Government housing blueprint 'weak'

20:04, Oct 29 2012

The Government has "dropped the ball" with a set of weak proposals when urgent action is needed to make houses more affordable, according to property commentator Hugh Pavletich.

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The Government's planned measures in response to the Productivity Commission's report on housing affordability include four main aims:

- Increasing land supply with new developments inside cities and with subdivisions on the outskirts.

- Reducing the time and cost of the Resource Management Act process, including a six-month limit on the processing of medium- sized consents.

- Improved timing for infrastructure support for new housing projects, including co-ordinating subdivision work.


- Improving productivity in the construction sector.

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A retired developer, Pavletich is co-author of the Demographia internal housing affordability survey.

He said the proposals were a step in the right direction but were weak and sorely lacking in any concrete detail.

The Government had dropped the ball when urgent action was needed, he said.

"What the Government failed to do was set up a competent task group to come up with workable and pragmatic solutions. That's what we should be discussing now, not just good intentions."

Thrashing out the details would take more time, "and that is something we cannot afford".

The housing market was inflating and delays and indecisiveness in tackling affordability would only exacerbate the issue.

"In normal housing markets, people should not have any more than 21/2 times their annual household income in mortgage debt; currently it's about six or seven and if they allow the market to inflate further it could get to eight or nine."

Registered Master Builders Federation chief executive Warwick Quinn said the measures looked sensible but the proof would be in the pudding.

If land became more readily available through faster consent processing then that would create cost savings and help bring down house prices, he said.

"Land would theoretically be cheaper. Supply should improve faster to meet demand, which would put a cap on prices. Land would be the biggest driver of property prices altogether because of how much it costs." The federation was keen to see a competitor agency for processed resource consents to help ensure they were processed as efficiently as possible. It also supported consolidating the processing of building consents, for efficiency.

But there did not appear to be any easy wins for improving productivity. "Anything that improves [land] capacity is good, but whether it makes a big difference [to affordability] or not, I think the jury will be out for a while."

Auckland Mayor Len Brown said his council was committed to working with the Government.

"Two areas that require caution are the cost of infrastructure, which can only be funded three ways: through development contributions, rates or taxes. In the end, someone has to pay, the question is who? And with regards to proposed changes to the consent process, the rights of the community must continue to be protected." 



New Zealand's main centres are ranked as a "severely unaffordable" housing markets, along with Australia and Britain.

In the past 12 years, house prices have risen 118 per cent, compared with general inflation of just 38 per cent.

During the housing boom last decade, prices more than doubled from a national median price of $170,000 in 2000, to $352,000 in late 2007 and are now $371,000.

There has been a recent dearth of homes being built - 13,500 houses and flats in 2011, half the levels seen in 2007.

Economists estimate New Zealand needs 20,000 new homes a year to meet demand.

During the peak of the boom in 2003-2005 about 30,000 homes a year were consented.

Sources: Demographia, Reinz and Statistics NZ

The Dominion Post