Govt cash urged for housing
The Government should be intervening in Christchurch's housing market by making low-interest loans available to developers so the cost of building homes is reduced.
That is the view of Christchurch City Council finance committee chairman Cr Raf Manji, who is worried that simply adding more sections to the market will not stimulate enough building activity to generate the 10,000-plus new homes that Christchurch needs.
''The main issue for developers is not so much the demand, as that is clearly there. The problem is affordability. Section costs are too high, building costs are too high, consent costs are too high and, with interest rates rising, funding costs are too high. Put that altogether and the risk-profile rises, so the smart approach for a developer is to wait until demand is at an elevated level and then build. By that time it's too late,'' Manji said.
''We need some kind of government intervention. The Government cannot afford to wait around and see a severe housing market squeeze, with inflated prices and major shortage of stock.''
Manji believed the Government should be accessing cheap funding from the Reserve Bank and using it to fund a large-scale house building programme in Christchurch.
It has done that before; in the 1930s the first Labour government borrowed £5 million from the Reserve Bank to fund the construction of 5000 State houses nationwide.
''A loan of $1 billion could finance around 3000 homes at probably 3 per cent cheaper rates, at least, than developers could access. Those houses could then be on-sold directly to the market or to housing trusts for rentals,'' Manji said.
''The market needs some very clear direction from the Government and now is the time to provide that.''
But developer Hamish Wheelans says if the council really wants to bring down the costs of new housing in Christchurch it should be cutting the development contributions it charged and reducing the cost of its own consenting processes.
''He [Manji] should be looking closer to his own nest rather than looking to the Government to solve the problem.
''Residential development in Christchurch city is not particularly easy. We do residential development in Christchurch and Selwyn and Christchurch is more difficult and more costly than Selwyn,'' Wheelans said.
Labour's housing spokesman, Phil Twyford, agrees with Manji.
He says simply ''tinkering with the planning rules'' and making more land available for residential development will not be enough to address the acute shortage of housing in Christchurch.
''The Government should have intervened much earlier,'' Twyford said.
''The housing shortage in post-quake Canterbury is so acute now and the need is so great that you have to deal with the supply shortage urgently. It's really only the Government that has the resources to do that.''
But Housing Minister Nick Smith said the Government already had an extensive programme in place to improve housing affordability and what Manji was proposing was unworkable.
''The proposition of somehow the Government getting a special loan of $1b from the Reserve Bank makes no sense. The Reserve Bank does not provide loans.
"If the Government is going to get into more risky propositions, then its interest rates will be higher as well,'' Smith said.