Brian Rudman: Only obstacle in housing is Govt's denial

It's the Government's refusal to admit there is a crisis. Illustration / Peter Bromhead

Any plan at all is better than twiddling thumbs and hoping the market sorts it out.

Nothing quite underlines the enormity of Auckland's housing crisis, as the recalculations Labour had to undertake for the re-launch over the weekend of its KiwiBuild housing programme.

In November 2012, when then Labour leader David Shearer first unveiled the promise to build 100,000 affordable homes within 10 years of becoming government, he said a home could be built for less than $300,000 " even in Auckland. At the time, an industry source confirmed they could provide a one- or two-bedroom, 90sq m, two-storey terrace house, ready for occupation, at that price.

Just three-and-a-half years on, Labour is now offering an "affordable" stand-alone home in Auckland at between $500,000-$600,000, with apartments and terraced houses at a rather vague "under $500,000".

The problem, says housing researcher Ian Mitchell, is that such prices are unaffordable for most Aucklanders in the target 20-40 age group. He says the median household income for this group is $93,000, which limits them to a bank loan sufficient for a $450,000 home.

Still, for the lucky, the bank of mum and dad can always help out.

Whatever its shortcomings, Labour's policy is better than the Government's alternative of sitting back and waiting for the market to sort it out. That has patently failed. Even their allies in the Property Council welcome Labour's housing plan as "a possible game-changer".

"We have an acute housing deficit which is only getting worse by the day," spokesman Alex Voutratzis said. He spoke of people living in garages and cars and acknowledged "a lot in Labour's announcement that excites the Property Council".

Adding to Labour's "respectability" was the much more radical call, by former Reserve Bank economist Arthur Grimes, to flood the Auckland market with 150,000 new homes and trigger a 40 per cent crash in prices. He pointed to the 66 per cent increase in Auckland median house prices in the past four years, and argued this was the only way for families on lower incomes to buy a house.

As a one-house-owning, "paper" millionaire, thanks to the present craziness, I'd be happy to see that happen and let the younger generation and poorer families back on board, but I suspect most politicians would be terrified of potential voter backlash. But at least Labour's KiwiBuild programme would ensure Auckland's housing keeps pace with population growth.

Interestingly, while Government ministers have been busy rubbishing Labour's plans, Prime Minister John Key seems to have endorsed a key aspect of it. He recently floated the idea of creating Urban Development Authorities to co-ordinate - with the aid of construction firms - the development of whole areas.

Whatever its shortcomings, Labour's policy is better than the Government's alternative.

Key raised it last month at a Chinese Chamber of Commerce meeting in Auckland, in response to a question by a representative from the giant China State Construction Engineering Corporation. Key later said he'd been approached by other developers along the same lines, and said "we're always prepared to explore new and interesting ways of getting things done".

Such UDAs are hardly a new concept. Across Australia, in Singapore and further afield, they're used, in particular, to create major housing developments. A year ago, the NZ Productivity Commission advocated such a vehicle to mastermind housing development from the pipeworks up.

And back in 2008, in the dying phases of the last Labour Government, a ministerial discussion paper was circulated on building sustainable urban communities which raised the issue of urban development agencies.

Of course, if you trawl through the "nothing new" files, the Savage Labour Government of 1935 pioneered a similar sort of partnership with private enterprise to build much-needed housing, provide more jobs and guarantee ongoing work flow to enable Fletchers and other fledgling companies to design and achieve the end result.

The approach has continued to this day with, for example, public-private partnerships in the Hobsonville Land Company redevelopment of the old air force base, and the "Alliance" model, first employed by the NZ Transport Agency on the Grafton Gully redevelopment many years ago.

It's not the "how-to" that's a problem. It's the Government's refusal to admit there is a crisis.