Yesterday Phil Twyford and I spent the day meeting with key people involved in housing and urban development in Auckland. I recommend Phil Heatley the Minister of ‘no Housing ‘ does the same. He might learn something.
Auckland needs to house another million people over the next 30 years requiring an extra 400,000 dwellings. That is an impossible task without a long term strategy and total commitment from government, local government and both the private and community sectors.
The Auckland Council has drawn up a draft Auckland Plan looking forward 30 years. It emphasises a commitment to a quality compact Auckland region. Feedback from Aucklanders has made it clear they want a bold visionary strategy. They also want the impact of development on the heritage and character of the region to be considered. And they want the ‘housing crisis’ addressed!
Auckland Council with all the good will in the world won’t achieve their plan on their own. Around 13,000 new houses a year need to be built every year for the next 30 years. That is a quantum leap from where we are now. In 1992 around 4,800 houses were being built a year. The number peaked at 12,000 between 2001 and 2005. In the latest figures the number has plunged to just over 2,000.
With this crisis already on us where is the National government’s long term plan? To date the only response has been to duck for cover and push responsibility on to anyone and everyone. Meanwhile Housing New Zealand has increasingly become nothing more than an uninterested landlord.
A different response is vital if we are to get out of the hole Auckland is fast sinking in to. It requires a multi-pronged strategy. Doing what has been done in the last 20 years won’t work. Quality affordable housing for rental, public and private, as well as homeownership for the modest income earner must be part of the equation. But where is the leadership from John Key’s Ministers?
The Government holds many of the levers needed right now. First, they need to get alongside the Council and other players to reach an agreed plan. If they have no ideas of their own use the draft Auckland Plan as a starting point. At least the Council recognises the crisis and have started consulting on it.
Identification of forward supply of land needs to occur now so zoning and the cost of holding the land can be worked through. Appropriate services including transport and amenities have to be planned for in advance. Local government is underway with this process but Government has been more interested in closing down affordable housing opportunities. How about Hobsonville Mr Key?
Finance for housing is a major hurdle as well. It’s time for some innovative thinking by Government as to how they could better use their borrowing power to kick start development. I’m told the market cannot produce homes below $300,000 in Auckland. If that is the case government has to consider the part it will play to get sufficient affordable houses built.
I met with a representative of a major bank recently who set out their ideas to improve access to housing finance particularly in Auckland. They want to work with political parties to see what can be done to address the crisis. Of course they are not benevolent organisations but at least they recognise something has to be done. I suspect there will be little interest from the Government.
A recurring theme yesterday was the cost of building houses in New Zealand. Costs are too high, according to those we met. Why are they so high? With so many natural home grown products available it should give New Zealand a cost advantage. If we better understood what drives those costs, with our ability to innovate and reach unique solutions to problems, we might come up with new ways of working. Perhaps it’s time for an inquiry into the cost of building houses in New Zealand.
We hear a lot about ‘economic transformation’ from John Key and Bill English. It’s hard to believe they can’t see Auckland’s housing crisis will be a barrier to that transformation.
The problem with less and less houses being built in Auckland and a limited supply of good quality houses available, prices can only go up.
Rubbish houses in Auckland are going for big money and rental accomodation is scarce.
Leaky homes have compounded the problem as technically they are off the market.
The real question is why are we adding 1 million to Auckland’s population? Such population growth is fundamentally unsustainable. The government should be looking more at trying to slow Auckland’s population growth, as that will give far more time to build additional housing.
Annette, would you support a relaxation of the development rules, a significant reduction of council charges, reduced compliance requirements and less ability for the ability to stall development of large land block simply because a few neighbours don’t want to see a 90 year old villa torn down on their street, to stimulate private and community sectors in building more homes?
I’m sure Key and Heatley want a “bold visionary strategy” also, just as Key and Bennett and the rest of them would describe current attacks on other areas of social welfare a “bold visionary strategy”. In other words, where is your policy?
Does anyone really know why building costs are so high in New Zealand we hear about all these timber companies and mills going broke but the price of building materials keep going up???
Also I am told that a number of companies and wealthy individuals own vast tracks of land with potential development sites, however they only release onto the market in stages to keep the prices up which is sensible if you want to maximise profit.
Development costs plus GST make building costs prohibitive, hence we are at a stalemate, thank god for all the shinney new Chinese money that has come into Auckland in the last 20 years that has kept the property market bouyant for the property investors.
Also with housing and suburb developments in places like New Lynn, Albany and Mt Wellington that don’t have back yards- are there proper and free public recreation spaces available and easy to get to on foot?
Are the currently available parks sufficient given infill housing, these new blocks however you term them and apartments?
Or does recreation become a luxury item? Does sport (already expensive to view on sky) become prohibitive to participate in for some?
No clearer sign of the underclass than life on the estate.
Tena korua Annette raua ko Phil,
Like the Mitre-10 ad on tele with the kids at the playground: “no surprises there mate!”.
The evictions of working class Aucklanders from their GI state houses is surely Labour should act on, and fast? The sales of state houses on valuable sections by the Nats is also something that needs to be opposed LOUDLY by the opposition.
A suggestion I’ve seen made in a few letters to the editor columns in Wgtn & Chch seems sensible – Housing NZ should subdivide (if necessary)existing 1/4 acre sections with existing state homes on them, and build another state house at the back. Retaining the existing state houses, many built by the 1935 Labour Govt and subsequent administrations should be kept for a number of reasons:
1) The rents received have paid for the land/house build costs once – if not twice over. They are unencumbered and a real state asset in that regard;
2) Many state houses which the Nats have for sale are in established, now middle-class areas eg Kohimarama, Orakei, GI etc, in Wellington in Strathmore/Miramar etc as a result of the smart ‘pepper-potting’ policy which puts ordinary kiwi families in good areas in terms of community, schooling opportunities etc;
3) the above policy has seen generations of state-house kids ‘make it’ educationally and in terms of their working lives and the range of contribution and community good coming back to our nation egs include Bruce Jesson, John Key (dare I say it), who were raised in Ilam state houses and both graduated from Canty Uni (LL.B and B.Com respectively)
4) I wonder whether Key ever thinks about the impact on his Mum and siblings and himself if they had been evicted etc;
5) State housing offered many whanau the only opportunity they ever had for a secure, stable home, and the attendance of one primary school and one high school; and
6) Many working class families who were given the opportunity to purchase their state rental home got their only chance to own their own homes.
The Nats have created a diaspora of NZers to Ozzie, plus a diaspora of state-house refugees, evicted from their homes, neighbours and communities.
A friend of mine from uni days in Auckland – Rau Hoskins – is NZ’s leading Maori architect with a practice in Grey Lynn. He was contracted to design state houses for the 21st century and the plans are fantastic – providing for the kind of extended whanau living that Maori and Pacifica families need, which would be great if only they were ever built.
Roll on the next election, but in the meantime, could you Labour MPs shout a bit louder in the media? And support in person the folks being evicted in GI and elsewhere in person?
That would be great.
Iri Sinclair BA (Auck) LL.B (Cant)
PS My late dad and my mother built our family home in Paraparaumu, after building their first house in working class Linden near Wellington. My mother applied to Maori Affairs for a loan but was turned down in the early 60′s cos she is a woman, and only Maori men could get those. In the end they got a ‘state advances’ loan at 3 percent which allowed them to buy a cheap section and build the first ‘kit-set’ house in Wellington.
The sale of council housing in Auckland didnt help either, and I see that the Freemans Bay former council flats and units are now inhabited and owned by professionals. Ponsonby where I lived in 9 ‘worst house best street’ abodes while a student from 1983-86, which was a vibrant diverse community like Newtown in Wgtn where I now live is today. Newtown has extensive council owned housing currently under refurbishment and upgrade.
Kia kaha, kia manawanui
Some real thought needs to go into town planning issues and an integrated approach needs to be taken the problem is I think Central Government want to make all the decisions however nothing looks like getting off the ground.
Hello Annette,
The councils are at the centre of this problem and cannot be trusted with the resolution. Let me go through some of the hoops that a developer/ private citizen has to jump through.
1. My partner and I purchased fully zoned medium density residential land in the old Rodney District Council. Prior to the purchase we did due diligence with council to ensure we could do what we wanted i.e. subdivide and build houses. All was good and we paid a substantial multimillion dollar price for the land.
2. We immediately started the consent process with high calibre consulting advice.
3. During the process we had to put up with a hopelessly inadequate and incompetent group who could not keep track of files, regularly changed their minds, lied to us, misled us, arbitrarily called for redesign etc etc.
4. This went on for 15 months. My partner and I are positive people and we tried to manage this through.
5. We were then told that the consent was about to issue. At that time Development levies were $15k per lot. Three months later no consent had issued and we escalated the matter to the Director of Planning and Consents who initially disclaimed all knowledge of the development (which at that time was the largest in Rodney).
6. It then transpired that council would not provide water or sewerage connections in spite of telling us during our due diligence that these were available. At the meetings we had with our lawyer and the senior executives I found them to be untruthful and incompetent. The acting water engine could not manage a sentence in English.
7. At a crunch meeting we threatened council with civil litigation. At this meeting we were told levies would rise from $15k to $33k per lot! So 18 months down the track after all the hassle council were going to push us from one fiscal period to another so they could take over 100% more in fees.
8. The outcome was that we got some at the old rate and some at the new.
9. My experience is that is is no good complaining to the politicians (councillors) as they are just not equipped (intellectually or by experience) to deal with the issues. They are also regularly misled by council staff who use any flimsy pretext to put the file on hold.
The point of all this is that a section costing around $250k has around $90k of council charges, GST etc. Housing will never be affordable whilst this situation prevails.
Council officers are completely unaccountable and often act with out rational or ethical oversight.
One experience we had was council requesting that we put in over capacity sewerage pies so they could pick up another catchment. We were told that by council that they would pick up the difference of $40k plus. They subsequently dishonoured that commitment and blandly informed us that they had made a mistake. That was in a meeting where we arrived to hand over a $1.2m development cheque!
This was the reason I voted for the supercity. Unfortunately some of the same faces have made it on to committees on the new council. Heaven help us!
So if you are genuine about wanting affordable housing please take a look at the mess that exists within council. Unfortunately the local rate payer has no idea how incompetent their council is. No applicant should be subject to the whim of council. The rules should be explicit and clear. You should not be forced to employ a consultant to understand council rules. It should not take 18 months for a straight forward consent to issue. Fees should apply from the date of application, not the date of issue of the consent. Officers should have to really justify suspending a file and consents should issue within the required statutory time frame unless there are reasons provided in writing.
Additionally, there should be a more rational approach to zoning. Councils restrict the supply of land, inordinately hold up the development of zoned land (often capriciously) and have no controls over the amount they can levy. Is it any wonder land is expensive. This is the major cost in housing. These are also they reasons why so many developers go broke.
Just so no one misunderstands, I am in favour of controls and consider my self to be ‘green’. But to be told by a council that they are not ‘going by their widely consulted and published catchment plan’ but by a new set of unpublished and unapproved criteria is intolerable. No one can make a complying application when council officers capriciously change the rules.
I hope you have some idea now of the complexity of the issue.
@Annette – I said it once and I’ll say it again. Herd up dem homeless people, stick em in the waterfront cloud and start up an Occupy the Cloud protest!
!!!!!
Pete – Well said! And your experiences in Rodney echo my own with the Manukau City Council just prior to the Super City merger, and by all accounts is similar to the frustration many Christchurch residents also face in that city.
If local government is serious about planning for significant growth of our larger cities, then they need to look at the barriers in terms of both costs and processes that they themselves are responsible for.
Thanks Annette for raising this issue.
Kia ora koutou, he mihi ki a koe e Jack,
Whoa! Whats happening? Boy oh boy its hard times alright! I’ve just returned to Wellington after 2 weeks down south. Christchurch is munted. MUNTED. Ten thousand people have already fled the chaos, others are trapped as their whare are condemned but the Govt ‘bailout’ doesnt provide them with enough money to build or buy in an area of Chch not suseptible to shake,quake, rock n roll.
This is the MOST serious disaster to hit our nation since NAPIER but the Govt is stuck in the mud. The people living there are tired, stressed, literally buggered. All Key and his fat mate Brownlee can offer are empty platitudes. Our Chch people need more. Leadership, empathy = the Govt needs to tackle the insurers, and make the Chch City coucil accountable…
Praxis is needed yesterday! Praxis is the joined practical response – action – by ordinary people to sort out real problems in real ways.
Kia kaha, kia manawanui
PS Sack the Mayor and deleted Trevor soon as possible. Hold fresh elections and get competent leaders in the chairs!
Pete
I sympathise with your plight with Council officers. Remember they operate in an environment terrified of liability (leaky home crisis) and this results in conservative approaches. We were promised post Hunn Report and pre Building Act 2004 that Council’s would improve the quality and standard of their building officers. IF they have achieved that it is a sorry indictment of how bad they were before!!!
Bear in mind that while you are looking for more accountability, staff are being “rationalised” throughout Auckland and elsewhere I am sure. When institutions rationalise often the best staff move because of the drop in morale and increase in workload, the ones who stay are entrenched and you’d love them to have left.
“a relaxation of the development rules”
We all need to be very careful here. I have case after case coming to my notice where the party most likely to have long gone is the developing company. Set up a company, build the project, remove profits, wind up company and start a new one for the next project. Mark Bryers began this in 21998 and had Council Notices issued against him for building without a consent and yet it took another half a dozen years for the empire to collapse. Put his name into the company search engine and see how many company vehicles he used and abused.
Not all developers are rat bags. However many of them building between 1990 and 2005 cut and ran, with dece3nt profits. Council has to take up their portion when the claims are resolved.
Developers tend to have only one guiding principle, their bottom line. Council’s must be broader than that.
Tracey, thanks for your comments.
Before I undertook this development I was CEO of a very high profile consulting group. As such I had wide involvement with senior management across the government and private sectors. It is against this background that I made my comments about council officers. My comments are about process, competence and ethics. The point I made was that the typical ratepayer would have no idea what it was like to deal with their council on a business to business basis. It was a major eye opener for me. This is not about my development, it is about why housing is so expensive.
The principal component in house prices is land, and the major cost in land development is council and related charges. It costs more in council costs and GST than it does to purchase the raw land (per section) or to complete civil construction. This is why land is expensive.
No applicant should have to suffer council increasing charges by over 100% after the application is made, and no ratepayer should have to suffer deliberate obstruction by council staff.
As one prominent councillor told me (now a Super City Councillor) the culture in councils is to obstruct applications not to facilitate them. It should not take 18 months for consents to issue on a fully compliant application on zoned land. When I spoke to a council engineer about the inordinate delays and told her that council was going to cause us to miss a whole construction season and that this would add$500k to the cost, her response was ‘so?’. That would effectively put another $5000 on each section. The true cost of that is borne by the purchaser.
With regard to the Hunn report I just cannot conceive that council staff were worse before. I cannot understand how it takes five senior managers to attend a meeting to inform a ratepayer that they are going to dishonour a substantial financial commitment made to that ratepayer. So much for ethics in business. How can five managers in any organisation agree to fraudulently extort services from a party and not pay for it? How can any one trust people like this? This is why I say any reform has to be driven from the outside.
I agree with your comments about some development companies, but my concern was about the cost of housing and the causes for this. In this area councils are a big part of the problem. Unfortunately, in my experience elected officials do not have the intellectual horsepower, experience or fortitude to understand and deal with the issues. I know this sounds harsh, but that is the way I see it.
Cheers.