$52 million to address Auckland’s housing supply problem
Thursday 21 May 2015
Crown-owned land in Auckland will be developed - thanks to a $52.2 million capital contingency fund in today’s Budget to facilitate a housing programme.
By Miriam Bell
The Government estimates that the Crown, through various agencies, owns approximately 500 hectares of land in Auckland with the potential for residential development.
Building and Housing Minister Dr Nick Smith said the initiative will enable the Government to select vacant parcels of land and make it available for private development through a competitive process.
Smith said the success of this approach can be seen in Christchurch with developments that are under way in Awatea, and Welles and Colombo Streets which will deliver over 400 homes, a proportion of which are in the affordable range.
“We would be looking to achieve a similar result in any development agreement that is reached with this new fund. We are boosting not just supply, but the supply of affordable homes.”
One benefit of the Auckland initiative is that it will enable development on land that has already been zoned as residential, but with no existing buildings or tenants to manage, Smith said.
“This means houses will be able to be brought to market faster.”
Following the establishment of the fund, the Government’s next step will be identifying the specific parcels of land for possible purchase.
The Government’s aim is to then have a signed development agreement for the first land parcel within six months.
Smith said the fund is the latest initiative in the suite of measures the Government already has in place to improve housing supply and affordability in Auckland and across New Zealand.
Property Institute chief executive Ashley Church said the government’s move was a hugely significant initiative which will make a big dent in Auckland’s supply problem.
“The 4,500 to 10,000 homes which could be built on this land will go a long way toward meeting pent-up demand and helping to resolve the Auckland housing market crisis”.
However, while the initiative was addressing the issue, it will not provide a quick fix, Church warned.
“No-one should expect house prices to drop, or house price inflation to slow down, as a result of the announcement as it will take a considerable period of time for these homes to be built.
“In the meantime, we still have a supply issue and house price inflation is based on what’s happening right now – not what the situation might be in two years’ time.”
Further, buyers should expect these homes to be selling at whatever the market rate for similar homes is when they eventually hit the market, Church said.
“There’s no suggestion that the Government or private developers are proposing to subsidise the price of these houses – so people shouldn’t expect a sudden flurry of cheap homes coming onto the market in 2017 or 2018.”
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