Wholesale change to govt housing approach

Property

Wholesale changes to how government approaches housing affordability as it drops helping demand and focusses on supply side

27th Jul 12, 3:01pm by Alex Tarrant

By Alex Tarrant

Wholesale changes are coming to how the government approaches housing affordability, with the focus turning to influencing the supply side of the market.

A repsonse to the Productivity Commission's recommendations on improving housing affordability is being tied in with the government's local government and Resource Management Act reforms.

See the Commission's recommendations here: Productivity Commission recommends immediate release of land for residential development in Auckland, Christchurch, in final housing affordability report.

The size of the policy work programme means a large package may still be some months off. But it is likely to set benchmarks to be hit over the next three to five years aimed at improving the ability of the market to supply much more affordable, lower quartile housing.

The government has become disillusioned with 'rinky-dink' demand-focussed schemes such as Gateway, which was dropped this year by Housing Minister Phil Heatley.

Gateway allowed people to buy properties on state-owned land and delay paying for the land portion for ten years. This type of scheme did little to actually boost the supply of housing, and helped only a handful of people into home ownership. Just 32 properties were sold through the scheme.

This was the same with the former Labour government's Shared Equity scheme. Sure, it might have helped people into home ownership, but ownership at overvalued prices meaning large mortgages. The pilot of the Shared Equity scheme ended in 2010, and was not renewed by the current government.

The thinking in the Beehive is these schemes did nothing on the supply side of the equation.

"You can do much more on the supply side," one official said.

That means a focus on development costs and land availability.

Pressure off govt books

This change, from a demand to a supply focus, is also set to reduce pressure on the government's balance sheet by taking pressure off the accommodation supplement rental subsidy, and also schemes like Working for Families, which is viewed as effectively a rent/mortgage subsidy for the middle class.

While Treasury and the Ministry of Social Development only forecast Accommodation Supplement payments to rise slightly from NZ$1.2 billion in 2011 to NZ$1.3 billion in 2016, they were warned by the government-appointed Housing Shareholders Advisory Group in 2010 that the annual cost could rise to over NZ$2 billion by 2016.

That's goodbye surplus for a couple more years if so.

Finance Minister Bill English refered to this while addressing The Herald's Mood of the Boardroom meeting in Auckland on Thursday:

"The prices you pay for a house are ridiculous and they look that way to 24-year-olds with lots of student debt and the prospect of better pay in Australia," English said.

"The most unfair aspect of it is that there's no housing being built for people in the lowest quartile of income. Like none. That is clearly unsustainable," he said.

"If we want to get back to surplus and keep it there, we cannot afford to have the Government providing growing subsidies to a housing market that then flow into higher levels of debt. That cycle does not make sense and we intend to break it."

They're actually doing research now

Meanwhile, officials at the Department of Building and Housing have started actually talking to the big housing developers in New Zealand. This seemingly common-sense approach is just a recent occurence, interest.co.nz has been told.

They rang up the big developers to ask them what was standing in the way of them building large swathes of new housing. They even asked about timelines for development costs over a five year track. A sensible approach? Of course, but heads had to be banged together to get there.

That begs the question: How is a government supposed to run an effective housing policy if officials are not out there talking to the main players? It's not as if there are many of them either - only five companies in New Zealand build more than 100 houses a year.

The Productivity Commission's investigation into housing affordability has given government housing officials a massive kick to actually get out there and talk to people.

That it needed the government to set up a group like the Productivity Commission to get officials to do their job properly has definitely cemented some views in the Beehive about the public service.

"No wonder they were moved into the new Ministry," one official said of DBH being disbanded and its team becoming part of the new Ministry for Business, Innovation and Employment.

And no wonder why Bill English has started publicly making comments about needing the public sector to engage in some fresh innovative thinking. Yesterday he told the Australia New Zealand School of Government meeting:

"Other people can help us. In fact, I would say this: Unless you are working with other people, you’ve probably got it wrong. If you’re still living in a little bubble where 'the public service cares, and we know what we’re doing, and other people are a bit stupid,' you are wrong.

“I haven’t come across a single example in the last three-and-a-half years where that’s the correct diagnosis of the situation," English said.

Auckland Council has no where to run

The government also got the Auckland Council along for the ride.

As one official said, the Council can't be seen to be opposing measures which would make housing more affordable in their city. The aim isn't just sprawl either. There is plenty of room in Auckland for more brownfields development.

On Wednesday the Auckland Council paid lip service to improving the supply of affordable housing in the city. See the Auckland Council's comments below.

It followed a meeting between senior Cabinet Ministers and the Council last week about how they would work on a joint approach to improving housing affordability in the city.

A supply approach.

Alex Tarrant will be interviewing Housing Minister Phil Heatley on TV3's The Nation programme, airing at 9:30am on Saturday and 8am on Sunday morning.

See comments from the Auckland Council:

Auckland Council is making steady progress in its campaign to make housing more available and affordable, says Regional Development and Operations Committee chair, Councillor Ann Hartley.

The committee endorsed a two-stage approach to a housing strategic action plan.

Stage one focuses on the tools the council can use to improve housing supply and affordability. These include assessing the impact of regulatory fees and rates on housing costs, using council land and development partnerships to increase housing, further improvements to consent processes, and incentivising upgrades of existing houses.

New zoning options and future urban land requirements will be incorporated into the new Unitary Plan.

The committee will receive a report on stage one proposals in December this year and a report on stage two scoping in March 2013.

“The council is talking to many people across the housing industry and with central government to achieve some consensus on how best we can all help ease the housing burden on our citizens,” says Councillor Hartley.

“We know Auckland is in the grip of a housing crisis but all industry parties have to contribute to the solution.

“The Auckland Plan gives strong direction on how we can build up the housing stock through the principles of a quality compact city which aims for well-planned, well-designed higher density housing offering a range of housing choices.

“The Unitary Plan, which will set the rules, will play a major part in ensuring a quality approach with a mix of dwellings and neighbourhoods across Auckland,” she adds.

Auckland needs about 10,000 to 13,000 new dwellings a year but is currently only building around 2,500.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

82 Comments

by jh | 27th Jul 12, 3:24pm 1343359471

The productivity Commision was told what to give "special attention too" and that excluded immigration. The Australian Productivity Commoision concluded that there was little or no mesuarable benefits to Australians of immigration (it had all been captured by the migrants) while the Savings Working Group blamed House prices on immigration when combines with restrictions in the land supply. They also said:

there was little evidence that immigration boosted local incomes. In fact, the need to build roads and schools meant that net migration contributed to the national deficit. ”

http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices

http://www.treasury.govt.nz/downloads/pdfs/mi-jarrett-comm.pdf

by wtf | 27th Jul 12, 4:12pm 1343362349

A 12 month moratorium on immigration would be a good start to see what happened. If people continued to leave and weren't replaced, house prices and supply might sort themselves out and unemployment reduce. Yes the "potential" consumer/retail market might reduce but there seems to be a lot of inter-trading and inter-employment in many immigrant communities that doesn't filter out to wider economy.

New Zealand urgently needs a population/immigration debate around what it means to be a kiwi, what sort of urban and rural environments we want and at what level of population do economic and lifestyle factors near equalibrium. Just bringing people in assuming an increase in population and GDP is good seems absurdly simplistic.

by rp | 27th Jul 12, 4:37pm 1343363876

wtf - agree 100%.

by muzza | 29th Jul 12, 4:31pm 1343536309

A very simple 'solution' to a complex situation. Plenty of businesses and services need immigrants with skills. Wtf can only see a certain consequence, he seems oblivious to other unintended consequences.

by jh | 29th Jul 12, 6:08pm 1343542100

, there is little

evidence that New Zealand’s industries benefit from economies of scale. New Zealand’s

biggest and most successful industries such as dairying, tourism, fisheries, do not rely on

3

domestic economies of scale. Nor did their model consider any diseconomies of scale such as

the infrastructural congestion caused by increased population density. This influential

research is now twenty years old and in that time, the industries most likely to benefit from

economies of scale ie: manufacturing have gone into decline as more production is located

off-shore. Globalisation would also imply focusing on off-shore markets is a more logical

approach of obtaining economies of scale given the size of the international market vis-à-vis

an expanded domestic market. In this way, globalisation has actually decreased the rationale

for the free flow of labour for countries like New Zealand.

There is also little evidence to support claims of technological introduction. Research by the

New Zealand Immigration Service shows that even among business immigrants, who might

be most expected to introduce new technologies, it was found that that only 2% were

introducing “any new skills or technology” into the country (NZIS 2002: 76). An inflow of

migrants could encourage technical progress but it is dependent on the characteristics of the

migrants (Barwell 2007). Highly skilled immigrants should be able to produce more output

from complex machinery than those with lower skills, thereby encouraging companies to

introduce capital-intensive technologies. Progress also occurs if the migrants can do

innovative work in the R&D sector. Although low-skilled migrants are less likely to

contribute to technical progress, they can have a positive impact on inflation, albeit through

reducing wage growth.

Neither are the arguments for assisting exports strong. Although immigration has a small

effect on export growth, it has been found to have a greater effect on imports, as immigrants

import products they are previously consumed in their country of birth, thereby having a

negative effect on balance of payments (Bryant and Genc 2004).

Another argument for immigration is that it increases diversity and thereby increases

creativity and innovation. Scott Page(2007) has championed the benefits of diversity arguing

that if an organisation has a diverse workforce it has a broader range of knowledge, heuristics

and perspectives which increases the toolbox that a group can work with and solve problems Balanced against the claims that migration benefits the nation are the negative effects of

immigration. For example, Easton (1990) suggested that population growth was a key reason

for New Zealand’s poor post-war economic performance. Other arguments against

immigration include costs to environment, social and cultural charges, inflationary pressures,

and the displacement of local entrepreneurs by wealthier immigrants.

The debate has not been resolved. In a Treasury paper, Moody (2006:40) concludes that

“overall, it is equivocal whether there is enough robust evidence to support the claim that

immigration is always positive for per capita growth”. The Treasury paper concurs with the

observations of the OECD which stated “there is not sufficient or detailed enough data on the

behaviour of the New Zealand economy to give clear answers on the overall effects on per

capita incomes of existing residents.” Helping to complicate the debate are the strongly held

views on the subject. It has been noted that “a number of researchers in this emotive area had

views pro or anti immigration, and that this had perhaps coloured their conclusions”(Chapple,

Yeabsley, Gorbey and Poot: 1994).

http://kauri.aut.ac.nz:8080/dspace/bitstream/.../clydesdale.GrowingPains.pd..

by jh | 27th Jul 12, 3:39pm 1343360397

Part of the problem is:

For the housing market’s winners, the gains have been spectacular.

Infometrics director Gareth Morgan calculates that between 1989 and 2005, the residential property market has provided investors - and owners - with a tax-free 319% gain.

http://www.catalyst2.co.nz/blog/news/the-rent-trap/

PM says 'no'

Prime Minister John Key reiterated later a land tax and broader capital gains tax were still off the cards. Asked whether the implementation of one or the other could allow government to reduce income taxes to give people more income to spend, he replied:

“At the risk of repeating myself from last year, we looked at a land tax, and land taxes, one, reduce the value of land in New Zealand, by definition, and it has an impact on every single homeowner in New Zealand."

http://www.interest.co.nz/news/52737/imf-recommends-govt-broaden-capital-gains-tax-base-and-introduce-land-tax-your-view

by meh | 27th Jul 12, 5:38pm 1343367488

Correct jh and it also shows he lacks vision.

“At the risk of repeating myself from last year, we looked at a land tax, and land taxes, one, reduce the value of land in New Zealand, by definition, and it has an impact on every single homeowner in New Zealand."

It may well be true that it has an impact on every single homeowner but it also has an impact on every single future homeowner.

by General HubHub | 28th Jul 12, 9:36am 1343425009

Hugh, you seem to be on top of all things housing. Would you have any idea how much government revenue is generated by this property-go-round? Is the government loathe to change the status quo because property bubbles are what keeps the country afloat?

Always enjoy your contributions...

by Wolly | 28th Jul 12, 9:50am 1343425838

They have your number General....and they will sort you out....no way can you post the truth about govt behaviour in NZ....people might learn that their govt is nothing but a puppet

By the way general...it's the banks that are being kept afloat...not the country.

Govt keeps quiet because govt revenue depends on banks feasting on the economic carcase....

First objective is and always was to ensure the banks could extract fat wads of profit every year and to hell with the damage and pain caused to Kiwi peasants....aint that right, Bill English?

by Stephen Hulme | 28th Jul 12, 10:06am 1343426783

Wolly, lest we forget banks also bid on government debt at excruciatingly low rates, which hardly reward their shareholders, but the proceeds certainly fill the ever rising government salary A/Cs. I fear it's a never ending circle of quid pro quo for the entitled paid for by you and me.

by General HubHub | 28th Jul 12, 10:26am 1343428012

As a General in my own lunch hour, there isn't much that worries me... After all you can't scare a terrified man....
I guess then my added question is then, how did the banks get so butch and bullyish?

And more importantly will the status quo remain and should I take that job in Oz? My income is high, but I cannot afford a house in an Auckland middle class neighbourhood!!!! How our young are ever going to afford a home is beyond me.

by Stephen Hulme | 28th Jul 12, 10:55am 1343429707

After all you can't scare a terrified man....

You are not on your own and those professing to lead us are the most frightened and hence dangerous. Banks are no different they are panicking too.

Given the cost of selling up and moving in a very unsettled world I would consider staying put for a while longer - keeping your nerve and just doing your duty is the most that can be expected of anyone. And remember most have no concept of duty.

by General HubHub | 29th Jul 12, 11:37am 1343518643

Stephen, you talk of duty... I have served my country in uniform, I pay tax, lots of it in many forms... I contibute readily and feel as a citizen that is part of my duty too. I whinge a little about it, but mostly I see it as paying my dues. I work two jobs, one full-time and the other part-time, though there is a cross-over of skills and I make a good middle-class income.

I am very good at what I do, educated and hard working. I upskill continuously and am deemed an asset to my company. Yet despite this, I am priced out of my suburb, my city and my country.

I don't want to live in the so called 'leafy suburbs' like Takupuna and Remers etal, am happy with a middle, middle-class suburb like Glenfield, a decile 6 school for my children and a battle in the morning commute. Yet 3 bedroom houses here (and similar suburbs) cost over half a million dollars, that's a repayment of over $800 a week and that excludes rates... and that's for a cold ex statey on no land.

On a pay parity in any major city in the world we would be well on our way to owning a home, yes even in Vancouver, Sydney and London. Why am I going to be forced to leave Auckland and New Zealand because local and national govenement are terrified to lead or worse, reluctent to lead because of personal interests? The RT Hon John Key says there is no housing problem, Hon Len Brown rubs his hands together in dismay and does nothing... while all the time house prices continue to bubble up beyond the ridiculous.

How am I going to set myself up for retirement in 28 years or so? How am I going to set my children up so they aren't forced to leave the country of their birth to survive? Or will they already be shouting "Aussie, Aussie, Aussie!!" at the 2016 Olympics.

Yes, Stephen Hulme, I understand duty... but surely there is a tacit contract with our leaders that they will reciprocate by endeavouring to improve the lot of those loyal to them, not just to keep taking from them?

by Wolly | 28th Jul 12, 2:32pm 1343442734

How does $950 a sqm sound Hugh...plus $150 of thieving govt tax!....no it's not a franchise cheapy.

by General HubHub | 29th Jul 12, 11:44am 1343519072

thanks Hugh, but I still can't see why the government is so reluctant to address the housing bubble in Auckland and Christchurch, unless they are getting significant returns themselves in some way....

by Andrew R | 28th Jul 12, 12:34pm 1343435697

Is Hugh on top of all things housing or loud on all things housing, but only banging one drum?

by General HubHub | 28th Jul 12, 1:20pm 1343438401

well Andrew, if you have a constructive comment, feel free to chip in...

by Gummy Bear Hero | 28th Jul 12, 3:43pm 1343447006

Hugh is both on top of all things housing , and vociferous on all things housing .....

..... . and thank goodness for that , that we have public spirited folk such as Hugh to stir up the bureaucrats ..... 'cos the nation's building industry is in a shambolic state , and the re-build of Christchurch is a Monty-Pythonesque joke , but without the humour .....

And if he wasn't here , we'd have no Hugh more , ourselves ........

..... unlike his detractors who only bang on one drum ( peak oil ! ) ....... Hugh can bang across a multitude of subjects , the guy is a veritable non-stop banger ..... kind of like one of those bunnies with the Duracell batteries up it's back ( in the TV advert . )

H.P. for P.M. !

by jh | 28th Jul 12, 12:06pm 1343433967

Ngaitahu are bicultural so they can switch between disciplinary knowledge and group knowlege which constitutes their culture and only they are the authority on.

http://www.nzcpr.com/guest298.htm

by Globalplus | 30th Jul 12, 8:07am 1343592448

Yet Mr. Douglas did nothing about it in the 1980's (when his gains from housing had been astronomical - doubling evry 5 years for a time in the 60's and 70's). Why is that?

by notaneconomist | 30th Jul 12, 2:49pm 1343616549

Globalplus - yes you are correct and I remember articles in International Living which had interviewed Mr Douglas in which he strongly advocated that NZ property was some of the cheapest around and people should invest here. NZ was marketed as a safe place to live with a stable Government, extremely cheap housing etc.

I often wondered if Mr Douglas assumed kiwi's wouldn't read or have access to the International Living newsletter back then. Direct foreign investment in property and Immigration were advised by the authors of the magazine after interviewing Mr Douglas.

by michael2 | 27th Jul 12, 3:42pm 1343360569

What ever way you look at the collection of pc buzz words

"The Auckland Plan gives strong direction on how we can build up the housing stock through the principles of a quality compact city which aims for well-planned, well-designed higher density housing offering a range of housing choices."

It still looks like battery hen housing

by bob | 27th Jul 12, 5:11pm 1343365866

The major Ithsmus zone is 6A in which a site less than 750sqm is deemed too small to subdivide (yes there's innovative housing - but that's Discretionary). The rules allow this 750sqm site to have 35% coverage - that equates to a 525sqm house over two floors.

If you think going smaller than that is "battery hen housing"...

by wtf | 27th Jul 12, 4:02pm 1343361732

You can easily set up a company to churn out 100-200 warm, well designed, cheap homes a year but a) you need the equally cheap sections to put them on (no use putting a $100,000 house on a $400,000 section) and b) they need to be of a standard modular design and about 100-120m2 with few options to get economies of scale.

But councils don't want low priced houses on low priced sections affecting property values because of rates. Homeowners in the vicinity don't want their properties reset at a lower value. Low cost housing needs to be accompanied by full employment or they become susceptable to neglect and crime. Large numbers of Kiwi's don't seem to want smaller homes of standard design yet all the state houses for the 30's-50"s were small 3 bedroom as were the Universal/Neil type subdivisions of the 70's.

Without central govt jumping in and initiating a full on state housing programme, forcing the zoning and consent issues with local govt, I don't believe anything will happen, just more studies and reports and hand wringing.

by rp | 27th Jul 12, 4:39pm 1343363995

jeepers where did you come from wtf. Agree again. Asking councils for more affordable housing is like asking turkeys when would you like christmas dinner. More affordable housing, as you say, means less rates for them.

by bob | 27th Jul 12, 5:16pm 1343366162

Cheaper houses also equate to a much bigger % of development contributions which discourages cheaper housing. 20K council tax on an $600,000 fringe sprawl house is one thing - $40k council tax on a $300,000 CBD dwelling is quite another.

by Matt in Auck | 27th Jul 12, 6:27pm 1343370446

Bob

the council should charge development contributions on a per hectare basis as an incentive to develop to higher densities

by Chris-M | 27th Jul 12, 4:34pm 1343363650

Good grief!!!! This is the first sensible utterance from the National party on the subject (ever?) Congratulations, it is the first small step of many that could actually help the country in this matter. I totally aggree with other correspondants that wholesale immigration undermines our ecconomy after the initial ponzi sugar rush. At the end of the day it's our exports that sustain us, and imigrants only consume more of our resources, both natural and financial, without adding any obvious significant additional export income. All they are doing is increasing the pressure on our best young people and pushing them out of the country. If national want to do some more good stuff they would do well to dust of some the ideas of their ex tauranga MP, Bob Clarkson.

by Wolly | 27th Jul 12, 4:54pm 1343364865

One fabulous change from July first has been the added cost of scaffolding round the whole house before the roofers can put your roof on...add $2000 minimum to the cost.. so far 35 building sites closed down by Goon squads...next piece of nanny state law will be the ladder law...applying to DIY and all LBPs!....step above 2.4m and you must have scaffolding....Try the sky dish...no scaffold = no dish...or the new burner flue...no scaffold = no flue....

by Kermit The Frog | 27th Jul 12, 5:01pm 1343365312

Have just spent over a year and some $6k just to get resource consent for renovations to our place.

City Hall in Auckland is well and truly out of control.

by Wolly | 27th Jul 12, 5:08pm 1343365688

Why oh why did you plan a reno task that required a consent Kermit....you will discover BRANZ is owned by the suppliers and they dictate that their product be used, times a factor of ten....while council will fleece you for all they can get.!...your reno is what?

by Kermit The Frog | 27th Jul 12, 5:40pm 1343367646

Good point Wolly, but I figured that if I added a couple of rooms upstairs without asking permission, Len Brown would probably notice.

One consolation I guess is the same processes and costs that are getting under my skin are also responsible for increasing the value of my house. Go figure.

by Wolly | 27th Jul 12, 6:45pm 1343371553

And you pay extra rates on the higher value, plus gst!

by Kermit The Frog | 27th Jul 12, 10:37pm 1343385424

Yes, but considering the fact I need more space for the family it was either add on or buy bigger.

Thank goodness though Len has decided to cap my rates increases at 10% for the next few years. Such generosity will not go unnoticed at the next election.

by Your Landlord | 28th Jul 12, 2:26pm 1343442410

Stop and think Wolly.

The increase in value of the house is worth far more than the small increase in rates or any GST payment made. It's a wise investment of his money.

If you don't understand that then it's little wonder you are relatively poor.

by Wolly | 28th Jul 12, 2:37pm 1343443021

Yes, relative to many, I am poor..It's not a wise investment if the intention is to not sell...to stay put...is it!

And the small increase in rates is not so small...and for the retired, it amounts to a kick in the guts.

by Your Landlord | 28th Jul 12, 2:49pm 1343443789

Wolly, it's a brilliant investment if one intends to keep the property.

The increase in value means the owner is wealthier, has more equity in the property, has more capacity to borrow money ... has more of all sorts of things.

And retired people have no need to worry about a small increase in rates either.

A person gets wealthy by expanding, not shrinking, their assets.

by Wolly | 28th Jul 12, 6:39pm 1343457586

Rubbish YL....old farts would do better to have less stuffed in a property and more earning from a variety of investments....why feed the council greed when you can sleep just as well in a crib so long as the long drop is not deep in the bush and the rats keep to the attic....then the income plus the pension pays for all those nice trips to sunny spots in mid winter and for the booze and dentists bills.

by Your Landlord | 28th Jul 12, 7:10pm 1343459421

If you have a variety of investments you will pay still more tax to the government, on the income Wolly.

The gains from improving one's house are tax free (aside from the minimal increase in rates of course).

But remember the tax situation is very much secondary to the profit situation.

by Wolly | 27th Jul 12, 5:17pm 1343366229

"only five companies in New Zealand build more than 100 houses a year."....and now all of those houses will cost a minimum of $2000 more thanks to the dept of Labour deciding ministry reshuffle time was the best time to issue a decree that scaffolding be put up before roofing could take place...

Is there enough scaffolding in the country...NO

The LBP meetings have been told by the bureaucrats that the scaffold rule is business positive...go figure!

by robby217 | 30th Jul 12, 12:02am 1343563320

It's a wonder they managed to put a roof on houses back in the day!

by jh | 27th Jul 12, 8:31pm 1343377882

STEVE KLINEBERG, a sociologist at Rice University, mentions a couple of events that made Houston’s leaders take notice of a looming problem. One was the day, in 1999, when their city overtook Los Angeles as America’s most polluted—evidence that the rise in asthma attacks among the city’s children, and the students passing out on football pitches, were no coincidence. Another was when Houston came up short in its bid to compete to host the 2012 Olympics. No one on the United States Olympics Committee voted for it, despite the fact that Houston had a brand-new stadium and had promised to turn an old sports field into the world’s largest air-conditioned track-and-field arena.

In fact the city has been sceptical of regulations in general, and even more of central planning. Houston famously has no zoning, which helps explain why the city covers some 600 square miles. It is America’s fourth-largest city by population, but less than half as densely populated as sprawling Los Angeles. People are heavily dependent on cars, the air quality is poor and access to green space is haphazard. At the same time, Houston has jobs, a low cost of living and cheap property. Many people have accepted that trade-off. Between 2000 and 2010 the greater metropolitan area added more than 1.2m people, making it America’s fastest-growing city.

Still, the public is taking more interest in sustainability, and for a number of reasons. As the city’s population has swelled, the suburbs have become more crowded. Some of the growth has come from the domestic migration of young professionals with a taste for city life. And despite living in an oil-industry hub, the people of Houston are still aware of the cost of energy; during the summer of 2008, when petrol prices hovered around $4 a gallon, the papers reported a surge of people riding their bicycles to bus stops so that they could take public transport to work.

The annual Houston Area Survey from Rice’s Kinder Institute also shows a change. This year’s survey found that 56% think a much better public transport system is “very important” for the city’s future. A similarly solid majority said the Metro system should use all its revenue for improvements to public transport, rather than diverting funds to mend potholes. In the 1990s, most respondents were more concerned about the roads.

People’s views about houses have changed, too. In 2008 59% said they would prefer a big house with a big garden, even if that meant they had to use their car to go everywhere. Just 36% preferred a smaller house within walking distance of shops and workplaces. By 2012, preferences were running the other way: 51% liked the idea of a smaller house in a more interesting district, and only 47% said they wanted the lavish McMansion.

Houston Goes Green

by jh | 27th Jul 12, 9:56pm 1343382990

Oilfield services (OFS) firms such as Schlumberger are the unsung workhorses of the oil industry. They do most of the heavy lifting involved in finding and extracting oil and gas. They are far less well-known than the oil firms that hire them, but immensely lucrative. Schlumberger, with headquarters in Paris and Houston, earned profits of $5 billion on revenues of $40 billion last year. Its market capitalisation has risen fourfold in the past decade, to $91 billion. That is bigger than several international oil companies, including ENI ($82 billion), Statoil ($75 billion) and Conoco-Philips ($71 billion).

.......

We ought to get them down here.

http://www.economist.com/node/21559358

by robby217 | 28th Jul 12, 10:31pm 1343471468

Waiting on 787's I imagine.

by kiwimm | 30th Jul 12, 11:10am 1343603434

Would be interesting to see adjusted salary figures based on cost of living figures for NZ. Auckland would surely be low down the list based on the adidtional housing costs.

by jh | 27th Jul 12, 9:19pm 1343380793

On the Sunshine Coast, where unemployment topped 6 per cent and many sought work elsewhere, long serving environmental and community activist mayor Bob Abbott was replaced by businessman and one time APN director Mark Jamieson.

........................

It's the great migration: 90 per cent of Australians now live within an hour of the coast.

it's lovely by the beach. Unfortunately we can't all be fishermen or work in tourism and in Queensland the construction industry is the biggest employer (constructing accomodation).

It's the great migration: 90 per cent of Australians now live within an hour of the coast.

...........................................................

A report commissioned by the Insurance Council of Australia into the nature and causes of the January floods that tore through Toowoomba has slammed the design of detention basins along the town’s creek system.

It also says urban overdevelopment exacerbated and increased water levels.

(thanks Mr Business Knows-Best)

http://www.brisbanetimes.com.au/queensland/toowoomba-overdevelopment-blamed-for-flood-levels-20110221-1b1dv.html#ixzz21oSdNsXY

by Wolly | 28th Jul 12, 8:01am 1343419263

"...ruinous public policy, inadequate supervision and absent political leadership". .........

Yes that about sums up NZ as well Hugh.

Are you awake to the dept of Lab 'scaffolding' madness?

by notaneconomist | 30th Jul 12, 2:30pm 1343615419

Wolly - good on you for bringing up the scaffolding madness. It is a significant added cost to the repairs, maintenance and build work. It does not distinguish between a small half hour repair job to say many hours or days at the height restrictions that have been imposed.

I know builders who were within the legal height limits working when they were visited by the over zealous bureaucrats who demanded that work cease and was not able to continue until scaffolding had been erected. The cost of scaffolding hadn't been included in the original quote as the height limits were below the threshhold. The scoffolding police weren't interested in any relevant facts.

by jh | 28th Jul 12, 8:39am 1343421568

Greece, Italy, Spain... There is a reason it's Europe's southern nations that are facing the worst of the financial crisis.

The dense river network in northwestern Europe (not to mention other infrastructure) affords that region much lower transportation costs. Thus, Northern nations have a significant competitive advantage in exporting. The one trick Southern nations had up their sleeves—devaluing their currencies to make their exports cheaper—ended with the adoption of the euro.

The result? An Italy with a national debt at 120% of GDP, and a Germany with a trade surplus -- negative outlook credit rating or not

.......

The Revenge of Geography. Robert D Kaplan

by rp | 28th Jul 12, 9:02am 1343422965

what an absolute croc jh. Southern nations of Europe haven't gone bust because north has a better river network. That is totally ridiculous.

Look at spain. Massive housing bubble, over-buidling, housing prices collapse, banks with bad debts, then those bad debts put on the public. Bang, near collapse. Look at greece. Farcical spending, people retiring at 40, govenrmnet workers with jobs for life even if they don't turn up for work. People stop paying taxes. Corruption running wild, you have to pay bribes to see the doctor. Government sells proceeds of its assets in future (thanks to Goldman Sachs). Bang, when the financial crisis comes the whole edifice falls down, country broke.

Rivers? Where are the river sof the north??

by jh | 28th Jul 12, 10:53am 1343429586

That's the synopsis of the book promoted by Stratfor. Apart from everything else you can't ignore geography and especially with regard to a comparison between Houston and Auckland.

by waymad | 28th Jul 12, 2:39pm 1343443157

Um, chaps and chapesses, anything by Robert D Kaplan is well worth the read. I've been following him since the late '90's - he contributes to the Atlantic.

And a quick word on the scaffolding rort - a long Jaws/Gorilla-type ladder, a back section, a payoff to neighbours who will undoubtedly need the favour returned at some point (like lending them that ladder), a commitment to weekend work and did I mention a back section.

What Council?

What bunch of clipboard toting minions?

by eliteincome | 28th Jul 12, 3:22pm 1343445756

Gidday NZ

Look good areas have expensive houses

Crap areas have cheap houses

Auckland is full crap areas

Sell all statehouses to young working familys

Everybody wants to live in the best area

Everybody is trying start at the top off the ladder

Life does not work that way

by jh | 28th Jul 12, 4:53pm 1343451190

part of the problem with crap areas (I trhink) is safety. PI's do well there (big families and bigger than everybody else). The anti-authoritarians have a lot to do with that think?

by Justice | 29th Jul 12, 4:59pm 1343537966

location location location.................

anyone with even half a brain wants their investment in the best place possible.

WTF are YOU to tell people "start at the bottom"? It's also not so much the house as the it is the LAND VALUE.....i.e. only a moron would want their biggest investment in as YOU say "the crap areas" which are already way over priced even for those punters.

Life must be so black in white for the ponzi scheme lovers like you

by jh | 28th Jul 12, 4:49pm 1343450979

Housing affordability solutions must be kept simple. Confusers are losers.........

......

Hugh doesn't see immigration or infrastructure costs as an issue. He sees infrastrucure financing as a solution (boils down to if the residents can afford it).

Also Hugh doesn't support a land tax?

and on TV3 The Nation where Alex was a panelist, immigration policy wasn't even mentioned yet it is widely believed (especially amongst property investors) to be a significant driver of house prices. Only Alex knows the answer to that. Could it be the seductiveness of wealth/near wealth/future wealth that makes people believe that growth has no limits?

by Trolleyboy | 28th Jul 12, 5:40pm 1343454030

What a lot of dogma in this thread. Hugh bangs his one-tone-drum about planning laws, Wolly blames the lefties for everything.......and all the posters ignore the fact that they are posting about human beings, and their problems.

I think we should get PDK to suggest a new housing policy. He could certainly do no worse than the current government.

by powerdownkiwi | 28th Jul 12, 6:11pm 1343455917

Chuckle. Well, first off, GBH has earned his F, well and truly.

Concrete, bitumen, alkathene, polybutylene, steel, paint, insulation, timber, aluminium, rubber, plasterboard, copper, furnishing plastics, excavation, subbies' utes, all use oil. No alternative in sight, and only blinkered-focus folk believe it is coming in greater amounts forever. All the folk taking on the mortgages, will be further than ever before from the hub they surround, all will rely on oil to get from these houses to wherever. Fracking, deep-water, water-flooding, shale, all denote the end-game, not the cherry-picked opening gambit. All around the planet, the same problem exists, so the sequences of baton-changing Empires stops here. A first, that, but entirely presictable.

So - housing for the future (no good housing for the past).

Energy efficient - to the point of being self-sufficient.

Kit-settable, easily broken-down-moved-re-erected.

Resilient - no mass (erthquake inertia) but with a need for thermal mass (storage) so the thermal mass has to be jettisonable. Water tanks? Local stone/brick/clay?

Smaller than those of late - 80 sqm probably optimal for 2+2.

Where? Expect to see the old rural towns refilled, Then a host of new rural hubs founded - the activity in the current CBDs' (despite Hughey's belief) is not the 'enginge of a modern economy', but a largely virtual exercise. It won't continue buying real stuff, which includes food. Food is oil-delivered, oil-based to an unbelieveable degree.

So the townies will migrate onto the land the collapsing Big Ag vacates. This will be a movement of increasing velocity, hence the need for transportability.

by steven | 28th Jul 12, 9:28pm 1343467696

earthship.com seems to have some very good ideas. There will certainly be a lot of car tyres laying around. Which gives you the mass using local earth, water inveriably leaks eventually so the solution has to not care if it leaks.....insulation, well wool or hay bails...

Not sure on the low inertia, rf'd concrete will last a long time....200 years plus...or that it needs to be transportable....all of it anyway........density is one of the Qs...

Rural towns, yes....there are some interesting historic snap shots of how the old towns were...Blenheim has one, spent a few hours there just wandering around.

The problem is we really dont know for certain just what the level of energy/technology available will be. Its an iteration process....so much is interlinked and interdependant. If just one piece is missing then you have to fall back to something else....hence why for me, solar panels, no....water wheels, yes.

80sqm, rather small.....but realistically much space do you need? 80 sounds about right for a simple lifestyle especially as I assume there will be considerable conservatory space attached for food production.

Im wondering just how the big Ag land will be occupied or allocated....

regards

by powerdownkiwi | 28th Jul 12, 9:57pm 1343469455

probably by hunger-induced force - it's happened before!

by Wolly | 28th Jul 12, 6:32pm 1343457175

So what Trolleyboy.....I dish out blame to all who deserve a dose or three....that includes the current fools playing at governing the country...and so what if they are Human Beings...most of them anyway....

Or would you rather we blamed the Sheep for the financial farce that sees a handful of banking elite dictate govt policy!

by Trolleyboy | 29th Jul 12, 8:32am 1343507571

Blame is all very well, but it is not constructive. How does laying blame solve the problem?

by Justice | 29th Jul 12, 5:03pm 1343538223

Ohhh, Tell that to the Wall St bankers!

Looking for BLAME is great IF you desire 'accountability" or "justice" so it IS constructive and part and parcel of a healthy democracy!

What a.....

by powerdownkiwi | 28th Jul 12, 9:58pm 1343469507

Opening up Sydney.

You forget your Form 2 geometry, Hughey?

Macquarie Fields was 30 years ago, or more. Maybe you could sprawl down Audley way, fill in round Bundeena, hell, go all the way to the 'Gong. What else? Fill in up to Gosford? No need for the trees, eh? And out past Penrith? They were climbing the hill 30 years ago too. Yep, unlimited room, all the way to Lithgow.

Ever stood on Palm Beach, North Head, or Stanwell Tops, and looks east? Bit wet, is that 180degrees.

Bit like Chch and farming, really. You cant have more housing and more food, exponentially and forever on a finite flat-plane landscape, and most cities, being ports, are adjacent to the coast so you're down half the circle before you start.

Don't blame others for what you refuse to see.

by Gibber | 28th Jul 12, 10:41pm 1343472096

The population center of Sydney moved EAST last time they counted the people.

Sydney is getting a lot more dense. One of the prime reasons for the shift is that it is easier to sell apartments closer to where the work is, than houses on the outskirts and having to put up with very long travel times..

by robby217 | 30th Jul 12, 12:12am 1343563931

Thats another political issue as well. Read somewhere that from one such Sydney urban development plan from the 60's or 70's nearly all of the planned roads had been built, but none of the rail lines. In recent times the state governments have actually signed away its right to build a rail line that would compete with some of the roads built via PPP.

How insane is that?

by bigblue | 28th Jul 12, 11:00pm 1343473257

Forget Capital Gains Tax - National will not introduce it and even if they did a CGT did not stop house prices rising in those countries that have CGT - ie Australia. So don't give yourselves RSI typing more twaddle about the impact a CGT would have cause it's not going to be introduced - remember most politicians own rental properties too!

On building affordable homes - in the short term you can forget that too, especially in Auckland where there is simply not enough land, no prospect of any zoning changes in the next 3 years that would allow more sites to be created and other than the big players like the Fletcher housing companies, no bank funding support for other developers to create large scale housing developments.

What this government really need to do is:

Look at the monopoly practices of the building material supply companies that see our prices considerably higher than Australia.

Put some effort into cutting costs with regard to council fees and RMA requirements. All the recent restricted building work laws have done is add another layer of costs and complexity to any building project whether it be a renovation or a new home - it's a joke!

Fast track change to zoning in Auckland city to permit higher density by allowing at least one house per 300m2, 10 metre height restriction instead of 8 metres in order to permit 3 level homes and remove the development levies with government funding infrastructure in the case where homeowners are doing a simple two or three lot subdivision.

A 750m2 site should be able to contain four 2 bedroom single level units rather than two or eight if spread over two levels - that's how you fit more affordable housing into Auckland.

Just like the snails pace rebuild in ChCh the whole of NZ is unlikely to see any serious increase in the volume of new homes being built, let alone affordable homes.

The lack of any real action or intent for change with regard to housing policy in NZ is appalling.

by bigblue | 28th Jul 12, 11:09pm 1343473784

More people living in each house will be the economic result of this lack of building ie as wages stay flat and rents rise a 3 bedroom home may have 3 couples living in it in order to keep the cost per person down whereas previously maybe only two couples renting the same house.

In Auckland an ordinary 3 bedroom home within 7kms of the city centre may currently rent for $600 per week and two couples renting it equals $150 per person - that's affordable, but when rent increases to $900 per week thats $225 per person and the only way to keep it at $150 per person is to have two extra people living there.

Without significant housing intensification in Auckland rents can only increase and on prices Olly will probably be proved right - ie house prices in good suburbs will double over the next 10 years.

by bigblue | 28th Jul 12, 11:12pm 1343473920

Oh and does anyone really think interest rates will increase over the next 5 years?

by Wolly | 29th Jul 12, 6:27am 1343500035

No way Big Blue cos we are stuck in big pooh....cheaper credit and tons of it are the medicine and will remain so...on and on into the future...zero real growth for all...

And you are right about the pathway to stuffing the old houses with more bodies...the reno trend is well entrenched...at least you don't have Labour dept Goon squads on hand to threaten and demand scaffolding right round the reno house.

Consent demand for new housing...sliding away down an ever steeper slope....way to go dept of Lab....but hey...there's no scaffolding to stop the slide down the slope....send in the Goon squads...make a name for yourselves you Lab dept bosses...show the Minister how great and good you are...no!

by bigblue | 29th Jul 12, 10:47am 1343515630

Section D page 3 of today's Sunday Star Times - "Trust in builders lacking"

Item states a failure of trust is playing a huge part in the lack of building activity.

The governments planned amendments to the Building Act will make things much worse. Under the changes, amongst other things, councils will no longer be required to issue code compliance certificates.

Builders will be made more accountable - this will put up costs. When building manufacturers products fail as per plaster systems in the leaky house debacle, the manufacturers have got off scot free. Builders will not want to become the de-facto guarantors of new products and systems that may fail, despite having been BRANZ approved.

Anyone think Linea or Titan board are products you can trust?

The cost for builders to obtain insurance will escalate under these new rules. All sub trades will be impacted by increased costs and workers moving to Christchurch and Australia will leave Auckland short of tradespeople - and there are few apprentices in training.

The cost of building is gonna skyrocket and there will not be much new house building until existing house prices have increased perhaps by around 50%.

At Aucklands current growth rate we need 13,000 homes a year built and currently less than 2,500 are being built. Over the next 5 years with little likely to change that means we will be short of almost 50,000 homes by 2017 and 100,000 short by 2022.

Existing houses prices are gonna skyrocket based on those figures!

Now what happens when we throw in another surge of returning Kiwis and asian immigrants into the mix.

As for this Auckland Plan - what a pile of crap.

by notaneconomist | 30th Jul 12, 1:46pm 1343612771

It's not just the building industry that is bureaucratically bludgeoned back into the Sone Age Hugh. Every area of the whole damn country is bureaucratically bludgeoned back to the Stone age.

I agree Hon Bill English has made some heartening statements however it is immediate urgent action that is required and I'm not sure the there are enough people with (pardon my expression) balls to make any kind of difference.

The one problem that never gets addressed is the one on every Public servant from the PM down who are nothing more than beneficiaries who's existence relies on Other People's Money.

by Chris_J | 29th Jul 12, 3:47pm 1343533643

NZ has an appalling record of failed building products:

How houses are still rotting away with NZ Forest Products "Weatherside" cladding from the 1970s and 80s?

How many leaky homes with various plaster claddings are there?

How many homes modern with untreated timber and inadequate flashings?

How many homes with vulnerable (to earthquake) foundations?

How many unreinforced concrete block and brick buildings?

Obviously the bureaucrats don't know what is important.

by notaneconomist | 30th Jul 12, 2:01pm 1343613701

Chris_J - you are absolutely correct on all counts. The trouble is, human nature being what it is, fails to be responsible. People seem quite happy to pay any value they can afford without looking at the actual construction of the house they want. They then whinge when they have found they purchased a lemon and look for someone else to blame which spirals out of control with more legislative requirements being enforced.

The bureaucratic beneficiaries are given the mandate to suggest legislative change and because they do not know nor understand they cannot sequence importance into the equation. When something goes wrong they all pass the buck and duck for cover into the nearest available office.

by bob | 30th Jul 12, 1:33pm 1343612032

"Anyone think Linea or Titan board are products you can trust?"

No - wouldn't let it near my house or house of anyone I liked.

by noponies | 29th Jul 12, 12:50pm 1343523005

Kit homes could easily be manufactured here. So long as they exceeded building code specs for insulation and are well designed, they would probably be winners. Signature homes recently brought out a new range of 'affordable' well designed plans. According to them, the demand has been spectacular. But even then, their 'affordable' build estimated cost psqm is $1500-2000, which is too high.

My partner and I would ideally like to build our first home, we have about 100k in the bank. But looking at section costs (200k), plus councils fees and build costs we are looking at 450k+ for a fairly modest, but extremely well energy performing home. This is simply far too expensive. Shame really. It simply means there is nothing keeping us here.

by muzza | 29th Jul 12, 4:26pm 1343535999

Part of the problem is that quite a few prefer to rent good properties in desirable areas rather than buy and live in less desirable places/suburbs. So building cheaper house in areas is not attractive anyway, no wonder numerous builders shy away from that. Have a tenant, double income situation, he has a secure job for a Council who has now been in the rental for 10 years. He said he could buy a place in an area he wouldn't prefer to live in, he loves the area/house he rents, and the rent is very reasonable.

by Justice | 29th Jul 12, 5:06pm 1343538373

An excellent point. Many now approach life this way and good on em

by Ricardo | 29th Jul 12, 7:29pm 1343546972

3.5 years on and this Govt is still in the mode of "issue identification"...like watching paint dry

by robby217 | 30th Jul 12, 2:45am 1343573109

They know the NZ public does not like change, and so don't want to scare the horses. Its understandable as painful as it is to observe.

by Chairman Moa | 30th Jul 12, 12:48pm 1343609304

bigblue | 29 Jul 12, 10:47am New

"As for this Auckland Plan - what a pile of crap."

I made a submisison to the council's LTCCP couple of years ago. Now every few months Auckland council would send me a thick book all the way to Australia by urgent courier - the last set of Auckland Plan books had an postage receipt of $47.

Nice and very thoughtful of Len, he needs to increase the rates and all other charges so he can send me more warm fuzzy books.

by Gummy Bear Hero | 12th Aug 12, 2:16am 1344694593

Seriously , Rogie , you are a fecking idiot : It's still winter , numbskull ...

.... we need UGG boots , big Uggly uggs , not stoopid sunglasses !

Getcha Oakley finger outta yer bum & smell which way the wind blows , Space-Cadet !!!!!