Hon Maryan Street
Minister for Housing

12 February, 2008 Media Statement
Embargoed until 3pm

Action plan to increase affordable housing

The government is working on a comprehensive plan of action to help families into home ownership by boosting the supply of affordable houses, Housing Minister Maryan Street said today.

“A package of initiatives was announced by Prime Minister Helen Clark in her annual address to Parliament today and marks the beginning of a bold new direction in housing policy in New Zealand,” Maryan Street said.

“House prices are beginning to stabilise, but have nevertheless risen sharply in recent years in New Zealand and in other comparable countries. While this is in some ways a positive reflection of a buoyant economy, the government recognises how hard it is right now for families to buy their first home.

“The Labour-led government is determined to increase housing choices and to reduce cost pressures so more people can realise the Kiwi dream of home ownership. This is best achieved by building greater numbers of modest homes for first home-buyers, which will also help keep prices down more generally.

“Firstly the government plans to develop large scale housing developments involving partnerships between central, regional, and local government, and the private sector, to increase the amount of affordable housing being built. Urban Development Agencies (UDAs) have been set up overseas to develop master-plans for similar large scale projects and we are examining whether these would be appropriate here.

“Regional UDAs in Australia have been used to coordinate faster urban development of large, strategic sites with roles including: land acquisition and amalgamation; fast-tracking regulatory approvals; specification of design, quality standards and affordable housing requirements.”

In the future large housing projects, such as those underway in Hobsonville and Tamaki, could be overseen by such an agency, Maryan Street said.

“A review of public land holdings, beginning in Auckland, will also be undertaken to see what new land might be made available for significant housing developments involving a mix of public and private provision.”

“Secondly we will support the development of the not-for-profit sector to provide more affordable rental and owner-occupied houses for lower-middle income families or individuals in high cost areas.

“The existing not-for-profit sector is small in scale and caters almost exclusively for those in rental homes with the highest housing needs.

“The change could result in local authorities, iwi and others already working in the not-for-profit sector expanding their role. It could also see the establishment of new dedicated housing entities such as the successful housing associations in the United Kingdom.

“It will take time to increase the numbers of affordable houses through these initiatives, so in the meantime we are launching a shared equity scheme in July for people in high cost areas,” Maryan Street said.

“This involves the government taking an equity share in a home, bridging the gap
between a family’s income and the price of a modest house which would otherwise be unaffordable.The scheme will be targeted at the purchase of newly built homes to avoid increasing competition for existing ones.

“The government is also going to re-evaluate some of the regulatory costs which, while not the largest drivers of house price rises, have contributed to them. The government will, for example, look at how to simplify the design and building consent costs for starter homes.”

The Affordable Housing: Enabling Territorial Authorities Bill now before Parliament is yet another tool which should soon be available to increase the affordable housing supply in some areas, Maryan Street said.

ENDS

Embargoed until 3pm

Housing Affordability: New Solutions

Question and Answers
12 February, 2008

Why is the Government facilitating large-scale urban housing projects?

To substantially increase the supply of affordable housing New Zealand needs to develop large scale urban housing projects which incorporate realistic numbers of affordable homes. The private sector and central, regional and local government need to work in partnership to deliver these projects.

What are Urban Development Agencies?

In other countries Urban Development Agencies oversee the planning of intensive and new developments, with the private sector carrying out the developments. They undertake specific development projects that are of a scale and complexity that would not occur in the private sector alone.

Where are Urban Development Agencies in use?

Urban Development Agencies have been established in most states in Australia and have been able to demonstrate commercially viable and sustainable housing development, high-quality design, and urban regeneration. Some have also facilitated the provision of affordable housing, community facilities and services, and initiated redevelopment in strategic places where there was little market interest.

What is the Hobsonville project?

On the site of the former Hobsonville air base there is a project to develop an integrated urban community.

The Hobsonville project will deliver more than 3,000 new homes, five hundred (or up to 15% of total development) of which will be available for first home buyers on moderate incomes. A further five hundred (or up to 15% of total development) will be state rentals, the remainder will be available for other market buyers. The plan is for house construction to be underway in 2009, following earthworks and infrastructure work this year.

The Hobsonville project will set a new benchmark for sustainable urban development. It will build a community that is available to people from all sectors of society and include schools, employment, heritage areas and reserves.

Why is the Government planning to work with the not-for-profit sector?

Not-for-profit housing providers can provide housing at a lower cost than for-profit providers, and in many cases, they may leverage other resources (and property development opportunities) without being wholly reliant on government funding.

Where is not-for-profit housing being developed?

Some housing associations in the United Kingdom now provide the full range of housing options – rentals (medium and long term), shared ownership and full ownership. In Australia the Queensland government and Brisbane City Council have provided funding to set up the Brisbane Housing Company, which is forecast to have a stock of 781 units this year to cater for particular groups of people.

How long will it take to develop the not-for-profit sector?

Development of the not-for-profit housing sector in New Zealand is a medium to long term strategy to increase the supply of affordable housing. This may involve a small number of relatively large providers in main urban areas to provide at first affordable rentals and then provide a pathway into home ownership.

The next step is for the government to consider how it can best encourage the growth of not-for-profit providers and talk to the existing sector and potential providers about their ideas and what might be possible.

What immediate steps will increase the supply of affordable housing?

Increasing the supply of affordable housing will take time. So in the short-term, there are a range of more immediate steps we can undertake.

1. Review of public land holdings

We will carry out a review of public land holdings, starting in Auckland, to see what land might be available to contribute to these kinds of projects.

2. Information on land availability

While there is significant land zoned for housing in our major urban areas there is little information regarding timeframes in which it is likely to be available for development. The Department of Building and Housing will further investigate to provide policy-makers with more detailed information.

3. Tackling regulatory costs

We are also going to tackle some of the regulatory costs that have added to the cost of building a house. While these are not the largest drivers of house prices, we are committed to ensuring that housing is produced as efficiently and cost-effectively as possible without compromising on quality.

We will start by looking at how to simplify the design and building consenting process for starter homes. Starter homes are modest-sized houses with designs that can be built using simple construction methods and have basic fittings in rooms such as the kitchen and bathroom.

4. Shared equity

In July this year we are launching a shared equity scheme targeted at new builds to help people in high cost areas to get onto the home ownership ladder. Focusing this scheme on new builds will avoid adding to competition for existing houses.

5. Affordable housing: Enabling Territorial Authorities Bill

We will progress the legislation before Parliament now which gives local government the power to require affordable housing as part of a development. (Councils that choose to use these new powers may also decide to assign the developer’s affordable housing contribution to a not-for-profit provider to manage.)

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