KiwiBuild killjoys wrong on two counts
If there’s one thing New Zealanders love to do, it’s having theories about why a thing won’t work. The naysaying is particularly strong around KiwiBuild – the admittedly ambitious government programme to build 100,000 ‘‘affordable’’ houses over the next 10 years.
Housing Minister Phil Twyford is so familiar with his own intricate policy that he seems oddly relaxed amid a rising clamour of misinterpretation that risks both the credibility and the political momentum of the scheme.
So here, as a public service, are rebuttals to two of the biggest KiwiBuild myths doing the rounds.
Myth #1: ‘‘Buying off the plans’’ means KiwiBuild isn’t building new homes – it’s just buying houses that were going to be built anyway.
Wrong. Barely 5 per cent of all homes being built today qualify under the Government’s definition of affordability – a figure that seems to slide between $500,000 in a regional centre and $650,000 in Auckland.
By offering to buy dwellings off the plans, the Government hopes to use its buying power to push developers to build a larger number of more affordable dwellings than they would most likely otherwise have done.
In other words, the ‘‘plans’’ will need to be new plans. The Crown won’t stump up a cent towards big, unaffordable homes. That would be absurd.
Myth #2: Getting rid of the rural-urban boundary will promote ‘‘sprawl’’.
No, it won’t. This policy is really about collapsing the artificially inflated price of urban land, especially in Auckland.
As long ago as 2013, the Productivity Commission pointed out that ‘‘pressure on land prices has been particularly acute in Auckland and land now accounts for around 60 per cent of the cost of an Auckland house, compared to 40 per cent in the rest of the country’’.
The value of land just inside the Auckland boundary was ‘‘almost nine times greater than the value of land just outside the boundary’’.
Chew on that, those who argue that rural land is more ‘‘valuable’’ than urban land.
Since then, Auckland land and house prices kept rising, reaching an average sale price of about $1 million.
That upward march has faltered recently, only thanks to sheer unaffordability.
Lower house price inflation may also reflect expectations that the new Government’s policies will reduce immigration, increase housing supply, and put a spoke in urban land values.
While there’s not much sign of the first of those, and KiwiBuild – the second – is only just starting to be visible, the third –blowing up the rural-urban boundary (or RUB) – is essential to more housing supply emerging.
Ironically, removing the RUB may have its most profound effect within existing urban boundaries.
It should encourage owners of undeveloped city land to stop ‘‘banking’’ it, a practice that adds to the shortage of land available for – as opposed to zoned for – immediate development, pushing values high.
The fear of sprawl comes from a widespread misapprehension that developers seeking to use land outside the RUB can expect local and central government to pay for the roads, water, sewerage, parks and other essential services those new developments would require.
Not so. Build outside the boundary and those costs will be borne by the developer.
In other words, the incentive to build inside the existing urban envelope improves – especially if land banking is less attractive and more city land becomes available at a more affordable price.
Add in some rules that encourage housing density – such as KiwiBuild buying smaller, more affordable dwellings off the plans and investing in high-capacity public transport corridors – and the stage is set for denser, more affordable, more liveable cities. Let’s hope it works.
Labour wants to remove the rural-urban boundary around Henderson in west Auckland, to stop land-banking on the fringe.