Increasing land supply isn't enough to solve Auckland's housing crisis

Increasing land supply isn't enough to significantly decrease Auckland's property prices.
Chris Skelton

Increasing land supply isn't enough to significantly decrease Auckland's property prices.

Almost 400,00 homes would have to be built in Auckland or land supply increased by 184 per cent in order to solve the city's housing crisis - but that still might not be enough.

An Auckland Council report - Land Supply Constraints and Housing Prices in New Zealand - found relying on land supply alone would not be sufficient and it was unlikely such a huge number of homes would be built.

Mario Fernandez from the council's research and evaluation unit spent four months compiling the report and said an increase in wages, building taller buildings and restrictions on immigration were other factors to consider. 

"The results show that given that there is a long queue of people who are wanting to reside or buy a house in Auckland, either in the form of migration, investors or speculators, by the time you increase housing supply that's going to be taken up immediately," he said.

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"You would have to build roughly 400,000 new dwellings in the next five years. I know that number sounds crazy."

While he's optimistic, he said it was unlikely. 

Regan Solomon, the council's team manager of land use, infrastructure, research and evaluation, agrees.

"There is so many parts to that jigsaw puzzle that for them to all come together at same time, at the same place, is a huge challenge.

"It could all come together fantastically but if interest rates decide to go upwards or downwards that in itself might make everything else out of alignment again." 

While an 184 per cent increase in land supply would contribute to halving property prices, a 10 per cent decrease in house prices would mean 78,000 additional dwellings would have to pop up, according to the Auckland Council report.

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"Increasing land supply is one response of many that has to happen but in itself it may not have significant price reduction," Solomon said.

 - Stuff

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