Housing affordability

January 24th, 2013 at 10:00 am by David Farrar

Stuff reports:

The move came as Finance Minister Bill English warned councils could be stripped of land-allocation powers unless new space was set aside for development, especially in Auckland and Christchurch.

English predicted progress within months, adding: “Certainly well before next year we would be expecting to see changes.”

Allocating more land for housing isn’t quite a silver bullet. There are almost no silver bullets in politics. But it would be the one action that can make the most difference.

Auckland has an urban density around the same as New York and Sydney.  That’s pretty incredible when you consider that the more populous the city the higher you expect the density to be.

Tags:

31 Responses to “Housing affordability”

  1. gazzmaniac (2,319 comments) says:

    Good start.

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  2. GPT1 (2,103 comments) says:

    But how far can cities sprawl? Isn’t price one driver for housing density? Don’t get me wrong I’m as keen on the 1/4 arce dream as the next man but where is the line to be drawn?

    Vote: Thumb up 0 Thumb down 3 You need to be logged in to vote
  3. thedavincimode (6,589 comments) says:

    Good start.

    Step 2: stop councils gouging developers and homeowners. The effective develpment tax is a nice little earner that doesn’t attract the same level of scrutiny as rates bills and is very useful to fund non-core activities like gay parades and soccer promotions but is unfortunately only passed on to buyers.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  4. Rick Rowling (823 comments) says:

    Negative correlation between urban density and commute time (i.e. counter-intuitively, in general a sprawlier city = less time to get to work each day)

    http://www.newgeography.com/content/002488-oecd-cites-shorter-us-work-trip-travel-times

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  5. tvb (4,246 comments) says:

    But councils have a significant interest in where subdivisions occur. They are obliged to provide services such as reading water sewerage which involve significant obligations on councils. Land is only part of the issue. What is the government going to do?? Take over the whole deal and supply the services as well??

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. Rick Rowling (823 comments) says:

    Every new subdivision introduces more cats into the environment

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  7. Monique Watson (1,062 comments) says:

    Why draw a line on city size? I live on the quarter acre pavlova paradise. An hours drive from San Francisco or a 45 minute rail trip away. 200,000 people a day commute in from our lovely McMansions into the city. On s line that has been engineered through hills and under the sea. Scrap Len ‘s train and put one fast mother in from Hamilton up. Then open it all to developers.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  8. Lance (2,556 comments) says:

    1/4 acre sections in Auckland?

    Yea right. Maybe in the 1960′s but that is long gone.
    But if you want to spout forth propaganda then exaggerated claims like this come in handy.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. Monique Watson (1,062 comments) says:

    @ TVB that is what the Greens are proposing.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  10. Scott Chris (5,967 comments) says:

    Allocating more land for housing isn’t quite a silver bullet.

    Magic bullet, not silver bullet. Silver bullets kill werewolves.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  11. gazzmaniac (2,319 comments) says:

    Well there’s a couple of options about the development charges. They can either be upfront (like now) and the council has the cash straight away to build services, or the council can borrow money to build the services and (theoretically) rates will be higher to pay the loan. Either way, the buyers of the land pay.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. dime (9,662 comments) says:

    they need to act. we have a shit ton of land around auckland.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  13. Colville (2,172 comments) says:

    The most important issue to consider when looking for land for housing at the moment is liquefaction. Its a word no one knew prior to the ChCh shakes but now you cant put anything infront of a Council unless its in the nil risk category. Any land within a km of a river or 100 meters of where a stream has been (and no may be piped and invisible) is a no go area and will remain so until the engineering is proven so that houses can be built in these places.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  14. swan (659 comments) says:

    Sounds like a good start. I hope they will also be acting on the councils very restrictive development policies within the existing city limits as well.

    Regarding provision of infrastructure. This is only an issue because we don’t have a proper user pays system. Water is underpriced. All major water infrastructure has to be funded via rates not water prices. Why? Watercare is legally not allowed to make a profit. If you can’t make a profit you can’t borrow as you won’t have the money to pay it back. Look at supermarkets. You don’t see them complaining about having to build new stores (a significant investment) because of a new subdivision. Obviously it is the opposite. This would be the same for council infrastructure if it was priced properly.

    The other issue is the politicisation of infrastructure provision. Recently one of the senior managers at the Auckland Council announced (with a straight face) that Auckland would eventually need to produce zero waste as we are “running out” of landfills. Why building more landfills did not occur to this guy as an alternative, I have no idea.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  15. Colville (2,172 comments) says:

    Anothe important issue is land that is close to existing major infrastructure so that Council does not need to rack up debt to do the downstream services.
    Obviously the Developer pays for everything within the subdivision but Councils want to take the development contributions and pay down debt not have to build new assets.
    Quite rightly Councils are very debt averse at the mo’.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  16. hj (6,714 comments) says:

    “You can learn as much about a country from its silences as you can from its obsessions. The issues politicians do not discuss are as telling and decisive as those they do. While the government’s cuts beggar the vulnerable and gut public services, it’s time to talk about the turns not taken, the opportunities foregone: the taxes which could have spared us every turn of the screw.”

    http://www.guardian.co.uk/commentisfree/2013/jan/21/i-agree-with-churchill-shirkers-tax

    Silence:

    ” Immigration and tax breaks for investment in residential property are being cited as the underlying causes of steep increases in the cost of housing over the past decade.

    New Zealand now boasts one of the highest rates of home unaffordability in the world as a result of prices rising far faster than incomes, and the government’s Savings Working Group blames that squarely on the policies of successive governments.

    Although “the favourable tax treatment of property investment” accounted for about 50% of house price increases between 2001 and 2007, the working group said, there was also strong evidence that rapid swings in immigration brought about price-rise “shocks”.

    There was a sharp spike in immigration in 2001, 2002 and 2003 and, said working group committee member Dr Andrew Coleman, it appeared that property prices did not fall anywhere near as greatly when immigration fell again.

    The report added that there was little evidence that immigration boosted local incomes. In fact, the need to build roads and schools meant that net migration contributed to the national deficit. ”
    http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  17. hj (6,714 comments) says:

    A Complete Guide To The Ponzi Scheme That Is Suburban America

    http://www.businessinsider.com/suburban-america-ponzi-scheme-case-study-2011-10?op=1#ixzz2IqCx5w7T

    what a drippy useless (bent) government this is.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  18. hj (6,714 comments) says:

    Fran this, Fran that: what about the (independant) Savings Working Group -experts from academia and industry – or the Australian Productivity commission- (not our own small penis politically compromised one)?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  19. Viking2 (11,261 comments) says:

    Bare land costs stuff all. Its what you do after it that matters. The cost start after you buy. Now apart from employing Chinese laborers at their rate everything that’s done to that land costs. If you want cheaper sections then you had better start with carving down the wages and overhead costs of every Kiwi involved from that point on. Lawyers, surveyors,councils etc etc.
    Oh but you work for one of these or are one and you don’t want a pay cut any more than councils want toput sewerage in for nothing.
    What a bunch of hypocrites.

    Then you don’t want to live in a Reid built 3 beddy of 75 sq mtrs either so you grow the size and adornment’s of your house. and its the builders fault or the building supplies and materials are costing so much. But being the builder or supplier you don’t want to go broke either.

    The building design can’t be what it used to be either. You want double glazing fully insulated etc etc building with an inbuilt garage and all the necessities of modern theatre. you want it to withstand earthquakes and floods and fire and tempest generally, not something that is going to fall over in the wind.

    You want to live in a posh suburb so you insist that developers protect your investment for the longterm by having covenants the set out exactly what you house can and cannot be. Your palace could never have a cheppie built next door, nor a house without an inbuilt garage that is constructed with Hardie plank and not your brick. You don’t want a recyled house plonked down in your paradise.

    You want your castle to be surrounded by park lands and good roading, water and sewerage and services like swimming pools and playgrounds supplied by some other dumb cunt called the ratepayer.

    And fuck me you all wonder and whinge and moan about house prices. Idiots at large just like your new Minister.

    As I pointed out yesterday it’s all about expectations. Yours.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  20. Paulus (2,558 comments) says:

    Colville

    The Christchurch City Council had a number of Earthquake reports made available over many years (many ex DSIR as was) and Council’s past. They all talked about liquifaction being one of the products in the East city. But rate collection by new building was more important.
    Such reports were politically undesirable, so was quietly shelved internally.
    It should be asked as to how many reports the Council have in their files, or were they “lost” in the quakes.
    This is over many Mayors and Councils, not as currently blamed the present mayor and Councillors. I heard one former well known Mayor obfuscate when asked why he did nothing about these reports. Pure waffle.
    We could ask whether new members were not acquainted with these reports.
    Undesirable political proctice by Council staff probably.
    NIMBY – yes nasty Wellington, but not the Holy City of New Zealand, Christchurch

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  21. hj (6,714 comments) says:

    With regard to building on liquifaction areas, Hugh Pavletich says: “tbese poor chaps were forced..”….Yeah right.. the east had water/nature and a quake was not likey to function in the buyers psyche.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  22. thedavincimode (6,589 comments) says:

    tvb

    The developers have to put in the services infrastructure eg sewage, roads, footpaths; not the council (which takes ownership at completion). That cost is included in the price to home owers. The thieving council charge a development cost on top of that something like $20,000 in the big taro I think, plus, the building consent costs – maybe a couple of grand, and that’s without the squillions spent on subdivision resource consent where they have to deal with some miserable old bag who isn’t happy because she thinks the subdivision will make her teeth fall out or disorientate her poxy cat. On the bright side, it keeps a few pencil pushers in cardigans and corduroy shoes in wage, but is otherwise a slush fund for waste and excess by big-noting deadbeats.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  23. thedavincimode (6,589 comments) says:

    Then you don’t want to live in a Reid built 3 beddy of 75 sq mtrs

    Well, if it’s your first house then why the fuck not?

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  24. Griff (6,989 comments) says:

    Add the cost of tribal consultation ,the distortions in the building code due to the insurance industry’s insistence of totally over the top building standards and the capture of building codes by professional bodies resulting in over regulation all adding exorbitant costs and stifling flexibility and innovation.

    Vote: Thumb up 2 Thumb down 1 You need to be logged in to vote
  25. rg (200 comments) says:

    ACT NZ was the only party at the last election which had a policy of opening up more land for housing. The voters did not vote for ACT so with expensive housing they are really just getting what they deserve,

    Vote: Thumb up 8 Thumb down 0 You need to be logged in to vote
  26. BlairM (2,305 comments) says:

    But how far can cities sprawl? Isn’t price one driver for housing density? Don’t get me wrong I’m as keen on the 1/4 arce dream as the next man but where is the line to be drawn?

    Wherever people want to live. You don’t have to live 40km outside of the Auckland CBD if you don’t want to. You can live in a shitty shoebox flat in Mt Eden if you want. Those are your choices. But don’t deny them to other people.

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  27. meow (17 comments) says:

    Since when was the population of Auckland only 1.050 million? About 10 years ago? Its roughly 1.4 million now, and growing fast. The figures for New York also seem incorrect – the land area is approximately correct, but it seems they’ve used the population of the entire state rather than New York City (source: Wikipedia, NYC has a population of 8.25M on a land area of 784km2).

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  28. SPC (5,473 comments) says:

    The primary problem is that the rising cost of existing property is inflating the value of land yet to be built on.

    Our property valuing system is a major part of the problem. This needs to be addressed.

    I doubt expanding the supply of land for new building change that.

    For example – land was valued at $100,000 and the improvements at $100,000 in 2000. After existing property prices doubled, the land is now valued at $300,000 and the improvements reamin at $100,000. Now land yet to be built is also valued at $300,000 a section – 3 times what it was worth before property prices doubled

    (and given building a new house is around $200,000 – so not much change from $500,000 for a new home).

    The second factor – banking practice.

    Because banks in New Zealand have no risk – if there is a mortagee sale and no net equity the remaining debt remains to the bank – so banks will lend the $500,000. Whereas in some markets, such as the USA, the bank takes the loss and thus property prices fall in any recession causing mortagee sales. Here prices always rise and thus the property investment speculation and thus banks risk lending at high levels of borrower income.

    This means the RB has to constrain banking practice – that means minimum deposit ratios/loan to value for home ownership. As for investor ownership (beyond a first home as some invest to step into property ownership), a higher deposit and a falling loan to value ratio over the period of ownership to reduce leveraging for speculation.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  29. thedavincimode (6,589 comments) says:

    SPC

    You aren’t related to Vern Cracknell or Bruce Beetham by any chance are you?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  30. SPC (5,473 comments) says:

    You must be old enough to focus on super policy before voting the davinci mode.

    FYI, the S is for super and the C is for correctness, not social or credit.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  31. SPC (5,473 comments) says:

    Somewhat related a deputy governeor of the Reserve Bank discusses the consideration of loan to value ratios.

    http://www.nzherald.co.nz/residential-property/news/article.cfm?c_id=76&objectid=10861410

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.