The Auckland Housing Accord

May 11th, 2013 at 10:05 am by David Farrar

announced:

An Auckland Housing Accord has been agreed today by Housing Minister Dr Nick Smith and Auckland Mayor to urgently increase the supply and affordability of housing in Auckland. …

The legislation, to be introduced to Parliament as part of Budget 2013, will enable Special Housing Areas to be created by the with approval of Government. In these areas it will be possible to override restrictions on housing put in place by Auckland’s eight predecessor Councils, like the Metropolitan Urban Limit.

Qualifying developments in these Special Housing Areas will be able to be streamlined, providing they are consistent with Auckland’s Unitary Plan, once it is notified, expected in September this year. New greenfield developments of more than 50 dwellings will be able to be approved in six months as compared to the current average of three years and brownfield developments in three months as compared to the current average of one year. The streamlined process will not be available for high rise developments that will need to be considered under existing rules until the Unitary Plan has been finalised in 2016.

“This is a three year agreement to address these housing supply issues in the interim until Auckland Council’s Unitary Plan becomes fully operative and the Government’s Resource Management Act reforms for planning processes take effect.

“The Government respects in this Accord that it is for Auckland to decide where and how it wishes to grow. The Government is giving new powers for council to get some pace around new housing development and is agreeing on aspirational targets to ensure Auckland’s housing supply and affordability issues are addressed.

“The Accord sets a target of 9,000 additional residential houses being consented for in Year 1, 13,000 in Year 2, and 17,000 in Year 3. This is a huge boost on the average 3,600 homes that have been consented each year over the past four years and the 7,400 a year over the past 20 years.

The only way one can reduce the price of housing in Auckland is to reduce demand or increase supply. Now assuming you can’t start deporting Aucklanders to Gore, that means increasing supply.

39,000 houses in three years compared to 3,600 homes a year is massive.

And best of all it doesn’t involve the Government borrowing hundreds of millions of dollars to try and become a large scale property developer itself.

Congrats to Len Brown and Nick Smith for working together to do something meaningful in this area.

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51 Responses to “The Auckland Housing Accord”

  1. Roflcopter (446 comments) says:

    Does this essentially scuttle Brown’s Unitary Plan for building upwards? If so, well done Nick Smith!

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  2. Sb (59 comments) says:

    Does this essentially scuttle Brown’s Unitary Plan for building upwards? If so, well done Nick Smith!”

    No it doesn’t its complementary to not a replacement for that plan, that why it mentions “Unitary Plan”

    Both will occur in parallel which is what that plan always envisaged

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  3. Colville (2,198 comments) says:

    So 1 acre (4000 M2) greenfields will yeild 50 x 200 M2 appartments in a 5 storey block. Awesome. 6 months from application to work on site. Developers will be loving this.

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  4. flipper (3,847 comments) says:

    39000 houses in 36 months? Crap!

    The AC and other LG policy Nazis take the full 20 working days to consider a “consent” to build on land owned by the “applicant” (A wonderful thing to live in a property owning democracy, is it not?) – then on the penultimate day, they ask for clarification on some esoteric point, and suspend the day count indefinitely..

    The move, as the Whale points out in delightfully blunt fashion, has just seen Red Len and his dummy friends sodomised.

    Those house pigs will never fly down Queen Street. :)

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  5. 3-coil (1,204 comments) says:

    It has to grow up or stop growing.

    The dysfunctional old “Auckland” (now the SuperCity) has been unable to function properly for years now, as it out-grew the capacity of it’s infra-structure to deal with the number of occupants. I used to go to Auckland as a NZ “tourist” often, but have visited only once in the last 5 years (only to have the stories of congealed-traffic/nothing-to-do-in-city etc etc stories confirmed) so, why bother?

    But if the answer for solving the cancer-like growth that Auckland is experiencing is to apply a dose of steroids, to rush ahead and try to cater for your future SuperCity populations of 2million, 3million?…well good luck. Consuming land hasn’t worked for you so far, more of the same will not solve your problems now. Eating up the surrounding productive land to cater for an out-of-control population explosion is insane – you do not “need” this population explosion, your geographic and infrastructure limitations cannot sustain it.

    You will not be the next Sydney, or Hong Kong, or LA – get over it.

    Edit: if this is the best National can offer to sorting this out, it is very disappointing. Like Wellington, the Nats have “no idea” how to turn it around.

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  6. KevinH (1,160 comments) says:

    The Accord is great news for young families desperate to get into their own homes and all parties concerned are to be congratulated for moving ahead with the plan.
    In the short to medium term the Accord won’t impact greatly on the inflated prices of some Auckland properties, which is the underlying cause for the shortage of house availability in the Auckland region.

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  7. Fox (202 comments) says:

    The only way one can reduce the price of housing in Auckland is to reduce demand or increase supply.

    Well, more specific to this instance; to ensure the increase in supply outpaces the increase in demand.

    I think demand for housing in Auckland runs at around 10,000+ houses per year, so 39,000 over three years is not going to have much of an impact on prices, if at all. So whilst certainly an improvement over 3,600, it’s nothing to get too excited about.

    However, on a positive note, this is only meant to be a stopgap policy until the RMA reforms and new Unitary Plan come through. Obviously given that these are now being touted as being the real panacea to the current housing woes, expectations will be running high!

    Fingers crossed they actually manage to deliver.

    Now assuming you can’t start deporting Aucklanders to Gore…

    Please don’t give the Green Party any more ideas.

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  8. hj (6,754 comments) says:

    The only way one can reduce the price of housing in Auckland is to reduce demand or increase supply. Now assuming you can’t start deporting Aucklanders to Gore, that means increasing supply.
    ……………………………………………..
    PfffffffffffTT………………………!!!!!!!!!!!!!
    …………………………………………

    You and Len Brown and a whole lot of others can say things like that because there is no opposition from Labour or the Greens (NZ First appear to be silent – perhaps due to pressure from the next elections coalition partners), however:

    From Tony A;lexanders list of why Auckland house prices will stay high:

    3. The government is explicitly aiming to grow Auckland’s population as a means of achieving “agglomeration” benefits for economic growth which accrue from high interaction amongst economic players.
    http://www.davidwhitburn.com/blogs/the-bnz-chief-economist-s-view-on-the…

    [Any productivity boost would help Auckland firms compete more effectively against those
    in other locations. However, considering the official projection of population growth in
    Auckland (43% over the next 24 years), even elasticities at the top end of the international range would result in (agglomeration-sourced) productivity gains of only 3% in total, spread over the next two decades.

    Drivers of Economic Growth in Auckland
    A report prepared for the Royal Commission on Auckland Governance]

    So it is a lot of grunting for a sugar rush benefiting developers, investors etc.

    And from the Savings Working Group:

    Savings Working Group
    January 2011
    “The big adverse gap in productivity between New Zealand and other countries opened up from the 1970s to the early 1990s. The policy choice that increased immigration – given the number of employers increasingly unable to pay First-World wages to the existing population and all the capital requirements that increasing populations involve – looks likely to have worked almost directly against the adjustment New Zealand needed to make and it might have been better off with a lower rate of net immigration. This adjustment would have involved a lower real interest rate (and cost of capital) and a lower real exchange rate, meaning a more favourable environment for raising the low level of productive capital per worker and labour productivity. The low level of capital per worker is a striking symptom of New Zealand’s economic challenge.

    http://www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup/pdfs/swg-report-jan11.pdf

    http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices

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  9. hj (6,754 comments) says:

    One of the hallmarks of the libertarian “it’s all about land supply” thinking is a denial of any hint of limits , be it in infrastructure, fuel and technology (driverless cars), climate change, population…. The Government (leadership) minnows have fallen for it hook, line and sinker (perhaps because those types migrated to the well funded National Party).

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  10. Rightandleft (656 comments) says:

    It’s great to see the government working alongside Auckland and really doing something to slow the insane increases in house prices. The decreases in times for consents is excellent, less red tape is a good thing.

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  11. GraemeB (10 comments) says:

    Well done Nick Smith. Your performance on The Nation this morning was brilliant. Next target is the building material supply chain.

    http://www.3news.co.nz/Government-investigates-building-costs/tabid/370/articleID/297366/Default.aspx

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  12. Johnboy (15,602 comments) says:

    The huge increase in electrical demand for the 39,000 extra Jafaland hovels should push my profit on MRP shares into triple figures very rapidly! :)

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  13. wiseowl (834 comments) says:

    Just all bullshit.
    It’s time Nick Smith got the hell out of that house.I heard him on this issue and it was clear again he has been there too long.
    He needs to be subject to the real world again.

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  14. Pauleastbay (5,035 comments) says:

    heard Smith on larry Williams last night on this. he did not have one solitary concrete answer on how things were to happen all he could say was that the council would speed up consents, Tui bill board to that.

    Who is going to build all these houses,? I hope they are not gong to rely on the demonised property developers.

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  15. Johnboy (15,602 comments) says:

    Not the only housing plan for Jafaville of course…..

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10882929

    Phew bro the smell from the hangi pits should curl a few nostrils! :)

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  16. NK (1,138 comments) says:

    Demonised developers? Don’t you mean liquidated and bankrupt developers?

    Apart from Todd Corporation and Fletchers, I doubt there are many others around big enough to cope with this capacity. The likes of Universal and Sovereign could help, but with the lack of mezzanine funding, coupled with no/very little developers around now, it’s a big ask.

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  17. tvb (4,259 comments) says:

    Let the homes be built financed by the banks and with private sector builders. The Labour Party is always proposing some statist solution that creates all sorts distortions. .

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  18. Pauleastbay (5,035 comments) says:

    very little developers around now..

    Hopefully theres someone out there with the nuts,theres plenty of money around

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  19. Colville (2,198 comments) says:

    Hopefully theres someone out there with the nuts,theres plenty of money around

    You obviously havent tried borrowing money on a bareland development in the last 5 years.

    One third pre sold or forget it. Or just make up the diff with your own cash and joint and several gaurantees of course.

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  20. Colville (2,198 comments) says:

    The developers will need a mezanine finance market to tap into, for the 60% to 90% of equity loans.
    At least Ma and Pa will have somewhere to risk their savings for a reasonably high return.

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  21. Colville (2,198 comments) says:

    Hopefully the banks have a decent long list of banned valuers now. Its amazing that there is no media focus on the part that bent valuers played in the pain and suffering of the banks.

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  22. hj (6,754 comments) says:

    A BNZ spokesman said lending to iwi posed issues.

    “It’s not that we can’t, it’s just different, more complicated, and due to these challenges, freehold title security is the most common form of security,” the spokesman said.

    “The beneficial ownership of a Maori land title typically links back to, say, a hapu, so multiple ownership of more than 50 people is not uncommon. To undertake any sort of transaction, you need collective stakeholder consent.”

    —————–
    What sort of legal entity would they need to create and what other problems would they have?… Low savings , low incomes (while not on selling)?

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  23. Johnboy (15,602 comments) says:

    No sweat hj. You and I can fork up for the Murri whares. ( I’m assuming you are a honky here). :)

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  24. hj (6,754 comments) says:

    What sort of legal entity would they need to create and what other problems would they have?… Low savings , low incomes (while not on selling)?
    ……………
    as in “NZr’s just can’t afford theses prices… that’s why we have to sell to wealthy foreigners” and call it “let’s get the country moving”.

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  25. hj (6,754 comments) says:

    Commodities have gone up, China has awakened (etc), so why should building materials be cheap(er)? How do building materials compare here to comparable countries when you add transport costs etc?

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  26. Akld Commercial Lawyer (165 comments) says:

    Well, yes and no. Sure, at 39,000 homes in years – it is an element of window dressing. The draft Unitary Plan uses assumptions of 600 new Aucklanders a week to underpin its population projections. This is made up of internal and external migration and natural increases. The latter is very important because of the massive hockey stick projections for Auckland’s youth population (completely dominating the youth data for the entire country) and thus the pressure on infrastructure, housing schools etc etc.

    A 39,000 kick start in the short term also breaks some of the impasse between the Council and the Govt over making more land available and enables parts of the draft Unitary Plan to be implemented while the larger debate continues – particularly about intensification. And it signals that a leftie Council can work with the Govt – while they thrash out some of these bigger issues.

    The two groups will have to continue to work together while the Unitary Plan gets worked over. Some of the intensification goals in the draft Unitary Plan are simply unworkable and will end up being ditched while some others are adopted. So it is likely to be a give and take process – and remember Stephen Joyce’s comments about Wgtn not the current mayor of Auckland will determine how the taxpayer’s $$ is spent on Auckland infrastructure.

    And the two groups are also working together on the Tamaki Transformation Plan – which has huge implications in terms of both $$ and the underlying drive to fix the huge ‘social deficit’ in this area. The Pt England school which featured in the news this week is a sort of poster child for what is being proposed. (Another hobby horse as Hone & Minto and friends want to block the early stages of what is going on – when it is their electorate who stand to benefit most from a combined effort on social housing improvements and schooling etc to break the cycle of poverty and its affects).

    So, its a start, but the outcomes will take some time to be felt – and the report of the Productivity WG and what is done with it is all good stuff that this Govt (or rather pragmatists such as Joyce & Smith), is probably better placed to deal with than one whose default setting is to regulate and attempt to interrupt normal market behaviours.

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  27. Viking2 (11,284 comments) says:

    Ha, my builder mates and their subbies will just luv this shit.
    They are already months behind with their work and have more than they can do. They are already putting their rates up and up and now the blue/green socialists reckon they are going to build all the extra houses at a cheap price. What mindless stupid fucks they are.

    The govt. is already pouring multi millions into CHCH builders pockets and into a cable laying excersise that is employing the unemployed that are in any way useful so who the hell is going to do the work. That is if len’s minions can ever get round to signing the permits.
    Mind you we in Tauranga have fortunately dispensed with Lee Autons services at last so Len can put him in charge. :lol:

    Of course now we can look forward to Smiths grand plan that he put forward recently whereby they will become a supplier of building materials as well. Apparently our materials are too expensive. No one gives any thought to the requirements of the building act and the fact that these days most building materials and fittings are imported. Building are required in NZ to withstand earthquakes, fires ,cold, wind,Rain (well now they do) and so on. Smith is as stupid as that clown from CHCH who thinks we can build houses like they do in Texas. Well good luck with that when you have a rebuild cause it blew more than 25 knots.

    When one looks at this and the grand scheme in CHCH where the govt. seems to be provider of everything one wonders how to distinguish between the Grand National Plan and that of Labour whereby they intend to buy and resell all the electricity in NZ.
    Seems rather hypocritical of National shrills to lamblast one and tout the other.

    And just in case you wonder if property developers are a bit dumb and won’t rise to the oppourtunity.
    Section prices in Tauranga recently underwent a review. And Jumped up to 25K per section.

    These guys are not silly. They know their markets as any business person should. Politicans never do.

    Why do National set themselves up to fail for fail is what they will do. Stuuuuupid.

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  28. Viking2 (11,284 comments) says:

    ACL.
    Ngati Whatua have already shit their nest when it comes to leasehold property.
    Who in their right mind would trust them after what has happened downtown?

    That place will turn into a slum if it ever gets built. If you for one second think that Maori are altruistic with their own kind you have a lot to learn.

    Their problem is quite simple. Too much booze, drugs and easy money which leads to crime and violence which is just accepted by many as a part of their life. Until you fix that nothing will change.

    If Govt. largess and taxpayer funding fixed all that shit Maori would be the best educated, most upright citizens of NZ but they aren’t. Now that doesn’t apply to all but sure does to a lot.
    Am reminded of it daily among the ones I employ. The safest place for them to be is at work.

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  29. Johnboy (15,602 comments) says:

    Nothing could be kapai than a marae by Orakei in the mornnnnning! :)

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  30. Akld Commercial Lawyer (165 comments) says:

    @V2 Putting to one side much of your 4.29pm comment, with which I disagree, may I suggest that you need to look a little closer at what is going on.

    I think you might find that no-one is proud of the Railway Station development. Like any major business, you don’t get it right first time (or every time) and there are some very impressive young people incl Ngarimu Blair coming through the Ngati Whatua ranks. Hence you will note Rob Hutchison (former Valuer-General and CEO of North Shore City) is now involved in managing the development – and upskilling the young people he is working with.

    And on the North Shore, the benefit of having Ngati Whatua with a 1st right of refusal over Navy Housing stock is that they are not likely to flick it on to the first developer they can find.

    On you final sentence, I don’t disagree – and learned a lot from having a prison inmate in my watch at Outward Bound as a varsity student (more years ago than I care to remember). It took me out of my middle class comfort zone to find out that he was probably on a one-way ticket to jail from the time he was born. But are we going to stand by and allow it to continue or act to break the cycle? You are already actively helping – by providing employment.

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  31. Judith (8,462 comments) says:

    Now assuming you can’t start deporting Aucklanders to Gore, that means increasing supply.

    Lets have a referendum on that idea.
    So all of Auckland and all of Gore vote against it – but the rest of us make up the majority (just) – easy!

    Jafa’s start packing! :-)

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  32. Johnboy (15,602 comments) says:

    “in my watch at Outward Bound as a varsity student”

    I knew there was a reason you made me puke ACL! :)

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  33. Johnboy (15,602 comments) says:

    Be careful what you wish for Judith. Some of us wish some folks were deported to Ouagadougou! :)

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  34. Akld Commercial Lawyer (165 comments) says:

    @JB

    Besides my being a member of the legal profession? Seriously, you have a problem with Outward Bound!

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  35. Viking2 (11,284 comments) says:

    ACL. Greed doesn’t change and at 6000 on the point it would be a big concentration of one race. The biggest in NZ.

    If you talk to Maori in Aussie they mostly tell you they went there to get away from that sort of control.

    Personally can see not a lot of good coming from having a racial ghetto. Indeed its racist of itself. No better than apparteid.
    Not the right thing to do. NW can do what they like with their land for it is theirs but personally I think they can do much better for their people than this.
    We object to concentrations of other races and religions, and rightly so, and yet here you are trying to tell us it would be a good thing.

    Like any board of Directors if you don’t have a diversity of people who can contest the ideas put up by management then you get faulty decisions.

    it smacks of inward thinking.

    I should also point out that HNZ is breaking up all these enclaves and buying, building houses scattered all through the housing estste for the very reason we should be afraid of building another ghetto. Locally I can say there is a noticeable improvement in a least two of thiose area’s, including the schools.

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  36. Johnboy (15,602 comments) says:

    I’ve met so many funny folks out in the scrub who have to recite how it was so wonderful what they learned on outward bound that I treat everybody who feels they have to mention it as a tosser.

    Your being a lawyer as well assists you even more rapidly towards tosser status! :)

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  37. Akld Commercial Lawyer (165 comments) says:

    @V2

    I think you might find that Ngati Whatua, despite the report in the Herald, have no plans to create any sort of ghetto. They however, have plans to use their capital in a manner that will enable some of their community who do not enjoy a great standard of housing, to improve their lot.

    The mission is little different from that of the Tamaki Transformation Project. Yes, I understand that there will be controls, as there are in many large-scale developments today. But its a lifestule – not a sentence. People can choose to opt in or out. Stuck in some of our existing welfare ghettos is a sentence with no remission.

    And if I do sound like a bit of a preacher, it is because one of the not-for-profits I do pro bono things for is getting involved in the Tamaki Transformation Project – where agencies such as HNZ are seeking to break the cycle of poverty and its problems. The new Govt initiative on science learning is also part of that matrix.

    As one small example, some of the affected schools are BELOW Decile 1 rating – and need a combined effort from all Govt agencies and the private sector (because it is people like you who will solve employment problems – not an army of bureaucrats) to get the kids a decent start, hopefully get many of them into tertiary training of some form, and then get them into the workforce.

    Enough, I must get some work finished.

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  38. Johnboy (15,602 comments) says:

    Most of them are silly little girls who have to recount how awfully fulfilling it was to spend a night out on their own squatting in the scrub at Anakiwa.

    You can give us a recount of your time at outward bound and what you learned there too if you wish ACL.

    I have heard most of it many times before but who knows you may surprise me! :)

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  39. Akld Commercial Lawyer (165 comments) says:

    @JB – I guess I plead guilty on both counts!

    But then I have clearly led a sheltered life – and only meet interesting folk out in the scrub. Other than the ones who shouldn’t be there of course, because they are tending their dope crop.

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  40. Johnboy (15,602 comments) says:

    Yeah. Outward Bound is like a trendy little finishing school for tossers that have never been far away from mummies skirt.

    It’s best not to mention it to jokers that have spent a fair part of their lives in the bush.

    Just makes us realise you are really a prat! :)

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  41. Akld Commercial Lawyer (165 comments) says:

    @JB coming from you – they are badges of honour that I will wear with pride.

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  42. Johnboy (15,602 comments) says:

    Seeing it’s gone a bit quiet perhaps you could regale the silly folk here with tales of derring-do from your days at Anakiwa ACL! :)

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  43. Johnboy (15,602 comments) says:

    I promise not to laugh! :)

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  44. toad (3,673 comments) says:

    @Fox 12:48 pm

    Now assuming you can’t start deporting Aucklanders to Gore… Please don’t give the Green Party any more ideas.

    No, the Greens are not planning to build a nickel smelter or a lignite to diesel plant in Gore. Just for the record :)

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  45. Johnboy (15,602 comments) says:

    Using AussieGinga time again are you Toadie. Eight hours late as usual! :)

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  46. Johnboy (15,602 comments) says:

    Have you guys considered a voice transplant for him or even an eye spacing op? :)

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  47. SPC (5,473 comments) says:

    At the moment the private sector is only building new larger area homes for the well to do (because of limited bank finance for new building and unlimited finance for existing houses drives up the price and secures the bank from risk – banks act in their self-interest to drive up property values) and their former homes become rentals. The new home building does nothing to improve levels of home ownership (these are falling) – the banks are more secure when speculators own homes than those at risk of losing jobs.

    http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10882884

    The rationale of the Labour plan is that homes built without a developer profit are more affordable and to build them in greater numbers than the limited finance to banks for new building allows. Thus new supply sufficient to meet demand and hold prices. That means holding down the demand for mortgage finance and leaving banks to only grow by lending to the more risky productive sector – something we will have to demand of banks as they make money easily with less risk out of rising property values and making half of us tenants for life.

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  48. hj (6,754 comments) says:

    SPC (2,921) Says:

    At the moment the private sector is only building new larger area homes for the well to do (because of limited bank finance for new building and unlimited finance for existing houses drives up the price and secures the bank from risk – banks act in their self-interest to drive up property values) and their former homes become rentals. The new home building does nothing to improve levels of home ownership (these are falling) – the banks are more secure when speculators own homes than those at risk of losing jobs.
    ……………………………….

    and that is probably why nationals goal is to increase Auckland’s population, the banks and developers need well healed people to buy real estate. The agglomeration thing sounds decidedly dodgy The banks and real estate interests seem to be the government these days.

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  49. rg (201 comments) says:

    The only reason this was a problem in the first place is because of govt interference in the market through land zoning. The govt has reduced the problem but not solved it by rezoning more land, because it is not their land. It belongs to private people who if they had been allowed to do with their land what they wanted and zoning did not exist, would have seen the market prevent any problem in the first place.
    You people think you need central control and nanny state to live your lives for you but I say toughen up and try and live without big govt. Get rid of all land zoning, put the price of council services and roading on the developer and sack all the planners and hey presto, problem solved for ever.

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  50. hj (6,754 comments) says:

    No zoning?
    “For 14 years, I have had to listen to the frustration and disbelief of professionals with major companies who are transferring to Houston ask me, “What do you mean you don’t have zoning?” Incoming homebuyers have become increasingly cautious about their purchases because our regulations are weak. To suggest that Houston is in danger of overregulation in development is laughable if not an outright lie.
    When potential buyers see three- and four-story town-homes and four- to five-story midrises adjacent to and crowding one- and two-story single-family homes, they take a pass. It then becomes a challenge to find a relatively “safe” neighborhood with deed restrictions, or a separate city such as West University or Southside with a property that meets my customers’ needs.
    Unregulated residential construction on top of active railroads, freeways and busy commercial streets is the norm at this time, not the exception.
    Excessive regulation is an economic danger? If I may quote the great poet, John Milton, “License they mean when they cry liberty!”
    DORIS MURDOCK
    Realtor, Houston”

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  51. doristhedarkelf (2 comments) says:

    @ flipper – just out of interest, when was the last time you were involved in a resource consent? These issues were dealt with by the 2008 amendments to the RMA.

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