State house plan hit by high costs

Photo / Chris Gorman

Rising land values spell slow progress on new builds.

The number of state houses has dropped by 1600 in the past three years as grand plans for more state homes in Auckland appear to have been hit by rising land values.

A plan for 500 new homes next to the Papakura army base, announced two years ago, has yet to result in a single house started. Other projects across Auckland are making slow progress.

Meanwhile, Housing NZ has kept selling off high-value properties in Auckland, and houses to its tenants nationwide, reducing the number of state houses from a recent peak of 69,717 in June 2011 to just 68,125 at September 30 this year - the lowest since 2007.

New Housing NZ Minister Bill English has said since the September election that the Government aims to sell more state houses to consortiums including community housing trusts.

But the corporation's acting chief executive, Greg Groufsky, said there had been no reduction in a target of building 2000 new houses between July 1 last year and the end of next year. By the halfway point on September 30, the corporation had built only 274 homes, including 80 in Christchurch.

Auckland was due to get "more than half" of the 2000 new homes. In fact only 118 were "delivered" by the end of last month, comprising 112 for state tenants and six for private sale. A further 522 were "in delivery", 72 in "negotiation" and 176 in "evaluation".

A geographical breakdown of the total 888 homes now built or planned over the two and a half years shows the biggest numbers are new two-bedroom homes behind existing houses across Auckland (198), followed by 169 new homes in West Auckland, 139 in Glen Innes, 110 in Manukau-Mt Wellington and 86 in an inner-west group from Avondale to Mt Roskill.

The list includes 76 in Papakura, where initial roads and a marketing pavilion were built in Walters Rd between Papakura Normal School and the army base a year ago - but where no houses have yet been started.

Housing NZ chief executive Glen Sowry said in January that the development's commercial structure was "still being debated" in view of rising land values.

Housing NZ said yesterday it was subdividing larger lots into smaller house lots to cut build costs and house prices.

House-hold

How much is state housing falling behind schedule?
Housing NZ's 2013 Statement of Intent projected a net increase to 68,722 in June this year and 69,364 by next June. The numbers dropped to 68,125 by September 30, about 600 below the June 2014 target.

What is causing the delay?
Government policy requires new social housing to be mixed in with private sale homes but Auckland's skyrocketing land values price homes well above what Housing NZ and community providers can afford.

Will development get back on track?
HNZ is still negotiating a revised statement due to the Government's plan to sell state houses. Bill English said proceeds might not be used to build more: "If we want less stock, there's not much point in rebuilding stock with it."