It is disappointing, though no surprise, that after two years the Government's "housing accord" with the Auckland Council has produced just 102 houses (of which it knows) in areas designated for faster building consents. When the accord was signed in October 2013, Auckland needed 39,000 houses in three years. This is the rate of building that will be needed to accommodate the region's projected population increase over the next 25 years. At least 25,000 new houses should be built or nearing completion by now if the three-year target is to be met. The tally of 102 known to the council is pitiful.
But it is no surprise because the housing shortage in Auckland is not caused only by slow council consent procedures. The Productivity Commission has found a raft of other contributing problems, including the scale and capacity of the building industry in New Zealand. The council also points to the fact that when it does issue consents, there is no guarantee a house will be built. In fact, 2027 consents have been issued under the accord's fast track and only 102 are known to have come to fruition so far.
The routine consent procedures appear to be doing better than the accord. At least 19,900 new sections and building consents have been issued across the region since October 2013, not many of them inside any of the 95 special housing areas marked for rapid consent. To qualify for the fast track, projects had to include a proportion of "affordable" houses, which means priced no higher than 75 per cent of the median house price in Auckland.
That condition is probably discouraging construction in the special zones and making land in those areas more attractive to speculators than developers. At least one block has been advertised as a "land banking" opportunity. That illustrates a truth the Government has been reluctant to acknowledge. Auckland house prices have been driven by speculative demand as much as - or probably more than - a shortage of supply.
Fortunately, both the Government and the Reserve Bank realised this year that demand would have to be tackled. The Government introduced an effective capital gains tax on non owner-occupied houses bought and sold within two years, and required foreign buyers to have a New Zealand bank account to get an IRD number. Those measures came into effect on October 1. The Reserve Bank has imposed a higher loan-to-value ratio on mortgage lending for Auckland investment property, which came into force last Monday.
