House market still too hot to hold

22:26, May 16 2013

Housing experts have welcomed drastic moves to streamline the consent process where house prices are unaffordable, but warn they are unlikely to turn the market.

Parliament went into urgency yesterday as the Government unveiled the Housing Accords and Special Housing Areas Bill as part of the Budget, a three-year measure to force land on to the market.

The bill is designed to counter rising house prices, especially in Auckland, and the Government will have the right to require councils to reach accords for specially designated areas, where consenting must be streamlined.

Where agreement cannot be reached, the Government has the right to assume the power to issue consents.

The legislation is aimed squarely at Auckland, where last week an agreement was reached to streamline consenting to allow 39,000 houses in three years.

But the conditions could be imposed wherever housing is deemed "seriously unaffordable", that is, with a median house price five times the median income.


This could include Tauranga, Wellington, Christchurch, Nelson and Queenstown.

"I'm not ruling anything in, or anything out," Housing Minister Nick Smith said yesterday.

The measures were a "short to medium-term intervention" urgently required while wider reform, such as overhaul of the Resource Management Act, took effect, he said.

Property investor and writer Olly Newland said the announcement was "side-splitting" for anyone who had experienced the delays in the consenting process, a key challenge in the development process.

"It will certainly put council planners on notice that they better get their acts together, otherwise they'll wake up and find some bureaucrat in Wellington saying it's going to be done," he said.

"But I don't think in the end it will stop [the housing market] in its tracks. Price rises will continue, subject to there being some shocks that we don't know about."

BNZ head of research Stephen Toplis said the streamlining moves should alleviate the bottlenecks. However, it was an open question whether that was enough to boost housing to the degree required to stem house price rises.

The Auckland accord aimed for 17,000 houses in the third year, more than were built in all of New Zealand last year, and would come amid the Christchurch rebuild, Mr Toplis said. This would put pressure on the economy.

"When you've got a shortfall in housing of the order that we've got, there's no magic wand you can wave and it all goes tomorrow."

Labour leader David Shearer said there was nothing in the accord which ensured affordable homes would be built.

"There might be some land freed up but it's likely to go to more expensive homes and it won't help out first-time buyers."

Nevertheless, Phil Twyford, Labour's housing spokesman, immediately indicated that the party would support the bill through the first reading, despite reservations about the risk of stripping powers away from local councils.

The bill will now enter an urgent six-week select committee process.

Fairfax Media