Time to think outside square on housing
Councils need the right tools and incentives if the country’s shortage of homes is to be overcome, writes Lawrence Yule.
AS THE heated Auckland housing market spills over into other cities, driving average national property prices ever further from the reach of many, the release of the Productivity Commission’s Using Land for Housing report provides a timely call to action.
It looks at how the laws work together, and the impact that has on housing supply and release of land for housing.
One barrier for councils in building new housing is the effect on existing ratepayers, so it’s promising to see the commission highlighting the need for councils to be provided with the right tools and incentives, and to pay for the infrastructure to support that.
There are key foundations that underpin successful cities.
A city cannot be truly successful if cost precludes new people from moving to it – without that, even the most vibrant city can stagnate over time.
To achieve more affordable and much-needed housing in our major centres, we have to start doing things differently.
Over the past five years, the Auckland housing market has been the single biggest point of imbalance in New Zealand’s macro-economic system and that effect is spreading insidiously.
Rising prices in Hamilton and Tauranga might be a source of satisfaction for those who have already bought – but a pall of gloom must be settling over many hoping to buy or experiencing rent surges driven by high house prices.
That’s repeated across many of our larger cities.
Apart from those mentioned already, a number of factors are driving property shortages – such as the timing of private sector sales and the time developers take to build once land has been zoned.
Banking policy, construction costs and the high cost of building materials were all flagged in the Productivity Commission’s last report in 2012.
While the housing stresses in Wellington are not yet as acute as some other regions, many central areas are already unaffordable or becoming unaffordable for many buyers, particularly first-time or single-income purchasers.
In July, property sales in the region rose 12 per cent compared to the same period in 2014, with the median sales price increasing by 4.1 per cent. That could seem a mountain to climb for a family trying to get a deposit together.
There’s a multitude of issues and none of them can be resolved by local or central government alone. Our hope is that this report will result in a number of changes, including the forging of a joinedup approach.
CRUCIALLY, the report reflects Local Government New Zealand’s (LGNZ) stance that councils are limited by existing laws to respond quickly to challenges such as the need for more land for housing.
The commission recommends councils are provided with additional options to pay for infrastructure development, including for new developments, such as the ability to use road user charges.
One of the recommendations LGNZ particularly supports is enabling councils to capture property value rises resulting from infrastructure investments.
Also welcome is the commission highlighting the potential of debt as a way of paying for infrastructure. We would strongly support a review of the debt-servicing benchmark for growth councils implemented in 2014.
We share the concern that this is set too low and could constrain the ability of councils to meet future infrastructure demands.
Councils are prudent bodies and, by and large, have very conservative debt.
Intergenerational debt can play an important role in funding essential growth of communities. It’s clear current systems aren’t working for New Zealanders or NZ Inc.
We need a planning system that’s responsive and enables plans to be made in a timely way. We need better information on factors likely to influence the pace and nature of growth.
If land for housing is to be prioritised, then the Resource Management Act or its tools – such as a National Policy Statement – need to require this.
Otherwise, councils won’t have the ability to make the sorts of decisions the commission is calling for. Likewise, if central government is to take a bigger role in planning and shaping our cities, then more investment is needed to build an urban policy capacity within central government itself.
The commission urges better co-ordination amongst central government agencies with regard to urban affairs.
That’s a challenge local government across New Zealand is keen to take up – we look forward to a future where we can work with central government to determine the priorities which are vital to all New Zealanders.
Lawrence Yule is president of Local Government New Zealand.