National eyes land to ease home crisis

Plans to urge councils to free up land for development should ease the housing affordability crisis, the Government says.

A survey published yesterday shows New Zealand is the second most expensive of six selected "housing bubble" countries in which to buy a house, just behind Australia with median prices 5.7 times the average national income.

Housing Minister Phil Heatley said yesterday that the Government planned initiatives to make home ownership more affordable, including:

Working with councils to remove planning restrictions on Maori-owned land for housing developments.

Ensuring councils planned for a "forward supply" of suitable land zoned for new housing.

Boosting the Housing Innovation Fund which provides money for community housing providers to $20 million.

Introducing a "Gateway" housing project, which would provide first homeowners the use of a ready-to-build leased section. They would later have the first option to buy the land at its original capital value, plus 3 per cent for every year they lived on it.

Mr Heatley announced the plans yesterday after the publication of the Demographia International Housing Affordability Survey, which measures the cost of buying a home in six countries at 265 locations.

It placed New Zealand second worst, up one from its least affordable placing last year. Australia has the most unaffordable housing, at 6.3 times annual earnings, followed by New Zealand (5.7), Ireland (5.4), Britain (5.3), Canada (3.5) and the United States (3.2). Countries are considered to be in a "bubble" market when the price of housing exceeds three times the average annual household income.

Mr Heatley said that, though property values always went through cycles, "there are fundamental problems with how the market is operating", and they were largely linked to land supply.

A spokesman for Mr Heatley said changes to free up land could include establishing population/land ratios, which specified how much land councils had to make available for development depending on a city's size.

"There are places from Nelson to certainly parts of Auckland where it's just all locked up and not meeting the growth of the population."

Councils could also be told that Maori-owned land usually zoned rural should contain more housing. "We should be able to find a middle ground where we can put a reasonable number of houses ..."

But Wellington city councillor Andy Foster said freeing up land would not make housing cheaper. Development sites, which in Wellington included land between Churton Park and Tawa, required costly infrastructure and were less attractive because of commuting costs.

Mr Foster said he was not aware of plans for housing on land owned by Wellington Tenths Trust, which administers Maori reserve land.

- © Fairfax NZ News