Property editor of the NZ Herald

Big Read: Is this the answer to Auckland's housing crisis?

750 new residences have risen at the $4 billion Hobsonville Point housing development.
750 new residences have risen at the $4 billion Hobsonville Point housing development.

Alongside the upper reaches of the Waitemata Harbour, some of the country's biggest house builders are constructing new dwellings at the rate of about two every working day.

In answer to Auckland's housing crisis, 750 new residences have risen at the $4 billion Hobsonville Point development, deposits have been paid on another 350, and a total of 5000 homes are planned in a mix of standalone, terrace and apartment configurations, often on tight sites along relatively narrow streets.

Welcome to squeezing in and squeezing up on Auckland's northwestern outskirts.

Hobsonville Land Company chief executive Chris Aiken says this is New Zealand's biggest residential project, vast enough to rival huge new housing estates in places such as China and the United States.

"This is selling and settling houses at a run rate of two houses every working day," Aiken says.

But Te Atatu MP and Labour housing spokesman Phil Twyford remains less than impressed.

As he looks across the picturesque waterfront site, what he sees is too few affordable residences, and a return for the taxpayer that amounts to a "negligible, minimal" $184 million.

His view is that valuable Crown land is being sold off fast, privatised at the very worst time, when a huge Crown estate such as an ex-Air Force base could help ease affordability issues for the city's good, not enriching just a few.

Instead of most places at Hobsonville selling in the $500,000 category, they're more likely to be double that, he complains.

Hobsonville Point is nothing more than a giant missed opportunity and far too expensive for most people to buy into, Twyford says.

"A standard three-bedroom home on the site costs $825,000 and four-bedroom homes are over $1 million," Twyford says.

"This jewel in the crown is just being sold off into private ownership. The public good outcomes are weak. At the end of this project the Government will get a $184 million return, less than 5 per cent of the value and only $17 million above the $167 million cash injection given, not including the huge value of the land provided."

The land at Hobsonville Point was all originally Government-owned, and used for defence purposes. Hobsonville Land Co, a subsidiary of Housing NZ, was formed specifically to create a new residential community on the site.

The company is in charge of preparing the land for development, installing services and creating titles, then selling sites to group house builders, who build homes and sell them to the public. None of the estate is available to the public as bare land.

Twyford has quizzed Building and Housing Minister Nick Smith in the House about the state's return from the huge scheme.

It will deliver 5000 homes. It is one of the biggest international residential projects outside of China or the United States.
Hobsonville Land Company CEO Chris Aiken

"The Crown transferred $167 million as a capital injection to get the development started. The development process is happening piece by piece. Parcels of land are getting sold to developers and then individual dwellings get on-sold.

At the end of the process, Hobsonville Land Co will pay the Crown $184 million, presumably out of its operating surplus, which I argue is a very small return on investment, not much more than the $167 million, plus interest," Twyford says.

Next door to Hobsonville Point, at a site known as Scott Point, migrants who arrived from China in the past four to five years have bought nearly 300 residential sections, says James Law of James Law Realty, whose agency sold the sites. They are saving about $200,000 to $300,000 on the cost of a house-and-land package by purchasing raw land, he says.

Aiken defends Hobsonville Point, saying it is enormously expensive to create and 24 per cent of the new dwellings are affordable -- in the $400,000-$550,000 price range -- sold largely to first-home buyers.

The land at Hobsonville Point was all originally Government-owned, and used for defence purposes.
The land at Hobsonville Point was all originally Government-owned, and used for defence purposes.

"By the time the project finishes approximately 1000 affordable homes will be delivered on this site, arguably more than the rest of the total Auckland market for this period. Another 2000 will be around or below Auckland's median price," Aiken says.

"Very few people understand the sheer scale of this project. It will deliver 5000 homes. It is one of the biggest international residential projects outside of China or the United States," he says.

"It has required a significant front-loaded cost for land acquisition and capital expenditure. The typical questions asked of a normal land subdivision don't apply easily in this case."

We can learn a lot from Hobsonville, but next time we must achieve better outcomes for the public good.
Labour housing spokesman Phil Twyford


Aiken does at least agree with Twyford on one point: that the projected capital return to the Crown is $184 million "and there has been no change to this forecast return. The other financial target related to becoming self funding -- needing no more capital from the Government -- and this was achieved two years ago", Aiken says.

Two new schools and a new ferry service have been established, all with a lean team of 14 staff, he says.

"This is a remarkable achievement in the biggest post-war residential property boom in Auckland's history, where much of the response has been land banking and home price escalation. This is a direct result of the Government setting aggressive affordable housing objectives and attaching this directly to the supply of Government land."

But Twyford mourns the lost opportunity to build state houses.

Hobsonville Land Company chief Chris Aiken says the housing development is New Zealand's biggest residential project.
Hobsonville Land Company chief Chris Aiken says the housing development is New Zealand's biggest residential project.

"[Prime Minister] John Key pulled all the state housing out of the development. The overwhelming majority of the homes are not affordable," he says. "And of the ones classified as affordable, only half of them are allocated to first-home buyers. The other half can be sold to anyone, including speculators. We can learn a lot from Hobsonville, but next time we must achieve better outcomes for the public good."

There is no doubt Hobsonville Point is a commercial success, he concedes, and high-quality homes are going up in well designed neighbourhoods.

The Point is pioneering a way of builders and developers working together in a large complex project. And they are building homes when the city desperately needs new homes, he agrees.

"But is that enough?"

As the water quietly laps at the edges of the peninsula, only 20 minutes from the Auckland CBD, the business of building today over-rides politics. Earthmovers, nail guns and truck engines pierce the tranquillity.

Work will continue like this for many years, until up to about 15,000 people move in.

For them, Hobsonville Point will simply be known as home.

- NZ Herald

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