Twelve Questions
Jennifer Dann poses 12 questions to well-known faces

Twelve Questions with Helen O'Sullivan

By Jennifer Dann

Property developer Helen O'Sullivan, chief executive of Ockham Residential and former REINZ boss, says the new Unitary Plan will greatly help solve Auckland's housing crisis by enabling developers to build much-needed mid-priced housing.
Helen O'Sullivan hopes councillors who voted in the plan will be rewarded for their bravery. Photo / Greg Bowker
Helen O'Sullivan hopes councillors who voted in the plan will be rewarded for their bravery. Photo / Greg Bowker

1 Are you pleased the Unitary Plan has finally passed and has it taken too long?

We're popping the champagne corks. It opens up opportunity which is the key. It's happened remarkably quickly when you consider the size and scope of it. The people most affected by the Unitary Plan couldn't make submissions because they were too busy goofing off at primary school - this is a plan for their future. Hopefully councillors will be rewarded for their bravery at the voting box.

There's a misconception that bulldozers will soon begin bearing down on every villa in the city but the reality is there wouldn't be any margin in bowling a $2.5 million villa to build townhouses, so that's just not going to happen.

2 How do we best meet Auckland's housing supply problem?

We need to increase the supply of mid to low-priced houses. Less than 10 per cent of new builds since January 2015 were under $600,000.

Under the old planning rules it had become economically impossible to build lower priced options in large parts of Auckland. For example, I couldn't make money building three two-bedroom units on a section in Mt Wellington but I could sell two large town houses on the same site for over $1.1m each.

3 Are there enough construction companies to build the high and medium-density housing we need?

There's only a couple of dozen players in the Auckland market who have the capacity to build a high-density apartment complex like this one (Ockham's The Isaac in Grey Lynn) and they're very busy over the next five years with things like the City Rail Link and the Conference Centre. The beauty of medium density 2 and 3-level "walk ups" (where each apartment is on a different level with external stairs) is they can be built by small and medium-sized players who make up the bulk of our construction industry.

4 Are we going to get any new houses at under $400,000?

I don't think so. They'd almost certainly have to be subsidised. That's what it's costing to build them. Construction costs are rising - labour, materials and equipment. We're selling one-bedroom apartments in Avondale and Mt Eden for around $420,000 but you don't get a carpark. Our Avondale development is 800m from the train station and Mt Eden has two shared vehicles for residents' use. It makes it possible for people to live without owning a motor vehicle.

5Do you own a car?

I have a black Fiat Abarth as my daily driver and an MX5 that I race in Classic Trials at Hampton Downs. I lived without a car in London and Sydney for five years. Public transport's a great way to commute.

6 Should the Government do more to help solve Auckland's housing crisis?

The problem is no one has control of all of the levers. We urgently need a series of co-ordinated, interlocking initiatives. It's the same problem faced by every successful city in the world. If there was a silver bullet we'd have done it by now.

7 Do you agree with the Reserve Bank increasing Loan to Value Ratios (LVRs) to 20 per cent?

Shoring up the banking system is a laudable objective but the consequence is that it's become incredibly tough for first home buyers or owner-occupiers of any kind. A 20 per cent deposit is a big chunk of change even if you can find a $500,000 property. When teachers, nurses and service workers can't afford to live in our city, we've got a problem. We need to lower LVRs or provide some other kind of bridging mechanism to get those people into properties. It is possible to get a Welcome Home loan with a 10 per cent deposit but there are restrictions including income thresholds which I think make access too limited. The Reserve Bank is consulting on whether to lift LVRs for investors to 40 per cent but fortunately the policy as I read it doesn't apply to new builds.

8 Is there any other Reserve Bank mechanism that would be better than increasing LVRs?

Capital adequacy ratios. That's where the Reserve Bank says banks must have a certain amount of capital for every dollar they lend in a particular category. The way it's set at the moment, residential lending is treated as less risky so banks are incentivised to focus on it. The Reserve Bank could crank the ratios up a notch to alter the way the banks see risk.

9 Are there any other regulatory changes you'd like to see?

The Government could talk to developers about how it can encourage new supply within the price range it wants. Watercare could change its connection charges. The charges should be like council development contributions which are at least partly driven by liveable floor area.

10 What lessons can Auckland learn from Christchurch about dealing with a housing crisis?

Christchurch opened up supply by short-cutting the planning process and five years on prices have stabilised. Auckland needs a similar approach. I wouldn't want central government taking over the entire consent process but it does need to be better resourced. Consent fees are a small part of our costs but delays are expensive, so we'd pay more if we were guaranteed a faster turnaround.

11 Why did you leave your job as NZ's Real Estate Institute boss to become a property developer?

I've been friends with Ockham Residential's founders Mark Todd and Ben Preston since primary school in Mt Wellington. We love Auckland and want our built environment to be as beautiful as our physical landscape. Our property developments have a double bottom line; they have to make money but they also have to be buildings people are proud to live in.

12 You're speaking about Auckland's future at the Property Council's Women in Property Power Panel: The Future of Auckland next Tuesday. Are there many women in property?

There are very few in property development but more in property management and property law. I found myself the only female in the room at a recent MBIE function. I haven't worked out the driver of it yet. I would have thought the value of diversity has been proven. If you fill a room with people of the same age and gender who all went to the same school, you'll miss out on the rich analysis that diversity of thought brings to the decision-making process.

- NZ Herald

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