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Lateral thinking required to increase housing stock

By Paul Lochore FREINZ

May 2017

Lateral thinking required to increase housing stock

We’re in a crisis situation, people. Do the maths. Buying a house is now unaffordable for 86% of Auckland’s non-home owners. Over the past five years Auckland rentals have risen by 25%, land prices have increased 52%, building costs by 36% and house prices by 45%. Land is the new gold.

With only 7200 new houses completed last year (although 9900 dwelling consents were issued), we’re still 50% behind the number of new builds we need in Auckland annually to cope with our population increase – and we’re not within a bull’s roar of addressing the overall backlog shortage of houses.

The reasons for this are many and varied.

The pressure on Auckland’s housing and infrastructure increases by the year. In 2016 Auckland absorbed an additional 33,900 net permanent migrants.

The current big projects in Auckland’s CBD are sucking up materials and tradies from the rest of Auckland.

The majority of New Zealand banks have become more cautious and restrictive in their lending to local residential property developers, particularly those involved with high-risk big residential projects. In 2016 35 planned Auckland multi-residential projects fell through.

The development fees charged by the council for extra community and network infrastructure are still astronomical. Where are these reserve fees going? Not into infrastructure, it would appear.

In Auckland we’re paying the price of many years of poor planning by our local bodies. We still have sewage pouring into our harbours whenever it rains. Let’s fix up the existing infrastructure first.

The cost of new builds has increased 50% in five years – horrifying. It makes nonsense of budget forecasts for big construction projects because they’re out of date before the first sod is turned.

The shortage of construction materials continues to be crippling – construction firms are struggling to source concrete, glazing, kitchens and carpet. Because the supply of local materials is so stretched, cheap and substandard materials, including poor quality steel, is being shipped in from China. This is another ticking time bomb in our new buildings, as we will all discover in years to come.

Here are some solutions.

  • We should be manufacturing more of our construction materials in New Zealand. Because we can’t compete with third-world countries on price, some key manufacturing areas would require government subsidies. Worth it, if we can create better quality products and therefore better, more durable homes.
  • Incentivise new centres of manufacturing outside Auckland to encourage people to move to the provinces, which are currently in their death throes.
  • Radically increase the number of trade apprenticeships. There are already government incentives for employers prepared to take on apprentices. Why not incentivise apprenticeships too? Make them a more attractive option for young people.
  • Place the immigration focus on bringing in qualified builders, plumbers and sparkies, rather than on so many unskilled hospitality staff.
  • Build more quality terrace housing rather than placing the emphasis on small, mean apartment blocks that will become the slums of the future.
  • Speed up the building and resource consent process by privatising it. Take it away from the Auckland Council.
  • We have a colossal bureaucratic system at Council – there are too many people on six-figure salaries. Slash away at this number of bloated bureaucrats and put the money saved into infrastructure.
  • The government needs to close the door completely to any non-resident foreign property investors.
  • Government and local bodies need to take greater responsibility for ensuring sufficient affordable housing or rentals for our key service people, not just teachers, nurses and police, but also construction workers, to ensure that we can retain them and reduce the number of homeless in our city.
  • The Council could commit to partnering with the private sector to build a substantial quantity of new factory houses on some of its land to accommodate the above.
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