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Ratepayers vs affordable housing

Written By: - Date published: 9:25 am, June 12th, 2017 - 60 comments
Categories: housing, leadership - Tags: , , ,

Great piece by Bernard Orsman in The Herald:

Large affordable housing project in Manukau hits snag

A $140 million housing project on council land in Manukau has hit a snag on the eve of Auckland Mayor Phil Goff releasing a major report to tackle the city’s housing crisis.

The council’s development arm is being blamed by New Zealand Housing Foundation chief executive Paul Gilberd for wanting too much for the land, where hundreds of homes, including more than 100 affordable homes, are planned.

Just in passing, why aren’t all the planned houses in this project “affordable”? The New Zealand Housing Foundation’s site is here: “We are a not-for-profit, charitable trust delivering affordable housing for low income households, and supporting many other community providers also to provide affordable housing in neighbourhoods that work for low income and disadvantaged households”.

“The whole process has collapsed and is off the table as of Wednesday last week,” Gilberd told RNZ.

He said the foundation offered $13m for the land but Panuku Development Auckland wanted $24m, making affordable homes too expensive.

The project highlights the difficulty balancing the cash-strapped council’s desire to maximise the value of selling surplus land and using its landholdings to deliver affordable housing.

“The other important factor is that the sale of the site needs to make a reasonable financial return for Auckland ratepayers,” the statement [Panuku Development] said. …

From the council / ratepayer point of view why shouldn’t they want the best price possible for the land? But that drives up the prices of supposedly “affordable” housing still further. We are going to see versions of this dilemma played out everywhere.

In my opinion the needs of affordable housing should come first. Existing ratepayers need to make way for those who need a home too. The land should be cheap, “cash-strapped” councils can put up the rates.

This needs leadership from central government. I won’t hold my breath.

60 comments on “Ratepayers vs affordable housing ”

  1. dukeofurl 1

    Part of the issue here is that this is a very high density location ( its across the motorway from the Manukau Court and Police station) in the heart of central Manukau.

    Could it be the zoning is for apartment blocks, when the Housing Foundation wants to build terrace style homes. ? This mean the land cost per dwelling is completely different which is why they disagree

    As has been pointed out only a portion of the homes are affordable, others being at market rates ( previous sites seem to be 1/3 in this category)

    • adam 1.1

      dukeofurl, people want, can handle, and indeed thrive in medium density housing. High density not so much. Exceptions every where of course, but in broad sociological terms medium density is better for peoples well being.

      High density is not the solution, it comes with it’s own set of problems.

      • dukeofurl 1.1.1

        Not all households are ‘family type’ I think Auckland has a large number of single and two person households, who could be very happy in apartment blocks.
        Im not thinking 15 stories, but from 4 to 9 levels.

        • lprent 1.1.1.1

          I think Auckland has a large number of single and two person households, who could be very happy in apartment blocks.
          Im not thinking 15 stories, but from 4 to 9 levels.

          I am one of them. I have absolutely no interest in a house – don’t have time for one. I’m certainly not having one so just I have an hour each way commute. And for you provincials out there, in my areas of expertise I either work in Auckland or I emigrate to where at least equivalent work exists. While there may be work in other cities in NZ, there simply aren’t enough employers to be worth taking the risk of uprooting. In Auckland I have a moderate range of choice.

          I have a 51 sq meter one bedroom city fringe apartment in a 3 level complex (with two other parking floors). Originally I was rattling around on my own. In the last 9 years my partner has been there as well – which makes it slightly tight. We’d like to find a slightly bigger two bedroom apartment (about 70 or even 65 sq meter would do) so that we can separate out work area from our living area. But as far as I can tell they either don’t exist or they are priced for millionaires who like paying exorbitant body corporate fees for lifts and things that they never use.

          Instead what we have in Auckland is a lot of 70 sq meter 3 bedroom apartments (with two bathrooms), low ceilings and no parking designed for flatting. Which are even tighter than our existing openish plan apartment. Or teeny 35 sq meter apartments for single people who don’t need a workable desk.

          Eventually my partner brought her own 53 sq meter one bedroom apartment in the same block. The only way she was going to get property in the city that she wants to work in was to get another small apartment.

          Basically Auckland has a lot of 3 bedroom housing. It is bloody short of 1-2 bedroom housing.

  2. Keith 2

    With neoliberalism we labour under the maxim of maximize return on investment, aka Greed is Good. There is no other way, this is the cross we are nailed to.

    Housing cannot be sorted and will only get worse until there is a substantial shift from the way this country is run.

    • tc 2.1

      +100 also what’s affordable isn’t the same as what’s a reasonable COST to build.

      If we stripped out the cartel/monopoly style pricing that CHH/fletchers etc indulge in our cost of building would reflect our abundant natural resources and not the bottom line of the few companies who control the supply side.

      This is aside from the pittance developers contribute to the perennial infrastructure issues they create and walk away with Profit banked and favours repaid.

      • dukeofurl 2.1.1

        Yes . Im suprised that steel framing hasnt made a headway, especially in strong siesmic areas.
        Yet it seems to be priced as a premium product on top of the ridiculous prices paid for wood. ( especially since the fall in iron ore and sheet steel prices)
        I have heard rumours you can buy NZ cut timber framing cheaper in Australia than in NZ ?
        Another issue is NZ has all these boutique builders building medium to high end homes.
        the 3 bedroom / 130m2 home with a carport has practically disappeared. Yet this is what young familys want.

        • mauī 2.1.1.1

          Whoever put steel framing on the market and managed to convince people to use it is an idiot. It’s another rort. It’s not a renewable resource, it takes large amounts of energy to manufacture, its more expensive and it’s great if you want to lose heat through your walls in your home. And we’re using this to replace a perfectly good material – timber.

    • Gosman 2.2

      You want to turn NZ in to a fully socialist state to solve the housing issue do you?

      • Keith 2.2.1

        Yes. Because this shitty system sure ain’t working!

      • Craig H 2.2.2

        I’m personally not for a full command economy, but markets can be seen to be functioning best when the outcome is equilibrium i.e. supply = demand. Suppliers naturally prefer when there is some sort of scarcity i.e. more demand than supply as they can make more money. That’s not always possible to achieve in all markets, but for land and housing, there is clearly a scarcity in some regions, particularly urban, and it’s often easily manipulated by a relatively small number of people. We can try to reduce demand in Auckland by reducing incoming population and shifting demand into regions where there is no scarcity of supply, but part of the solution for Auckland still has to be more supply.

        That assumes housing is even some sort of reasonable market at all – given some of the demand involves “consumers” who are unable to pay the prices the suppliers require to sell/rent, but still require housing of some sort, my personal belief is that housing is not a fully functional market, and therefore state intervention is required. I would do it by having the state provide basic housing at low cost, and leave the higher end housing to the market.

        • As a possible tangent, socialism doesn’t require a command economy. You can have demand-driven socialism, it just requires either a lack of capital property or some sort of redistributive function that addresses wealth inequality. (eg. everyone gets a UBI, but you still have co-ops or corporations who get together to produce and sell things, and they still have varying success based on consumer demand)

          This is actually one area where Marx and his derivatives got pulled into thinking that was too conventional, buying into the very supply-side thinking that capitalists at the time also supported.

          • Gosman 2.2.2.1.1

            Example of this working in action please.

            • Matthew Whitehead 2.2.2.1.1.1

              Like a lot of communist political theory, it’s never been tried, my point is that the command economy part isn’t an essential part of marxist theory, it’s just one of the things he suggests a revolutionary government does in the transition period.

              Of course, capitalism doesn’t exactly work in action either, so I wouldn’t get on a high horse about its results if I were you.

        • Gosman 2.2.2.2

          Why isn’t supply meeting demand?

        • Gosman 2.2.2.3

          The supply problem in Auckland is largely artificial. It is easily rectified. Remove the restrictions on building on land.

          • In Vino 2.2.2.3.1

            We were told back in the 70s that we could not go on and on eating up productive land for unproductive urban spread – but that is what you want to do now. Idiot. Every other country in the world with a growing population has had to adapt and stop gobbling up land. But you want to continue the utter madness of house/garden, house/garden?

            • Gosman 2.2.2.3.1.1

              How many people live in the UK (Similar land area to NZ)?

              • In Vino

                How long ago did the UK realise that urban sprawl was unsustainable and increase dwelling density? Don’t ask me dumb questions – NZ is obviously at the stage where the UK and so many other countries were when they accepted the inevitable. Do your own research – all too often you cherry-pick questions to make out that the people you are querying should do heaps of research for you to justify themselves. Go jump in a lake somewhere, Goose.

          • dukeofurl 2.2.2.3.2

            “The supply problem in Auckland is largely artificial. It is easily rectified. Remove the restrictions on building on land.”

            SHAs did that.
            “Tranche 10, comprising 36 new SHAs, was declared on 19 May 2016 with an estimated final yield of nearly 2,749 dwellings bringing overall potential yield from 154 SHAs to 55,757 dwellings.

            Actual number built ?
            The number of dwellings issued with building consents continues to accelerate in special housing areas into Accord Year 3 and reached 1,750 by 31 March 2016 with new data to 30 April 2016 showing over 1,000 dwellings completed*.

            land available and consented is 55,000. Building consents is 1750

            This refutes your claim not enough land is available.

            SHAs being land consented for subdivision, the first step in the process. the reality is creating the sections is high risk and most SHA developers dont have the capital to do so

            http://www.aucklandcouncil.govt.nz/EN/ratesbuildingproperty/housingsupply/Documents/aucklandhousingaccordmonitoringreport20160622.pdf

          • lprent 2.2.2.3.3

            Can I (politely) request that you pull your head out of your arse and deal with the real world for a change?

            It has been tried.

            1. The Special Housing Areas (SHAs) in Auckland have been an unmitigated disaster.

            2. In Auckland the constraints are often the sewerage, water, stormwater, power and roading systems which take a lot of leadtime to expand – bothin greenfield and intensification areas.

            3. Whenever the ideological idiots like you in National announce another ill-considered plan like SHAs, they immediately assume it has been completed and raise the nett inwards migration levels.

            Basically be need to get rid of the idiots in government

      • Who said anything about wanting socialism just to solve this one issue? 😉

      • dukeofurl 2.2.4

        Gosman “you want to turn NZ in to a fully socialist state to solve the housing issue do you

        have you forgotten that Nick Smith has been talking about the compulsory purchase of private land- but only so that private developers can create larger subdivisions.
        Of course for many years up to the mid 80s, the state did this for state rental houses

        Gosman you need to ask the beehive for more emails on their own policy rather than the attack labour/greens bumpf you are getting

      • greywarshark 2.2.5

        Trolling Gosman? You seem to float through the posts and don’t seem to be learning anything except the next empty question or challenge you pose.

      • georgecom 2.2.6

        How you doing pulling that really really long bow Gosman?

  3. Gosman 3

    Surely the cost of the land is determined by the market (Willing Buyer and Seller). If you don’t have either of these two things then there won’t be a transaction. Are you suggesting that the State forces people to accept less than they are willing to accept for land?

    • r0b 3.1

      The state has that legal power already:

      http://www.linz.govt.nz/crown-property/acquisition-and-disposal-land/land-involved-public-works/landowners-rights-when-crown

      I think there are circumstances where the use of this power is justified, and in principle this could be one of those cases (I don’t know enough about the specfics to be sure).

      • Gosman 3.1.1

        The State has the power to take your life if it so desires. That doesn’t mean it should exercise that power.

        • r0b 3.1.1.1

          The state does not have that legal power. And reductio ad absurdum is seldom a good form of argument.

          • Draco T Bastard 3.1.1.1.1

            And reductio ad absurdum is seldom a good form of argument.

            That’s the only ‘argument’ that the RWNJs actually have.

          • Craig H 3.1.1.1.2

            The State does, it just chooses not to use it. Granted, there would be law changes required and a treaty to repudiate, but legally it could be done.

            However I agree that the argument that taking someone’s land at slightly less than current market rate and taking their life is somehow analogous is BS.

          • Matthew Whitehead 3.1.1.1.3

            Actually reductio ad absurdum is fine, so long as you don’t exaggerate your opponents position all the time like Gosman tries to.

            Like any logically sound debating technique, it requires you to be careful of what your opponent is actually saying and to try and respect their points, principles, and integrity.

          • Gosman 3.1.1.1.4

            Police can be authorised to use lethal force.

    • Keith 3.2

      You have hit the nail on the head Gosman. “The market” is the problem.

      “The market” could not care less if you live in a car or on the street, the market is all about money and profit. “The market” is ill equipped for the inevitable instability in society when too many people fall foul of it.

      “The market” is essentially feudal in its workings, Lord, vassal and peasant.

      “The market” is where everything goes to the highest bidder and in time and it is speeding up, on ultimately to the wealthy until they have nearly everything and the vast majority have nothing.

      This appears to be working at the present time because there is still land to transfer but its rapid transference upward means the logical outcome will be fewer land holders and more and more people left only to rent and even then to struggle.

      “The market” relies on greed and selfish individualism, pure and simple.

      A rerun of the middle ages may suit the few but it sure as shit doesn’t inspire me.

  4. greywarshark 4

    Why can’t houses be tendered from australia so bringing back our cheaper wood in a cost efficient manner, and putting up by teams of locals trained to erect and fix these packed down houses?

    Going onto sites where the sections have been planned properly with appropriate services, they could be up and running with a central community room on the side of a small store/post office, (no booze, ciggies), visiting dental and GP room, bus stop.) This would provide a hub and be something along the lines of one established by Sisters Pauline O’Regan and others years ago.
    http://www.nzine.co.nz/views/oregan.html
    http://www.teara.govt.nz/en/photograph/28131/sisters-of-mercy-in-the-community

    What a great thought and all that it requires is the will by those who have the power, and commitment from start to finish with services in place. Maori community interests such as those who provided help with housing last year, would be interested in the services and might wish to do this.

    Seeing the timber trade has been monpolised by big players, and so the market is captured and buggered, we should look at alternative ways to use this ‘great’ market we are stuck with.

    • Gosman 4.1

      It’s not really the houses that is causing the problem so much as the land availability. You haven’t solved that issue.

  5. Treetop 5

    Government need to make up the shortfall or 50/50 otherwise no lower cost housing will get built. Were I to have it my way the land would only be used for low cost housing.

    • lprent 5.1

      Especially since this government is the problem. Having high return migration on top of high immigration is a central government decision. Since the greedy fuckers have made it to have a high performing economy without extra investment, then central government can damn well pay for it.

      After all central government are the people picking up the extra tax for having an estimated extra 800 cars per week on Auckland roads (rego + warrants _ drivers license), the extra income tax, and the extra GST.

      Auckland ratepayers aren’t going to be picking up the bill for the National stupidity of trying to have high immigration after under funding infrastructure. Everything from the Auckland super city they imposed, the public transport, roads and all the way to not training sufficient builders.

      • Muttonbird 5.1.1

        This. And what of the Farrar types who blame Auckland council for not selling assets to fund the city’s growth (which is out of their control) yet uses any and every chance to also blame the opposition for not backing these private developments. I suppose Farrar is all for Auckland Council to sell for $11 million less than it’s worth – I mean that’s a dozen Maseratis for the developers right there.

      • Poission 5.1.2

        So you make the hard decisions on migration.(being the most cost effective option).

        http://www.radionz.co.nz/news/political/332816/labour-would-aim-to-reduce-immigration-numbers

      • Gosman 5.1.3

        Local bodies should receive a significant proportion of the GST on new builds consented under their watch.

        • lprent 5.1.3.1

          You really don’t understand GST do you?

          The central government will receive the GST on consents. The local council will only recover the GST that they have already paid for their goods and services purchased.

          • Gosman 5.1.3.1.1

            No, you don’t understand ACT party policy. The central government will direct 50% of the GST collected on building to the council that consented to the work.

  6. Draco T Bastard 6

    From the council / ratepayer point of view why shouldn’t they want the best price possible for the land?

    Do the ratepayers even want to sell the land?
    Would they be happy if the land was used to build some council flats on that could then be rented out to people on an as need basis at a cost neutral rent?

    From the ratepayers perspective, actually selling the land is a bad idea as they’d lose that value.

    • greywarshark 6.1

      Good point DTB. Why sell the land. I can’t see why it can’t be carried forward as a special financial project. The houses would be built and valued at today’s prices, the land also at a reasonable value. Then the rent worked out to cover costs and some maintenance allowed for and then rent them at that rate or close to it. The rent should cover costs, but wouldn’t be put up to match market rental. Perhaps it would go up by about 2% a year so it shifted slightly. The maintenance would go up by the same per year.

      I think it is important that the values changed regularly as surrounding housing and land values go up. And that maintenance would be covered and attended to regularly to keep the stock in good order.

    • Craig H 6.2

      Very good point.

    • dukeofurl 6.3

      yes . the Council could be the developer/builder and then all could be affordable homes, with the Housing foundation as ‘project manger’ ?
      But the current circumstances mean they have enough problems with transport, amenities, infrastructure etc and wont be going down that path.

  7. Gosman 7

    Why is the housing market one of the very few areas in NZ where supply cannot meet demand?

    • Muttonbird 7.1

      A lack of transport and utility infrastructure and a lack of immigration planning.

      • Gosman 7.1.1

        Actually it is a lack of the ability to convert land from one use to another as quickly as needed.

        • Muttonbird 7.1.1.1

          Yes, the lack of ability is because of under-investment in utilities and public transport infrastructure.

          Why don’t RWNJs get this?

          • Gosman 7.1.1.1.1

            Yes and that is why 50% of GST paid on buildings receiving consent by a council should go back to that council to pay for the infrastructure required.

      • Gosman 7.1.2

        Try lack of ability to change land use very easily.

    • Barfly 7.2

      Because your corrupt mouth breathing RW Government is obsessed with juking the stats by mass importation of people to artificially inflate the GDP.

    • Gabby 7.3

      Because we’re importing lots of people but not many houses.

    • Draco T Bastard 7.4

      Because ‘The market’ is a fictional construct that’s sole purpose is to steal from everyone else.

  8. saveNZ 8

    The easiest way out, is for the council to build the affordable houses themselves and run them and take the profit from them, just like in the past before Mayor’s like John Banks sold them.

    Housing appreciates in general. It’s a good investment – that’s why the developers want the land.

    Also 100% of the housing should be affordable for a 11 million discount! Zero profit for the developer and who knows how many ‘charitable trusts’ are just fronts these days.

    Auckland council have zero concerns bankrolling Westgate malls for development -maybe they need to put their money out of corporate aid and actually build some bloody affordable houses for ratepayers. They are so desperate to fill up the city with low paid workers and demolish as many affordable houses as possible with McMansions replacing them.

  9. mauī 9

    They could fix it if they really wanted to. Build out central Auckland really quickly and you have an oversupply of houses sending prices/rents down towards the affordable direction as long as they slow immigration.

    I don’t know what the minimum lot size is, but let’s say they halve it straight away and then you have people wanting to subdivide their properties all over the place. Garages and backyards become new small houses or low rise apartments. Because you’re increasing building in central Aucks you’re not adding too much to the traffic chaos as people will be tempted to make use of public transport and biking instead.

    Unfortunately the Council won’t do something like this because they’re tied to archaic planning laws. Ironically it’s the oldest suburbs like Freemans Bay that were by and large built without planning restrictions that are the most desirable to live in.

  10. greg 10

    they cant just give away ratepayer assets at knock down prices that is a subsidy
    rate payers should expect the full value for the land .the problem is the bubble economy and in-balances that has infected the whole system.

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