KEY POINTS:
The Auckland Regional Council says its choke-hold on fresh housing land outside urban limits is not pushing up house prices.
It plans to tell Parliament's inquiry into housing affordability to look further than its metropolitan urban limits policy as a scapegoat for the plight of first-home buyers.
The council oversees nearly a third of the country's population in an area which has the highest average house price to median income ratio of 18.7.
Property developer Hugh Pavletich and Reserve Bank chairman Arthur Grimes were reported in The Business yesterday as saying a strangled land supply was the cause of Auckland's runaway house prices.
But council strategy and planning committee chairman Paul Walbran said affordability was affected by wider issues than purely urban planning's effect on land supply, also affected by "land banking" by speculators.
"It's all very well to promote a solution by increasing greenfield land on the periphery of the city as a way of providing cheaper land," he said.
"But there is a [rates] cost imposed on the whole community in servicing that new area with water, wastewater, roading and public transport.
"Those that find themselves parked on the periphery of the city, well away from employment opportunities and facilities, are faced with greater costs.
"Those of us from the west [of Auckland] are well aware of what happened when the west was developed as a dormitory suburb a generation ago," said Mr Walbran.
"We are still living with some of those problems [traffic congestion] now."
ARC chairman Mike Lee said the policy of restraining urban sprawl by regulation had always been under attack from vested interests such as property developers.
But not this time, he said.
This time the Government and quasi-government sector had taken it up, including the Centre for Housing Research and Motu Economic and Public Policy Research.
"Essentially, one of their recommendations is for the ARC to relax its metropolitan urban limits.
"I share the concern of other members because clearly the situation is way more complex than local government making its town and country planning even weaker than it is today."
Mr Lee said that the ARC submission needed "to take the intellectual high ground" by emphasising how complex the housing market was and why the housing market in this country was unique.
He said that construction costs were a key issue to emphasise.
An Auckland City Council survey found that the average cost of building a small house in Auckland was far higher than in Australian cities.
"Yet we know wages in Australia are significantly higher."
Mr Lee said the ARC had asked the Government for some time to form a national policy on population growth and development to guide council planning.
"The present situation means we can anticipate over 40 per cent of the country's population will locate itself in Auckland in the next decade.
"That will create significant demand and distortions on the housing market apart from other effects on the environment, like traffic congestion."
MAKING CHOICES
ARC take on house affordability:
* Demand and investment drive up house prices.
* Strong economy pushes up costs.
* Research shows sufficient supply of sections.
* Strong supply and more diverse supply gives more choice.
* Higher density living pushes land value per resident down.
* Low average wage and high interest rates.
