We can highlight the increase as indicators of greater demand by people, including retirees and young families, wanting to move to Kāpiti as a great place to live. And the positive projection of growth related to the coming completion of Transmission Gully and PP20 expressway projects. But there is a dark lining to this silver cloud.
Three years ago when the average Kāpiti house price was valued at just over half a million dollars, it raised eyebrows. This week the average value benchmarks at $711,465.
Despite moves by the Reserve Bank to cut interest rates, printing money to buy government bonds to lower long term rates, and relaxing loans-to-value restrictions to enable first home buyers and landlords, house prices keep spiralling up to unaffordable levels.
People are homeless and struggling with increasing rents. The single key explanation for this has been the chronic lack of supply of houses to keep up with demand.
The conundrum was best explained by Bernard Hickey in three opinion pieces in Stuff (September 26/ October 10/ October 24). He points out the reason why over the last five years, as the cost of houses and rents kept spiralling up in the rest of the country, Christchurch bucked the trend to keep prices stable.
The key was the large scale release of land. Following the Christchurch earthquakes the neighbouring councils of Waimakariri and Selwyn turbo-charged their 30-year growth plans to deliver it within one year. This competition forced land banking Christchurch property owners, fearing loss of value, to also race to release land.
The Government took two significant steps. Using the emergency powers of the Christchurch Recovery Act they suspended the RMA. Central government also directly funded the cost of infrastructure.
As Bernard Hickey explains, normally when new suburbs are planned councils and the government have cost sharing agreements. The problem is councils, especially those dependent largely on rates for revenue, are up against borrowing limits.
Reluctant to borrow to support the upfront cost of the infrastructure to enable subdivisions, especially large scale suburban developments. Debt levels that could undermine their credit rating. And made politically more difficult by ratepayer intolerance of increasing debt.
When the cost of infrastructure development is passed on to developers through development contributions the cost in turn is passed on to buyers.
Given Hickey's explanation the political economy requires the leap-frogging of existing land bankers to create large releases of land for residential development and also rezoning urban CBDs to increase density.
These are aimed solely at lowering land prices. And securing central government funds to pay for roads, waste and stormwater, parks, footpaths ... etc to enable infrastructure for housing. Christchurch has used its lower housing costs to attract businesses and workers.
Changes to the RMA are pending that will empower regional spatial planning. One expects such changes to align with the centralised power of new enabling legislation like the NPS on Urban Development. These support the creation of regional spatial planning and the creation of powerful Urban Development Authorities.
There is also an infrastructure funding and financing element for councils to use special vehicles to prefund infrastructure for housing development without using ratepayer funds.
Over the last 18 months Wellington's councils have collaborated on a regional strategy, the Wellington Regional Growth Framework.
It's set to go through a public consultation process early next year. This is a parallel strategy to enable the region to leverage the government's legislative changes. Change cannot come soon enough.
