Brian Rudman: Santa, let's talk about housing

Illustration / Peter Bromhead

Analysis shows a big gap between reality and the mutual admiration society's figures on new-house building

Let me pat your back, Mr Mayor. No no, minister, the credit's all yours. The way Housing Minister Nick Smith and Auckland Mayor Len Brown are talking up the first year of the Auckland Housing Accord, you'd have thought the city's housing crisis had been solved.

Says Dr Smith: "11,060 new sections and dwellings have been achieved in the first year - more than 20 per cent above the target of 9000."

Chimes in Mayor Brown: "We have moved quickly to establish the Special Housing Areas (SHAs) where construction is now under way at full steam. We have diggers on the ground at sites across Auckland ... " Yeah right, and Santa's going to drop houses on every one of them.

Dig into the first annual report of the accord, and a rather different picture emerges. Of the 5523 new sections created in the year to September, only 617 were in SHAs. And of the 7366 new dwellings approved in the year, only 354 (4.8 per cent) would, if they go ahead, be built in an SHA.

Of those 354, at least 247 were in areas under development before they were designated SHAs, such as Flat Bush, Northern Tamaki and Hobsonville.

In other words, the vast majority of the 11,060 new sections and dwellings Dr Smith is bragging about were planned before the Government rushed to Auckland with its housing accord. As for claiming 11,060 new sections and dwellings have been "achieved", that's just fairy tale territory. Only a handful of new dwellings have been "achieved".

The head of Auckland Council's housing project office, Ree Anderson, identifies the Weymouth SHA as the most advanced, with nine houses occupied and 20 expected to be finished by Christmas.

Meanwhile, house prices continue to soar. On Wednesday, in defending Auckland Council's recently released property valuations, Quotable Value operations manager Jan O'Donoghue said: "In some parts of Auckland prices have increased 5 per cent in the past three months."

What the report highlights is the accord's limitations. Even if it fast-tracks consents for new building sites - the 80 SHAs identified have room for about 40,000 dwellings - it has no control over when and if any building takes place. There is already evidence that land bankers are seeking the added-value that the SHA badge brings to their vacant sections, then sitting tight or putting it on the market for the unearned windfall profit.

Two years ago, the Productivity Commission touched on an obvious solution - a partnership between government and private enterprise on large-scale projects.

The Labour Party took up the theme last election with its KiwiBuild proposal to build 100,000 low-cost houses over 10 years.

This week, the Ministry of Business, Innovation and Employment released its October briefing document to the incoming minister, Dr Smith, which advocated a similar interventionist approach. Perhaps to save his blushes, the ministry's detailed proposals are censored.

It notes that in Auckland, despite building consents rising rapidly, "they are still only half their previous peak and about 30 per cent below the level called for in the Auckland Plan".

Also, because 44 per cent of migrants settle in Auckland where housing supply is already constrained, the risk of further significant price inflation over the next six to 12 months is high.

It estimates a current shortfall of 18,000 dwellings and an "ongoing supply shortage".

Pointing to the boom/bust cycle in the building sector as a major problem, it suggests "using the Government's role as a major construction client" would have a calming effect. It would also "provide opportunities for the sector to deliver innovation and scale economies".

Also "to lift supply to match demand in Auckland" would require the Government "facilitating large-scale and innovative developments in partnership with the private sector" by "leveraging Crown land assets and potentially supporting the aggregation of private land".

Whether that includes buying up land under the Public Works Act is not spelt out. Not in the censored version anyway.

An alternative floated by the Productivity Commission is a government agency set up "to plan, carry out, promote or co-ordinate and control" specially designated "urban development areas".

Alternatively, there's Santa.