More needed to address supply issues

Budget 2016’s increased funding for housing development might offer some supply-side help - but it’s not enough, commentators are warning.

Thursday, May 26th 2016, 4:00PM

by Miriam Bell

Growing public concern about Auckland’s critical shortage of both rental accommodation and affordable homes to buy means many had high hopes for supply side announcements in today’s Budget.

But there was just one major supply side initiative: Finance Minister Bill English allotted $100 million towards housing development on surplus Crown land in Auckland.

Building and Housing Minister Nick Smith said the funding would add momentum to the programme of using public land for increasing the supply of housing.

“The programme’s goal is to increase the pace of housing development and to put a greater focus on bringing more affordable housing to the market.”

Following the success of the approach in post-quake Christchurch, the government decided to adopt the approach in Auckland last year.

Budget 2015’s funding has resulted in agreements for 20 parcels of land, along with ongoing work building this new pipeline of housing supply.

Smith said the government recognises that the Auckland housing situation is one of the biggest challenges the city faces.

As such, he will soon be releasing a National Policy Statement on Urban Development, which will direct councils to adjust their plans to allow for more development if necessary.

“In Auckland, which is still functioning on 1993 planning documents implemented when there were half a million fewer people living there, that will mean going up and out.”

While addressing Auckland’s housing problem was taking time, Smith said initiatives like the surplus Crown land programme will play a role in resolving the city’s housing supply and affordability issues.

However, some say more could have been done to address Auckland’s housing issues in the Budget.

Property Institute chief executive Ashley Church said the government has missed an opportunity to influence the housing market in other ways.

“It’s good to see that there has been no repeat of last years ill-considered attempts to artificially slow the housing market, and no mention of knee-jerk responses such as land taxes.

“But it’s disappointing that there are no positive initiatives to further encourage the private construction of new homes.”

For example, the government could have made further adjustments around the KiwiSaver Home Start grant and/or reinstated depreciation incentives for property investors who build new dwellings.

Church said the National Policy Statement on Urban development was a good idea, but it won’t achieve what the government is claiming for it.

“Opening up more land is a good thing – but any belief that doing so will reduce house prices is naïve.

“We need tens of thousands of new homes in Auckland, so the best we can hope for is to reduce that backlog as quickly as possible to slow house price inflation down. But house prices aren’t going to drop anytime soon”.

A number of other organisations said the Budget did not offer any real solutions to Auckland’s housing issues.

Taxpayers’ Union executive director Jordan Williams said that, instead of throwing money at the problem, the government should cut the regulatory taxes choking housing supply and free up the limits on supply.

The only promising announcement in the Budget was the new National Policy Statement on Urban Development which might reign in those council’s holding up housing supply, he said.

Youth lobby group Generation Zero said the Budget’s housing policies were band-aids designed to ease criticism of the government rather than solve Auckland’s housing crisis.

The group’s Auckland director Leroy Beckett said the government and Auckland Council had to work together to avoid gridlock on the problem.

“Auckland Council need to play their part by passing the Unitary Plan and central government need to invest in infrastructure which allows more affordable housing to be built.”

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