KEY POINTS:
A key plank of the Government's housing plans has come under fire after revelations that repayments on a model "affordable home" will suck up over half an average family income.
Prime Minister Helen Clark this week outlined a range of measures to tackle the housing affordability crisis, including a stocktake of Crown land to see if more could be freed up for public-private developments with an affordable component.
But Housing New Zealand chairman Pat Snedden yesterday conceded that a couple would need to earn more than the average $68,000 household income to meet mortgage repayments on an affordable home at the Government's flagship Hobsonville housing development.
Mr Snedden told Parliament's social services select committee he expected the 500 affordable homes planned for the 3000-home project, which has been billed as a model for such developments, to have a price-tag in the mid-$300,000 range.
Couples would need to be earning about $70,000 to service a mortgage on the homes, he said.
Mortgage calculators show repayments on a 30-year 90 per cent loan at a current two-year fixed interest rate of 9.35 per cent would be $603 a week before rates and insurance.
At a rate of 8 per cent, repayments would be $533 a week.
The joint income, after tax and ACC, of a couple each earning $35,000 is $1064 a week.
National's housing spokesman, Phil Heatley, questioned how those homes could be termed "affordable".
"These new affordable homes at Hobsonville - by your own admission - only those above the average household income are going to be able to afford them," he told Mr Snedden.
"So they are not actually aimed at the first-home buyer at all."
Mr Snedden said he expected people would make financial sacrifices to get into a first home and could also be helped out by the Government's planned shared equity scheme.
The details of the scheme will be announced in July.
Mr Snedden said the first sod on the Hobsonville project, which has already been in train for several years, would be turned in October, with the first tranche of houses available in about two years.
It would be several more years before the project on the outskirts of Auckland was completely finished. Mr Snedden said Housing NZ had public-private partnerships under way in Hobsonville, Weymouth and Papakura and one was planned for Tamaki.
With the shared equity scheme, the Government is looking at the possible establishment of regional urban development authorities to co-ordinate large-scale public-private ventures.
It also has introduced legislation that will allow councils to force developers to include a component of affordable housing in their projects.
Helen Clark said yesterday that officials estimated New Zealand was short of 18,000 affordable homes a year, with 70 per cent of renting couples unable to afford to service a mortgage even on the lowest quartile of houses in the city where they lived.
But National Party leader John Key said initiatives like Hobsonville were too narrow in scope and would take too long to make any dent in the problem.
The Government's shared equity scheme was also likely to be narrowly focused and came with problems.
They included who would take the loss in equity if house prices fell, which could happen in the medium term, and how the added value of improvements would be assessed and shared.
Mr Key said National's plans to take legislative action to free up the supply of private land and reforms to the Resource Management Act to cut red tape would have a far faster effect.
Helen Clark said the Government as yet did not have a target of how many affordable homes a year its policies would create.
THE FIGURES
* 3000 total homes at Hobsonville project.
* 500 of these homes marked "affordable".
* $350,000 approximate average price.
* $31,356 in mortgage payments each year at current interest rates.
* $70,000 income required for a couple to pay the mortgage.
Source: Housing New Zealand
- NZPA
