Business

‘Over-promising and under-delivering’

It will be a key battleground in the election: just how quickly can the Government ramp up housing production by the state-owned Housing New Zealand?

The issue is becoming even more pressing given the problems private apartment and section developers are having getting funding because bank regulators on both sides of the Tasman are making it tougher to lend cheaply to developers and home buyers. See Newsroom's report from earlier in the week on that.



Only the Government has the balance sheet (ie low debt and low borrowing costs) and the investment horizon (ie can invest in a multi-generational way) to create the economies of scale in the building industry to start to lower house building costs. A guaranteed pipeline of housing supply that is immune to the ups and downs of the market could also reset expectations of home owners and land bankers in particular.



Over the the last year the pressure has intensified on the Government to step up and promise that pipeline of supply, both to meet the acute need for social housing and to add extra houses for first home buyers to buy.

Since September the Government has been ramping up its own rhetoric about using Housing New Zealand land in Auckland and the new less restrictive Auckland Unitary Plan as a launch-pad to add an extra 30,000 homes to Auckland's housing supply -- both social houses and homes for others to buy.



Newsroom Pro reported first on September 23 that Housing New Zealand was planning to add those extra 30,000 homes to Auckland's housing supply and it was subsequently confirmed by then Housing NZ Minister Bill English and Social Housing Minister in October.



But Labour Housing Spokesman Phil Twyford has more than a few doubts that the numbers promised by the Government for building in Special Housing Areas are actually being delivered at the scale promised in press releases.



Twyford supplied data from an analysis of Housing New Zealand's consent applications to the Auckland Council for Special Housing Areas that he said showed that the announcement in October of an extra 1,297 homes actually meant just 770 new Housing NZ homes would be built.



"They spend more time spinning than they do actually building houses," Twyford told Newsroom, adding that the October announcement was more about submitting consents before the expiry of the SHA Act than announcing a true ramp up.



Labour's researchers went through Housing NZ's resource consent applications and compared them with what was originally estimated for the land.



They said the original 1,297 was whittled down to a net 770 new Housing NZ homes on the SHA land because 356 homes were being demolished and 174 would not be held by Housing NZ.



A spokesman for new Housing NZ Minister Amy Adams did not address the Labour analysis and referred Newsroom back to Housing NZ.



The spokesman said Housing NZ would add 1,400 new social housing places in Auckland over the next three years and Community Housing Providers will add another 857. This is across Auckland, including both SHAs and other areas.



"Overall in Auckland this will result in around an additional 2,250 social housing places in the next three years. This is on top of the 800 affordable and market houses that Housing NZ will build in Auckland," he said.



He said the net movement included houses built by both Housing NZ and Community Housing Providers.

The Government has focused since September on promoting the use of Housing NZ land to build more intense housing, and following models developed at Hobsonville Point and at the Tamaki Redevelopment Corporation.

Plenty of big talk



In mid February, English talked up the prospect of increasing the number of houses on Housing NZ land fro the current 27,000 to more than 69,000. He also started mentioning the prospect of international firms doing some of the work, and in areas not previously touted for redevelopment.



He said the speed of Housing New Zealand's developments would depend on its approach to procurement. He pointed to early signs of international interest in building at the Housing NZ/Auckland Council project at Tamaki. For the first time, he talked about further projects at Avondale and Mt Roskill, which would add to a Northcote project to build 900 new homes that was announced last year.

"The next change will be the way that Housing New Zealand goes about its procurement because it’s procuring quite large-scale projects," he said, referring to the Tamaki and Northcote projects, and the international interest in Tamaki.

"Then they move on to other areas like Avondale and Mt Roskill, where there’s big potential for redevelopment and they’re consciously now setting out to use the scale of those projects, which will be large and will go on for a decade, to have some positive impact on productivity in the construction industry."

The Government will want to prove over the next six months that the talk of ramping up is turning to concrete plans for concrete and steel and foundations on the ground. September 23 is looming and expect to see a swathe of high-vis clad ministers parading in front of diggers and scaffolding before then.



Without that demonstration, Twyford and others in the Opposition will be keen to capitalise on perceptions the Government has failed to act decisively in the face of a 40,000 plus housing shortage that is spilling over into all sorts of social and economic disfunction.



See more on that from Newsroom's Teuila Fuatai on the 'fluid children', who are forced to become transients bouncing from school to school because of high rents in private rentals.

