Government and Auckland Council agree plan for fast-tracking of housing developments, with 9000 new homes promised in the first year

Prediction - this will do absolutely nothing for affordable housing. House prices will go up until the Unitary Plan (if it's not altered too much) is operative.

There are a handfull of developers that can handle 50 houses plus in one go. Those that can are not charities. Freestanding houses and the associated kilometers of roading and infrastructure required are not affordable (as the DBH has already pointed out) - especially if they also have to be to Unitary Plan standard. They'll be lucky to get them under $500K and an hours commute...

No restriction who can buy them..or have I missed it?

Doesn't supply create demand?

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

The Wizz- bangs have to do something as they cause the problem:

3. The government is explicitly aiming to grow Auckland’s population as a means of achieving “agglomeration” benefits for economic growth which accrue from high interaction amongst economic players.

http://www.davidwhitburn.com/blogs/the-bnz-chief-economist-s-view-on-the…

Any productivity boost would help Auckland firms compete more effectively against those

in other locations. However, considering the official projection of population growth in

Auckland (43% over the next 24 years), even elasticities at the top end of the international range would result in (agglomeration-sourced) productivity gains of only 3% in total, spread over the next two decades.

Drivers of Economic Growth in Auckland

A report prepared for the Royal Commission on Auckland Governance

........

So is the attraction of this policy the sugar rush of population increase? Does it reflect political influence from outside government?

What do Labour and the Greens think? Zzzzzz!??

If we were to hop into a time machine what would we find?

Sometimes I find political speak a little unclear- are they committing to building 9000 houses by September 2014, or is this an "aspirational goal" for the year after the unitary plan is settled.

Having a plan to make land available is a start. Agreement on expediting consents and hopefully cutting the cost of getting projects to the point where building can start is also good.

The other parts of the puzzle will be

Development funding. Not much of that around any more

Cost of materials. Always amazes me on those British property shows when someone says they intend to put on a two story extension and think it will cost 15,000 pounds when you know it would be $150,000 here.

Finding some tradespeople when the ones who aren't in Aussie are all working in Christchurch.

Normally in thiscountry when a whole lot of work in any area is undertaken we run out of capacity real fast and costs sky rocket. It is going to take some sort of public private partnership and some big thinking to get these houses built at reasonable cost. It would be nice to get economies of scale and not diseconomies of bottleneck.

Agree with Bob - this latest announcement will do nothing to boost supply within the next three years. The Unitary Plan should simply be made operative within 6 months - problem solved!

This gives me no confidence at all - "The new accord will be managed by a steering committee consisting of Smith, associate minister Paula Bennett, Mayor Brown and deputy Penny Hulse"

I wonder where they are going to find the skilled labour to build all these houses? Lots of workers left the industry after the bust of 08 and there were very few apprentices taken on over the following 4 years. Maybe they will use an army of first year apprentices still mastering the art of sweeping up and banging in a nail in straight!

They are dreaming if they believe its possible to build 39000 thousand new homes over 3 years in Auckland when we currently build 4000 and the second largest city has been wiped out by a quake.

Here's the Greens take on the Accord;

The Green Party are pleased to see progress on the issue of housing affordability in Auckland, but says that we still have a long way to go.



“This afternoon’s release of the Auckland Housing Accord sets out a first step forward for Auckland’s housing crisis, but it’s only one step,” said Green Party Co-leader Metiria Turei.



“Brownfield developments are key to providing affordable housing and the best way to achieve the compact city that the Auckland Plan sets out to achieve.



“So it’s really unfortunate that brownfield developments are not given a higher emphasis over greenfield in the accord.



“Building new developments a long way from the city just piles on extra transport and infrastructure costs and keeps Auckland sprawling.



“While the accord is a first step, no one has asked the question of who is going to build these affordable houses; that needs government leadership.



“Creating affordable housing requires central government investment.



“Part of the solution is set out in the Green Party Home for Life plans which would put in place a progressive ownership model to help families afford their own homes,” said Mrs Turei.

And here's Labour leader David Shearer prior to the announcement;

That’s the average house price Aucklanders will face in 3 years time according to an expert in the NZ Herald today - $1 million.

After almost 5 years of the problem getting worse, National still think that tinkering with consent processes is enough. But it won’t work.

Labour has the solution - KiwiBuild. It’s a bricks and mortar answer that cuts to the heart of the problem.

Yesterday Phil Twyford and I spent the day with experts and some of the biggest players in the industry to discuss the next steps in our KiwiBuild policy. Everyone in the room was there because they want to revitalise the Kiwi dream of home ownership. It was a really successful day with some great ideas being shared.

This is the sort of change a smart, active hands-on Government can make that will benefit people and boost our economy.

That’s what I was talking about in my pre-budget speech earlier this week. NZ Power is another example.

The sale of Mighty River Power will push up power prices as investors demand greater profits. Last year prices went up more than five times faster than inflation. That hurts all New Zealanders and our economy.

Labour's plan will bring down power bills for all New Zealanders and businesses. It will put money back into the pockets of Kiwis and boost our economy by $450 million and create at least 5000 jobs.

That’s the sort of change we need to make in New Zealand. It’s what the Government should be delivering in next week’s Budget.

Cheers,

David Shearer

Labour Leader

More houses -Yeah right

How about less or nil immigration?

Less people will alleviate the problem by the fastest achievable means.

Stop new overseas arrivals and wait until housing catches up. Then think again.

No brainer.

Houston Houses Cheap?

We've all seen the articles proclaiming that Houston is a low cost of living paradise, where jobs flow like milk and honey and houses are all the size of mansions.

Well the job market is indeed good, and gas is cheap, and eating out is cheap, but what about housing? That's the biggest single expense for most working people and therefore the most important. My professional geographer's opinion is that the cost to own a house is NOT low in Houston.

All the proclamations of low cost of living are based on house value statistics, which are aggregated spatially, but those aggregations don't necessarily have meaning. The only value that matters is that of a house you actually want to buy. The vast majority of us would only want to live in one of two places, the suburbs or one of the good neighborhoods "inside the loop". In between those places is a big sprawl of ghettos, strip malls, and various levels of urban decay and ongoing gentrification. ALL of that is included in the home value averages.

http://www.city-data.com/forum/houston/1768694-houstons-low-cost-living-myth-baytown.html#ixzz2Sn3kDfB2

I would like some insight into how this is going to happen , THE EXACT MECAHNICS OF "HOW "

There are thousands of unsubivided sections and thousands of speculators holding out for a windfall .

Well we all agree (almost) that this accord won’t achieve more affordable housing. What both the local government and central government have failed to address is the underlying systematic failure of the present system.

Typical thought process of those that promote this type of failed methodology is to think the reason it is not working is because they are not doing it fast enough. Their response is therefore to do the wrong thing quicker.

Anyway saving to be made in shortening the consenting process will be first captured by council with their proposed shared land value uplift and/or inclusionary zoning that they will place on developers as a planning gain counter to being allowed quicker consents. Any saving left will be captured by the developer.

Send us more Chinese builders  .....we dont have enough skilled people to build  9000 houses a year , ( 251 working days)  , or 36 new houses to be completed each working day,  nearly 2 houses an hour ..... thats in addition to CHCH Rebuild .

I disagree with the criticism. I have been a fierce critic of this government but I think this is a great initiative and it will make a difference, how much is another question. Of course there are still other things that should be done, like building more state homes, changing rules on foreign property ownership etc. But credit where credit is due 

Hugh, with all due respect I think your criticism is unfair. The Unitary Plan will open up a LOT of new green field and brownfield land for development, it would be good if it would happen sooner but the need for public enaggement is understandable. In the meantime the accord (Subject to legislation being passed) will allow development generally in accord with the Unitary Plan to be contemplated.

what is wrong with that?

What do you want to see? The unimpeded and unregulated "smashing" of the MUL? That will NEVER happen  nor should it.

I'm all for release of greenfield land, provided it is planned and co-ordinated. 

Auckland can learn lessons from Houston, sure, but there are many geographic, cultural and economic differences that make a straight transfer of the Houston model to Auckland both unrealistic and undesirable. 

This is admirable progress from the Govt and Council, at last....

I think HT is right about how this work,s and where it ends- deflation, but keep trying Im enjoying the circus.

our future

http://blogs.telegraph.co.uk/finance/jeremywarner/100024476/spain-is-officially-insolvent-get-your-money-out-while-you-still-can/#disqus_thread

What a great article, Jeremy!

You have taken the reader along with key definitions and then application of the facts that lead to logically derived conclusions and a robust recommendation.

Anyone, with assets in Spain, reading your analysis here, and does not get those assets out now. will only have themselves to blame for their losses.

Otherwise your key insight is this:

"But in the end, no amount of liquidity can cover up for an underlying problem with solvency."

Now do us a favour and work the same analysis for Italy and France.

Jonathan

Another plague of leaky buildings on the way??don't even pay lip service to building standards this time??

Built by registered master "cowboys", good at disappearing after the build, as are those who issue consents and "inspect" the build(more likely a brown bottle)

My 2c worth FWIW. 

• Unless something unbeknown to all us common taters is a'lurkin' in the wings, there is nada in this Accord which gets the land price down to a proper range, which I take to be 1/4 of the house+land price as determined by a 3x median Multiple.
• In particular, there is nada in any of this to tackle the CG about to be handed to lucky owners of 'greenfield'.  Or. most prolly, brownfield either.
• There is no linkage/connect-the-dots to TLA differential rating,  Gubmint tax audits or similar pressure, with the objective of socialising some of the landbankers' CG which is undoubetdly gonna get crystallised by this Rush ter Build.
• There is nada, indeed there is the sound of crickets/an altogether unseemly silence on the question to TLA DC's, levies, contributions, fees and other racketeering (a racket is traditionally defined as the offering of a threat, and the promise to mitigate said threat via a continued cash infusion)
• There is absolute silence on the cost of building materials.  Just as Fletchers is making up like a bandit on the Chch rebuild - look up the history of FBU and note the timing.
• There is nada to indicate just How all of these luvverly little boxes is gonna get built.  Recall the Productivity Commish finding that only a handful of builders do more than 100 units pa.

Too many moving parts to this multivariate.....too many to believe it is a serious Accord.

With over a hundred comments here so far and the talk being about fast tracking building it would be interesting to discuss what we would like to see happen long term. The Key Government is capable of short term thinking only (apart it seems from extending Sky City contract to 2038) and so we end up with the plan as above.

On the other hand those of us who can remember witnessed when home ownership was as high as 80% and it is now less than 60%. Investors can outbid those who want their own home and this is the major real problem.

I believe we show tackle the debate from an entirely different angle which would help repair the damage that has occurred over the last 25 years and so I am reminded of Edward De Bono and his use of lateral thinking. An example is his solution to inner city parking congestion. He suggested that parking meters would not be needed if all parked vehicles had to leave headlights on at all times of restriction.

So let us apply something like this to housing and here I suggest that it was (and still is) the desire of most citizens to own and occupy their own home.

I will put up a few questions for which I do not proffer and answer right now.

1. Is there really a housing shortage and how bad is it?

2. Do we see more people living on the streets today than we did in time before the present problem?

3. Are there many unoccupied dwellings out there?

4. Are there possible policy initiatives that would serve us well into the future?

I would like to try to answer with some general thoughts about what might be true.

There are indeed some people living on the streets but not a large number more than we have had in the past. Yes, there is overcrowding but that was also true in the past.

There is a recent surfacing of suggestions that unoccupied properties are held and in particular by speculators.

Here is where I step up with the De Bono thoughts and the aim is to suggest that we had an owner occupation rate of close to 80% in the past and it is now below 60% in some areas. The people in general would like to return to those days when it was possible to aim at owning your own home and the above is the best way of measuring it.

So we would wish to:

1. Shift the position of 20% of the population to owning their own from renting from an investor.

2. Incentivise bare land to be developed for owner occupation.

3. Make holding unoccupied property unattractive.

The important thing to note is that all of the above are under the control as a political decision. Neither RBNZ /lenders nor local councils have any ability to do anything helpful here.

Some options to help achieve the balance desired:

1. Reduce deductions for tax on mortgage interest cost. This has been highlighted before because owner-occupiers have no ability to do so while investors do and can even shift the burden further than rent income will allow. To make the transition easier one suggestion would be to remove 20% in the first year and each year for five years. Investors then have five years to either divest themselves of the asset or become mortgage free so the impost would not affect them.

2. Bare land with a mortgage would come under that same rule. However an incentive may be needed to encourage development and the existing FIF regime gives a good potential method. Under this an asset is ''deemed'' to earn 5% and if taxed at 30% it means the tax payable is 1.5% of the asset value every year held.

3. Unoccupied property would have the same ''deemed'' value for tax purposes

4. Overseas owners (individual or corporate and less than 75% NZ ownership) who do not have a tax relationship with the IRD would receive no concessions as to expenses incurred outside the NZ system.