Council responds to commission's report

UPDATED: Auckland council respond to the productivity-commissions report.

Auckland Council has made housing affordability a priority in the draft plan.

"The council has a goal of affordable housing. Although it can influence some costs such as raw land costs, consents and development contributions, it can't directly influence the materials and construction costs which contribute significantly and are rising.

"The commission says the councils target of accommodating 75% of new homes within existing urban limits is difficult to reconcile with affordable housing. There are no absolute rights and wrongs on this. The real issue is to ensure that adequate land is available for both urban intensification and greenfields development, to meet the council's overall goal of a quality compact city," Auckland's deputy mayor Penny Hulse says.

"The commission recommended that Auckland bring significant tracts of greenfields and brownfield land to market. The draft Auckland Plan already contains provisions for identifying land, staged release of land within the rural urban boundary, zoning and infrastructure to ensure we have at least five years of 'ready to go' land to meet market demand, and a further 15 years forward supply of land in the planning pipeline," Auckland Councils chief planning officer Roger Blakeley says.

"The council is already planning for several of the recommendations in the commission's report. For example, the council is looking at collaborative models with the private sector and its own council-controlled property organisation for identifying, assembling and releasing substantial tracts of land," Dr Blakeley says.

More land must be opened up for housing, according to a long-awaited Productivity Commission report.

“Bold changes” are required to allow young people the ability to by affordable houses, the report said.

It recommends that the Auckland Council throw out its spatial plan that aims to house 75% of new homes within existing urban boundaries.

The plan “will be difficult to reconcile with affordable housing”.  

The Commission found that land prices now account for up to 60% of the cost of a house in Auckland.

“That means new homes tend to be at the top-end of the market. No one is going to put a $150,000 home on a $300,000 section,” commission chair Murray Sherwin said.

The high costs of building and land are constraining the supply of affordable new houses available for purchase. Yet, New Zealand faces a growing population, he said.

“The 2001-2007 housing boom was unprecedented with house prices almost doubling over that period.”

Construction costs also rose 30% over the nine years to 2009.

The report said tax was not a key driver of the recent housing boom and that any tax-advantage for investors is much smaller than often suggested.

GST applies to both rental and owner-occupied housing purchases; local body rates are also a tax; and capital gains on housing are already taxed when those buying and selling houses are “in trade”, the report said.