Auckland property issue refuses to die

Auckland needs to build 11 more Hobsonville-sized developments now. Photo / Richard Robinson

This week's Productivity Commission report on housing is the bureaucratic equivalent of a forensic science TV show that rips apart the victim's body to identify the murderer.

"Using Land for Housing" shows how Auckland's land prices have spiralled over the past decade and the toll that is taking on New Zealand's economy, particularly those on lower incomes.

It dissects the decisions by a self-interested minority of ratepayers and property owners that have cost the economy billions.

Restrictions on where people could build, how high and densely, what materials to build with, how many carparks they needed, how much councils could borrow and how rates were assessed have pumped up land prices and rents to economically and socially disastrous levels and consigned thousands to housing poverty.

Here are the shocking details:

• Auckland land costs have trebled over the past 15 years and are now 60 per cent of a property's value.

• Unlocking greenfields and brownfields land for housing in Auckland could cut the cost of housing by as much as 47 per cent.

• The average size of new houses has increased 50 per cent since 1989.

• Even with 8,000 new homes a year, Auckland will have a shortage of 60,000 homes by 2020, double todays' shortage.

• To make up that shortfall, Auckland would have to build 11 more Hobsonville-sized developments now and then complete four more every year. The Hobsonville development is already touted as the biggest in Australasia and will take a decade to create 3,000 homes.

• New Zealand households spending more than 30 per cent of their disposable income on housing has almost trebled since the late 1980s to more than 25 per cent.

• Over-crowded, expensive, cold, damp and mouldy housing is estimated to be responsible for the hospital admissions of more than 1300 people with infectious diseases each year. This entrenched poverty is costing the Government at least $2 billion a year in rent subsidies and countless billions a year in health and other costs.The commission recommends:

• Creating an Urban Development Authority with the power to compulsorily acquire land to create more large-scale developments.

• Changing rates from being based on capital (building) values back to just land values. Also, the council should look at targeted rates for areas with extra up-front infrastructure costs and the potential for a special idle-land tax.

• Charge the Government rates on land council owns to potentially raise $180 million a year.

• Remove requirements that apartments have balconies, minimum numbers of carparks and private open spaces. It should also lift height limits and review minimum apartment sizes once the Building Code for air quality, lighting and acoustics is updated.

• Government should exempt foreign investors from Overseas Investment Office rules if they're buying land to develop homes within a certain time frame.

• Council should look more at increasing debt to fund infrastructure.

Most of these would appal a generation of land owners who created the current mess and are profiting from it.

But if ratepayers and their elected representatives don't relent, the Government should threaten to take over the council.

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