'Wellington staring down barrel of housing crisis'

Property

Wellington is staring down the barrel of a housing crisis if Council does not move on reform of housing plan - Deputy Mayor Eagle

3rd Mar 17, 10:19am by Alex Tarrant

Wellington will be staring down the barrel of a housing crisis if the city’s council does not move now to lift the supply of housing, Deputy Mayor Paul Eagle warned councillors on Thursday.

With rental housing “scarce” and “housing affordability…a problem,” Eagle said more could be done to improve Wellington’s building consent process and free up land for development.

The council’s City Strategy Committee met Thursday to discuss its Draft City Housing Strategic Investment Plan. Eagle, who is set to replace Labour’s Annette King in Wellington’s Rongotai electorate in September’s general election, holds the housing portfolio.

The session focussed on a plan to increase the amount of council-owned social housing in Wellington by an extra 750 homes. However, the discussion also touched on the broader private housing market in the city.

Figures provided by the council show officials consider construction has lagged population growth by about 3,600 dwelling units since mid-2003.

While Wellington housing affordability had been reasonably stable in recent years, there is evidence of increasing pressure on the market, a discussion document on the draft plan submitted by Eagle said.

The document cited a 10% increase in rental bonds lodged in Wellington between 2001 and 2013, against a 17% rise in population over that time.

“This suggests that the reduced rental turnover in this period is limiting rental opportunities and anecdotally is reflected in increased competition for rental property,” it said.

Meanwhile, supply has been constrained since 2008: “There have been fewer houses to buy in Wellington – a constraint on housing choice.”

Wellington City Council is relatively rare among peers in that it is the biggest provider of social housing in the city.

In 2007 it signed a deed with central government for the upgrade of its social housing stock, requiring the council to remain in social housing at approximately the same levels until 2037. The Crown committed $220m towards the $400m programme. That central government contribution has been fully drawn.

However, due to increasing housing pressures in the city, that model is not sustainable and needs to change, Eagle said. Councillors agreed on the draft plan’s recommendation to increase the council-owned housing stock of about 2,200 by 750 extra homes. The plan would see 200 new homes within three years, a further 300 by six years out and 2250 new homes in years seven-ten.

Median house price growth

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Source: REINZ

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34 Comments

by KH | 3rd Mar 17, 12:22pm 1488496948

National walking blindly into a perfect electoral storm. Their economic policy which folk a startng to realise is for the 'economy' but not for them. Disappointment growing. A growing population - why? How do we benefit ? Economic nationalism the new disrupter. And folk aren't falling for the propaganda blitz trying to surpress. House situation underling all the above.
I'm seeing this government as vulnerable with it's only asset a lack over a voteable opposition

by Kakapo | 3rd Mar 17, 12:27pm 1488497249

Was just talking to a friend trying to find a perfectly ordinary rental in Wellington somewhere. She is a nice law-abiding middle-class professional, and after Bill's idiot comments about the problem, I think she'd cheerfully kick him to death if she saw him in the street.

by dictator | 3rd Mar 17, 12:36pm 1488497797

In the last 3 months I've offered a room in my house as an emergency last resort twice. That's if people couldn't find a flat in Wellington. Bill English should just carry on making stupid comments so the National Party will end up thrown under the bus this election.

by Casual Observer | 3rd Mar 17, 12:33pm 1488497595

Not just Wellington and Auckland https://www.odt.co.nz/regions/central-otago/movement-housing-priority

by simon wallace | 3rd Mar 17, 1:13pm 1488500020

In the 2013 census there were 5,184 dwellings classified as empty. This includes holiday homes but still suggests some thousands of permanent vacant houses.
The Council could encourage owners to rent them out or sell them by imposing a special rate on genuine unoccupied homes. In the interim more income for Council but likely to prompt owners to make houses available. It is a waste of capital to build new properties, develop new greenfield sites etc when these houses remain empty. Auckland has a similar percentage of empty houses as do other regions. This is a simple zero cost fix for people seeking a house to rent as well as likely to add to houses for sale which will take some heat out of the market.

by Computer | 3rd Mar 17, 1:37pm 1488501473

I don't see anything in the draft plan that is going to make life any easier for FHBs (or renters).

- Nothing about streamlining consents to make it easier for developers to build.
- Nothing about reducing the cost to build.
- Nothing about opening up land for new builds or dis-incentivising land banking.

Am I missing something?

by Alex Tarrant | 3rd Mar 17, 1:48pm 1488502101

Hi Computer, no you're not - to be fair the plan is just dealing with the social housing owned by the council and expansion of that. I thought it was interesting though that Eagle also talked about the broader problems faced in the city and raised that Council should look at its consent process and land availability - perhaps two work streams we'll hear more about as the year goes on?

Will be writing a bit more on this - my column on Sunday here will take it a bit further,

Cheers

by Computer | 3rd Mar 17, 2:14pm 1488503686

Thanks - look forward to it.

by dictator | 3rd Mar 17, 3:02pm 1488506540

Eagle was promoting a spin article about 500 residential consents being issued. Some of the comments I saw provided an alternative narrative and it's good to see that he's listened. It's quite evident there's a problem in Wellington and putting the idea in motion is the first step.

by RickStrauss | 3rd Mar 17, 2:27pm 1488504421

The most honest thing National have ever said about housing is "We don't want the prices to come down."

Don't expect measures to be implemented that will have the effect of bringing prices down.

by Rob | 3rd Mar 17, 2:24pm 1488504298

Yet they are letting more immigrants in, to make the economy numbers look stronger, even though we aren't building enough houses (or infrastructure) to cope with that growth... As a result of this, people are forced to pay more, due to supply and demand. It is false economy IMO. It is going to come back to bite us badly.

by nymad | 3rd Mar 17, 2:46pm 1488505618

I just cannot understand how we could ever say that shortages of any goods are a sign of success in a market economy.
They in fact epitomise the exact opposite - a categorical failure due to the adverse manipulation of the market.

The only way it could ever be construed as a success is that it solidifies the dominance of the established gentry.

by Kakapo | 3rd Mar 17, 5:15pm 1488514509

Not unlike trying to buy a pair of shoes or a chicken in the Soviet Union. Queue for hours, the product is expensive and substandard, there won't be enough, and to get what you need you have to bribe somebody.

by unaha-closp | 3rd Mar 17, 3:14pm 1488507291

Wellington looks at a housing short fall and sees that they need to free up restrictions.

Meanwhile Aucklame wishes for regional fuel taxes to make it even more costly to live here.

by Property king | 3rd Mar 17, 3:44pm 1488509085

I’ve had enough of all of the negativity, as an owner of a 3 flat property in Mt Victoria, Wellington which provides accommodation to 9 people, I’m done. I’m turning it back into a house and selling it to a rich lawyer type. Then I’ll be free of all of the nastiness that is going on, the envy and the ‘biting the hand that feeds you’ types. There will be others like me who cash up, robbing young people of a chance to flat in the best area of town. This will happen more, the shortage will only get worse and only then will these people realise how foolish they were.

by dictator | 3rd Mar 17, 4:04pm 1488510276

Do it.

by Kakapo | 3rd Mar 17, 4:51pm 1488513077

What, you're crashing into a thread discussing an acknowledged and growing problem affecting a lot of people, so you can throw a ridiculous petty tantrum, and threaten to make the problem worse, apparently out of pure spite that your grotesque sense of entitlement to endless pandering and praise isn't being satisfied? Oh, poor persecuted you. If you want smoke blown up your arse, you're in the wrong place.

by RickStrauss | 3rd Mar 17, 3:55pm 1488509700

Eh, if all the property investors dump their properties many more Kiwis won't have to rent. That's the other side of the coin.

by unaha-closp | 3rd Mar 17, 4:20pm 1488511211

And all the people who are renting, but don't have the necessary to buy the dumped houses, what happens to them?

by the Joneses | 3rd Mar 17, 6:42pm 1488519722

The market would meet them of course.

by unaha-closp | 6th Mar 17, 11:01am 1488751278

It will indeed.

In such places as Brisbane, Melbourne and Sydney where there are lots of homes being built, the young people will find better places.

by Property king | 3rd Mar 17, 4:17pm 1488511024

What rubbish, there isn’t a single property in Mt Victoria that a first home buyer could buy. You have no idea whatsoever and miss the whole point. Renters (and there are loads who do not wish to buy at this stage of their lives) in particular the ones lining up, not everyone wants to buy. The rent squeeze will get worse.

by mja | 3rd Mar 17, 5:26pm 1488515181

I can't see how social housing within 2km of the CBD solves a housing crisis. Essentially the tenants, will for all intents and purposes be people who do not need to live within 2km of the CBD. Assuming we are talking about the retired and beneficiaries, do they really need to be housed in this location. The council should develop the land and on sell, or sell to a developer, so these housing units are available to those employed in the CBD. Sounds like a big negative cashflow white elephant, for a do-gooding council that will in the end force up the rates bill for those in the Wellington region.

by Kakapo | 3rd Mar 17, 5:50pm 1488516629

There are likely to be lots of working people as well. Somebody has to clean and maintain all those CBD commercial buildings. But I agree - it would make sense to spread the new housing around, cater for a variety of people. Wouldn't hurt to let the CBD diffuse into the greater region, either. Somewhere as seismically risky as Wellington, doesn't make sense to have the whole commercial district literally jammed up against the fault scarp or on reclaimed land. Some satellite hubs would spread the risk a little, and there's plenty of brownfield out in Porirua and the Hutt where the manufacturing and industry used to be.

by Too clever by half | 3rd Mar 17, 7:46pm 1488523615

Staring at a housing crisis if snap crackle pop,when the big one strikes. I like Wellywood to visit but not keen on living there especially canter levered hillside.

by Rob | 3rd Mar 17, 8:02pm 1488524559

Just need an earthquake and it may shake a few people out. But seriously, why don't students start to protest about the shortages in Wellington. It may get national to finally admit a crisis and protests in election year are never good. I am a national voter but hold my head in my hands when I see denial. Letting the nz population increase so much without infrastructure and housing in place is not a sign of success, it is a sign of failure.

by Too clever by half | 3rd Mar 17, 8:20pm 1488525644

Students won't protest they love 3to a bed so no electric blanket Lol

by IT GUY | 3rd Mar 17, 9:55pm 1488531309

Helon Clark was the last PM to deny major issues going into an election....

by Rob | 4th Mar 17, 12:04am 1488539065

Yes I think it is a sign of when a government gets too complacent and arrogant, and loses touch with what is going on.

by Kakapo | 4th Mar 17, 8:26am 1488569196

If these turkeys are deluding themselves that they're only pissing off and blighting the lives of beneficiaries so who cares, then they deserve any rude awakening. It's not just beneficiaries they're angering with their uselessness, laziness, dishonesty, and self-serving dismissive bullshit. It's students (including all those Nat voters of the future), students' families, all kinds of working people whose security and peace of mind they're playing with, all kinds of people with children whose schooling is being disrupted, the grandparents and great-grandparents of those children ...

by Fritz | 4th Mar 17, 8:23am 1488569028

My big question is: Why is Wellington growing, needing more housing?
I am being facetious and serious.
It seems that a govt that initially talked tough on reducing the bureaucracy has allowed it to expand ever so quietly. Some of the departments are monstrous and I can tell you dysfunctional.
It's not like there is a whole lot of business growth there

by Roger Witherspoon | 4th Mar 17, 8:34am 1488569663

Ask a barber if you need a haircut and he will tell you that it's overdue. Ask a civil servant how to solve a problem and he will say give me more people and resources and I will solve it for you.

by Alter Ego | 4th Mar 17, 9:26am 1488572802

The number of snivel serpents in Wellington who are all Beneficiaries.....includes all Politicians, who are the problem, not the resolution.

Nuff said.

by clone278 | 4th Mar 17, 9:09am 1488571783

One thing is clear and that is Bill English is *not* the person to solve this crisis. Not only is it questionable that he thinks its even a problem but he's already lying about National's endeavours to solve it, i.e. saying they're building a record number of houses when they're not.
The problem is that half the country are sitting back quite amazed at how easily they made a pile through housing equity that they're likely to vote him in at the next election.
Are there genuine leaders out there or can we expect empty platitudes up until the point this country truely implodes?