Government affordability proposals a mixed bag for investors

Finance Minister Bill English yesterday announced the Government’s response to the Productivity Commission’s inquiry into home affordability.

He said there was no one quick fix to the problem and it would require the work of many different agencies. Councils would be told to make more land available for housing development, or legislation would be drafted to force them.

As well as requiring councils to free up land around the fringes and within cities’ centres, the package includes changes to the Resource Management Act to reduce delays and costs, introducing six-month time limit on councils processing consents for housing developments of more than 20 homes and will also include an inquiry into factors in the building industry pushing up construction costs.

The Government is also considering a proposal to allow consents for large regional projects to be more easily referred straight to the Environment Court.

NZPIF president Andrew King said it was a good package. “If they had come in and said there’s a problem here, we have to fix it and come in with a sledgehammer, home owners and property investors would have been very affected. The softly, softly approach is quite good.”

But he said the Government needed to be absolutely sure that there actually was a housing affordability problem, and who it was affecting.

If it was just that first-home buyers could not afford to buy brand new properties, that could be more a case of buyers needing to reset their sights and reconsider what is appropriate as a first home. “It’s a hugely complex issue and legislation is not entirely the best way of going.”

King said people needed to understand the market. Prices were defined by what people were prepared to pay for properties. “It’s best left to the market. Sometimes it makes a  house more expensive because there’s more demand and not enough supply and sometimes it makes a house cheaper.”

But he said the Government proposals would be good for property investors who were developing new properties. “It’ll reduce the amount of bureaucracy and the cost of consents.”

More land being available would help property investors wanting to provide cheaper rental property, he said.

But he said increased housing supply would have a tempering effect on price rises. “Rental property values probably won’t go up. That affects home owners, too.”

Labour and the Green Party have criticised the moves but Local Government New Zealand  president Lawrence Yule welcomed the package.

"LGNZ notes that housing affordability is an issue that impacts significantly differently on different parts of the country. Therefore it is important that the policies that are ultimately chosen are targeted to areas of need.

Auckland Mayor Len Brown said the Government proposals fit with his council’s initiatives.

"As the deputy Prime Minister pointed out, at the moment the housing market is not working. Land is available for development right now in Auckland, but in many cases, developers do not feel confident enough to put that land on the market.

"This is a complex issue that requires the government and councils to work together with developers, the banks, the building industry and all the other players in the housing market to find long-term solutions.”

He said urban sprawl was not the answer to housing affordability. 

“We now have broad consensus that the way forward is the creation of an affordable, quality, compact city that gives Aucklanders housing choice through mixed density development on brownfield and greenfield sites, both inside the Rural Urban Boundary and in satellite centres such as Warkworth and Pukekohe.”