Auckland Council lays out strategy for ramping up house building activity in the region

Auckland Council lays out strategy for ramping up house building activity in the region

The Auckland Council has a flurry of activity lined up to start progress toward achieving a targeted 39,000 new homes for the Auckland region over a three-year period.

By the end of this month the council plans to have the first "special housing areas" identified that will be targeted for development, while a Housing Project Office is planned to be operational by October 1.

Housing Minister Nick Smith said this week he was looking to get "sufficient special housing areas approved for at least an additional 5,000 homes by Christmas".

But first the council needs to set the ball rolling.

The council's governing body - essentially the full council - is meeting on Tuesday with two big ticket items to consider.

It is seeking to approve the Auckland Housing Accord and also to notify the Auckland Unitary Plan.

The accord was originally announced in May, to act as a link before the Unitary Plan - the new Auckland rule book - takes effect in three years time.

Too long to wait

With Auckland having a perceived shortage of 30,000 homes, three years was seen as too long to wait for the making available of land for developments.

The intention of the accord is to, as an interim measure, allow the freeing up of land, through creation of the so-called "special housing areas" and fast-tracking of housing developments, hence the target of 39,000 new homes.

The Housing Accords and Special Housing Areas Bill was introduced into Parliament on Budget day, May 16 and having been rushed through, was passed this week.

A contentious issue in the legislation was the fact that it allowed the Government to "over-ride" councils and both designate special housing areas and fast-track developments itself if it either could not reach agreement with a local authority on a housing accord or terminated such an accord.

Council opposition

The Auckland Council had opposed the Government having this power, but the "over-ride" provision has been retained in the final legislation. The concession made is that housing accords will now have a "dispute resolution" process written into them.

Another concession is that the legislation as amended now contains provisions for the special housing areas to contain agreed percentages of affordable housing.

The council has not issued any media statements since the legislation was passed. But to this point there's no indication of any planned opposition to approving the housing accord on Tuesday.

Local Government New Zealand, the body that represents local authorities, had opposed the over-ride provisions.

'You can't have a partnership'

President Lawrence Yule said the retention of the provisions in the final legislation was “really our only issue of any significance" with the new law in its final shape.

He said the introduction of a dispute resolution process was “an addition which we welcome”.

However, "...our view still remains that you can’t have a partnership when effectively one partner has an over-ride provision to do what they want if they don’t agree with the outcome before that".

“The Government would argue of course that what’s important to the economy is more important than a partnership and they’ve seen fit to keep the over-ride provision in.

“...But as a principle of democracy we don’t support it.”

Auckland's the only area currently covered by the legislation as it is has been designated as having a housing supply issue.

Other regions to follow

However, it is likely to be joined in short order by other regions, with many other parts of the country also meeting the technical housing shortage criteria as recognised by the act.

So, assuming the Auckland Council does give the sign-off to the accord, it will be full speed ahead toward freeing up land for new developments.

Here is the council's proposed framework for getting work under way. SHA stands for special housing area :

  • 10 September. Governing Body receives advice on Housing Accord and HASHA legislation and potentially ratifies the Auckland Housing Accord
  • 10 September. Governing Body meeting: endorsement of SHA criteria
  • Mid–late September. Auckland Plan Committee receives advice and provides direction on first tranche of SHAs.
  • Late September. Auckland Unitary Plan notified. Governing Body endorses first tranche of SHAs / Council recommendations communicated to Minister of Housing
  • Early October. First tranche of SHAs formally established by order-in-council and communicated to affected parties
  • Early October. Council fully ready to implement SHAs and able to communicate clearly all requirements and processes to interested or affected parties
  • Mid October. Council meets with land owners / developers and initiates process to receive first Qualifying Development applications
  • Late October. Council completes analysis of second tranche options.
  • Late November. Council recommends second tranche of SHAs
  • March 2014. Third tranche of SHAs established.

The planned Housing Project Office (HPO) is intended to integrate all the council's "housing policy and delivery functions".

This will include undertaking consenting and approvals for qualifying developments within the special housing areas.

The council says it is intended that the HPO have dedicated resource including resources from Auckland Transport and Watercare Services Ltd.

"This will ensure that challenging statutory timetables can be met. Subject to Council’s approval of the Accord, the HPO can be operational by 1 October 2013."

The council hasn't as yet publicly indicated exactly the areas likely to be recommended for fast-track development.

The initial announcement about the housing accord in May made reference to the "significant developments" in train at Tāmaki, Hobsonville, Papakura and Weymouth and across Housing New Zealand’s Auckland housing stock.

Who will do it?

The moot point that will remain is who will undertake all the developments and can the 39,000 in three years target be achieved.

Auckland did achieve 12,000 new houses in a year briefly in the early 2000s, but the figure's averaged closer to 4000 a year in recent years and the long running (20-year) average is only 7400 a year.

The other potential snag in ramping up development in Auckland is that the rebuilding of Christchurch means there will be huge competition for labour and resources.

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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50 Comments

'The other potential snag'. Now there's an understatement.

There is already a shortage of skilled people to deliver the current levels of development work. Many businesses involved in the front end - design and planning are currently struggling to find (the right) people to do the work they have. Every day business owners are telling me they are going to have to start turning away work because they can not find the staff to deliver it. There is a shortage of experienced tradesmen in Auckland. There has been practically no training and professional development of people in the construction/development sector for the past 4-5 years. Thousands of skilled people have gone overseas. 
 
I would say that is a pretty big snag. 
 

My second cousin is a structural / roading engineer he just got laid off as Chch is so slow....off to OZ where there is more work.
Same with some mates of mine, project managers etc...all good, all capable, leaving or have left, too little work, not enough $s, no pension scheme.
Yes sure there is a shortage of apprentiships, well blow me if businesses cant afford to carry many if any. This and even the last Govn wont set / pay for training ppl...so naturally they go where the money is.
Short termism bites....they get what they deserve.
regards
 
 

"Goody Goody Gum Drops"
All those builder who bankrupted themselves over the leaky syndrome will come out of the closet!

so there you have it once again, NZ short sightedness. The govt could have tried to retain capacity over the last 5 years by doing things like building more state homes, providing grants for first home buyersof new homes etc etc. like has been done in Aus.
They didn't, and now when capacity is required it doesn't exist. Typical!!!!!
 

No way Matt. That sort of expenditure would get in the way of Bill English's precious budget surplus goals. Can't have that now can we? 

Exactly - this administration is all about no new taxes, deficit into surplus and selling government assets. Anything else is not on the 'to do' list.

shortsighted, don't you think? The sort of mindset we can look forward to here in Aus after tomorrow!!!

An extra 5000 homes by Christmas?  That's a joke, it's only 3 months away! 

Or did I read that wrong?  Maybe they're just hoping to get the paperwork done by Christmas? 

Ha ha , that's a classic , Mozart ! .... no , we're not gonna have the 5000 extra homes built in Auckland by Christmas , not Xmas this year .... this is New Zealand , fella , not Australia !!!
 
... we have been given the approval for the possibly of maybe allowing new development sites which could contain up to 5000 houses ... then we'll start the paperwork , notify the elders , spend time on a marae ...
 
Actually have the houses built ..... you are such a wag , you are !

I don't know what I was thinking - it was a moment of madness where just for a brief moment I thought that somebody was actually try to get a move on with actually delivering on some of this stuff! 
Sorry all, it won't happen again.  :)

Average Value - New Million Dollar Club
1          Herne Bay       $1,709,450
2          St Marys Bay   $1,493,700
3          Stanley Point   $1,252,750
4          Remuera          $1,240,000
5          Westmere        $1,225,350
6          Ponsonby        $1,211,650
7          Epsom             $1,183,000
8          Cambells Bay  $1,141,850
9          Devonport       $1,108,100
10        Orakei             $1,099,500
11        Mission Bay     $1,081,300
12        Kohimarama    $1,077,550
13        St Heliers        $1,072,100
14        Parnell             $1,043,900
15        Takapuna        $1,036,550
16        Glendowie       $1,023,000

Yes , but if David Cunliffe is correct , and the rarefied special air in Herne Bay does make your wife lactate better , .... then I think that's $ 1.7 million well spent ......
 
... even more so if you bludge off her , and she pays for the house ...
 
Cunning , Cunny !!!

LOL, you know the more you repeatedly whine about the CGT, the more Im convinced its a great idea. The so called mom and dads are probably the small self-employed and middle class managers who wouldnt dream of voting Labour by and large anyway.
You got a year to sell up mate....
LOL
 
 
 

A simple comparison for you to choose between , steven :
 
.. a land-tax , as promoted here by Bernard , which will give regular income to the government (even during recessions ) , is simple to apply , cheap to administer , and socks it to absentee off-shore owners of NZ land ....
 
Or the CGT , as promoted by David Cunliffe , which doesn't give regular income to the government , particularly so during recessions , and which just opens up a whole new field for accountants and " tax-planners " , and only kicks in when you sell something , so people don't trade properties so often.
 
... which of those two taxes grabs yer ?

Both actually, I dont have to pick one or other.
I will start at the last paragraph. The CGT will catch ppl who have in effect not paid any tax on their "profit" indeed some ppl neg gear with the view of a tax free cash out at the end.  A CGT makes such a stratgey obsolete. Unless they hang on hoping an incoming National Govn reverses it.  So right now there are likely to be a lot of Landlords, farmers etc sitting on gains from 15~20 year ownership aiming to retire tax free....ditto land bankers and especially them.
Im for a Land tax, but I'd only support a land tax on the priviso that PAYE was dropped to compensate, ie tax revenue neutral, yet catch those paying no tax.
regards
 
 

I might be a little simple.
 
But how would land tax administer land of different values?
 
Say I own three parcels of land, each the same size, one is swamp that I am regenerating with natives, another is an exotic forestry block and the third is irrigated fields in dairy.
 
What land tax do I pay on each block and how does that differ from rates?

Bernard Hickey would be able to answer that question for you ....
 
... from memory he says the tax is levied at 0.25 % or thereabouts upon the " unimproved " value of the land ( excludes buildings and woodlots ) ...
 
The land-tax is in addition to rates ! ... discourages land-banking .... and pings the Shania Twains of this world , makes 'em pay a little in absentia ....
 
... unlike CGT , you can't do tricky smoke & mirrors stuff with an accountant or taxplanner to get around it ... and unlike CGT , it's cheap & easy to administer .... CGT costs alot in the bureaucratic administration ...

But wouldn't the devil be in the detail. Causing a lot of trips to the accountants, surveyors and lawyers to game the system.
 
Like how to value the 'unimproved value' of the land.
 
Say Shania's clever lawyers state the farm is no longer a farm but an area of regenerating natives. So unimproved land with a lot of tussock that is land taxable becomes tax exempt regenerating land with lots of tussocks.
 
Nice theory but does it pass the simplicity test?

Nup , Shania would have to gift the land back to the crown , to get away with that !
 
... compared to CGT , land tax is much simpler ... if the Gummster can follow it ( Bernard's explanation of it ) , anyone can ...
 
No need for accountants and tax-planners ... no devil , no detail .... maximum revenue collected for the tax-man with minimal cost of collection ...
 
... CGT is a crock , by comparison ...

Not completely convinced that land tax will be simple to police, as I said i'm a simple fella. Maybe BH or someone else could explain it to me. But agree about CGT

its simply collected with the rates....so Im unclear on your "policing"?
regards

Typical, you only think about yourself. 
You wont live for ever....so one day even if its after your death your estate will actually sell. 
Otherwise while you may well keep and hold and have a positive return, I know others who have a neg gear and aim or pray to make a capital gain tax free.   These are in it purely for the potential end profit.
regards
 

Steven...you do realise if you tax the gains then you can claim refunds on losses?  So in a declining property market, which could be at a time the gummit needs tax revenue, they could end up giving tax refunds to your landlord mates.
I have discussed CGT at some lenght with tax specialists.  The view seems to be that they do not work and are easily avoidable.  The challenge - find a country where they actually work......apparently you won't.  And expect a silence on the implementation from the tax professionals - as they know they will clean up big time with fees if it ever happends - from avoiding the tax and manipulating refunds on 'losses'.
A land tax is the way to go...make it too expensive to land bank.
 
 
 

.... very good points ... lotsa Aussies " bed & breakfast " their shares on June 30 ( sell ) and July 1 ( buy ) to deliberately lock in losses , and off-set them against income tax or future capital gains ....
 
Not that I'd recommend such a devious practice to avoid paying " your fair share " to the tax-man ... ahem !

Ideally a CGT should be introduced at a lowpoint in the property cycle ie 2008
 
As for capital gains and losses they can be quarantined so capital losses can only be offset against capital profits (as I think is the case in australia)

The NZ housing market went into its anomalous behaviour (ie bubble) in 2003, the local dip in 2008 was insignificant compared to the overall bubble state. Introducing CGT in 2008 would not have been much more of a better time than now, given the size of the bubble.
Encourage the anomalous money out first.

Actually no, you can legislate on gains only...
I find the panic on a CGT interesting....the more the right wingers protest the more it sounds like a good idea. 
Tax professionals, personally I think they should be held liable for any advice they give thats proven to be illegal.  So if a punter loses a tax case to the tune of $100,000 (say) the tax specialsist gets fined the same amount. If the punter goes to jail for 6 months, so does the tax speacialist...
might focus them a bit.
regards
 
 

Im amazed you are so concerned about Labour chances, LOL in fact I think thats absolute rubbish on your part, so no I think its whining.....better sell mate before Labour taxes you.
To start with CFOs are not likely to vote Labour by and large so who cares about votes never had. I also commented about this before, seems you are incapable of listening.
There is some evidence that a CGT does actually work, NZ is pretty unique in not having one, so it just brings us into line internatioanlly.
Indeed its not a level playing field tax wise so that needs fixing.
regards
 
 

Thats just funny....
I'l take Cristov's view thanks.
regards

Even to get 5000 consents done in 3 months is mind bogglingly fast (for a council)....then even if the building could start next year, where will all the inspectors, engineers, builders etc come from?
Maybe the idiot meant xmas 2014 for a start in 2015....
regards

They will be built by the invisible hammer-hands of the free market. But invisible hands make invisible houses, that is why you can't see evidence of the 5000 homes.

Marcus Lush - always good for a chuckle
"didnt sign up to spend his life stuck in auckland traffic"
"quotes John Minto as saying no city has ever paved its way out of congestion"
http://www.radiolive.co.nz/Good-turnout-at-the-Auckland-mayoral-debate-last-night/tabid/439/articleID/37696/Default.aspx

"Another concession is that the legislation as amended now contains provisions for the special housing areas to contain agreed percentages of affordable housing."
There will be no need for these provisions if supply is ramped up enough. The market will then provide affordable housing on it's own.

So that means the creators of this new housing policy do not think it will mean housing as say Hugh defines it will become affordable. They admit failure before they even start....

5000 new houses..like that kid in the Mitre10 TV ad
"Ya drimin!"

It still seems unclear to me anyway whether the "Special Housing Areas" allowed for in the Act are in fact exactly the same areas that Auckland City already plans to rezone in its new plan; but that without this Act would have needed 3 years to be notified and come into being. Until now I had assumed so, otherwise the new plan becomes a bit of a waste of paper and time. 
Rezoning sections doesn't of itself of course make  those sections available nor get them built on, so it will be interesting to see how that will work. 
The other uncertain area is how the provisions for cheap housing to be built as a percentage will come about. I now assume the system will be very similar to the UK where a developer will be told that x percent of any new houses in a development of more than y houses, must be sold for no more than $x00,000. In my view this is not actually a bad system, (I still own and rent out a house in Kew in London that is part of such a development, and it all seemed to work okay, but then Hugh thinks the UK is a lost cause so who knows) The devil will be in the detail. It needs some cross subsidy by the buyers of the more expensive houses to pay for any shortfall in the cheaper houses; and that can make the more expensive houses tricky to achieve a price for.
Reading Bernard's top 10 yesterday suggested the only other way cheap housing is typically built, is for governments to be the commissioners and buyers. I expect that isn't in Bill's plans here, and the ACC cannot reasonably go there, so lets see. 
 
 

This is the UK housing market. Judge for your self if it is working.
UK's shoebox homes
And houses are getting smaller. The average UK home - including older and new-build properties is 85 sq m and has 5.2 rooms - with an average area of 16.3 sq m per room.
In comparison the average new home in the UK is 76 sq ms and has 4.8 rooms with an average area of 15.8 sq m per room

"Susanka has helped readers understand that the sense of "home" they're seeking has almost nothing to do with quantity and everything to do with quality."
 
But there are a lot around here that harp on about cost without any real comprehension of quality.

It is possible to live in small areas more efficiently through better design.
 
I have lived in a small NZ two bedroom town house and an even smaller two bedroom Finnish apartment and prefered the smaller one because it was better designed.
 
But what is happenig in the UK is not through choice. It is not that people are choosing smaller more efficient designs because that is where the demand is. The reason is cramped spaces is all that is being supplied and that is why Royal Institute of Architects was making an issue of it.

The balloon is up and they are racing this time! Just kidding. Poor Mozart thinking that all these media releases are about getting earthmovers, diggers, saws and hammers in action. Re-read all the official fluff put out above and you find that Auckland Council and the government have moved heaven and earth to create a plan for planning to think about building new houses.
 
Still we have a SMART target (specific and measurable - yes; achievable - no) of a new Dunedin by September 2016. And we here at interest.co.nz have long memories.

Obviously it will take a while for the construction sector to gear up to new demand. This is 100% unavoidable. The damage was done and we now how an industry "repair" job to do. But the sooner its done - the better! And if we're turing planning gain monies instead into proffit-signal to builders, then it's going to happen infinitely faster than the status quo. 
Also, as builders become costly, we should expect a heavy leaning toward the use of good-quality (hopefully) prefabricated homes, imported from overseas. This should mitigate some of the supply load. All good.

..gawd Hugh I don't know where you get the energy from.  As they say, it's hard to get someone to understand something when their job requires them not to.
Viewed a new housing sudivision out of Austin, Texas recently. Mayor roading system, huge bridges required for gullies etc built by developer.  The show home at $370k ish.  And a palace at that.  Was absolutely gob smacked, the quality, size, space, fittings, benchtops, laundry, dinning  areas etc were so far ahead of the c##p going up here it was unbelivable. It would only be found in the most exclusive subdivisons here......

Apparently Japan has adopted the Canadian building code alongside their own. This allows resilence in the face of disaster. And obviously Canada has a big opportunity to participate in the Japanese rebuild. But there is nothing stopping us doing the same.

Well, everyone's missed the obvious conspiracy theory.
 
Want 5K homes by Xmas?
 
Build 'em in Factories!   Who has that capacity, and the finance to get a few up and running quickly?  Who has the factory hands to run the machine tools?  Who has the freight and on-site erection capabilities?
 
Who has got half of a nice cosy materials Duopoly?  Which generates enough super-profits to build a factory or seven, staff it with 24x7non-unionised robots, ship the products to sites and - er - Erect?  Who has a new shiny CEO who is on record as being Astounded about the lack of factory produced housing (i.e. has spotted a gap in the market)?
 
Why, of course.
 
A Fletchers - Fanuc - ICBC -  NZSteel - Kiwirail  deal has been stitched up, behind the scenes, under the disguise of a Housing Accord.
 
FFINK, for short.
 
You read it Here, first......
 

Wonder if this Bayleys Chinese estate agent will pay tax on the $500k profit made in 24 months on this sale:
http://www.stuff.co.nz/business/money/9139315/Cool-500k-profit-in-house-...

to the person who commented about companies not being able to find good tradesmen; the reason is that these companies want to pay peanuts and expect experienced good tradies to work for $25p.h. at the most. Why would any good tradie want to stay in nz for that pittance?! They don't and move if they can. Australia pays more and is easy to immigrate to.

HHH - very fair comments. The wages are significantly lower in NZ. It is fairly typical for the qualified labour to be charged out at a maximum rate. E.g a quailfied builder will be charged out at say $45 per hour or higher and then paid $30 per hour or under.
There are high costs to employers however, Sick leave, holiday leave, Stat hols, OSH, insurances, compliance obligations etc.
 
Most quaified tradies would be better off working for themselves in NZ.

I'm talking about the ones that are not working for themselves. They are paid much more than $25p.h in oz for doing the same work.