Free Market No Solution to Auckland’s Housing Costs

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Who defines the problem, gets to define the solution, and so it has come to pass that Special Housing Areas are the ‘solution’ to the ‘Housing Crisis’ as defined by Government and handed to Auckland Council through the ‘Housing Accord’ to enact.
The stated purpose of Special Housing Areas was to “free up land supply”, and “address Auckland’s housing affordability”. With the creation of 63 Special Housing Areas (SHAs) spread far and wide, the Government and Council aim to enable the speedy consenting of 33,500 new homes.
The factors affecting high house prices are diverse. But the Government picked land use rules as the issue requiring urgent action. Not prepared to address other causes like speculative pressures pushing prices up, with a Capital Gains Tax; or the cost of house construction, by dealing with New Zealand’s building duopoly, the Government, and by extension, the Auckland Council, have departed from due planning processes, ignored infrastructure constraints and removed parties’ rights to a say in matters affecting them. Special Housing Areas are a crude free-market response relying on trickle-down economics and minimal intervention to address Auckland’s complex population and housing situation. The creation of fast-tracked SHAs compounds Auckland’s planning and infrastructure problem, rather than solving it.
To address housing affordability, SHAs improve theoretical availability by flooding the market with new urban zoned land. One wonders about the building industry’s capacity to build that many dwellings so quickly. But land supply addresses just part of the issue. Other costs include economic and environmental, visible and invisible costs. There’s site development, and building costs; the public costs of infrastructure – if provided; and social and environmental costs if not –such as air and water quality effects, loss of amenity and open space, and the long term costs of commuting and congestion.
Public concerns over SHAs include lack of consultation, costs carried by ratepayers, adverse environmental effects, traffic, and infrastructure requirements, and whether there’ll be enough ‘affordable housing’ to justify the projects. From others are concerns about what ‘affordable housing’ will mean for existing communities and current social and land values.
The proposed development areas are not all lacking merit. But many of the new SHA are in places not previously contemplated for high density development. Local Boards are sometimes opposed to the new zones for want of infrastructure. The Government proposes reducing some development contributions meaning either a funding deficit or a service shortfall.
Because consents are to be approved within six months, SHAs short-cut the planning process applied to conventional subdivision, and privilege some developments over others. Other regions of New Zealand are also disadvantaged as special provisions support yet more growth in Auckland at the expense of investment in the provinces.
‘Affordability’ is defined as a house worth between $325,000 and $475,000, probably unaffordable for many first home buyers anyway– especially in the face of the Reserve Bank’s Loan-to-Value lending limits for those with less than 20% deposit for a house.
The Unitary Plan is supposed to provide sufficient capacity for the generations to come. But by expediting ad hoc development in selected areas, the Council and the Government are allowing years of the region’s predicted growth to be guaranteed consent within six months of application. The SHAs clearly pick winners. The losers are existing communities, good urban design, strategic and planned provision of infrastructure, and our environment.

10 COMMENTS

  1. The SHA’s are the result of the threat from Nick Smith to Auckland Council to not ratify the draft unitary plan.

    It achieves the neo-lib aim of freeing up landbanked land – without the necessary oversight and community input.

    Groups of landowners can get together and apply for SHA status, and the continual release of “tranches” just negates the stated intention for a well-designed compact living city.

    I would have preferred Auckland Council to call their bluff and been vocal in their fight against this interference by National. We are left with the dribs and drabs of intent, and the continuance of the delivery of sprawl by developers.

  2. On the subject of rising house prices. What really p…s me off is when smug real estate institute people get interviewed about the problem of rising house prices. One subject that is never mentioned is the rampant greed of the Real Estate industry which has a vested interest in keeping house prices continually rising so their members make more money. They are not part of the solution, they are part of the problem.

    • Totally agree. Of course real estate agents think it’s a good thing when property prices increase; their commission on sale goes up along with it.

      For the rest of us though, well, all it does is widen the gap between the haves and the have-nots. I don’t much like the idea of waiting for an inheritance to buy my first home but it looks more and more like that will be the case. After all… these “affordable homes” of between 325-475k – where in Auckland can you find one of those? They simply don’t exist.

  3. This is all by govt design.
    They need lots of land and properties for the Chinese to purchase – especially once the TPPA is singed off – soon.

    Opinion and belief.

  4. Nicks Smiths scheme is so rushed it can only end in tears. And Len Browns approval only further undermines his credibility.

    In Northcote for example, the area earmarked is all state housing including a number of pensioner flats albeit there are a number of privately owned ex state houses in that area.

    Smiths solution, not surprisingly, is to literally turn state housing tenants lives upside down by ejecting them whilst building mass terrace housing. I can picture him looking at a map on a white board and wiping it clean, just like that, after all they don’t vote or don’t vote National.

    There is no word on how the current infrastructure such as roading, or public transport will cope with the sizeable increase in residents or even what the current schools are going to do to deal with this mess when the bulldozers move in and the residents and their students are turfed out. It will be like the recent Glen Innes evictions on steroids.

    I am very sure though that some developers somewhere who have had an donations funded audience with the minister will do bloody well out of this! Pity the poor residents though.

    And none of this will have addressed the fundamental reasons you have identified.

  5. all these SHA will also mean upgrades to roads, sewerage,power, and other infrastructure.
    If more rapid,regular transport (think trains) was made available to areas south of Auckland ( Mercer, Pokeno etc) and people were encouraged to move there, perhaps we’d have a partial solution…builing up communities away from the main centres.. but public transport is the key.

    • Public transport is the key, be it for developments inside the city or outside. Sprawl development seems cheap, but the costs come later – most visibly clogged motorways and feeder roads and the consequent endless road-building and environmental problems it brings. (Even the Herald is publishing articles to this effect).

      For example, if the SHAs in the far northwest go ahead, the Northwestern Motorway will be just as clogged even despite the multi hundred-million dollar upgrade happening now. This is not progress by anyone’s measure.

      Much as the NIMBY brigade hates it, intensification around transport nodes (moderate to high as appropriate) is needed now. Aucklanders have said they will pay for it when provided, it needs to happen. Time for Len to show some steel.

  6. The biggest driver of Auckland property prices in the last 3-5 years is Asian buying and the lack of housing stock.

    When you have Real Estate Agents actively promoting the sale of NZ real estate in Chinese Newspapers and the capital gains that can be made tax free, it does not take alot of buyers to skew the market upwards especially when there are NZ buyers also looking to purchase houses.

    Unfortunately we have a NACT Government who does not really realise that it is creating an inflated market for its own citizens. However the horse has actually bolted.

  7. We need to stop voting for political parties that view housing as a commodity, rather than a human right.
    Raymond Huo of Labour owns 7 properties.
    Also, other Labour MPs with four properties each include Shane Jones, Iain Lees-Galloway, Sue Moroney, and finance spokesman David Parker. 19 Labour MPs own more than one.

    We should expect National to create an economy that encourages housing poverty – that’s what National stand for. If we think Labour can sort this problem out then we are not thinking straight.
    Of course we shouldn’t vote on the individual behaviour of MPs, and instead our votes should be based on policy – but we need to consider why Labour’s current policies exist and why they will do little to address our current housing issue.
    And we all know what happens when the left ignores the needs of those they claim to represent – we get race-based policies bordering on fascism. Winston Peters and his blame the Asians routine is gathering pace again, not so much because of the problem, but because of Labour’s non-solution.
    I don’t give a shit if my landlord is living in Beijing or Blenheim, either way I’m overpaying for a shitty product. If Labour, National or NZ First shape our housing policies, then we still get over-priced housing and under-stocked social housing.
    The solution to housing is to make it unprofitable by taxing multiple houses AND investing heavily into social housing. Doing only one of these is not an option if we believe housing is a right.
    If owning multiple houses is a form of freedom then we need to think about what freedoms we value. What kind of freedom does our economy reflect? We can look back at history and say that capitalism replaced feudalism, but when are we going to admit that capitalism has re-created another form of feudalism?

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