$1 billion housing pitch unveiled by Prime Minister John Key video

"We want more houses built so first home buyers can get a foot on the property ladder, so people who work hard can ...
David Unwin/Fairfax NZ.

"We want more houses built so first home buyers can get a foot on the property ladder, so people who work hard can reward themselves with a place they are proud to call home."

The Government is hoping construction on tens of thousands of new homes will be sped up with a new $1 billion infrastructure fund.

Prime Minister John Key said the fund would provide interest free loans to councils in high demand housing areas to fund the new roads and other infrastructure needed to support new housing developments.

The Government will borrow the $1 billion required, and councils will have to repay the money within 10 years from rates and developers contributions.

$1 billion has been set aside for councils to support new housing developments.

$1 billion has been set aside for councils to support new housing developments.

 Announcing the plan at the National Party's annual conference in Christchurch on Sunday, Key said the $1b fund would be available to local councils in high growth centres, currently Auckland, Christchurch, Queenstown, Tauranga


It would result in more houses being built faster in the areas where they are needed most, Key said.

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But Labour leader Andrew Little said the announcement did nothing for first home buyers.

"Auckland has a $19 billion bill for infrastructure hanging over it, and that's just for the next 10 years. So another line of credit is not the answer.

"Councils can already borrow this money for themselves so it's really just more smoke and mirrors by a Government that has no real answers."

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The Government has been under pressure on two fronts in the ongoing housing affordability crisis - soaring house prices in Auckland have pushed prices beyond the reach of most first home buyers, and have also triggered price rises in other centres.

The other flow-on effect of the affordability crisis has been a rise in homelessness.

Key conceded on Sunday that homelessness had risen under his watch.

The average house price in Auckland is now pushing $1 million.

Housing Minister Nick Smith revealed the Government was also looking at a Productivity Commission recommendation the Public Works Act be used to unlock more land for housing development.

That could include the Government compulsorily acquiring land from developers to stop them stockpiling it it to maximise their capital gains.

Smith acknowledged it would be a "big call" for a National government to override property rights.

But pragmatic solutions were needed for the housing supply problem.

The Government had also been talking to some councils, including Christchurch, about a differential rating system to penalise owners of undeveloped land, Smith confirmed.


How the infrastructure fund works: 

* The Government will invest up o $1 billion up front in areas where housing pressures are greatest so new roads and infrastructure like water can be bought forward, rather than wait on financing.

* The fund will directly finance or own the infrastructure till councils start receiving revenue form the new houses, in the form of rates.

* Money will be targeted at core infrastructure supporting additional new housing. Councils will have to submit specific proposals for funding, including the number of houses to be built and when they will be available.

* Applications will be taken from later this year.

* High growth areas are defined as those where population growth exceeds 10 per cent in the 10 years to 2023.

* The Government will take an initial $1 billion hit in borrowing, which will increase net debt until it is repaid.

 - Stuff


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