demand will be such that the 2 acres will become 1 acre and so on and so on.
once again they will be overpriced and way out of reach of the young

i have housing development land i cant give away( in Nelson, its the council cost that stop the developers from buying it. rents are very high but no one is keen. So land surply is not the problem.  

All the data points to releasing of more areas of land for subdivision to drive down land cost.
There’s  tens of thousands of hectares of land outside the centre of Auckland’s CBD.
Theres currently a shortage of land and housing thats affordable in Auckland.
The Construction industry is struggling for work - builders out of work i.e. Alliances collapse recently
One can only surmise that it is in the self serving interest of the affluent few to keep property prices up; even thou this detrimental to the needs of many people in society and its ability to grow.

The land issue is only one factor - the others are the compliance cost and restrictions on what you can or can't build. 

Come on folks. Surely you don't all have alzheimers. Surely not. In the space of 3 months we have seen Keriwin, Bob the Builder, and now today Boatman above demonstrating why people are not subdividing and releasing their land. Compliance costs make it uneconomic. If not prohibitive, bordering on the impossible.
 
There is the kernel of the problem. What work around do you suggest. Some Local or Central Government doing compulsory acquisition and subdivision? At least they could waive their compliance fees to themselves. But fact is the only way it can be done is by compulsory acquisition.
 
In the meantime while new land is not being made available, and immigration continues unabated, Olliver Newland will be proven correct, last year, this year, and again next year. 

Meanwhile it is in the interests of Interest.co.nz to maintain the status quo so Bernard can do his monthly catwalks with Olly and Barfoots and Roost and QV etc etc. Maintain the fog.

House price inflation driven to a large extent by ridiculously restrictive planning regulations may benefit council and govt in the short term but in the event the bubble bursts councils ratings base will be devastated, and the govt will be saddled with an expensive dole bill

PROPOSED RMA CHANGES!!!!
Not before time, an advisory group have come up with recommended chages to the RMA:
http://www.mfe.govt.nz/publications/rma/tag-rma-section6-7/tag-rma-section6-7.pdf
Let's hope these are adopted. They propose getting rid of the dreaded requirement to "maintain and enhance amenity values" from Section 7, which was been the NIMBY's greatest asset to avoid higher densities in residential areas
 
 

It's always been wierd that the RMA's overriding purpose of  "...promot[ing] the sustainable management of natural and physical resources" gets twisted into protecting and promoting existing patterns of land use which are some of the most environmentally destructive ever invented.
 

Having recently returned from the U.K. to provide a better life for my family I've found regarding home ownership I would have been better to stay in the U.K..
A 35 minute train journey from central London could have found us a tidy 3 bed home for around 400K N.Z. dollars. No chance of something tidy in an o.k. neighborhood for that here.
So a city where 20 odd million people live is more affordable to buy than my place of birth where we have less than 1.5 million... bonkers!!
Why aren't there marches and protests outside the council buildings? 
How can we start protests / petitions / something useful to move to action. I have zero experience in these things, but willing to help. Auckland town planning has clearly been a farce for decades.
I love my home country and dearly want to stay, but if opportunity and lifestyle are better elsewhere why should people stay and be slaves to greedy councils and banks. N.Z. is a paradise, but we can't eat the scenery.

re
“ACT is committed to reforming the Resource Management and Local Government Acts to do just that."
 
Some how my brain interprets that as:
 
“ACT is committed to removing any regulations that impede our rich members and will continue to pork the property market in any way we can make happen. We will continue to force feed immigrants in as we are shite scared of the outflow of young NZers meaning we won't have enough sheep...ah.. tenants for our rentals. And we have so many members of ACT with fringe land that needs to be rezoned so we make an instant motza it just isn't funny. And if the flow of migrants needing housing stops, then the value of that land we want to get rezoned will drop like a stone. Can't be having that happen now"
 
 

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Days to the General Election: 35
See Party Policies here. Party Lists here.