Developers choke supply of new sections

The Government must provide incentives for developers if it is to have any hope of cutting house prices, says Christchurch Mayor Bob Parker.

On Monday, Finance Minister Bill English announced several measures to ease the growing cost of new houses.

The plans include freeing up more land for building, placing a six-month time limit on councils when processing medium-sized consents and improving the supply of infrastructure to support new subdivisions.

Parker said yesterday that developers, rather than councils, were often responsible for a lack of sections on the market, and the Government's plans would not go far enough to solve the problem.

"It sounds really great in theory, and I wish them well, but we're unlikely to see much change unless the Government is determined to get more engaged with developers," he said.

The city council was operating with "very, very tight time frames" for its consents and had worked hard to ensure there were plenty of sections available for development before the earthquakes.

Parker said developers often sat on land without developing it fully because of the risk that sections would not sell.

"The choke on section supply is really sitting in the developers' corner," he said. "The market will only deliver the amount of land that it knows it can sell."

He said the Government should consider providing interest-free loans to property developers or buy completed sections if it wanted to see more sections on the market.

Parker said ratepayers should not be forced to subsidise infrastructure for subdivisions unless the sections would go on to the market as soon as possible.

"It's all very well to talk about affordability, but that affordability shouldn't be at the cost of all the other homeowners in the city," he said.

Selwyn Mayor Kelvin Coe said there were plenty of subdivisions and sections available for development in the district.

"There's no real limit on supply is the way I see it," he said.

Waimakariri Mayor David Ayers said his council had set up a working party to address the issue of housing affordability.

He said the Government's proposals were unlikely to make a big difference in the short term, but changes to the Resource Management Act process could have an impact.

A spokeswoman for English said last night that the Government would not "be subsidising loans or purchasing completed sections other than as part of its social housing programme".

"Taxpayers already spend around $2 billion each year on housing subsidies," he said. "This is forecast to increase by $300 million per year in the next four years. Subsidies do not solve the problem; they simply shift the cost. The Government wants to make housing more affordable by increasing the availability of land and reducing the delays, costs and uncertainties of the consenting process. There are no quick fixes."

The Press