The Auckland Housing Accord at the centre of this week's Budget is what the Americans would call a "Hail Mary pass".
Bill English and Len Brown have committed to issue 39,000 building consents over the next three years in a belated attempt to deal with Auckland's housing shortage.
They hope new supply will cap the latest 10 per cent-plus surge in house prices that the Reserve Bank warned could derail low inflation from its 1 to 3 per cent track and trigger interest-rate hikes. The Government and Brown know their re-election hangs on the perception they are "doing something" about the housing crisis. But this forecast of 39,000 consents is barely believable. Issuing 9,000 consents next year will more than double what we've seen in the past five years.
The 44 per cent jump in 2015 to 13,000 consents will see more consents than at the peak of the building boom in 2003/04, before the doubling of land and house prices.
The explosion in 2016 to 17,000 consents is just not credible, given neither central government nor the Auckland Council plan to build those houses. The assumption is that once it is easier to get consent, the buyers and developers will be there with cash in hand, and the tradespeople will be there with tools in hand. This cannot happen given the lack of skilled workers in Auckland, the land and construction costs, and the lack of development finance.
