Property Institute gives tick to Budget Housing initiative

Thursday, 21 May 2015

Property Institute gives tick to Budget Housing initiative

Property Institute of New Zealand Chief Executive, Ashley Church, has given a tick to Government plans to free up land, in Auckland, for housing development.

Around 500 hectares of land, currently owned by education, defence and transport agencies, has been earmarked, in the Budget, for development in areas zoned for residential housing in the city. $52 million has also been set aside to fund the plan and to enable the Government to partner with private developers to build thousands of lower-cost homes in Auckland.

Mr Church describes the move as ‘a hugely significant initiative which will make a big dent in Auckland’s supply problem’.

“The 4,500 to 10,000 homes which could be built on this land will go a long way toward meeting pent-up demand and helping to resolve the Auckland housing market crisis”.

However, Mr Church cautions that this will not provide a ‘quick fix’ and warns that homebuyers should not expect house prices to drop, or house price inflation to slow down, as a result of the announcement.

“It will take a considerable period of time – perhaps as long as 2 or 3 years - for these homes to be built. In the meantime we still have a supply issue and house price inflation is based on what’s happening right now – not what the situation might be in 2 years time”

Mr Church says the build time could take even longer if some of the land in question is affected by the provisions of the Public Works Act. The Act specifies that land which has been acquired for a particular purpose must, in some cases, first be offered back to the person from whom it was purchased before it can be used for any other purpose.

“Given that the land in question is drawn from the education, defence and transport portfolios those provisions could affect quite a lot of it”

Mr Church also warns that buyers should expect these homes to be selling at whatever is the market rate for similar homes when they eventually hit the market.

“There’s no suggestion that the Government or private developers are proposing to subsidise the price of these houses – so people shouldn’t expect a sudden flurry of ‘cheap homes’ coming onto the market in 2017 or 2018”

Mr Church says that the real benefit of the policy is that it will help address demand.

“Once supply matches demand – then house price inflation will taper off. Not before”

Ends

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