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Land supply key to improving housing affordability – English

The government is to focus on speeding up the resource consent process and increasing land supply in an effort to make housing more affordable.

Finance minister Bill English has agreed with the Productivity Commission's earlier assessment that houses can be made more affordable.

He has issued the government's response to the commission's report.

"High house prices matter because many New Zealanders spend a large portion of their incomes on housing and that has helped fuel household debt and contribute to damaging imbalances in the economy," Mr English says.

The four key priorities for the government include:

  • Increasing land supply. This will include more greenfields and brownfields developments, and allow further densification of cities, where appropriate.
  • Reducing delays and costs of RMA processes associated with housing. This includes introducing a six-month time limit on council processing of medium-sized consents.
  • Improving the timely provision of infrastructure to support new housing. This will include considering new ways to co-ordinate and manage infrastructure for subdivisions.
  • Improving productivity in the construction sector. This includes an evaluation of the Productivity Partnership’s progress in achieving a 20% increase in productivity by 2020.

Prime minister John Key has warned this will not be a quick fix, as existing home owners may become understandably annoyed if their homes have been devalued overnight

 

More by Blair Cunningham

Comments and questions
19

all that deliberation, contemplation, study, documentation, analysis, and what comes out the end? a high level description of the issue and no fundamental change to the dysfunctional institutions of prescriptive prior restraints on land use.

Lets not forget the poetry and BS that accompanied the Williamson, Nick Smith + Shipley when they perpetrated the leaky building fiasco....yeah, not just the houses, the schools, hospitals and community halls too + the commercial buildings this gang tried to run away from.
It all sounded the same....less regulation, less training, more "opportunities"....
Fix it by breaking the Fletchers monopoly from Wo-to-Go. Legislate to fire council goons who have 3-strikes-and-out on what they certify, WOF houses every 5 years for $1K, provide an ACC/UK Housing protection bond.
But that burns up the monied supporters....not that Labour had a clue. Clark just closed the leakers down with lawyers and liars

You are right on the money with your comments.

Its not the lack of supply in land that is the problem. Rather the governments lack of leadership, and being in the pockets of big business that is the problem.

Freemarket is an ass, and doesnt exist, yet politicians continue to advocate it; says it all. Its all about corporatizing profits and socializing losses, and thanks for the back hander on the way through.

Its time we brought back the guillotine for corrupt politicians; because they seems to be plenty of them. Maybe then they represent the wider community, rather than the elite few.

As long as politicians are given any power, they will always be a magnet for corruption.
Politicians are all up for sale, either for dodgy cash backhanders or more likely for donations and re-election.
A partly free market is not a free market at all.

This is exactly why the US has the constitution, to limit the power given to a few, unfortunately their supreme court no longer rules inline with it.

Basically English says they can't fix the problem properly as that would collapse equity values. I have sympathy with that but it shouldn't have stopped the Government making a clear statement of principle that the solution is to reverse the destruction of private property rights.

New Zealand can no longer give up land for housing. Land is required for our primary industry, farming. We need to build up, not out. The Govt should be leading by example and building multilevel estates for state house tenants and lease them on a 18 month basis. The land foot print for the estates is far smaller than current state houses take up. Existing State house could be sold off to the paying public or bulldozed to make way for other projects. There is no way we can carry on justifying a 3 bedroom house with a 1/4 acre section for state tenants when land is scarce.

The problem I have is when a subdivison is launched there are so many sections over 800m2. As well as a minimum section size there needs to be a maximum section size. And as for all the 10 acre lifestylers that have 2 horses and a lawn bigger than Eden Park....

I think Bill English is full of it. Here was I waiting on the edge of the seat for some great ground breaking announcement and the media fair hysterical over some change looming...and nix, nada, no change. Fletchers et al can still charge more for all their stuff than they sell over the ditch and a bit of farmland might get taken up, but the commute will be a pain thanks to the idiots at places like Auckland Transport. How is it Sydney with more than 4x the population of Auckland seem to all fit in the same geographic land space as we complain about no room yet only have 1x million to worry about ?
Maybe a bounty on Auckland City employees might have a better chance of creating change.

Wikipedia:
Sydney: Pop=4,627,345 Area =12,144km2
Auckland: Pop=1,507,700 Area=559km2

It is obvious the Government is only tinkering with the housing problem.
They are certainly not genuine.
National have been in for 2 terms now and
must have seen this problem arising many year's ago.
Vested interests are at stake here. Most National MPs have rental houses.
Gareth Morgan said it in a nutshell on TV last night.
There are enough houses to go around, the problem is that high income earners
own numerous rental houses to avoid tax.
There is a major difference between a rental property and a genuine business.
One is there just to reduce one's tax liability and the other produces something and creates jobs.
They must be treated differently for tax purposes..
If the Government brought in a Capital Gains tax on investment properties and
other disincentives to buy rental properties, this would go a long way to fix the problem.
If landlords exited the market, these houses would not just disappear, but would be
purchased buy genuine families.

This government's housing policy is a complete disaster and will cause major social problems
for many year's to come!!

Right insofar as the govt is only tinkering, but you are totally wrong over the capital gains tax and rentals. First this country already has a captal gains tax and it applies to everything. At IRD's will they can go anyone so be careful what you wish for. They can decide you are in the 'business' of trading stamps, 2nd hand good on trademe or houses.
Just because a landlord owns a box, it still contains a family so it just balances out. The real desire by many is that prices of housing gets cheaper and more houses are built where people supposedly want to live. Neither is going to happen. Dosn't happen overseas, cant happen here. Great swathes of cheap builds way out in the country to accomodate the masses. Whos going to pay for the infrastructure, schools , shops, transport links...build a whole bunch of nappy valleys if you want but I wont be living there. If you want more houses in Auckland then councils and associated agencies have to drop their policy of clipping the ticket. Try researching the cost of freeing up land into smaller development blocks in Auckland for example how much Watercare charge for a new connection and it only gets worse from there.

Bill English has just realised that he doesn't want to go near the real issues so he has done nothing:
- Increasing land supply - he is agreeing with Auckland Council that you need a mix of brown and greenfields.
- 6 month consents - nothing has actually changed on that one.
- infrastructure funding - we'll wait and see if Central Govt actually puts money into the rail loop & fund more Council infrastructure; but I think we will be just waiting a long time.
- Building sector productivity - it's a monopoly, good luck.
Productivity Commission is just there to butter up standard Nat Party policy rather than objectively look at the situation, so the real solutions are overlooked.

The government is moving in right direction but availability is only one problem. High cost of local government consents is another issue. Too many people trying to clip the ticket. While Auckland is bursting at the seams much of the rest of New Zealand has near static or declining populations. High cost is the price of living in Auckland. Shift somewhere else for cheap housing.

"High cost of local government consents " you are dead right.
I disagree that Auckland is bursting at the seams though. I've got a couple of big chunks of dirt all near the CBD, enough room to build more than 100 decent size apartments up to low rise 6x storeys or 12 x super up market townhouses with a bit of garden and all otions in between...not going to happen. prefer to sit on my estate as the cost and associated risks becoming a developer, then the tax at the end takes all the fun out of it. At least I keep a lawnmower man in a job. Auckland City Council bureaucrats and planners can swivel as far as I'm concerned, easier investments elsewhere.

To fix the supply and demand problem driving up prices.

Step one = Stop people moving to New Zealand.

and - stop people moving to Auckland. LOL

Theres a thought...all the UN quota of refugees and their extended whanau have to stay in Invercargill for 5 years.

If the council stops it's greed tactics on sub division then housing would be a lot cheaper. We did one sub division on a plot of land we had and the council costs came to $74,000 before we even began to build. We were amazed that they could charge for contributions to footpaths, parks, library etc which is covered in the rates. Double dipping I think. Then we got charged % of what they thought the land valve was just because they could. If we didn't pay we didn't get the building permit. Boy do they have us over a barrel.

The entire country is being fleeced of millions in mortgage interest payments (all a tax by overseas banks on NZ home owners) because...
Councils have raised the cost of every additional piece of land available for homes. They have done this by extorting fees for drawing lines on Deposited Plans, in Auckland it is nothing to be charge $50-$75k to draw a single line splitting a 1000m2 plot into two 500m2 plots. To this you still have to pay for drainage and sewerage connections. As you rightly say "they have us over a barrel"

If the cost at the margin is increased by 10% because of some trumped up council fee, that flows across all land values, and then poor property purchaser (home owner or investor) has to borrow a significant portion of that additional cost and pay interest which is cash that is no longer available for; saving, better standard of living, investing for retirement etc etc.

And no capital gain tax is going to alter that, heaven forbid, the only capital tax that might slow the capital appreciation of investment properties is an "annual capital tax" similar to the so called Fair Dividend Tax regime applied to shares owned outside of NZ and AUS.

But, that is just another tax, what is required is the reduction of "non productive added value costs" the likes of RMA consents, taking an average of 3 years to approve a small subdivision, all the holding and legal costs are passed on up the chain and these all go to inflate the capital value/cost of all homes.

The bright light in Nationals approach is it will be a slow process, read no major devaluations that would be politically unpalatable to all homeowners and investors, but we will get gradual change that will slow down capital appreciation above about 5%. The focus is also being directed right on councils who have become cost plus plus deliverers of Poor Outcomes.

Get over it. The Gov. job is to ensure that there is free competition for all inputs from finance to bricks, and taxation treatment is the same for the ownership of ALL property, then leave supply and demand to come into sync naturally.
Artificial interference in the demand side, or supply side will always create distortions. Just as our landlord friendly tax system is now.