Archive | Government programmes

Housing NZ takes Mt Albert townhouse land to market

20 residential sections in 5 development blocks in Mt Albert have been put on the market with resource consents in place, 4½ years after Housing NZ was granted special housing area status for a total 8094m².

The 5 blocks at 33 Asquith Avenue, corner of Burch St, Mt Albert, have been put up for tender through Bayleys, closing on Wednesday 21 November.

Each block contains 2-5 sections and they all have resource consents for 4-bedroom townhouses. They’re being offered individually, as one super-block or in any combination of lots. Housing NZ will continue to oversee construction.

Special housing areas were introduced in 2013 through an agreement between then-Housing Minister Nick Smith & Auckland Council. This one had 3 blocks of flats housing boarders at the nearby Mt Albert Grammar School, which were demolished in February 2015.

Housing NZ named the builders for a 40-townhouse project on the land in November 2017 – 20 of them designated one-bedroom units for its tenants and the other 40 to be sold on the open market.

It’s the open-market part that’s up for sale.

Earlier story:
9 May 2014: Third tranche of special housing areas unveiled
Accord tranche 3 adds 41 special housing areas

Attribution: Agency release.

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Classic Homes chief challenges minister: Clear the red tape

Residential developer & builder Peter Cooney issued a challenge today to Housing & Urban Development Minister Phil Twyford: “Clear the red tape and you will get 100,000 houses.”

Mr Cooney, of Mt Maunganui, heads Classic Builders Group Ltd, Classic Developments Ltd & scores of project-specific companies.

The group, New Zealand’s second largest homebuilder, has built 5500 houses and has 4000 lots & units in various stages of development now.

In a paper he wrote in August, released today, Mr Cooney targeted the council consent process – and the people who manage it – as the main obstacle in lifting the construction rate.

I think you have to go back a stage, to the reasons for those obstacles to quick processing being put in place, to establish a clear path to faster construction.

In one word, you can see a painful reason for risk aversion: leaks.

It’s a multi-million-dollar expense & cause of great anguish that ought not to have occurred. That’s not hindsight talking, it’s a case of not doing the job properly first time round – assessing the materials, testing the designs, not skipping the safeguards.

Mr Cooney doesn’t confront that bogey in his paper, but he does raise a number of other points that need considering, and action.

His key points:

  • Financiers want to invest, developers don’t have a skills shortage
  • Builders can build – if they can get through ever more layers of compliance
  • The minister can slash the bureaucratic impediments
  • Decision-makers need to have had skin in the game
  • He suggests the minister appoint housing czars to clear away barriers, and to have a direct line to the minister
  • Collaborative governance style is required
  • Governments don’t develop housing, developers do
  • The notion that relocatable housing will solve the housing shortage is a flawed concept
  • The nation needs a circuit-breaker
  • Populate the new Ministry of Housing & Urban Development with people who have commercial development & housing experience, and
  • Match infrastructure requirements & zone changes to housing needs – ahead of time.

Who does develop housing?

One of those points is debatable – Who develops housing?

Governments & councils in many countries have long histories of developing housing. The difference here, now, is the freedom to set up in business. Even so, building companies rely on tradespeople, and in this country it’s the Government that ensures a sufficient supply by providing an appropriate education system.

Extraordinarily, knowing that years of high immigration must increase the need for more tradespeople, the mandarins of government managed not to do the numbers.
In his paper, Mr Cooney said Housing & Urban Development Minister Phil Twyford “must cut through the ponderous pace & obstruction by council planners if he wants to solve the housing shortage”.

He said: “There is no shortage of financiers wanting to invest in New Zealand housing developments. There is no shortage of skill within development companies. Building companies can build the houses, but no one can get on with the job because council consent processes with ever more layers of compliance & cost prevent developers from getting started.

“Until we have a minister who is prepared to cut away the burgeoning layers of bureaucratic nonsense, then we are going to have a housing shortage and that pushes house prices up and creates crisis in our communities.”

Council planners too slow

Mr Cooney said councils weren’t freeing land for development quickly enough, and new developments were being deluged with requests for information by “council planners that don’t want to take the risk of making decisions”.

His local example: Tauranga

“If we consider Tauranga, for example, land runs out next year. There is no more land zoned for development so new house building stops. That means electricians, plumbers, bricklayers will all have to stop. It will impact carpet sales, furniture sales, lighting, drapes, paint, paving & anything else that is part of putting together a new home. The multiplier effects of development & construction are woven into our local economies & employment.
“It is enough now. It must end. We can’t advance as a nation and provide one of the basics of life, housing, if there is so much delay in getting good housing produced. If everything goes well it will take 4-5 years to get a proposed development through council processes. It can take much longer than that.”

He said the Government’s thinking that finance is the problem behind the housing crisis was a fallacy.   He argues Government is working on a problem that isn’t there and ignoring the one that every builder and developer is pulling their hair out trying to deal with.

Hard to justify investing

“We can raise as much capital as we need, and we don’t require Government help with that.  There are many financiers that would like to be part of the New Zealand housing market, but they struggle to justify investing when they can’t be sure how long a development they might back is going to take to get through all the council processes. The root of the problem with speed to market is the ever-increasing mountains of red tape and slow council decision-making or non-decision-making.”

Mr Cooney’s solution is to ensure the new Ministry of Housing & Urban Development is staffed with people who have actually developed housing and actually built houses.

“We have too many people in key decision-making positions in those key ministries without any idea of how to develop housing. They might have had long careers in government and understand the ‘machinery of government’ but know nothing about what makes housing tick. We need to change that.”

He suggests appointing regional housing czars with a direct line to the minister, who would have the power to clear away bureaucratic barriers: “It would be their job to cut away useless time-wasting council process and put a spotlight on any situation where barriers were being created for spurious reasons.

“Instead of consent officers seeing their job as hindering & slowing developers, we need a more collaborative style of governance where central government, local government & private housing providers work together on agreed goals that work for all parties. It can be done, it just takes leadership from the top and a required change in the way consent officers are tasked.”

Peter Cooney’s paper: CLAS paper Peter Cooney commentary 150818

Attribution: Company release.

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Roskill South: a small window on a growing regeneration programme

Published & corrected 10 September 2018 – 2 numbers transposed in original version

Housing NZ has completed the first homes in what will be its biggest regeneration project in Auckland, removing 3000 houses gradually in groups and building at least 8400 replacements in Mt Roskill over 10-15 years.

It again involves another Government subsidiary, HLC (2017) Ltd – the former Hobsonville Land Co, now with a wider role – as project manager. HLC is already undertaking that role in Auckland regeneration projects in Mangere & Northcote.

Image above: The Roskill South regeneration area.

It will also align with the KiwiBuild concept of developing communities of mixed ownership – about one-third each of state housing, KiwiBuild homes (state-developed, to become privately owned) & houses sold direct to the market.

Corrected: In Mt Roskill, the targets are 3000 each for new state houses and for the open market, 2400 for KiwiBuild customers. [State & KiwiBuild numbers transposed in original version].

Housing & Urban Development Minister Phil Twyford (pictured), onsite for an inspection yesterday, said the Roskill South segment of the overall Mt Roskill project was also likely to introduce the shared ownership concept, raised by former Roskill MP & housing minister Phil Goff when he campaigned for the Treasury benches in 1984, but rarely used since.

“I’m expecting to have more say on shared equity in a couple of months,” Mr Twyford said.

Auckland mayor Phil Goff.

Mr Goff, now Auckland’s mayor, was at yesterday’s walk-around, which started at a new 3-bedroom house on Freeland Avenue, celebrating completion of the first new homes in Roskill South. His involvement with the neighbourhood goes way back: “I used to play in this street when I was a 6-year-old,” he commented.

The key to the financial success of the regeneration projects is intensification in existing suburbs, in many cases – such as the replacement at 43 Freeland Avenue – providing 4 homes where there was one.

Remodelling the landscape

The second important factor, arising alongside intensification, is the revision of the landscape. What’s known as the Freeland Reserve is there because, when the subdivision was begun decades ago, spaces not conducive to construction were set aside as “drainage reserves”.

In the second stage of the Roskill South regeneration, the covered drain will be “daylighted” and will resume being a stream, regarded as better to deal with stormwater. Auckland Council will lead that task, as it has done at other stream daylighting exercises in various suburbs where new housing development is taking place, and overall project manager HLC will contribute $2.7 million to the upgrade cost.

Modernising the old tram route

The third factor is access. Freeland Avenue winds around the middle of a small, undulating precinct between the maunga (the volcanic mount of Puketapapa – Mt Roskill) in Winstone Park, with the Akarana golfcourse beside it, Richardson Rd at the southern edge of the precinct, and Dominion Rd running from the fringe of the city centre almost all the way to the Manukau Harbour, passing beside this precinct and ending at Waikowhai Park.

Auckland’s first light rail line is planned to run out from the city centre, down Dominion Rd, and continuing on to Auckland Airport at Mangere. It will pass within 300m of most of the housing in the Roskill South regeneration, and also run past the Housing NZ regeneration project which began in Mangere in July, upgrading public transport to big job centres at each end.

Financing rental housing

Mr Twyford briefly mentioned one avenue for financing the increase in rental housing, private sector investment funds. That is about to start happening, assuming the successful launch of the Haven Living fund by Kerry Hitchcock (see separate story to be posted on Wednesday).

Housing NZ, Auckland housing programmes
Mt Roskill development
Mt Roskill South development

Related story today:
First homes finished in Roskill South

Related stories, 16 July 2018:
Putting change in context
Robertson outlines focus shift from GDP measure to wellbeing
Demolition starts on Mangere regeneration project
Finance minister calls Productivity Commission in to examine local body funding

Attribution: Site visit, Housing NZ & HLC websites.

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First homes finished in Roskill South

Published 10 September 2018

The Roskill South component of the Mt Roskill regeneration project began a year ago and will see 260 old state houses replaced by about 900 new homes. Housing Minister Phil Twyford caught an update on the project yesterday, on completion of the first new homes.

Image above: Regeneration beside the Freeland Reserve, at the foot of Puketapapa (Mt Roskill).

Housing NZ intends to replace the old state houses with 302 new state houses and 578 houses destined for private ownership over the next 6 years. Some will be sold on the open market and the others categorised as “affordable” and included in the Government’s KiwiBuild programme.

Roskill South stage 1 will see 25 state houses removed (some gone already) and 80 built over the next 2 years on a total 1.3ha. At a land value of about $1200/m² (an HLC guide on costs), section prices can be reduced below $200,000. At $2500/m² for construction, a 160m² house can be built for $400,000. Note: Those are rough & general calculations. Costs & prices will vary across the development, and new laneways will be introduced.

Mr Twyford said of the intensification, that the KiwiBuild programme “will help us build our way out of the housing crisis. Most wash their face through redevelopment of the land. We’re taking advantage of the Housing NZ balance sheet – we’re not expecting to need to use the Government balance sheet.”

In his one reference to the imminent advent of urban development authorities, Mr Twyford said the Auckland authority “is going to be leading up to a dozen state housing projects throughout Auckland”, but housing was only one part of that equation: “We’re planning a system for infrastructure,” he added.

Roskill South stage 2

In the second, 5ha stage of Roskill South, house removal & demolition will start this year, about 90 old state houses will go, and 300 new homes will be built, including 50-60 state houses.

The balance of 240 new homes will be aimed at the open market, including a proportion of cheaper homes.

Overall Mt Roskill project

The Roskill South regeneration area.

The Mt Roskill project is initially targeting Roskill South and the nearby suburb of Owairaka, most famous for its production of world-beating athletes in the 1960s, led by Murray Halberg & trained by Arthur Lydiard. Regeneration in other neighbourhoods is being considered over the 10-15 years of the project.

The area has 3000 state houses spread over 143ha (21/ha), to be replaced by about 10,000 homes at 70/ha. The current plan, according to Mr Twyford, totals 8400 – 2400 state houses, 3000 each of open-market & affordable homes to be marketed.

Under the Auckland housing programme, the Government’s target is to deliver almost 11,000 new state houses and over 12,600 new market homes in Auckland over the next 10 years, including cheaper homes under the Government’s KiwiBuild scheme.

While the focus has been on getting more houses built, and replacing old stock with warmer homes, Roskill MP Michael Wood said it was also about building communities.

That’s one reason for the mix of ownership – retaining a high percentage of rentals, adding first-homebuyers through KiwiBuild and including houses built for the open market.

Mr Wood’s predecessor as local MP, mayor Phil Goff, said Auckland’s current build rate was about 12,850 homes/year, and intensification meant 69% of them would be built in brownfield areas (existing suburbs), not in greenfields: “That means we are doing what we intended. Bring on light rail.”

As for the old drainage reserves, Mr Goff said they’d be transformed: “This [Freeland Reserve beside the new house the minister was being shown] will be a place for the community to congregate, with open streams instead of drains.”

Mr Goff was also pleased the commitment was made to tenants moving out to make way for the redevelopment, to be prioritised as residents of the new-builds, either as tenants or buyers. Gentrification [introducing higher-income residents in more expensive homes] was a concern Mr Twyford expressed when he visited the Mangere regeneration project, and Mr Goff commented: “We don’t want to gentrify.”

Mr Twyford reiterated his concern too: “These big urban development schemes are not simply a turbo-charged gentrification – the last thing we want to do is drive up the price of land and drive people out. We’re going to make sure the people who live in this community are at the head of the list to buy these new homes. People who move out will have the right to move back in.”

4 replacing 1

Housing NZ’s asset development group general manager, Patrick Dougherty, was developing apartments before he moved to the corporation 6 years ago. He said Housing NZ would add 6400 homes over the next 4 years, and planned to increase its portfolio by 16,000 over 10 years.

The intensification is evident in Roskill South. On 12 sections there where houses had been removed, Mr Dougherty said 45 new ones would be built: “And they’ll still have a tree at the back and a private yard.”

Housing NZ hiring overseas

One drawback is the shortage of appropriate construction workers. Mr Dougherty said Housing NZ had 2300 applications in the UK & South Africa when it went looking for development & project managers and quantity surveyors over winter. After interviews in London, 18 of the top 30 had been confirmed and should start arriving next month.

“We’re also recruiting here – 13 joined the asset development group last week.”

Price remains an issue

Mr Twyford addressed the continuing concern that intending to build more homes is fine, but Auckland is an expensive – $1 million-plus – city. In those circumstances, he said a $600,000 new home was “relatively affordable”. But, he added, “We know a $5-600,000 mortgage is not affordable. That’s why we’re introducing shared equity and reforming the rental laws.

“The $650,000 top of the KiwiBuild range is not a target, it’s a maximum. The first KiwiBuild homes at McLennan, Papakura, with 3 bedrooms, are selling for $579,000, way short of that price cap.

“We’re taking land built on in the 1950s-60s, retaining the number of state houses in the community but, through good urban design & modern architecture, we’re building better communities, using the land much more efficiently.”

Housing NZ, Auckland housing programmes
Mt Roskill development
Mt Roskill South development

Related story today:
Roskill South: a small window on a growing regeneration programme

Related stories, 16 July 2018:
Putting change in context
Robertson outlines focus shift from GDP measure to wellbeing
Demolition starts on Mangere regeneration project
Finance minister calls Productivity Commission in to examine local body funding

Attribution: Site visit, Housing NZ & HLC websites.

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KiwiBuild prequalification opens

The Government opened the prequalification process on Monday for first-homebuyers & second-chancers wanting to buy a KiwiBuild home.

Aspiring homeowners can apply online at to determine if they are eligible to enter a ballot for a KiwiBuild home.

Image above: Artist’s impression of housing being built at McLennan, Papakura.

The target is 100,000 new homes over 10 years, half of them in Auckland.

Housing & Urban Development Minister Phil Twyford said the production rate would take 3 years to rise to the annual target of 10,000 new KiwiBuild homes: “In the first year we will build 1000 KiwiBuild homes, with the full ramp-up reaching 5000 homes by June 2020 and 10,000 homes by June 2021. KiwiBuild will build modest starter homes, initially focusing on areas with high housing demand & affordability pressures.

“First-time buyers & second-chancers will be given plenty of notice about homes that are coming on the market so there is no rush to prequalify.

“But this is a great opportunity for people to familiarise themselves with the KiwiBuild system and seek trusted, professional advice before entering a ballot to buy their first home.”

The first ballot will open next month for a limited number of KiwiBuild homes in Papakura. Kiwis will have over 6 weeks to prequalify & enter the ballot before it’s drawn in October.

To ensure KiwiBuild homes go to the people they are intended for, applicants must:

  • be a first-time buyer or a ‘second chancer’
  • have an income below $120,000 for a single applicant, or no more than $180,000 for more than one buyer
  • be a New Zealand permanent resident or citizen, or a resident visa holder who’s ‘ordinarily resident in New Zealand’, and
  • intend to live in the home as their main place of residence for at least 3 years.

The online prequalification process will ask for specific documentation including:

  • proof of residency
  • proof of income
  • statutory declaration signed by an authorised person (e.g. a Justice of the Peace, lawyer), and
  • financial pre-approval from a bank or other lender

The Government has committed $2 billion for KiwiBuild and said it intends to work with iwi, councils & the private sector, establishing a home-building programme, undertaking major greenfield & urban development regeneration projects and driving innovation to develop new ways to build quality affordable homes.

KiwiBuild work programme
Unitec land for housing
McLennan development, Papakura

Attribution: Ministerial release, KiwiBuild websites.

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Demolition starts on Mangere regeneration project

Demolition has started along Bader Drive in Mangere for the next major regeneration project for state housing areas in Auckland.

The programme envisages 2700 older state houses being replaced by 10,000 new homes over the next 10-15 years, in roughly equal mixes of intensive & standalone, and state, affordable & market-price.

Mangere has joined Northcote, Mt Roskill & Oranga (near Onehunga) as a focus for largescale urban development by Housing NZ and its subsidiary, HLC (2017) Ltd (originally Hobsonville Land Co Ltd).

Hobsonville is different because it’s been all about new housing, with only a few former Defence Force homes displaced. In the other areas – and in the Government’s Tamaki programme with Auckland Council – large numbers of state houses are being demolished to make way for more intensive subdivisions containing homes that meet modern standards.

Housing, Urban Development & Transport Minister Phil Twyford onsite with HLC precinct director Mark Fraser (left) & local MP William Sio.

While existing residents are necessarily displaced, Housing, Urban Development & Transport Minister Phil Twyford said on Friday those residents would be at the top of the priority list for new homes.

He emphasised the ultimate aim of community, not just housing, and particularly access to jobs.

Light rail a factor

Mr Twyford said regeneration would be a hallmark of this government: The Mangere project is “alongside the light rail site [from the cbd to Mt Roskill and on to the airport], which will deliver 21st century rapid transit to these communities and will be a powerful stimulant for economic development, attracting investment into these communities.”

He said light rail would prove a powerful magnet for private investment around rail stops, and would also connect Mangere “to the biggest concentration of jobs in the region [around the airport]… This community has been starved of good public transport for too long.”

Mr Twyford also said it was important that the project retained the existing community, although new price & ownership options would obviously bring change: “It is not our policy to run a regeneration programme that pushes values up and pushes the community out. It’s a policy to build homes & security. Families living in this community will get priority. [But] mixed communities are strong communities. That’s why we want private [in the mix].”

“We’re also working on ideas to include in the mix for this community tenure-secure rental.”

That’s the kind of long-term rental common in Europe, where large portfolios of rental housing have become a popular investment option for US, European & Australian property investment companies.

One issue for critics is how the cost of such developments will be met. Mr Twyford was adamant: “This project will wash its face. We’re redeveloping publicly owned land, reinvesting capital into homes. The KiwiBuild homes will be supported by the $2 billion KiwiBuild fund, and there will be community & residential development alongside the light rail route.”

The KiwiBuild homes would be priced under the Auckland KiwiBuild price caps of $650,000 for 3 bedrooms, $600,000 for 2 bedrooms. In addition, Mr Twyford said, “We’re working hard to put in place a shared equity scheme, which will make it possible for a lot of people to take part in the KiwiBuild scheme, reducing the upfront costs a buyer has to pay.

“We’re mobilising capital – public, and hopefully private as well – to get families into homes. And we’re working with Maori to look at ways we can work with iwi to ensure whenua Maori get a fair share of the homes.

Mangere about 40% of regeneration programme

The Mangere development will make up about 40% of HLC’s Auckland housing programme – 10,000 of the 24,300 new homes around the region over the next 10 years (or 10-15 years for Mangere).

The start last week was on demolition of houses in the first stages of the regeneration programme (in colour on the aerial picture), along Bader Drive between McKenzie Rd & Mangere College.

Housing NZ has about 100 redevelopments underway around Auckland, ranging in scope from a property or 2 through to largescale developments involving 1000 or more new homes. The programme, begun in June 2016, has a target of delivering over 10 years:

  • almost 11,500 additional new state houses
  • over 12,800 new affordable & market-priced homes.

Housing NZ, Auckland housing programmes

Related stories, 16 July 2018:
Putting change in context
Robertson outlines focus shift from GDP measure to wellbeing
Demolition starts on Mangere regeneration project
Finance minister calls Productivity Commission in to examine local body funding

Attribution: Mangere presentation, site visit, HLC release.

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KiwiBuild OK – and then come all the other inputs that need fixing, says bank economist

As the Coalition Government revises the accent on economic direction, housing remains a priority issue – with plenty of questionmarks from advocates of many hues.

Now that KiwiBuild’s chief advocate, Phil Twyford, is ensconced as Minister of Housing, Urban Development & Transport, the bulk of outside advice to him seems to be on how not to do his jobs.

Bank of NZ chief economist Tony Alexander took a different tack today – not criticising, but warning about the reality of the build rate, plus the many other inputs which need to be fixed before the housing sector will come right.

In his weekly overview, Mr Alexander wrote that, as over 20,000 people had signed up for the ballot for a KiwiBuild house categorised as affordable, the odds in this lottery had steadily lengthened.

This told him one thing: “You cannot build your home ownership plans around securing a KiwiBuild property. Your chances of getting one are shrinking by the day as the logic of absolutely everyone who is eligible signing up sinks in. It’s a lottery and, if you beat the odds and win, you will get a property you’ll only need to hold for 3 years then will be able to flick off probably at a decent profit – or hold off for 5 years then get that profit tax free.”

Mr Alexander also warned people looking for mortgage finance to be aware of shifts in international financial positions, and to expect an “increase in commentary regarding reducing availability of finance as global risks rise”.

As for KiwiBuild itself, he thought it was a good idea – but: “It doesn’t change the essential dynamics of our residential construction sector, which consist of many little, inefficient operators purchasing from oligopolistic material suppliers, dealing with obstructionist councils increasingly terrified about getting anything wrong, shortages of skilled & unskilled staff, and shrinking availability of finance as pressures keep growing & growing for banks to do less & less risky lending while holding more & more capital”.

Link: Full weekly overview pdf

Attribution: Alexander overview.

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Foreign buyer screening law advances in Parliament

Overseas investors will still be able to invest in new housing under the new regime of the Overseas Investment Bill, which was reported back to Parliament yesterday.

The bill will still ban non-NZ citizens & residents, except for Australians & Singaporeans, from buying existing houses.

Associate Finance Minister David Parker said: “Other recommended changes will simplify the process for buying residential land for commercial purposes, such as hotels, supermarkets & businesses that create jobs and support our communities. This includes an exemption for utility companies, reflecting the importance of these services to all Kiwis.”

Changes have also been made to the forestry investment screening regime (see separate story).

Mr Parker said: “This law will ensure that the market for our homes is a New Zealand market not an international one.”

All permanent residents & resident visa holders who spend most of their time in New Zealand will be able to buy homes under the regime without obtaining consent.

Australian & Singapore citizens & residents will be treated the same as New Zealand citizens & permanent residents.

They will be able to buy apartments, new rentals & homes available to buy under rent-to-own or shared-equity arrangements.

Looking at the ban remaining on foreigners buying existing houses, Mr Parker said: “This will help first-homebuyers to get their foot on the property ladder.”

“It’s also a matter of values. We believe that, from the most expensive seaside & lakeside properties to the most modest homes in our towns & cities, New Zealanders should not be outbid by wealthier foreign buyers.”

Mr Parker said the bill, reported back to Parliament by the finance & expenditure select committee, would support the creation of new housing & the Government’s KiwiBuild policy by better harnessing foreign capital and directing it towards large residential developments.

If the current number of Singaporean buyers “materially” increases, the 2 countries have agreed to meet to discuss the cause of the increase and how to address it, if required.

More information can be found here:

Overseas Investment Amendment Bill, residential land changes
Screening of residential land: Questions & answers
Related story today: Minister optimistic about changes to foreigners’ forestry rights

Attribution: Ministerial release.

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Parker uses wrong conclusion on statistics to justify ban on foreign homebuyers

Associate Finance Minister David Parker.

Associate Finance Minister David Parker said on Friday: “New figures showing a high level of overseas house buying in New Zealand’s least affordable areas vindicates the Government’s move to ban foreign buyers of existing homes.”

The aim of Mr Parker’s new law to stem the flow of home ownership overseas, the Overseas Investment Amendment Bill, is “to ensure that investments made by overseas persons in New Zealand will have genuine benefits for the country”.

Mr Parker introduced the bill to Parliament on 14 December and the finance & expenditure committee is due to report on it by Thursday next week, 21 June. He said it was on track to become law next month.

He was using the first release new Statistics NZ research to support a conclusion he’d already reached.

But he made one wrong assumption – that the concentration of buying is in the areas of worst affordability. The research showed foreign buyers (holding neither NZ citizenship nor a resident visa) accounted for 18.7% of residential purchases in Auckland’s central city Waitemata ward in the March quarter.

As I noted in my story on Friday: “There’s no differentiation in the statistics between purchases of apartments & houses in the Waitemata ward, which is material to the value of the statistics. Auckland’s (and New Zealand’s) apartment market has been led by sales through overseas campaigns, particularly through Singapore, Malaysia & Hong Kong. Without those overseas campaigns, most of the city’s big apartment developments would not have got out of the ground.”

Secondly, a high proportion of purchases by full foreigners (neither citizenship nor resident visa) & partial foreigners (where one half of a couple might have citizenship or a visa, for instance) have been in expensive suburbs such as Remuera and some of the bays on the North Shore.

They are areas which are expensive, where only wealthy people will buy. Some of their purchases have raised the overall price level and, I’ve argued, that has flowed through to the overall spiralling increase in house prices nationally. But to consider those areas to be in the realm of “affordable”, as in first-homebuyer affordable, would be irrational.

The foreign purchase of apartments off the plans – enabling development, followed in due course by selldown, not part of the proposed ban on buying existing homes but included in the statistics – is not a steal from locals. In some cases, the secondary sale has been made at a loss.

And purchases in expensive suburbs shouldn’t be used for an affordability argument. The Government is entering a programme to get construction of cheaper homes underway, KiwiBuild, and it’s not going to do that by buying land in the most expensive suburbs.

The first target for KiwiBuild is land the Government has bought from Unitec at Mt Albert, and you can expect the Government to look for similar suburban sites to continue the programme.

Back to Mr Parker’s Friday statement, in which he noted 3.3% of purchases nationally were by foreigners, rising to 18.7% in central Auckland & almost 10% in Queenstown.

“That shows the concentration of buying is in the areas of worst affordability and where price rises have been the highest,” he said.

“Kiwis were right to be concerned, and that is why we are passing the foreign buyers law.”

He said the data measured the flow of properties into overseas hands, not the proportion of the stock that was held by overseas owners, and with more foreign buyers than sellers the number of homes in foreign hands was increasing.

“We want the prices of New Zealand homes, whether it be a lakeside station, the best houses in the Bay of Islands or the most modest homes in our towns & cities, to be set by local buyers, not on the international market.”

He said it wasn’t just about the raw numbers of houses being sold overseas: “It’s also a matter of values. We believe New Zealand homes should not be traded on an international market and New Zealanders should not be outbid by wealthier foreign buyers.”

Earlier stories:
8 June 2018: 3.3% of March quarter home buyers were foreigners – but 18.7% in central Auckland
25 March 2018: Unitec land transfer kicks off KiwiBuild
15 December 2017: Twyford launches the KiwiBuild plan

Attribution: Ministerial release, Statistics NZ research.

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Twyford creates new housing & urban development ministry

Housing & Urban Development Minister Phil Twyford.

When the new Government allocated portfolios last October, Labour’s Phil Twyford won housing & urban development and the separate transport role.

On Friday, he announced that housing & urban development would get its own ministry, to be established on 1 August, operating from 1 October.

Initially, the Government will move functions from existing agencies, and will look at using funding from their existing operational budgets:

  • From the Ministry of Business, Innovation & Employment: the housing & urban policy functions, the KiwiBuild unit and the Community Housing Regulatory Authority
  • From the Ministry of Social Development: policy for emergency, transitional & public housing, and
  • From Treasury: monitoring of Housing NZ & the Tamaki Redevelopment Co Ltd.

The changes won’t affect where people go to for help with housing. The Ministry of Social Development will continue to assess people’s need for housing support and manage the public housing register.

The aim is for the new ministry to help deliver on the Government’s priorities of making housing more affordable & cities more liveable. Mr Twyford said: “Addressing the national housing crisis is one of the biggest challenges our government faces. The new ministry will provide the focus & capability in the public service to deliver our reform agenda.

“Too many New Zealanders are hurting because of their housing situation. Many are locked out of the Kiwi dream of home ownership. Others are homeless or suffering the health effects of poor quality housing.

“The new ministry will be the Government’s lead advisor on housing & urban development. It will provide across-the-board advice on housing issues, including responding to homelessness, ensuring affordable, warm, safe & dry rental housing in the private & public market, and the appropriate support for first-homebuyers.”

Mr Twyford said the new ministry would provide the Government with strong leadership & fresh thinking. It would also end the fragmented current approach caused by involving a number of agencies.

Then he rattled off 7 aims of the new government:

  • Ramping up efforts to house the homeless
  • Building affordable homes through KiwiBuild
  • Modernising & building more public housing
  • Reforming the tenancy laws to make life better for renters
  • Setting minimum standards to make rentals warm & dry
  • Adjusting the tax settings to discourage speculation, and
  • Setting up an urban development authority to lead largescale urban development projects.

In sum, he said: “The Ministry of Housing & Urban Development will help us deliver our bold & ambitious plan to build much-needed affordable housing, and create modern & liveable cities ready for the future.”

Earlier stories:
25 March 2018: Unitec land transfer kicks off KiwiBuild
23 May 2016: Is it really a faraway boundary that’s raising inner-city house prices?
8 November 2015: Twyford talks ideas which unitary plan & council funding review likely to resolve

Attribution: Ministerial release.

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