LGNZ encourages strategic thinking on housing affordability

Local Government New Zealand (LGNZ) sees a strong need for central government, local government and the private sector to work together strategically to address housing affordability.

At an LGNZ Major Issues Seminar in Wellington tonight, LGNZ President Lawrence Yule will lead a panel discussion on housing affordability with Finance Minister the Hon Bill English, Auckland Council Deputy Mayor Penny Hulse, Economist Arthur Grimes and New Zealand Council for Infrastructure Development Chairman John Rae.

Homes in New Zealand are the second-most expensive in the developed world, based on the ratio of price-to-income, and the most-overvalued relative to rents according to a new Organisation for Economic Co-operation and Development report.

“There are many factors influencing housing affordability including financial instruments, banking policy, the costs of construction, our desire for big houses, supply of land and housing and consenting costs. The areas local government can influence – zoning land for development, setting rules for density, building and resource consenting, and provision of infrastructure – are just a small part of a wider and more complex picture,” says LGNZ President Lawrence Yule.

According to the 2012 Productivity Commission report on housing affordability, the cost of building materials is overheated and makes a significant contribution to the cost of a house. Some of the tools to deal with this, such as higher loan to value ratio requirements, are blunt and could potentially create problems in parts of New Zealand where affordability is not a pressing issue.

“In most parts of New Zealand there is no shortage of land zoned for housing, and councils in areas with shortages such as Auckland and Christchurch have made good inroads on zoning and consenting despite facing significant growth and challenges,” says Mr Yule.

Many councils have introduced efficiencies such as online systems to speed up consenting. The future development of a national online consenting system could offer further benefits and LGNZ is working with the Ministry of Business, Innovation and Employment to develop this concept.

LGNZ also considers a number of factors could be looked at to improve incentives, including a more appropriate allocation of risk sharing for councils through a review of current joint and several liability arrangements.

“However, in many parts of New Zealand affordable housing is less of an issue. We see a real opportunity to leverage off this and develop a shared strategy to strengthen regional economies to make other areas in New Zealand attractive places to live.”

“While our largest cities will always have affordability issues for many, local government, central government and private companies all need to work together to address the multi-faceted aspects influencing housing affordability because New Zealand communities need access to homes within their budgets,” Mr Yule says.

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