Two Auckland lawyers have challenged the Government's housing moves, saying demand not land supply is driving up prices.

Lawyers at Berry Simons say they are worried about assumptions underpinning the National Policy Statement on Urban Development and its ability to address Auckland's housing crisis.

Partner Andrew Braggins wondered if it would work.

"While the proposed National Policy Statement on Urban Development Capacity contains a number of laudable objectives, it is sadly at least three years too late and will not alter Auckland's housing supply for at least two years, if not longer. Worse, if Auckland Council considers that it will be 'business as usual' under the NPS, then we probably will not see any meaningful change in Auckland's housing supply," he said.


Auckland Council might be forced to open up more land for development after the Government's move yesterday to announce a National Policy Statement on future land supply. That tool under the Resource Management Act might direct councils in high growth areas like Auckland to release 15 per cent more developable land than it is forecast to need over the long term.

Braggins said it was simplistic to assume that rising house prices and a shortage of affordable housing in Auckland was caused only by a lack of land supply.

Demand for housing outstripped supply, he said and it is that sheer volume of demand which is the central issue.

The Government must know that but is not prepared to admit that the lack of availability of houses for New Zealanders is not due to lack of supply but rather to demand - that a very large number of both existing housing stock and those being built are being snapped up by overseas investors - young and low income New Zealanders are simply unable to compete, Braggins said.

Reports that 46 per cent of all new mortgages in May were to investors are consistent with what we see in the market - that the bulk of Special Housing Area houses are being sold to investors - often overseas investors.

Partner Simon Berry agreed.

"We are consistently seeing that a large proportion of Special Housing Area houses are being sold, generally off the plans, to overseas investors. The same goes for the existing housing stock. I recently heard of an example of an overseas investor purchasing 55 residential properties in a single week.

"The Government's scrutiny of the market has overlooked - unwittingly or otherwise - these basic facts but all real estate agents and resource management practitioners know full well that this is happening every day," he said.


It was equally clear that Auckland Council did not pay nearly enough attention to urban land supply issues when preparing the Proposed Auckland Unitary Plan and while they might now be undertaking many of the assessments required by the proposed NPS, they were only doing so because they were directed to by the Independent Hearing Panel charged with hearing submissions on the Proposed Auckland Unitary Plan, Berry said.

"Not a single new dollar in the recent budget was allocated to Auckland's transport infrastructure - but adding new zoned land without infrastructure and the funding to service it is only likely to distract Auckland Council and the Auckland CCOs from providing infrastructure to existing zoned land and SHAs - this is likely to slow everything down. It's hard to see what they can do that they haven't already done without more money," Braggins said.

The Government's reluctance to act might be due to the contribution that overseas investment makes to the economy, the lawyers said.