Developers decry Affordable Housing Bill

By Andrea Milner

Housing Minister Maryan Street says the Bill is designed to stimulate the provision of more affordable housing for first homebuyers and low-income families in the rental market.

However Christchurch-based developer Hugh Pavletich, co-author of the Annual Demographia International Housing Affordability Survey, slammed the initiative as “by far the worst I have seen by any politician in the western world in recent years”.

The Bill will enable councils to require developers to either: include affordable housing in their developments, make payments towards the cost of providing affordable housing elsewhere, or provide land for the construction of affordable housing.

Councils will be able to offset the costs developers might incur by offering incentives such as the waiving of development contributions, or permitting greater densities in developments than might otherwise be allowed.

The Bill also prevents the use of title covenants used to exclude social or affordable housing from developments.

Rapidly escalating property prices have seen the rate of homeownership fall from 74% to 67% between 1991 and 2006.

Officials estimate the Bill could produce up to 1000 affordable homes a year, but acknowledge it may decrease developers’ profits. An “affordable example” of $350,000 is suggested within a development where the balance of the housing averages $450,000.

Pavletich argues a better alternative would be setting performance standards for local government, releasing fringe land and appropriately financing infrastructure.

“International research clearly illustrates that these types of interventions drive up the cost of housing and severely suppress the numbers of new houses built,” he says.

“What this means is driving down our housing construction from around 24,000 units a year towards the 12,000 a year mark – just when we desperately need more affordable housing of between $140,000 to $180,000 on our urban fringes.”