A new $1 billion fund to fast-track infrastructure development by councils could do much to solve the growing problem of housing affordability in this country.

Prime Minister John Key says the fund will be available to councils with high new housing demands such as Auckland, Hamilton, Tauranga, Christchurch and Queenstown.

They are the cities expected to have more than 10 per cent population growth in the next 10 years.

The fund will own or finance the infrastructure until the councils receive rates revenue from the new houses.

Advertisement

The Government is also considering another big measure - to establish Urban Development Authorities for areas of high housing need, which would have the power to override barriers to large-scale development which could include responsibility for planning and consenting.

The moves will sit alongside other parts of the housing plan: social housing build, emergency housing, special housing areas, an expanded Homestart scheme for first-home buyers, freeing up surplus Crown land, Resource Management Act reform and tax measures announced last year for foreign-based buyers.

Developers have long highlighted delays in getting infrastructure to new housing developments as a major hurdle to increasing housing supply.

The fund will hopefully mean that more housing can be built within quicker time frames. If the supply of housing increases then it should have a positive impact on affordability.

The fund provides some hope to first-home buyers who have been struggling to get on the property ladder amid soaring prices. Increasing the supply of housing could also address the number of people who are now facing homelessness because they cannot afford get a rental property.

While it could be argued that such a move was warranted several years ago, it is pleasing to see the Government finally take such a significant step towards addressing this growing problem.