Councils 'pricing Auckland out of market'

Rodney Dickens. Photo / Supplied

Not enough houses are being built in Auckland and families are being forced to squeeze up because land is too expensive, an economist says.

Rodney Dickens of Orewa said many young couples now had to live with parents. People had to take in boarders to afford mortgages or rent and garages were being used to house people instead of cars.

Dickens, of economic/industry/property researcher Strategic Risk Analysis, said the solution was to abolish the "smart-growth" planning policies which restrict land.

He wants more city boundary or fringe areas freed up, saying this will help to solve the problem.

His view is opposed by the Auckland Regional Council and organisations including the Environmental Defence Society and its chairman Gary Taylor, who is strongly opposed to what he calls urban sprawl.

Taylor predicted it would be a disaster for the environment and would add costs to the city.

But Dickens said Auckland's housing was becoming increasingly unaffordable and people would shift elsewhere unless more land was made available.

"Retired people hit by finance company failures are being forced to move in together.

"The gap between Auckland section prices and national average section prices has increased significantly, meaning people now have a much larger financial incentive than previously to live elsewhere."

Dickens cited the Hawkes Bay and Taranaki as areas where section prices were much lower and said house-building in Napier and New Plymouth was running above the national average.

Ring-fencing Auckland and strangling development caused big price hikes, he said. "Anyone vaguely familiar with economics will know that limiting supply will increase prices.

"Limiting new subdivision activity has meant the gap between Auckland and the national average section price has increased significantly.

"Councils are pricing Auckland out of the market."

The city faced the same fate as some United States cities which lost population after adhering to the "smart growth" policies, he said.

Dickens cited Statistics New Zealand data showing Auckland's urban area population was 30.9 per cent of the national total by last June. House-building in Auckland should therefore be the same percentage of the national new house-building sector, he said.

Yet since 2006, Auckland's housing-building sector had underperformed and the consequences could be severe, he warned.

"Even in the depths of the recession in the early 1990s that hit the Auckland region harder than some other regions, the annual number of consents for new dwellings in the Auckland region only fell to 28 per cent of the national total.

"During the strong performance by the Auckland region's housing market between 1995 and 2005 it averaged 38.5 per cent of the national total of new dwelling consents. However, the Auckland region only accounted for 23 per cent of the national total in the year to April 2010 and has been below 25 per cent of the national total since the year to September 2007.

"The period of underperformance since 2006 is much more than can be explained by a temporary cyclical underperformance, which suggests that there is something different than normal occurring."

Rodney Dickens is running two workshops on the housing market. Visit www.sra.co.nz/workshops.html