Nick Smith still targeting the passing of housing accords legislation next month; aims for freeing up of land supply before end of year

Nick Smith still targeting the passing of housing accords legislation next month; aims for freeing up of land supply before end of year

Housing Minister Nick Smith is targeting having "thousands of new housing lots" opened up by Christmas after his housing accords legislation cleared its second hurdle in Parliament.

The Housing Accords and Special Areas Bill passed its second reading by 63 votes to 57.

Smith said he was still pushing to have the bill pass its final stage next month, "meaning that by Christmas we will have opened up thousands of new housing lots".

The legislation gives the Government the power to negotiate housing accords with local councils in areas that are deemed to have a housing supply problem. Currently significant parts of the country would come under this category and so theoretically could be targeted for the development of housing accords.

The housing accords would allow the fast-tracking of housing developments in designated areas.

The Government and the Auckland Council have already negotiated an accord in an attempt to alleviate a perceived 30,000 shortage of houses in the country's most populous city.

It is planned and targeted that the Auckland Housing Accord would enable the building of an extra 39,000 new homes in the Auckland region over a three-year period. See here for articles on the accord.

However, the council agreed in principle to the accord before the enacting legislation had been drawn up. There were several things in the legislation the council did not agree with, particularly the "over-ride" powers the Government would get allowing it to take over the process of approving developments from the council if an accord could not be reached or was terminated.

The main opposition parties, having supported the bill in its first reading, withdrew their support while Local Government New Zealand has said the accords legislation would more effectively tackle the housing shortage issue if the "over-ride" provisions were removed. 

Smith has been adamant the provisions won't be removed, so all eyes will turn to the Auckland Council soon and whether it will officially ratify the accord. It has previously said it might not if those provisions are not removed and has formally called for their removal.

After the bill cleared its second Parliamentary hurdle, Smith said the legislation would allow for low-rise greenfield developments within Special Housing Areas to be consented within six months, as compared to the current average of three years, and three months for brownfield developments, as compared with the current average of one year.

"This bill confronts land supply shortages in cities like Auckland and will see central and local government working closely together to free up thousands of new sections for housing developments," he said

"Reversing New Zealand’s generation-long downward trend in home ownership and affordability won’t be solved by gimmicks.

"The Government is taking action on all the important fronts. This includes this bill on land supply, reining in council development charges, reforming the Resource Management Act, scrutinising building material costs, simplifying building consents, and expanding the Welcome Home Loans and KiwiSaver First Home Deposit subsidies to support first home buyers.

"All of the substantive inquiries into housing affordability make plain that increasing land supply is a critical part of the solution. Labour’s opposition to this bill shows they are more interested in playing politics than addressing the real issues," Smith said.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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24 Comments

The Govt is allowing land owned by their "mates" to be subdivided and who gets to pay for the future problems? ALL RATEPAYERS! Thanks Nick Smith.

Can interest. Co.Nz start recording the number of affordable sections created and the amount they sell for? Bit like the unemployment tally?

What about councils helping their "mates" by restricting the land supply and pushing up the price of land?  

Land in Nightcaps, Millars Flat and other SI desitinations is still pretty cheap because there are so few jobs. You can buy an acre for $45k! Have you thought of going there?
Auckland, the powerhouse of the NZ economy, has thousands wanting to settle there because they can get work to then fund a mortgage taken out on the premise that prices will continue to rise.  
 
Urban limits were set under the RMA to minimise sprawl. Everyone had the ability to put in a submission and speak to that submission.  Cheap oil won't be around for much longer.
 
I am beginning to sound like MurrayG!

Sorry James.  Auckland is not the 'powerhouse of the NZ economy'.   It's just big.  Look at the huge proportion of New Zealand exports that come from from south of the Waitaki.  Accomplished by the 300,000 people there.

And thereofre it will be shown that its not a Pollie fault. The buck will have been passed to those nasty greedy land bankers and parasitic developers. The Govn and councils will be able to show that there is enough land to built 40k houses the fact that few have been developed at prices most cant afford will be moot.
Next stop pass legislation to hang a few! (really I mean 2017 will be a ways off so naff all will be done, til 2016 then it will be blind panic again).
regards
 

Hugh P - didn't labour start the Housing Corp to build state houses? I think that it is disingenous to say "Labour has no credibility whatsoever on housing issues..".
 
There is no affordable economy without the environment - so Nats need to stop trashing it.

Hugh, do you really believe that Fulton Hogan and other companies are going to sell land again for $50K - when they can sell it now for $200K? Come on - you probably know the family so why don't you ask them to do a development selling land for $50K PLUS development contributions and make the costs fully transparent?
 
Just an idea!

Doesn't have to be FH infact they don't do residential developments?
Things like:
Devlopment company Incentives.
Tax payer subsidies.
Through economies of scale.
Another global financial collapse  i.e. interest rate increase, less fund available etc.
To name a few.
Applying these sorts of factors to house or apartment building can reduce cost further.

“Its A Coming” – The tide IS Turning So Get Out While You Can
Heres a thought.
All those people who have been sucked into the great property scam over the last few decades; believing they were going to make their fortune from ever rising property prices, funded by overseas money; along with the hype and propaganda of a dodgy real estate industry, media (News and TV shows) and finance companies cheap, hot and easy money is all coming to a head.
All that money tied up on paper. Always vulnerable to social / economic change; particularly when one considers we are one of the most over priced housing and sparsely populated countries in the OECD. Plenty of room to expand and so easy to do, as all the resources are here to make it happen.
Monies never been easy to make and people have failed to see that debt plus interest rates and buying in a rigged market (to suck as much money out of the purchaser as possible) may not make money but be more akin to a burden/trap (reminds one of the 87 share market crash). Along with ever increasing insurance cost in the shaky isles. It’s silly when you think we borrow so much money overseas to buy land that is here, putting NZ economy at risk of default.
Waiting for the next generation to come along and pay what they did :( - fat chance, looking at my kids and friends they’ll never be able to afford current prices as they are completely out of context to what our local economy can afford.
Ones only hope is for rich foreigners to come over and buy up all our properties - but we may need to be become province of China.
The problem is a zealous commitment of money vested in property “speculation”. That strong resistance is selfish to deny the need for an “Affordable” housing for all New Zealanders.
Just proves NZ economic prosperity for all is a greater force than a few.
Cheers

And that 2ToothB is an example of  Captured Money......my pet rant around here for years.....from the goldbugs, mineral stocks, futures, forex (long)...property (soon), squillions sunk into irretrievable or enormously long positions ...or captured  to be dissolved or leveraged from as it lays in limbo.

next steps:
1. Remove the Councils' monopoly on building related fees.
2. BRANZ, remove their strangle hold on building products certification (our standard isn't that great anyway)
3. Allow parallel import on building materials (i.e Gib wall boards, Hardie products)
After that we'll be sweet!

#1 Job done you quick worker you. Building Act 1991 removed the monopoly on consenting, and certifying. Problem is no-one wants to be a building certifier (no money and plenty of risk) probably not even the councils.

Im not sure where you get your info from but,
Im not sure BRANZ matters a damn. ie as long as the product meets a NZ code OR an AU  (UK code?) code it can be sold and its been that way for 15? years.
eg NZ circuit (2.5mm2) cable was $550 a roll (it was apparantly safer), OZ cable $150 a roll, so everyone bought and used OZ cable.
Parallel importing, its allowed now, that legislation was passed in HC's time I think (or J Shipley?)....after several Vendors (Jeep / Chysler was one I think) was planning court actions.
I dont know where Bunnings sources its stuff but OZ seems probable.    DSE I think imports from its OZ side....
regards

Some council certifiers will not issue CCC if the products isn't certified by BRANZ.  Like wall adhesive, wall boards,windows etc..  
As for parallel imports stuffs, google "Elephant Plaster Board" this product is way better than Gib but subjected to tax levy beacuse Fletcher lobbied the govt. 

Thanks, interesting........
I will go back ground read on this....it certainly wasnt my understanding branz had such "power"
Looking so far I cant see that BRANZ has any legal standing?  In effect its a free lance preformance evaluator?
So unless the CCC had good reason to reject I cant see where the legal standing is....the builder and manufacturer could sue them. "I used boshe glue with the correct sized stainless steel nails as per NZS???? etc..it conforms to the Building code requirements and is certified by the supplier as such"....
We cartainly need to get away from crap like this....in effect we are allowing monopolies which means un-justified margins...
regards
 

Even if Mr Smith is succesful  "meaning that by Christmas we will have opened up thousands of new housing lots" the land still needs to be developed and the houses built before there will be any impact on the supply side. It seems to me the unitary plan itself will create thousands of sections which can be developed - within the urban limits. Under both scenarios we are talking about 2-3 years plus before there are any  significant number of new houses built to add to the supply. Until then why would house prices do anything but continue to go up? The only thing that can taper house price increases in Auckland are interest rate hikes. The wider economy can't afford serious hikes any time soon so again no reason to think house prices will taper much for the next 2-3 years. 
 
If I wanted a section to build on I would wait until the unitary plan is enacted and buy something closer in to build on. Why buy and build on the outskirts of the city when thousands of sections are not far off coming online within the urban limits? If there is a great drop in property prices the houses on the outskirts of the city will be hardest hit. Inner (read existing) suburbs will riegn king. So why on earth would first home buyers (or anyone for that matter) invest in far out sprawling suburban developments when their main purpose seems to be to lower house prices? 
 
My prediction for Auckland: continued house price inflation for the next 2-3 years, not 14% a year but somewhere between 5%-10% depending on what happens with interest rates. Once the unitary plan is enacted house prices will plateau, probably dip a bit, possibly for a number of years whilst the new supply is absorbed by the market and incomes catch up with the cost of buying a house. I don't really see the cost of houses going down greatly though, not because of land prices but because the cost of construction is substantial (and you pay GST on that) - not to mention who is going to build all these new houses? There is already a skill shortage in the construction sector. 
 
If you're a tenant get ready for your rent to go up. From where I'm sitting all the actions being taken to reduce house price inflation = rental price increases!
 
Happy buying. 
 
"He who neglects what is done for what ought to be done, sooner effects his ruin than his preservation." - Machiavelli, Chapter 15, The Prince
 
 

Hugh, it is difficult to respond to you, with your lifetime of excellent research to reference. I am merely a student of human nature with a few paragraphs to offer in response. Please excuse my simplistic analyses. I will try to respond to your question taking account of the articles you referred me to. May I ask you a question. What do you consider to be the time frame in which housing affordability will be restored in Auckland? I will come back to this question. But first, why be a bubble bunny?
 
We have observed in modern times that year to year, or every few years house values go up and down. It's certainly not a one way bet in the short term -I don't think anyone will argue that it is. Over greater periods of time though property values increase overall. Dare I say it but it's a fact, like taxes. It also seems that over time house values have increased at a greater rate than increases in average incomes. All the while the home ownership rate is on the decline. I look around me in society, locally and globally and see two distinct groups of people. One group is getting wealthier, enjoying healthy capital gains off their leveraged capital and accumulating more and more. The other group is really struggling. Life seems to be getting tougher and tougher for many people. Home ownership, even just saving a deposit for a home is a far off fantasy for more and more people.
 
There is a saying I often think of: "The rich get richer. The poor get poorer". Hugh, let's play a game. I am sure you will know it. I will be a bubble bunny and buy an investment property in Auckland valued today at $500,000 with 100% finance. I will invest $100 a week of my own money on top of rental income received to cover the outgoings (my contribution will really be much less because it will reduce each year as rent increases, not to mention my tax deductions thank you very much). You play it safe and put your $100 a week in bonds or cash or somewhere else well out of bubble-territory. Do you know the game yet Hugh? We'll catch up in ten years and see whose $50,000 investment has grown the most. I’ll give you a clue. At 4% in the bank your total investment will be worth $64,000. You will have made a whopping $14,000 interest. Don’t forget to pay income tax on your interest earned Hugh. Based on historical averages my investment property will have doubled in value after 10 years so it will be worth $1,000,000. In comparison to your $14,000 interest (less tax) I will have made a $500,000 capital gain. So after deducting my contributions that’s a princely $450,000+ of pure profit if I decide to sell (due to my change of circumstances Hugh. My intention when I bought the property was never to buy, hold and then sell for a profit, no, no, no.). So I win by a respectable margin.
 
Anyone playing the short game certainly risks making a loss. Anyone in the long game, and let's be honest that's where the smart money is, faces no greater risk than they do of getting struck by lightning. Hugh, why not be a bubble bunny?
 
In my observations of people, more often than not they tend to act in a self-interested way. I think you can agree you too have observed this. Whose interest does it serve for house prices to reduce to a price / income ratio of 3:1 or less? It's certainly not in the interests of those who have the power. And therein lies the dilemma Hugh. Perhaps we are looking in the wrong places to fix the problem. The hypothesis is that this house price problem has economic and regulatory roots. So we look to the economists and the regulators for a solution. To some extent this is correct but perhaps we need to look deeper. Perhaps the problem is not merely an economic and regulatory one but a social one, a cultural one or fatally, one based in human nature.
 
With all due respect, I listen to the wiseheads and I hear theories of the ideal but I look around me and Rome is burning Hugh. There is a housing supply shortage in Auckland. Now even I know that Economics 101 dictates where there is a shortage of supply and/or increasing demand prices will rise. Until the supply problem is resolved it seems more than likely to me that prices will continue to increase. If supply meets or exceeds demand house prices will certainly plateau and/ or decline but I don’t see there being an oversupply of houses in Auckland anytime soon.
 
The question I pose to you Hugh is: What do you consider to be the time frame in which housing affordability will be restored in Auckland? To me it seems far off in the distant future. When I think forward to a time when house price to income ratios are 3:1 I think of people in white lycra suits and spaceships flying around - a futuristic socialist Shangri-la if you will. Perhaps it is not just economic and regulatory policy that needs to be changed but core social and cultural values. Perhaps the younger generation who are being shut out of the housing market right now will be angry enough to effect change. Alas history has demonstrated that people have short memories. And when the underdog gets a chance and gets a taste of being on top his world view often changes. Just as his self interest led him to desire change from being the underdog so too his self interest will lead him to take advantage of his better lot in life and seek to accumulate more wealth for himself now that he is on top. I know plenty of young aspiring property investors Hugh..
 
What should the working man choose? Rich getting richer bubble bunny or poor getting poorer idealist.
 
Increasing land supply beyond the urban limit to create thousands of sections will not reduce the price of houses in the short term. If anything it will create a harder landing when the bubble does burst and have the greatest impact on those who bought these sections/houses. Why? As past property downturns have demonstrated properties at the city limits, particularly sprawling new subdivisions suffer the greatest price reductions during  downturns.
 
A final thought hugh: “How we live is so different from how we ought to live that he who studies what ought to be done rather than what is done will learn the way to his downfall rather than to his preservation.” - Machiavelli

Machiavelli - yawn

Adelaide has that effect on me too Matt. 

This is a step in the right direction but as several common taters have noted, won't do anything for existing land, at existing LV/sqm.

  • Land inside a MUL has already inflated to the tune of 10x rural land a few km's away.  No way to ask nicely for the CG to be handed back:  even a CGT would just be nibbling at the edges given the second issue, which is:
  • Landbanking is rife:  holding for long periods in the entirely historically rational expectation that it will gently inflate of its own accord/be rezoned/accrue along with everyone else the latest stupid per sq m price paid anywhere in the district.  The longer it's held, the less bite a CGT has, unless yer rilly. rilly Retrospective....which will never survive the attentions of a few bright Legal Eagles who have hundreds of years of case law on this very point.
  • Conversion of e.g. brownfield ex-industrial to high density residential is subject to a barrage of regulatory imposts which are a very effective cost price inflator: rezoning, private scheme changes, consents, geotech, soil tests for contamination, development contributions, financial contributions, consulting and legal costs and the like.  As cost price is pushed higher, the cost-plus on-sell unit price per sq m to the end consumer also rises.

So don't expect miracles from a massive increase in supply, especially if inside an existing MUL.  Or RUB.  Because to use Hugh P's favourite phrase, the land price is already wrong.
 
Way wrong.

So Cap'n Hornblower, you get out yer parchment map and a HB pencil with a rubber on the end and where that line is where X marks the spot, yer rub it out, never to exist again, and using the other end of the pencil, draw in a new line further out and a new X marks the spot. Now, what I want to know is, what if dem local-yokels with woollen caps an gumboots and callused hands are content to wake up in the morn each morn and look out over the green paddocks, listen to the tuis and bellbirds, and watch the fantails and finches, and take daily walks down to the pond or dam or over to barn and get out the ATV and .. you know .. happy .. not interested in selling .. dont want to sell .. it's the family homestead .. been in the family for generations .. whaddya do? ..  confiscate it off em?

Waymad is spot on with his summary. MUL land prices are already land banked prices so cannot and will not come down unless the land banker is forced to take a bath. Busts, like bubbles are about losers and winners fighting over non-value added speculation, and therefore you can only win if some else loses, and visa-versa. Further, the housing accord then highlights areas within the MUL, which is limiting the supply even more. There is no point in limiting the supply of land that is already expensive. You may get more land released, but not more affordable land.
Iconoclast, you don’t have to worry about , ‘dem local yokels’ not selling the land because they are the biggest beneficiaries of restrictive land policies as they are the people that sell the land to the land bankers, or develop it themselves and reap the super profits . They can work it for years as $50,000 per ha dairy land and then sell it as $500,000 plus per ha development land – all done under the disguise of Federated Farmers not wanting to open up land for development to preserve rural land. It’s all in their members hands, farmers either do not have any control over who they sell to, or Federated Farmers do not speak on behalf of those farmers who chose to sell.
And as far as tuis and bellbirds are concerned, there are none on the scorched earth dairy farmers, but plenty in the mature developed Auckland suburbs.

Very good post. Seems to me this politics from Smith is all about being seen to do something, while avoiding giving any credit to Auckland's Labour City Council.
The government seem to me to be fundamentally now agreeing to Auckland's request to fasttrack consents and key bits of the Unitary Plan; getting around Amy Adams insistence that the RMA process had to be followed, such that 3 years would have to wait before anything happened. 
The objectionable bit of course is the override provision; but in practice that won't either be needed or applied in Auckland. I don't really expect Smith to go into next year's election having disregarded democracy for a third of the country's population. Hugh P's love affair with the Nats I believe is informed by his experience in Christchurch where the Council at best has been overwhelmed by the earthquake, and appears for that reason to have been disfunctional. Auckland Council actually wishes to free up its land and rules materially, the government is now agreeing to let them, but doing so in a way to try and appear to be in the lead. Hugh P needs a visit to Auckland to actually understand where land and building is happening.
None of it will fix building costs; nor in my view the debt fuelled drive on prices (but Mr Wheeler may well help there); nor the preference to live in higher value suburbs and school zones. But a good number of lots will become available to build on if someone can make a business case to do so.

Sydney was, is? 9 to 1 its been pushed there by OZ pollies doing the first time buyers grant.  Ergo that method simply has not worked. Forther, the last time it was done it stopped afltering and declining market. So as a quick panic stop the collapse button it seems to have worked. Ppl have been desperate and foolish in jumping on....here its not so bad, yet...
I think we both agree on 3 to 1 being the norm, if we disagree on all else. The Q is going to be what the pain in getting back there....Given houses are 50% over-valued the least painful way is 20 years of no house price inflation. I cant see that, ergo a drop and misery for a decent % of newly (<10 years) mortgaged NZers.  Of curse with such a big drop, no one can or will build...they would face losses. That leaves the govn and kitsets...
Going to be interesting to watch.