Herald Editorial – The Breakdown
The Herald produced a somewhat interesting editorial in relation to Auckland and its housing. You can read the full editorial HERE.
However, the piece seemed to have a few holes so I am going to provide a breakdown on it drawing in material from previous blog posts to flesh out further points. Here we go.
Editorial: Fresh ideas needed on housing crisis
Late last year Finance Minister Bill English acknowledged that Auckland’s runaway property prices posed a risk to the New Zealand economy. In similar markets, he cautioned, spiralling house prices had steadied before collapsing. For thousands of homeowners and investors, freefalling real estate prices would be a disaster. Property values would be wiped out, leaving mortgage holders servicing loans worth a lot more than their asset. That would endanger not just the economy, but also the Government’s political wellbeing.
I think we can move on beyond the doom and gloom even as deflation threatens the Economy. House prices have stabilised out in Auckland with people already moving the regions and housing supply coming through this construction season. Continued expansion in both the main City Centre and South Auckland heavy industrial complexes coupled with positive consumer, business and manufacturing indicators show confidence in Auckland. So jobs are not exactly a problem here but housing and transport are – something this Government is extremely reactive in while Auckland Council for whatever faults it might have are being proactive.
For younger generations, the chasm between property prices in Auckland and incomes has become so wide as to seem unbridgeable. By one estimate the gap, at 10 to one, is the largest on the planet, meaning the prospect for many of home ownership in the city where they live and work is out of reach. This breach has opened rapidly. Should it remain it could entrench the division between those fortunate enough to have a foot on Auckland’s property ladder and those who sense they will pay rent for the rest of their lives.
So it is hardly a surprise that Mr English has identified the Super City’s property market as a significant economic and political issue.
It will become a political issue if the under 35’s get off their backsides this year with Council elections and 2017 with Central elections and actually vote. Otherwise the rest is simply a moot point.
This week came the first sign that the Government is thinking outside the square, with Social Housing Minister Paula Bennett floating the idea of paying cash to help poor families find empty state houses outside Auckland. There was a hint of stick in the announcement, with the suggestion that tenants who stuck with the Auckland waiting list would find themselves waiting longer for a home. Ms Bennett indicated that the idea could appeal to Pacific Island families, though it would be unfair if any family got pushed down the waiting list for refusing to shift to a region where they might struggle to find work or social connections. This measure would have limited impact on the Auckland property market, but is a response to one part of the housing challenge, given that low-income families face overcrowding and related social ills.
If Government is really proposing this then they are truly suffering from intellectual poverty. Coercing people to move away from their communities and jobs to an area of New Zealand they are not familiar with (enough to be ready to move on their own in the first place) and might not have the job prospects lined up will not only harm those being coerced to move but wider New Zealand as well through amplified social consequences (crime and failing health being the worst).
As I said earlier the problem is not jobs but housing and proper transport to get people from their homes to their jobs (and places of community). My posts Jobs Within 30 Minutes using Public Transport. Auckland Has a Lot of Work to Do #AKLPols and How One South Link Improves the Job Catchment for Southern Auckland #AKLPols demonstrates the work Government and Auckland Transport have ahead of them if we are to better connect people to their jobs and places of community.
The real challenge is getting more houses built.
State House building anyone?
Pressure to close the house price-to-income ratio, thereby putting homes within reach of more residents – say by halving the existing gap – requires measures which reduce the costs of supplying housing and make more housing available. Given the pedestrian progress made towards this goal over the past few years, it may seem beyond the skill of policymakers in Wellington and city hall.
Actually this one I am going to squarely put on the Government. That is Council is actually getting stuff done via Panuku Development Auckland and the Proposed Auckland Unitary Plan while Government is caught reacting to the situation. That also includes trying to “sell” Crown Land for housing that either belongs to Council in the first place or triggers a challenge by Iwi over Treaty First Rights of Refusal (basically Minister Smith’s scheme was an entire flop with no one in the Developer sector touching what Government had offered).
This should not be the case, but the two need to work from the same page. There is a pressing need to make more land available for housing. This will require Auckland Council to look hard at its property portfolio and could involve measures which challenge landbankers. The role of private investors in the provision of infrastructure – usually the domain of the public sector – should be explored and the push to intensification – often in the face of local resistance – maintained. Foreign investors could be encouraged to buy non-urban land provided they quickly created new housing.
Here is the crux of the Editorial and the issues of our Government. Yes Council and Government need to work from the same page and to be fair they have been although damn slowly in regards to transport. But for the rest it is a case of again Council being as proactive as it can while Government continues to be reactive to the situations in Auckland. You see the Council’s property and development arm Panuku Development Auckland are already well under way with the Transform, Unlock and Support program in developing plans and kick starting residential and commercial development through urban renewal right through Auckland.
The big two Transform projects of Manukau and Onehunga show the start of such urban renewal getting under way: Panuku: The Presentations and The Work Ahead for Panuku #BetterAuckland. The Otara Papatoetoe Local Board have even jumped on the opportunity with Manukau and are pushing Panuku to start the ball rolling at affordable housing at the south end of Manukau City Centre: Otara-Papatoetoe Local Board Agenda – November 2015. + Manukau Land Sales Again #AKLPols. Initially the proposal for the land sale met my skepticism however, after meeting with Panuku on the situation I was more at ease with it especially if the site is used for higher density affordable housing. Affordable housing in a City Centre (Manukau) that is very close to jobs and transport facilities.
In the end though better integrated planning will be needed if we are to get Auckland firing on all its cylinders: Council Rebuttal Evidence for Centres Zones In. Case of Inter-Regional Planning Needed? #nzpols
Taking a leaf from Ms Bennett’s script, there may be value in trialling what have been called Special Economic Zones in the Super City. The idea, floated by the New Zealand Initiative, a Wellington think tank, could see the Resource Management Act relaxed in parts of Auckland with the support of local boards. In these places, restrictions on small dwellings could be eased so they go up faster.
These measures should not scare the horses. They should go in hand with steps which reduce New Zealand’s relatively high construction costs. Together they are modest steps which might help get affordable house building cracking.
The Special Economic Zones are simply not needed. More of the Mixed Housing Urban Zone and more Terraced Housing and Apartments Zone through the Unitary Plan across Auckland would go great distances in getting more dwellings up needed. The Government also getting off its backside and actually building State Houses would also go great distances especially breaking land banking but yes I know – politics…
The Council has put place a plan to deal with industry in Auckland over the next thirty years: More Information About the Industrial Business Precinct Plan. And such a plan once the Unitary Plan goes live later this year is going to be needed if the bulk of the 276,000 (approx.) new jobs over the next thirty years are heading to South Auckland: Auckland Plan Implementation Annual Update – 2015. From that post:
NEW INTEGRATED BUSINESS PRECINCT PLAN FOR THE INDUSTRIAL SOUTH
The Auckland Plan anticipates an extra 276,700 jobs will be needed in Auckland by 2041. A substantial share of these jobs will be located in the zoned industrial locations in south Auckland. These areas include some of the prime industrial and manufacturing locations within the region and they play a strong role in Auckland’s economy and the economic growth of Auckland and New Zealand, generating $18 billion of GDP in 2012.
An Integrated Business Precinct Plan has been adopted which provides a framework for the zoned industrial precincts for either light or heavy industrial uses within the Proposed Auckland Unitary Plan south of the city centre. It seeks to support these industrial areas in a co-ordinated way so that they can continue to contribute to the delivery of the economic priorities of the Auckland Plan, Auckland’s Economic Development Strategy and TSI. At both a regional and national level the industrial precincts will have a role in contributing to government’s business growth agenda outcomes.
Source: Page 37 of the Auckland Plan Implementation Annual Update – 2015
Ultimately I can not help but think the Editorial was more chiding towards the central Government than to Auckland Council. The Government has being reactive to the happening in Auckland while Council has hit its stride and is becoming more proactive within the resources it has. Maybe it is better for Government just to step back and fund out the new Auckland Plan (due 2017) if we want to get on top of housing and transport in Auckland? I noticed Key has said in the Herald he is looking for a fourth term. He might want to get a tad more proactive up here if he wants his rating to stop sliding through the 30’s.