Hive News Tuesday: English eyes 42,000 new homes on Housing NZ land in Auckland

Bill English yesterday talked up the potential for the Government to add an extra 42,000 houses to Auckland's housing supply over the next decade, extending suggestions from late last year of an extra 30,000 houses being built on Housing NZ land and sold to private buyers in a Kiwibuild-lite way.

He made the comments in his post-cabinet news conference after the High Court ruled in favour of the Auckland Unitary Plan's approach to intensification. See more here on that ruling in Auckland Council's release.

English said the previous town plans in Auckland only allowed Housing New Zealand's land to support an increase in its number of homes from 27,000 to 30,000, but the new Unitary Plan allowed around 69,000 homes on that land. That would allow Housing New Zealand to build up to 42,000 homes on that land, most of which would be sold off to private buyers. He talked about new projects in Mt Roskill and Avondale for the first time, noting his surprise in a recent helicopter flight over Auckland at the lack of density in state house areas of these suburbs.

"This court decision as it stands will probably allow a bit more than that (69,000 total)," English said of the Unitary Plan decision.

He said the speed of Housing New Zealand's developments would depend on its approach to procurement. He talked up the prospect for international firms to do the work, pointing to early signs of international interest in building at the Housing New Zealand/Auckland Council project at Tamaki. For the first time, he talked about further projects at Avondale and Mt Roskill, which would add to the Northcote project 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."

'Consenting may be a constraint'

English also threw some of the attention back onto the Auckland Council, denying that a lack of capital would constrain Housing NZ's plans and instead pointing to the speed of consenting.

"These things can move as fast as the Council processes allow, because we still can’t build a house until the Auckland Council says we can, and we still can’t put a person into until they have signed it off," he said.

He downplayed the role of the market cycle in adding to housing supply in Auckland, and the role of funding problems that some developers have pointed to as banks become more cautious. He repeated comments from last year about the Government continuing to build and sell into a market even if prices were falling.

"It's (house building) picking up speed. Government’s probably less likely to be sensitive to the impact on the market, so that's all coming ahead of us, as well as the at least 10,000 houses that are going to be built in Auckland this year," he said.

'Plenty of funding for greenfields'

I asked him about reports that funding problems for developers may restrict the housing supply needed in Auckland.

English pointed to the trade-offs of a debt-funded housing boom.

"There has been concern for some time that if you have a building boom financed on excessive debt lent by banks who aren't being prudent enough then that would create instability in the financial system. So you’ve got to weigh that up against the need for supply of housing," he said.

"So while there has been are some anecdotal evidence around funding and some observable impact in the apartment market, it doesn't seem to be much of a constraint on the development of stand-alone houses, which is where the growth continues."

Elsewhere, English downplayed comments in Treasury briefing papers about a housing shortage of 60,000 nationwide (from ANZ) and other estimates of a shortage of 15,000 to 70,000 in Auckland. The Unitary Plan panel estimated Auckland's shortage at 40,000. (A correction from yesterday's email, in which I reported ANZ saw the national shortage at 40,000. It was 60,000. It was the Panel that saw a 40,000 shortage.)

English saw the Auckland shortage at more likely to be in the 10,000 to 20,000 range.

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Have a great day

cheers

Bernard.