Local government encouraged to help kick-start property market

With property prices soaring and home ownership at its lowest level since the 1950s, local councils are under pressure to give the property market a boost.

They are being encouraged to free-up more land to meet the rising demand.

But some councils have seen this as a way to turn a profit by playing property developer themselves.

Industry experts say councils should not be in the property game, because it creates extra competition, while others see it as an astute move to bolster ratepayer reserves.

Under a proposed government policy statement on urban development capacity, councils would be required to supply more land than demand suggested.

They would have to monitor and respond to data on housing affordability, resource consents, and the value of land on urban boundaries.

Those who did not comply could be challenged Environment Court.

A Nelson City Council spokesman said the council carried out in the subdivision work in the 1990s.

The Walters Bluff Subdivision was a council-only project, intended to encourage growth and development close to the city, while the Ridgeways in Stoke was a joint venture with Homedale Holdings.

‘‘[The council] does not see residential property development as part of its core business,’’ he said.

By contrast, the Marlborough District Council was pushing for rewards for the ratepayer rather than providing cheaper accommodation.

A council spokeswoman said the Boulevard Park on Taylor and Forest Park Views subdivisions had enabled the council to allocate a total of $42.5m to different community and infrastructure projects since 2004.

The council came under fire from Kaikoura MP Stuart Smith earlier this month for leaving itself open to criticism for being the ‘‘poacher and the gamekeeper’’, competing on and regulating the property market.

Councillor John Leggett said land for the Boulevard Park on Taylor subdivision and the council’s first subdivision Forest Park Views, part of which was completed with developer Suburban Estates Ltd, was purchased when Blenheim was significantly smaller.

‘‘We didn’t set out to develop it for residential sale,’’ he said.

Providing affordable housing was not the point of the project, but it had saved ratepayers a lot of money, Leggett said.

‘‘We didn’t pass on the opportunity to someone else to clip the ticket,’’ he said.