Peter Jeffries: Renters bear cost of Auckland housing madness

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For people who cannot afford the new rents, the main alternatives are finding cheaper housing further away or possibly outside of the city. Photo / Janna Dixon
For people who cannot afford the new rents, the main alternatives are finding cheaper housing further away or possibly outside of the city. Photo / Janna Dixon

Auckland renters are facing bleak times, with steep rent rises looming as a result of the city's housing crisis. When Auckland's escalating property prices finally stabilise, the real cost of living in one of the world's most unaffordable cities will become apparent.

The cost will not be borne by existing property owners but by those who rent. Their future is one of rents rising way above reasonable wage and income growth expectations.

The effects will be felt at personal, family, neighbourhood and city prosperity levels.

Auckland is becoming a divided and truly inequitable city. We need council leadership that turns the tide and ensures a substantial portion of new housing will deliver affordable rental options for the 50 per cent of Aucklanders who are being priced out of the city.

There is a huge demand for more affordable rental accommodation as a result of Auckland's population growth and decreasing home ownership.

Increasing demand and stalled supply will place a huge strain on both people who are renting and the local economy as employees struggle to afford to live in Auckland.

It is time for the council to act. Auckland's Unitary Plan does not include sufficient provision for affordable housing and there are too many restrictions on the development of land within the city.

House prices will continue to rise until the market believes the supply of housing and land available for redevelopment in the city outstrips demand.

When neighbourhoods and councillors place restrictions on the growth and development of their areas, there is a very real financial cost borne by the increasing number of people who rent in the city.

The Auckland Plan had the goals right but they appear lost in the Unitary Plan.

Councillors need to get it back on track and take action to make sure a substantial portion of new housing will be affordable rental options.

Councillors need to be held to account for their failure to deliver the outcomes of the Auckland Plan - to house all Aucklanders in secure, healthy homes they can afford. Councillors need to talk about affordability when they debate the Unitary Plan, not just aesthetics or pleasing existing property owners.

The most cost-effective and affordable forms of new housing are terrace housing and three-storey housing, yet these options are limited under the Unitary Plan. Terrace housing is limited to just 5 per cent of the city and three-storey housing to 15 per cent.

Councillors who are advocating less housing and less development in their favourite suburbs need to demonstrate where affordable housing will be built and whether there is going to be sufficient supply to address the needs of both renters and first-time home owners.

Currently 56 per cent of Aucklanders over the age of 15 do not own their own home and the majority live in rental housing.

Over the past two years Auckland rents have risen by 12 per cent, which is not as much as property prices because many homeowners are looking for capital gain. However, if capital gains start to flatten then rents will be expected to cover all the costs of operating a property.

Landlords and investors will continue to provide new rental housing to the market only for as long as they believe that capital gains will compensate them for the low rental returns. But there is also a limit on how high rents can increase. Rents can only increase so far before households can no longer afford them and must seek alternatives.

For people who cannot afford the new rents, the main alternatives are finding cheaper housing further away or possibly outside of the city, accepting less suitable or poorer quality housing, suffering increasing overcrowding and homelessness.

We need more consideration given to the 56 per cent of Auckland's population who have not benefited from rising house prices and who need housing they can afford.

Peter Jeffries is chief executive of CORT Community Housing.

Debate on this article is now closed.

- NZ Herald

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