Lawrence Yule: Wider approach needed on housing

Building new houses in Auckland is not the only answer. Photo / Chris Gorman

Opinion

Creating vibrant communities NZ-wide will encourage people to look beyond cities, writes Lawrence Yule.

Homeowners in other parts of the country could be forgiven for looking at their counterparts in Auckland with envy as headlines flag up soaring property values in the city.

Many Auckland dwellers have become millionaires on paper due either to dramatic increases in valuations of their homes or CVs rocketing by more than a third in the past three years.

However, apart from those planning on cashing up and moving away, the overheated market is a challenge for Auckland dwellers. Buying in Auckland has simply become impossible for many.

A recent report by the New Zealand Institute of Economic Research (NZIER ) pinpointed the overvalued Auckland housing market and slowing global growth as key risks to New Zealand's economic outlook. It also predicted that if the Auckland housing bubble bursts, that will dent consumer confidence and banks' willingness to lend.

Clearly the overheated housing market is not good for Aucklanders, and it's not good for NZ Inc either.

The problem of housing affordability in New Zealand is not just confined to Auckland. A recent international survey found housing to be unaffordable in all eight of New Zealand's major markets. The Economist magazine also found New Zealand house prices were among the most overvalued in the world. However, the problem is most acute in Auckland.

Building more dwellings is one part of the solution. Part of the Government's approach to tackling this is a new Productivity Commission inquiry into use of land for housing.

The Government has asked the commission to "examine the bylaws, processes and practices of local planning and development systems across New Zealand's faster-growing urban areas". This will, most likely, reignite debate about the role of local government in addressing housing affordability.

Local Government New Zealand (LGNZ) strongly supports identifying solutions to housing affordability and welcomes the commission looking at how land planning systems can better benefit cities and how local authorities assess demand for and supply of land.

However, when considering housing supply and affordability, it is important to recognise the many factors at play.

Overall, land shortages are not the issue. Independent research commissioned by LGNZ found that apart from a small number of metropolitan areas, residential land supply shortages are not a universal problem.

Major issues affecting the supply and affordability of housing range from the timing of private-sector land sales to how long developers take to build once land has been zoned. Banking policy, construction costs and the high cost of building materials - highlighted in the Productivity Commission's last report in 2012 - also play a part.

Another recent NZIER report also found that demand for bespoke housing, poor project management and slow uptake of technology were factors in slowing productivity in the building sector.

And council roles in planning are not always clear cut. Changing zoning plans is complex and frequently subject to litigation and decisions are often challenged.

Local government will be determining how it can work with the Government on changes to the Resource Management Act (RMA) - and providing input on ways to make RMA processes more efficient and accessible for the public.

This includes Housing Accord processes that streamline and better focus public participation, template formats for consistency, plan provisions with greater clarity around expected outcomes and more accessible e-planning tools.

Statistics from the Ministry for the Environment show that timeliness of consenting has never been better, with 97 per cent of consents processed within statutory timeframes.

Tackling housing shortages is about much more than cutting through the red tape.

LGNZ strongly advocates that the most effective way forward is through a co-ordinated effort between local and central government - to drive regional development and revitalise regional economies.

Simply building new houses in Auckland is not the only answer. A total of 591 new-dwelling consents were issued for the city in October. Over the past decade Auckland's population has grown by between 21,000 and 24,000 a year, much of that fuelled by migration. The city is estimated to need 10,000 to 13,000 new dwellings a year.

Auckland Deputy Mayor Penny Hulse says the Auckland experience of structural housing unaffordability is one faced by many growing cities around the world. People want to live where there are good job prospects, where high-value service industries are, and where there is quality tertiary educational infrastructure. She says Auckland Council is looking forward and has plans for well beyond the three-year lifetime of the Housing Accord.

The priority cannot continue to be simply on how to provide more housing. It must be on how we encourage people to create and support vibrant economies and communities in the many areas of New Zealand with good land supply.

If we can do this, migrants will look beyond a handful of metropolitan areas, and skilled Kiwis will have confidence to move from areas of housing pressure to other regional centres to buy homes, raise families and enjoy productive careers. With a concerted, joined-up approach from local and central government and the building industry this can be achieved.

Lawrence Yule is the president of Local Government New Zealand.