Job fears 'limiting building'

Whangarei's mayor says a lack of job security is holding back the building industry and restricting first-time home buyers.

His comments were made as local authorities have been given an ultimatum to help increase the supply of affordable housing.

Finance Minister Bill English said councils need to free up enough land to allow the construction of more affordable homes or the Government would force them to do it through legislation.

The moves were announced in responses to the Productivity Commission's inquiry into home affordability. The package also includes changes to the Resource Management Act to streamline consenting processes.

While it was not getting cheaper to buy a first home in Whangarei, the market was more accessible than elsewhere, Mayor Morris Cutforth said: "We have quite a surplus of sections and land that can be built on - there's a lot of opportunity for young people to get into their new houses if they handle the situation correctly."

Unlike other areas, it was not necessary to free up council land to build new properties, Mr Cutforth said.

"There are a number of empty sections in and around Whangarei. Those sections are basically just sitting there unbuilt on, mainly because everyone seems to be waiting for the price to drop - whether that will happen or not is another story."

A lack of job security was hampering the building industry as people "don't feel safe" in their jobs, so were hesitant to invest in building projects.

It was in the council's interest to streamline the building consent process, Mr Cutforth said.

"The more building we get, the better the economy."

Mr English said soaring house prices had helped fuel household debt and contributed to damaging imbalances in the economy: "Those factors make it vital that housing becomes more affordable. In addition, projections suggest that many more homes will be required in coming years than are being built."

Local authorities could exert considerable influence on the market with planning and consent decisions, he said.

But Mr English warned there would be no quick fixes to the problem.

The package highlighted the need to increase the supply of land both inside cities and on their fringes which is available for building new homes, he said.