The Government are announcing their budget today and one of the surprises in it slipped out yesterday. The government plan to open up to 430 hectares of of publicly owned land in Auckland to be developed.

3 News can reveal a major part of tomorrow’s Budget will be a plan to develop housing on parcels of Crown land in Auckland.

A work tender mistakenly placed on a government website today details how the programme aims to deliver housing developments “at pace”.

Finance Minister Bill English and Prime Minister John Key are keeping quiet on tomorrow’s Budget.

The problem is one of the big secrets is out, bizarrely, with a tender advertised on the Ministry of Business, Innovation and Employment website for development of housing on Crown land, including residential land parcels and government land parcels.

It’s looking to: “Identify suitably qualified parties or consortia with the capability and capacity to deliver housing developments at pace in Auckland.”

After 3 News saw the advertisement, the Government gave over a document (see below) admitting more details. The Government will open up 430 hectares of public land in Auckland for affordable housing – that’s more than 50 rugby fields of land.

Housing Minister Nick Smith said he expected “thousands” of houses would be built on the land by private companies.

Dr Smith said money from the Budget would be provided for the Government to buy some of the land off universities.

Dr Smith said the private companies that built houses would not have to pay for the houses upfront, instead paying the Government once the houses were sold.

That is likely to be controversial, as it will be seen as the Government giving a leg up to private companies.

So the Government wants to start building houses and put them on public land, like that owned by the University of Auckland on its Tamaki campus.

“I’m having a pretty close and hard look at where there are land holdings that will help deal with the challenges over housing that we have in Auckland,” says Dr Smith.

Dr Smith is talking about land owned by universities, schools, tertiary institutions, health boards, defence, Housing New Zealand, the New Zealand Transport Agency and Department of Conservation reserves.

“You’d be quite astounded by some areas of reserves, and when you say the word reserve you assume that’s a park or land that is effectively vacant or being under-utilised,” says Dr Smith.

Making better use of the land we already have within the urban area is of course a far better strategy than carte blanche opening up of land of land on the edge of town. We’ve even talked before of places where we could do that, such as the Grafton Gully Multiway Boulevard idea which would improve transport and open up development opportunities on a decent chunk of government owned land.

Grafton Gully Blvd - Development

We don’t have full details yet however overall I think the idea from the government is the right one – although I’m not sure about the part where developers only have to pay once a house is built and sold.

To give an idea of just how much land the government are talking about, 430 hectares is about the same size as the land within Auckland’s Motorway collar.

Auckland CBD area

Of course that area will be spread throughout the city across many different sites. That leaves the question of just where the government has land. The answer is in a surprisingly large number of places. The map below is a couple of years old but shows all land owned by Housing NZ or listed as owned directly by the Crown. That still excludes a lot of land such as that owned by the NZTA but it does give a sense of of just how much there is out there.

Govt Land in Auckland

As you can see there’s a lot of government land around, especially Housing NZ land in clusters around Tamaki, Otara, Mangere and Mt Roskill. There are also some large individual chunks although they are unlikely to be involved as some include the likes of Paremoremo and Wiri Prisons, scenic reserves and schools. What all this means is the 430 Hectares are likely to come from freeing lots and lots of smaller sections for higher density developments. That’s not a bad thing at all although the reaction from locals to changes in Tamaki shows it might not be a straightforward change. Below is a closer look at the Tamaki area showing just how much government land there is there.

Govt Land in Auckland - Tamaki

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    1. And I believe (to be verified) the land adjoining the Greenlane railway station currently up for short term lease is to be rezoned and disposed by Railways. This land adjoins the proposed upzoned residential block of properties .

      1. I live next door to Mike F. We’ve joked about offers from developers with deep pockets who want to build a residential / office / retail complex around the Greenlane rail station and interchange, a stones throw from the Ellerslie Event Centre. If I had the money, I’d be that developer. 😉

  1. Based on this I would say Crown holds the controlling hand when it comes to the land price right now. Just think what they could do to set more realistic price points…

  2. Great find with those maps Matt, and the comparison to the city centre… puts it into perspective. On the other hand, it seems like there might not be that many new, large-scale sites which hadn’t been signalled previously. Tamaki is obviously a big chunk, and that’s an existing long-term programme. Lots of the others will be Housing NZ, some of which are already Special Housing Areas. But I’m sure there’ll be a few new sites which make good housing opportunities.

    1. Many of the large sites in the Tamaki map area are schools or similar institutions, which are either undergoing redevelopment already, or in use as schools, and as such very likely to need to grow themselves to accommodate thousands more locals in their zones under the existing plans, let alone these new ones.

      So while the government might want to think theres a lot of surplus land there in Tamaki, when you remove the double counting and the like its not all that much.
      Clearly a clean it all off and start again approach might almost be warranted here than try a simple “infill” with townhouses model.

      As for “density”, adjacent Stonefields is a 110Ha site, that is supposed to house 7,500 people once built (spread over 2,500 residences), not all residences there are “houses” by any stretch, most are not.

      So, if we went for Stonefields type everywhere, with 430Ha of land you could imagine being able to build 10,000 “residences” throught out Auckland.

      That is not even the growth needed for 1 years worth of demand now, clearly, we need to intensify this land a lot more than that [we need to aim to be able to build 10 years worth of demand on this land to even catch up, let alone get ahead]. After all we’ve going to have 1 million more people here by 2045.

      But in doing so, good amenity, schools, transport links and such has to stay/come with it too.
      No need to build low cost, dense, “slums in the sky” any more than we need to build slums on the ground, but thats what could happen unless properly managed and delivered.

      And just looking it as a “housing problem” is exactly the wrong approach, but unfortunately, Nick Smith has a track record of doing this and dumbing down complex issues and tackling them with a single simple solution.

      ACC not apparently “paying its way”? No problem I’ll massively hike the levies and leave there for 8 years while cutting down on what you can get covered for to balance the books.
      Building experts all say treated timber is not needed in NZ anymore as we have no borer pests and using it slows down the building of houses? No problem I’ll let untreated timber be used for buildings instead
      Councils not allowing developers to build what they want where they want and needing public notification of such consents? No problem, I’ve got SHA legislation to fix that.
      Councils not allowing developers to run rough shod over the environmental clauses in the RMA? No problem I’ll rip out the relevant clauses from the RMA.

  3. Nick Smith is provincial philistine and a cretin. Based on his past performances what we are most likely going to see is a corrupt and massive alienation of public green space at fire sale prices to National’s business cronys for more McMansions, AKA using Auckland’s housing problems for a nice bit of disaster capitalism.

      1. The only real control is that the government can’t sell off conservation land or council-owned land*, and most of our high-quality open space is one or both of those.

        (* without further legislation that is, and this being the government that made Gerry Brownlee dictator of Canterbury we can’t rule out the government repealing the Reserves Act or something).

        1. They already gutted democracy in Auckland via the amalgamation. I’ve analysed the last two local body election results. That majority of votes cast elected no one at all to the Council.

          We should have STV as the voting system. Using First Past the Post produced the usual terrible outcome in terms of converting votes into actual representation.

          1. You are so right on STV. I voted for Mike Lee, not because I thought he was the best candidate, but I just didn’t want the crazy man whose name I forget to get in. For some reason we have STV for the DHB though.

        2. If the CitRats get a majority next year and we get a right leaning Mayor, they won’;t have to change the law to be able sell off council land – the Auckland Council will do it for them.

  4. If the developers done thave the overhead of paying for the land, does taht mean they will earn superprofits, or will there be some mechanism to pass that benefit onto the purchasers (lucky purchasers) or returned to the Govt as higher purchase price?

    Will be interesting to see the detail to see who wins – developer, purchasers/investors, or Auckland.

  5. Remember we are talking about the same government that turned Hobsonville from a social housing project to one where houses are now selling for $700k plus. Excuse me if Im a little cynical.

  6. Do you have a link to a high res version of the Map. Hard to tell but looks like AUT North Shore campus is included, which while it is an ideal location, wouldn’t be available for housing.

    Would also be good to overlay the Congestion Free Network over the top so show which bits of land would have the transport infrastructure to go high density.

  7. How will these areas fit within the Unitary Plan I wonder? Will the Govt get to dictate the density of development etc, or will the Council? Will Govt contribute to infrastructure, water, roads, more schools? Questions, questions.

    1. Barring a radical law change, the developments would still need resource consent under the district and/or Unitary plan, presumably. So the council would need to approve rezoning.

      1. No further law changes are required, its already been done.
        Have a look at the “Housing Accords and Special Housing Areas Act 2013”

        it pretty much gives the Crown the power ( after talks in good faith fail with a local authority, and they beleive sufficient infrastructure us in place) to go ahead and zone anything as an SHA,
        Once that is done, the CE of MBIE can approve consents on their own,,


        16 Process for establishing special housing areas

        85 Chief executive has powers of consent authority

        1. Well, Nick Smith said they were all going to be declared SHAs, meaning they can use the UP not the operative district plans.

          But even if the government issues consents itself it still needs to consider the applications under the Unitary plan, right? Or the developer needs to lodge a private plan change with the council?

  8. It is an opportunity on an unprecedented scale to grow design culture and address productivity in the building sector while increasing the quality of product being delivered to market. It is an opportunity to look at new models, new ideas and grow talent.
    This needs to be a design lead initiative from selection of land parcels to divest through to selection of designs to get built.
    How to make that happen without reverting to good old fashioned crony capitalism ?

      1. The Devil is very much in the details on all this.

        But given the laggardly pace of previous government steered development (Hobsonville, Weymouth) you’d have to wonder what will done differently to deliver quickly and efficiently compared to the former developments – still going many years after they were “announced”.

        1. Hobsonville is a big development so has a long lead time but is moving pretty quick now. Hopefully some of these areas are small and perfect for a single high density complex which can be designed and built in a year.

          1. Hobsonville: How di the prices change so drastically in such a short space of time. The change can’t be in the developement cost and should not be that great in the Material or Labour costs, so where is the major price change accounted for?

  9. Explains why the old GI Tamaki Campus site was pulled from its Plan Change earlier this year – I’m sure the Government is going to buy that site from the UofA given its adjacent the GI Towncentre it will be easy to intensify. Also, may explain delays in the GI to Tamaki cycleway project – due need to change designs to allow more of that NZTA owned land to be carved up for SHAs.
    I truly hope KR stands firm on the 3rd main through here as selling that off for housing will be a very short term and poor decision. But given KR’s management who can be sure they’ll stand up to the likes of Nick Smith.

    Also Nick Smith said this morning that all the land will be SHA’ed to “expedite” the process and reduce objections. so unless you immediately border one of these areas, expect no input or say in what happens.

    I guess the big question is, do we have a building industry in Auckland actually capable of building that number of [leak free] additional houses (in addition to those 8,000 or so already consented) in the timeframes required?

    Given we’ve been underbuilding on house numbers for years and years you can’t just magic up 1000s more builders and construction workers overnight (well maybe if they come from China you can).

    Even so, building thousands more houses a year will be immense strain on the building industry at the same times that the Christchurch build is reaching its peak.

    How long before the Government invokes the “Auckland Housing Crisis Recovery Act” to allow carte-blanche with developments ala Christchurch?
    In some ways would be great way to fix the NIMBYs opposing the UP, but could also become a nightmare very quickly.

    1. Ain’t no hope of just turning taps on in Auckland.

      As for leakers, not too many being built anymore but still lumbered (excuse the pun) with the same old shithouse materials and shithouse workmanship. More puns.
      Over priced materials, under priced labour, time constraints, under resourced main contractors, Voltarin prescriptions… anyway, thankful every day I’m no longer involved with it.

      Likely just another profit vehicle for Fletchers.

    2. No problems with labour. Bill English expedited visa granting for China Southern Airlines “Business Class” passengers years ago. As in Canada, a flood of cheap labour from China doing cash jobs and no one in the whole chain going through the tax system.

      I regularly hear stories about the IRD auditing people and slapping them with $30,000 or $50,000 bills and fines. The parties concerned are apparently quite relieved because they actually owe millions. They love New Zealand.

  10. This is a great opportunity for Auckland, however there are many cynical questions raised by this proposal.
    1. Will consideration of future development for purposes other than housing be considered first? Will houses be constructed and then Auckland or the Govt either have to buy them back (undoubtably for significantly more than for what the land was sold by the Govt) or use other less than optimal solutions due to the loss of land? This would apply to things such as transportation, future schools, and expansion to existing infrastructure.
    2. Will this result in loss of amenities? Such as taking an existing park and turning it into housing is potentially a significant loss of amenity for the existing residents. Noting that this would make Auckland a less desirable place to live, which in turn should reduce house prices.
    3. If prices are kept low to improve affordability, what is to stop the purchaser from then on selling at market rates and making a large profit. Consider that even a five year ownership requirement won’t stop this from happening, just delaying it five years. As a result will this is likely to be just a minor blip in affordability where some will be a few winners.
    4. Lots of vacant land within developed areas is vacant for a reason. As someone with a PhD in Geotechnical Engineering, Nick Smith should be aware of this problem. Who will spend the money to both investigate and solve these issues? The costs here can be prohibitively high, where foundations and preparatory work runs into hundreds of thousands of dollars sometimes with the risk of very high over runs.
    5. As Cameron mentioned: if intensification in an area requires upgrades to infrastructure, who pays for the cost of these upgrades?

  11. There is potential for this policy to have a real impact on affordability if done right.

    By giving developers access to the land only if they are going to build on it removes any possibility of land banking.

    Holding costs and lack of access to finance is a major constraint on development. So removing high holdings costs could create greater capacity in the development industry.

    The key is allowing sufficient density and ensuring inherently affordable dwellings are constructed, as opposed to housing which is made ‘affordable’ through subsidy. Inherently affordable housing would need to be made up of smaller homes which occupy less land. If expensive housing is subsidised and offered as ‘affordable’ this will just lead to a windfall gain to the first buyer.

    Another important element will be to ensure that developers are offered enough of an incentive to get involved but do not receive a disproportionate windfall gain. But given the government’s record of crony capitalism there is a risk that this will just be a way for Government to flog off state assets for cheap.

    1. As in the case of Hobsonville, Developers seem to charge what the market will stand not what their costs are. This means that the resulting homes will be sold not for the cost but for waht they can get and so the rpofit is not going into more houses but into selected developer/building firms.

      1. “homes will be sold not for the cost but for waht they can get and so the rpofit is not going into more houses but into selected developer/building firms.”

        Yes but after the developers sell the houses they will need to pay the government back for the land which they have effectively borrowed. To ensure windfall gains are not given away to the lucky selected firms the government needs to charge a proper price for the land, possibly including an amount of interest for holding the land free of charge during development.

        1. I think the land price should be a percentage of the end user selling price [50%], not a fixed $ number per section. That way if developers try and build expensive houses to cream it.
          They know that they’ll have to give away 50% of the price they get to the Government as “land tax”. And then pay tax on the profits they make as well.
          And that way, if the developer builds decent lower cost housing they don’t have such a big land cost.

          Of course, those reduced land cost benefits then accrue to the owner who can then sell on the open market tax free after 1 day if they live in it for 1 day, and take excessive profits as they go.

          So that part needs to be looked at as well if the original buyers are not social housing providers.

  12. At 30 units/ha it comes to something like 12,900 units gross. 30 units in within the range of medium density. Easy to calculate what you’d get with lower density. I doubt Nick is thinking in terms of 30 units/ha, though, and he shouldn’t be. And since that’s gross, you need to adjust down by 30% or so. (?) Obviously mixed densities are better but some of those parcels are so small that they don’t offer much flexibility, nor economies of scale.

    One more thing. What about costs associated with site prep: clearance, demo, toxics, etc. I am guessing the developer will want a ready-to-go site.

    What about phasing? How long?

    So will the government give sweetheart land deals to developers? If so, will they require that the cost is reflected in the sales price? Will there be some kind of incentive for building low construction cost housing (but not junk)? This is a market that needs it, in the form of manufactured housing, smaller units, mobile homes gussied up to look like real houses.

    1. AUT long lobbied for there to be an intermediate category of “university of technology” between polytechnics and universities, but managed to get full university status before it was ever approved.

      We could have ended up with AUT University of Technology, i.e. Auckland University of Technology University of Technology.

      1. Much like ASB no longer means Auckland Savings Bank, hence why they say ASB Bank, AUT is also now just that, AUT, it’s not an acronym any longer.

        1. I remember pointing out to a ASB teller while getting a new EFTPOS card that saying “ASB Bank” is a tautology [as the B in ASB means Bank so its really like saying Auckland Savings Bank Bank.]

          She gave me some stock answer obviously drummed into them by the marketing dept. that “ASB” stood for nothing any more but “ASB”.

          I think the reason they make it an acronym is so they can copyright and trademark it. If its an acronym you can’t, whereas if its a “made up name” like ASB or AUT you can.

          Intel (the semiconductor manufacturer) had the same problem in the ’90s with their CPU and other naming schemes (like “MMX” – which originally stood for Multi-Media eXtensions but became just vanilla MMX in short order when the patent lawyers got involved).

          And is the reason why their range of CPUs were/are called “Pentium” processors not 586 processors as expected – as their competitors had begun producing pin compatible CPUs that they advertised as 100% “486 compatible”.
          Something Intel couldn’t stop them from doing.

          And that period is also where that stupid “Intel Inside” label on computers to say what brand of CPU in them they had came from, in case you ever wondered.

          Which you see parodied from time to time e.g. the Wall-E robot or the Mars landers/rovers with “Intel inside” stickers plastered on the side.
          [The Mars Rover example galling for IBM as the original Mars rover used IBMs processors inside, but I digress].

  13. This is nothing compared to the thousands of hectares of developable land locked up by the urban boundary. This initiative will make not one iota of difference to housing affordability.

    1. Not true. There is a dwelling supply issue not a land supply issue; the two are not synonymous. Or are you one of these that believes that no one wants to live within the existing urban boundaries? What evidence there is for this view I can’t fathom, since most already do…?

      1. There is a dwelling shortage as evidenced by escalating urban prices within easy commuting distance of places of employment, business and study. The government could remedy the inflation in urban land prices. By stopping RoNs, increasing regional taxes or transport charges. Building better transport infrastructure. Using one or both of compulsory purchase and liberal rezoning (up and out) around the new/improved transport hubs to increase housing supply.

  14. Haven’t heard any mention of who will pay for the infrastructure costs for these new subdisions. That’s been the issue that’s held up three of the existing SHO in recent times.

  15. It’s not in Fletcher’s interests to drastically increase supply of houses, so why would they? The captains of industry and politicians all circulate and mingle around the same troughs. It’s capitalism folks. Maintaining their profits and positions of power, without the peasants revolting.

      1. I do believe Nick Smith was on the news a couple of nights ago saying that some DOC reserves weren’t really reserves so they’d be up for sale. Maybe this is one he doesn’t consider to be a reserve, and in any case would be wise to hock it off before it’s underwater…

  16. The huge red blocks in Wiri are the two new prisons. One of which is busy making profits out of imprisoning people. Unlikely to be sold I think as they are are already providing housing.

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