Government plans to make housing affordable

08:05, Oct 29 2012

The Government's plans to reduce housing stress have been called weak and sorely lacking.

The measures announced this afternoon include increasing land supply for new housing, both within and outside the city limits; a six month time limit on council processing of medium sized consents as part of a broader suite of measures to reduce delays the costs of Resource Management Act processes associated with housing and improving the provision of infrastructure to support new housing.

Finance Minister Bill English said the Government would also look at how to improve productivity in the construction sector - including an evaluation of the progress toward a 20 per cent increase in productivity by 2020.
in response to the Productivity Commission's report on housing affordability, include

Today's announcement follows the Productivity Commission inquiry into housing affordability, which made a raft of recommendations.

Hugh Pavletich, co-author of the Demographia internal housing affordability survey, 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, he said.

"In normal housing markets, people should not have any more than two and a half 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."

Warwick Quinn, chief executive of the Registered Master Builders Federation, 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 - something the Government has said needs further exploration - to help ensure they were processed as efficiently as possible.

Quinn said it also supported the suggestion to consolidate the processing of building consents as that would also create efficiencies.

The construction sector was one of the least productive sectors due to high re-work rates and little change in the way builders worked, he said.

But there did not appear to be any easy and big 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 on the measures.

"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."


Bill English said the Government agreed with the commission that housing could be made more affordable and had launched a "comprehensive work programme".

But he said other recommendations from the productivity commission required more detailed investigation.

The Government had asked for more work to be done on specific proposals including consolidating building consent authorities in a regional or national hub, and the possible establishment of a competitor agency for resource consents and plan changes.

Meanwhile, the Ministry for Business, Innovation and Employment would undertake an inquiry into the construction sector to identify barriers to improving housing affordability.


More work would also be commissioned on the specific problems facing the Auckland and Christchurch housing markets.

The Government's four main aims:

* Increase land supply with new developments inside cities and with subdivisions on the outskirts.

* Reduce 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 coordinating subdivision work.

* Improving productivity in the construction sector.

Still looking at:

* Consolidating consent authorities regionally or nationally.

* Establishing a competitor agency for resource consent/plan changes.