The government has released its response to the Productivity Commission report on housing affordability and unlike ideological burp that the commission produced it seems the government has a bit more faith in what the council is doing (which in itself is odd given the history these two entities have had). In fact many of the outcomes of the report suggest the need for much more involvement with councils which seems out of character with the government. Here is the governments response:
The Government agrees with the Productivity Commission that housing can be made more affordable, and has embarked on a wide-ranging programme to make that happen, Finance Minister Bill English says.
The Government today issued its response to the Productivity Commission’s report on housing affordability.
“High house prices matter because many New Zealanders spend a large portion of their incomes on housing and that has helped fuel household debt and contribute to damaging imbalances in the economy,” Mr English says.
“In particular, high housing debt diverts money from more productive investments, contributes to New Zealand’s significant overall level of indebtedness and exposes taxpayers to growing demands for State assistance with housing costs.
“Those factors make it vital that housing becomes more affordable. In addition, projections suggest that many more homes will be required in coming years than are being built.”
Mr English warns that there will be no quick fixes and instead, work is needed in a number of complex areas and across multiple government, local government and private sector agencies to tackle issues that are deeply embedded.
Having carefully considered the Productivity Commission’s recommendations, the Government is today responding with a comprehensive work programme with four key aims:
- Increasing land supply – this will include more greenfields and brownfields developments and allow further densification of cities, where appropriate.
- Reducing delays and costs of RMA processes associated with housing – this includes introducing a six-month time limit on council processing of medium-sized consents.
- Improving the timely provision of infrastructure to support new housing – this will include considering new ways to co-ordinate and manage infrastructure for subdivisions.
- Improving productivity in the construction sector – this includes an evaluation of the Productivity Partnership’s progress in achieving a 20 per cent increase in productivity by 2020.
“Decisions made by local councils not only affect their local communities, but have wider effects on the economy and the Government’s books.
“Many of the changes that will make a difference lie with councils and the Government expects them to share the commitment to improving housing affordability,” Mr English says.
Some of the programme is already well advanced, with work under way in the Building and Construction, Environment and Local Government portfolios.
Other recommendations from the Productivity Commission require more detailed exploration and the Government has asked for more work to be done on specific policy proposals including:
- Whether Building Consent Authorities can be consolidated in a regional or national hub.
- The possible establishment of a competitor agency for resource consents/plan changes.
In addition, the Ministry for Business, Innovation and Employment will undertake a market-level inquiry into the construction sector to identify barriers to improving housing affordability.
More work will also be commissioned on the specific problems of the Auckland and Christchurch housing markets.
Mr English says the current economic climate, as well as projections of housing need, make it more important than ever for the housing market to function efficiently.
“Our response to the commission’s report also reinforces our existing programme aimed at reducing New Zealand’s vulnerability to foreign lenders, and removing economic imbalances caused by a disproportionate investment in housing.
“If implemented fully, today’s announcements on housing affordability will reduce housing stress and enable the housing market to better meet the needs of middle and low income New Zealanders,” he says.
And in an attachment they provide more detailed answers to the points raised by the commission. In relation to Auckland, there seems to be quite a lot of comments that suggest the government is now supporting the councils housing plans and suggest that they maybe satisfied with the amount of intensification proposed. If this is followed through with it represents quite a shift for the government who previously had been singing a very similar song to the commission, especially around opening up greenfield land to be developed. I understand that the council did a lot of work to provide evidence around the costs of sprawl so perhaps that paid off and makes me wonder if we see something similar happen on transport priorities once the City Centre Future Access Study is released. Of course while this appears not to be as bad as we feared, we will still have to wait to see some of the finer details.
One big area that both the productivity commission and the government failed address is the impact that transport has on the debate. Its all very well developing on the edge of town but without looking at the impact that has on a home owners transport costs as while it may be cheaper to buy a house, it takes a lot longer (and therefore costs more) to get around. Interesting that a similar exercise on housing affordability is going on in Melbourne however they seem much more aware of the transport issues.
Processing...
Most important way to improve housing affordability is to get rid of minimum parking requirements and density controls in the Unitary Plan.
the most important way to improve housing affordability is a broad range of sound investment opportunities that can offer alternatives to housing as the first choice for investors.
a capital gains tax wouldn’t hurt either
Another factor that I’ve seen raised more in Australia than here is that our expectations have changed a lot in the last few decades- massive increase in floor areas, double garage, more appliances considered standard.
That’s a very important point. The average home built today is 200 square metres. In the early 70s, it was more like 100 square metres, up to 150 square metres by the early 90s. Bigger homes cost more to build. Plus, we’ve got more architecturally designed homes – which cost more – and more complicated shapes (not just basic rectangles), which also cost more.
I wouldn’t have thought appliances would be as big an issue, but certainly a big part of the fact that homes cost more these days is that we expect much larger homes.
2nd highest floor areas in the OECD (for new builds I guess), said Rod Oram on Morning Report this morning.
http://podcast.radionz.co.nz/ntn/ntn-20121030-1106-business_with_rod_oram-048.mp3
Don’t get ahead of yourself the govt agrees mostly in principle not reality. The people will decide how they want their city to look, so go right ahead and ask little old Mrs Milford if she wants an big apartment block next to her unit. You see where this is going. Not upwards, outwards.
I think that the core issue in the Milford (and similar Highbury) case is simply on of scale in relation to the surrounds, a problem for any ground breaking development project. A smaller tower would have provoked less opposition and paved the way for wider development in the area.
I disagree, the blue rinsers of Milford are fighting against any and all change, anything that makes the area different from the way they have it already. They’d be fighting the townhouses alongside the mall if they could too, but thankfully those don’t need specially planning approval and can be built anyway.
Can’t see how a big apartment block is any worse than a big shopping mall.
Also due to proliferation of lifestyle blocks in the urban growth path there are lots of NIMBY’s in the way of sprawl, and I bet the are wealthy and connected too. This fragmentation of fringe land cause lots of issues for sprawl.
Anyway most of todays announcement is bluster, only actual announcement in the 6 month time limit for ‘medium’ sized consents. Going to put a lot of pressure on councils to bend the rules…
Apartment blocks are considerably preferable to shopping malls as at least they have windows and balconies so are broken into human scale unlike the vast blank walls and screaming signage of big retail. Especially if the grain of the building is further enhanced by adding retail or other amenity at the ground level so the structure is alive there too. Next, don’t lose it in a sea of asphalt, so either bury the parking within or behind, or better still, at the right locations, don’t provide any at all. This will hugely improve the appeal of the building and, of course, lower the cost of the dwellings within…. examples all over the world, and even a few old one in Auckland. And of course scale the building appropriately for its neighbourhood.
They are plenty of Aucklanders who would prefer a narrow street of say 4,5,6 story buildings to what we have a lot of now; single story houses only reachable by 4, 6, 8 lane highways.
+1 there Patrick
I agree, the Milford shopping centre is disgusting, apartments would drastically improve it.
I wonder how much the Government pays in rates to the Auckland Council for all the state housing they own? Also I heard the other day that Council won’t be releasing more greenfields beyond the MUL for another 10 years – which is a good thing I think as it encourages less outward sprawl.
This certainly seems to be a step in the right direction from the government… actually looking back, the full text of their response to the Auckland Plan is fairly positive too (linked as a PDF at the bottom of http://www.beehive.govt.nz/release/government-responds-auckland-plan-0). Not sure if it was covered on this blog? The transport points may be of interest to you guys, but I’ve just picked out some points about housing development below.
The govt said that it “support[ed] key elements of the Auckland Plan’s development strategy” which included the following:
“inclusion of a range for growth estimates within and outside the 2010 Metropolitan Urban Limit (MUL), with a target of 60:40 inside to outside the MUL, and an aspiration of 70:30. The Government sees the target of 60:40 as a more realistic basis to engage with the Council on Auckland’s land use, critical infrastructure and housing issues”
“the focus of the first decade being to set the right conditions for development of a quality compact city, including delivering high quality exemplars”
What I find concerning is the moved for regionally significant consents to be deferred to the Environment Court (see Amy Adams’ press release). Seems to be a further erosion of local democracy by this Government….