Ditched projects shouldn't put people off apartments - Key

Prime Minister John Key has stood by comments that people need to look to apartments as a first home option - despite 35 Auckland property projects collapsing in the past year.

"I think apartments are a very credible alternative for people to buy. For a whole variety of reasons - everything from convenience to affordability, Key said.

"While they [the developments] might not be happening, the consenting looks very strong...so from time to time you will always get a few developments that fall over.
It is just as interesting fact that is there. I wouldn't take too much out of it.

"It is just as interesting fact that is there. I wouldn't take too much out of it."

The Herald revealed today that 35 Auckland multi-unit residential developments have been cancelled in the last year, including apartments, terraced housing, townhouses and residential projects.

Rising construction costs and problems getting funding resulted in cancellation of the multimillion dollar Flo apartment project in Avondale, with people who paid 10 per cent deposits refunded.

In September, Key said couples in their late 20s in Sydney or Melbourne had different expectations to many house-hunters in Auckland.

"I tell you where their first house is - it's an apartment... that is the reality of a first home for a young couple in Australia and many other parts of the world," he said at the time.

"We are going through quite a big change as a society, I think in these fast growing areas where it is quite likely that people will start in apartments...you are seeing the market responding. The quarter-acre section is less prevalent."

Today, he said he absolutely still held that view, despite the troubled developments.

"What is shows you is that there is always risk when it comes to property development. And it's one of the reasons why when people say, just fix the housing supply issues - it's never quite as simple as people say."

However, Green Party co-leader Metiria Turei said people's home-ownership dreams had been left it tatters, while the Government stood by.

"If rising construction costs are the issue, the Government should be looking at what it can do to make sure apartment builders have access to enough finance to cover construction costs.

"The market is clearly broken if developers trying to build affordable homes can't get enough finance, while property speculators can borrow easily to buy their fifth or sixth investment property."

Housing Minister Nick Smith said he did not think there was a significant trend of more developments being scrapped.

"The overall impression I have is that the sector is growing at a phenomenal rate. We've had 20 per cent compound growth in Auckland in the construction sector over each of the last four years.

"It's inevitable when you get that level of growth that the price of doing that construction work will go up simply because there is such strong demand for everything from engineers, project managers, whether it is the specialist plumbers."