Affordable housing has no easy fix
Special housing areas, it turns out, are not making many more houses more “affordable”. It seems the attraction of a quick building consent has not been enough to make it worthwhile for developers to ensure 10 per cent of the houses are sold for an amount below 75 per cent of Auckland’s median price. Of 154 special housing areas designated by agreement between the Government and the Auckland Council since 2013, only 57 have applied for development consent and only 24 have produced houses. A total of 1268 houses were completed at May 31, a drop in the bucket of Auckland’s shortage.
For all the grumbling about the time councils normally take to issue consents, it appears developers find it worth their while to wait, carry the cost of delays, and maximise their return when the houses are sold.
Special housing areas were set up by legislation that will expire when the Auckland Council’s Unitary Plan comes into effect. Many eyebrows were raised last week when the council voted against putting an affordable quota into the plan. The mayor, supported by six councillors, wanted to put in a requirement that all developments of more than 15 dwellings had to make 10 per cent of them “affordable housing”. The proposal was defeated by 13 councillors who accepted the logic of the Independent Hearings Panel that the greatly increased capacity for all housing under the plan could do far more to improve the supply of affordable homes.
The plan, as revised by the panel, would push out Auckland’s rural-urban boundary far enough to provide 30 per cent more land for housing, and much greater scope for higher-density housing in designated areas of the city. The panel believed that to impose affordability conditions, such as the council had written into its proposed Unitary Plan, would “reduce the efficiency of the housing market”, become an “effective tax on the supply of dwellings” and be “redistributional in their effect”. The last, meaning redistribution of wealth, was not the purpose of this sort of planning under the Resource Management Act.
Those arguments did not persuade Mayor Len Brown and councillors Cathy Casey, Ross Clow, Chris Darby, Mike Lee, Wayne Walker and John Watson, but the majority did not let their heart rule their head. Warm and generous as “affordable” quotas may sound, experience with special housing areas shows they do not achieve much, and may indeed do harm, as the panel suggested. As a tax on development they undoubtedly increase the price of 90 per cent of houses.
There is no quick fix to the shortage of affordable housing in Auckland; no contrived solutions. The few projects to take advantage of special housing areas have been community housing schemes with government support. They barely make a dent in the numbers who cannot afford current market prices. If the Unitary Plan can greatly increase the supply of residential land, and speculators lose some confidence as a result, prices may stabilise at all levels of the market. The council has done all it can.