Christchurch's housing crisis may get worse before it gets better, Treasury officials have told the Government.
"We think the market is unlikely to deliver the scale of housing required to meet demand in Canterbury over the short term and there is a case for government intervention to help address the lack of affordable housing", a Treasury memo told Finance Minister Bill English and Associate Housing Minister Steven Joyce on March 11.
The officials advised the ministers that ". . . indicators suggest there will be a significant shortfall of housing for the next two years, and that this may worsen, before starting to improve in year three".
The advice related specially to the housing accord between the Government and Christchurch City Council, aimed at relieving Christchurch's housing shortages and inflated rents since the earthquakes.
Cabinet agreed to the accord on April 14, paving the way for a $75 million contingency fund including proposed housing developments at the Colombo St, Welles St and Awatea sites.
The previous month Treasury had advised "changes to land use rules through the Land Use Recovery Plan would be effective in the short term, including allowing two houses to be built on single sections without resource consent".
"We are not convinced that the Crown acting as a housing developer is a good use of Crown funding compared to other possible ways to relieve housing pressures, and want these to be further explored."
Crown-led villages would not address barriers to housing supply or provide housing on a scale that would improve housing supply and affordability. The plan also had a "high Crown cost per unit".
An alternative was "a contestable fund to generate more efficient ideas to stimulate housing supply".
Green Party housing spokeswoman Holly Walker said the Treasury had clearly told the Government the housing market in Christchurch was "failing" and the Government needed to step in to ensure more affordable housing was built.
Its support for new housing should be "scaled-up considerably", with new measures put in place to ensure rents were under control.
Labour housing spokesman Phil Twyford said it was telling that the Treasury, "hardly an advocate of intervention", had told the Government it needed to do more for housing supply and rentals in the city.
The "painfully slow pace of the rebuild" had shown that the Government had been wrong to believe that the city's chronic housing crisis would "heal itself".
Housing Minister Nick Smith was not in a position to respond to the memo last night, but earlier the Government had said the accord was part of its wider programme to help the city's housing recovery.
Other initiatives included the Land Use Recovery Plan, the Canterbury Earthquake Temporary Accommodation Service, the four temporary accommodation villages, the repair of 5000 Housing New Zealand houses and the building of 700 new Housing NZ homes.
The first of the accord homes were set to be completed and occupied by the end of this year.
- The Press
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