Govt to target city fringe for cheap housing

ROB STOCK
Last updated 08:38 07/10/2012

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The government is close to announcing policies that would free up city-fringe and more central 'brownfields' sites for residential development in an effort to cut the cost of housing.

While the Kiwi dream remains a picturesque weatherboard house with a garden for the kids, prices are so high in many cities, most notably Auckland, that that dream comes with a very large mortgage or is simply beyond the reach of many.

But later this month, a well-placed source said, the Government will unveil its response to the Productivity Commission's recommendation that land be freed for development of housing, most notably in Auckland and Christchurch in order to create a boom in affordable houses.

Finance Minister Bill English has spoken of his dissatisfaction with high house prices which are likely to be a factor in driving young people to Australia and are distorting the economy as mortgage interest soaks up much otherwise disposable income.

He has also expressed concern about the inequity caused by a lack of housing development for those on lower incomes.

No details are yet available, but the plans are believed to include zoning policy changes that will free more land reversing a multi-decade decline in building activity, which has worsened significantly since the global financial crisis hit in late 2007 and early 2008 and development finance dried up as finance companies collapsed and banks tightened their lending criteria.

In the year to the end of August 2007, there were 23,472 new dwellings consented, excluding apartments. In the year to the end of August 2012, there were just 14,134.

Christchurch's Hugh Pavelich said New Zealand's politicians, both in central and local government, had helped engineer a multi- decade decline in housebuilding which had created what could be called 'fiscal child abuse' with young housebuyers having to pay ludicrous prices.

Pavelich said the effect of the housebuilding decline was the enrichment of those with houses and residential investors at the expense of the young.

"It illustrates too just how incompetent the industry and professional groups have been these past few decades - more interested in political boot licking, rather than being socially responsible. Crony capitalism has been the game . . . with massive costs in human terms and the wider economy."

Starter homes were being built in the US for around $600 per square metre, while the starting price in New Zealand is $2500, he said.

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