Developers quit $1m city

Critics say affordable homes are a casualty of profit hunters in soaring market.

Property developers are quitt i ng projects t hat would have locked t hem i nto building affordable homes as Auckl and’s average house price nudges $ 1 million.

Housing Minister Nick Smith told the Herald on Sunday that landowners in five Special Housing Areas had decided not to proceed under a fast-track process that would have required 10 per cent of housing to be affordable. The developers have instead opted to use provisions under the newly approved Unitary Plan, which does not have the same affordable housing rule. “They have effectively got a better deal through the Unitary Plan process,” Smith said. Affordable housing is defined in the special housing area legislation as below 75 per cent of the city’s median house price.

CoreLogic analyst Nick Goodall predicts the average Auckland house price will top $1m when the figures are released next week.

“It was $975,000 in June and $992,000 in July, so I think it’s safe to assume it will be more than $1m in August,” he said.

Auckland’s soaring house prices have seen scores of wouldbe first-home owners locked out of the property market. Last month it was estimated the cost of an Auckland home was rising at up to $60 an hour.

Those renting while they try to save for a deposit are also being hit by ever-rising rents.

It was hoped the mandatory 10 per cent level of affordable homes in developments in the Special Housing Areas would be a springboard for desperate house hunters.

A study carried out in March by Auckland’s biggest real estate firm, Barfoot & Thompson, found nearly half of young Aucklanders who hope to buy their first home expect to pay more than $700,000 — meaning they have to save at least $140,000 for a deposit.

Only 14 per cent of aspiring home-owners believe they will be on the property ladder within two years and the same percentage don’t expect to own their own home until at least 2031.

Labour housing spokesman Phil Twyford said the fact that developers were walking away from the SHAs showed that they had been “a spectacular flop”.

“Why would they stay when they can make more profit by getting out of that and not having to build affordable homes?” he said.

But Smith said the SHAs were always seen as a temporary measure to kick-start new housing projects while the unitary plan was being debated.

Some developers said they had abandoned proposed projects only because they had not been able to get the necessary finance and other resources together in time.

John Dare, a consultant for developers in four SHAs, said his clients had decided not to seek consents for a proposed 66-unit project in Browns Bay because they were busy on a townhouse project in Northcote.

Ten per cent of the townhouses would be within the affordable limit, he said.