Govt lauds progress in Auckland housing market, but opposition says there's now 'back-pedalling' on targets

Govt lauds progress in Auckland housing market, but opposition says there's now 'back-pedalling' on targets

Housing Minister Nick Smith and Auckland Mayor Len Brown say Auckland is on track to exceed its first year target (9000 houses/sections) under the Auckland Housing Accord by almost 1300 dwellings/sections.

These numbers are given in the second joint Auckland Housing Accord Monitoring Report from Auckland Council and the Ministry of Business, Innovation and Employment (MBIE). The Labour Party, however, says the new figures show the accord is looking more "shaky".

Under the terms of the Auckland Housing Accord approved between the Government and the Auckland Council, a total of 39,000 new homes/sections are targeted for approval over the next three years. Not all of those 39,000 have to be found specifically through the accord, as the figure includes all developments that might be approved in Auckland during that period.

The full details on all the 63 Special Housing Areas are available on the Auckland Council's website and can be accessed here.

The report covers the first six months of the Accord, from October 2013 to March 2014. It shows the net number of dwellings consented and sections created in Auckland is at 5134 halfway through the Accord’s first year – more than half the target of 9000. In addition, more new dwellings were consented (3,417) in this period than in any similar period since 2006.

Housing Minister Nick Smith said he was encouraged by the progress the Government is making together with the council. 

"We are rezoning areas at an unprecedented pace and this will bring thousands of more homes on-stream. There are no instant or magic solutions to Auckland’s housing challenge but the latest figures confirm our land supply reforms are working."

He said the Government’s response to improving housing affordability was based on the substantive inquiry of the Productivity Commission in 2012.

The Accord mechanism was focused on the land supply issue but other reforms were underway to address the complementary issues of infrastructure, building materials, compliance costs and improving the skills and productivity of the building sector,”  Smith said.

Auckland Mayor Len Brown said the latest report showed that the pace of building was picking up in Auckland, driven by strong demand, a buoyant economy, and supported by record processing times by the council’s consents team.

"I am delighted with the progress we are making in partnership with central government to identify Special Housing Areas and to bring forward new housing developments."

But Labour's housing spokesperson Phil Twyford described the latest figures as "dismal" and said the housing accord was "looking more and more shaky".

"Twelve months after Nick Smith proudly promised Aucklanders 39,000 new homes he still hasn't built a single new home in the Special Housing Areas that people are living in and he isn’t expecting any for several months.

"Today's report shows the Minister is starting to back pedal. He is now predicting 529 fewer consents in the first year of the Accord than he was two months ago. No wonder he starting saying this week that meeting the targets of 13,000 and 17,000 for the next two years would be a ‘considerable stretch’, Twyford said.

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The deflation of achievement will follow the path we all predicted when Bernard first reported on Smith's outlandish promises.
The first report said Smith was promising construction of 39000 new dwellings in three years. To get perspective on this promise this is a new city the size of Dunedin - in just three years. Bernard  rightly pointed out this was not physically possible. It then became dwellings consented. Presumably it will soon become sections consented. Can we then look forward to AC staff peering around the city for Wendy houses and cardboard boxes to count towards the total?
Any journalist who wants to find out exactly how this project is going to go needs only find out whether Watercare are putting any new pipes in the ground yet. No-one is going to apply for building consent let alone build until here are water mains in place to connect to.
Look also at whether the government is extending its own infrastructure into the new SHA's.  What schools are promised? What upgrades to hospitals (remember: city the size of Dunedin). What motorway extensions. In the budget the government proudly announced funding for a new primary school in Pegasus; the deal to build the school was made by Labour and was dependent on closing the nearby Waikuku School. Not exactly a big commitment to servicing growth by this government!

If, say, 10,000 new houses came onto the market right now, would it actually have much effect on prices.   Maybe not, due to an almost inexhaustible supply of buyers offshore, incoming migrants, nz investors etc. 

Too many people get stuck thinking the supply side argument is about increasing or decreasing the number of houses built. It is not.
It is about when there is pent up demand. Say because the home ownership rate is falling then the supply response is building more houses not increasing prices. This is called elasticity of supply -look it up.
This implies that if existing house prices rise then new home buyers can go and build a new home to undercut the market.
Unfortunately in our current set up 10,000 new builds are more expensive than existing houses due to all the reasons we have discussed at ad nauseum -economically naive planners, insufficient infrastructure to access new areas, ticket clipping at every step of the build process by both public and private institutions and so on.
So 10,000 new homes that cost like at Ferrari but are in fact bog standard Toyota's will make bugger all difference to existing house prices because they are just not competitive.
If those property investors, foreign cash, big daddy's or whoever think they have the market cornered knew there was free entry into the market then the booms and bust in house prices would be over.