Editorial: House in order

by The Listener / 02 June, 2016
"The growing numbers of Aucklanders living in vehicles and garages suggests a whole new layer of dysfunction."
Photo/Getty Images
Photo/Getty Images

The writing’s on the wall for local authorities over housing supply – and this time it’s not just the graffiti of central government bluster that can be cleaned off and disregarded.

We now have a grand coalition in favour of greenfields housing development, with Labour joining the Government in backing the abolition of Auckland’s urban limits and forcing the council to consent to more home building.

Auckland is going to spread whether its council likes it or not. That almost certainly goes for other territories facing housing shortages and overpricing. The tacit message here is, if councils continue to block or delay the freeing up of new land for housing, the Government will legislate to force them, with the full support of the lead Opposition party.

For those who cry democracy, national democracy will trump local democracy every time, and for good reason. The housing price bubble that both besets and enchants Aucklanders is now spreading to other centres, and is a risk to the entire economy. It would be irresponsible of Parliament not to consider intervention, A. to house more people and sooner, and B. to avert a potentially disastrous property price crash.

For those rightly worried that councils cannot afford to extend infrastructure to service urban sprawl, Labour has the beginnings of an answer. Instead of landing developers and buyers with the full cost of new infrastructure up-front – thus perpetuating the unaffordability cycle – the cost could be smoothed out through the issuing of muni­cipal bonds. Used extensively overseas, this system means home owners pay much of the infrastructure debt back over time, effectively as an extra rating impost. The effect would have to be calibrated carefully so the rates in themselves did not make the new housing unaffordable. But the bonds could be a useful alternative for investors in these times of low interest rates.

Numerous other factors need consideration, such as the role of future public transport, including the feasibility of rapid rail to enable satellite city commuting. The horticultural sector is justifiably worried some of the most productive land outside Auckland will be gobbled up for housing, to the detriment of livelihoods, export earnings and the globally precious capacity for food production. And despite the Government’s intransigence on the issue, immigration flows and non-domiciled property investment need a rethink.

But this rare consensus between Labour and National is a promising start to creating a managed transition from Auckland’s housing madness. Greenfields development will not, however, help at the crisis end of the affordability issue. The apparently growing numbers of Aucklanders living in vehicles and garages suggests a whole new layer of dysfunction. People resort to such desperate measures for sundry reasons. Some are deeply in debt to loan sharks, and while usurious lending is being outlawed under new consumer finance legislation, there’s a long tail of victims. It’s probable some of those living in their car are there because of indebtedness on that very car.

In other cases, immigrants from developing countries choose to live in the cheapest possible accommodation to accrue capital. Sometimes a garage here is better than the home they left was. There is even anecdotal evidence of people occupying the garages of homes with the right postal address to access preferred school zones.

Whatever the cause, this is not a resort or a choice New Zealanders find acceptable. Overcrowding and poor housing have disastrous health, education and social consequences. Many such tenancies will be dangerous and downright illegal, were any authorities to police them. We are simply desperately short of emergency housing. This is more acute since Government agencies and councils responded perhaps over-stringently to the earthquake preparedness drive. The laudable goal of keeping low-income tenants safe has resulted in some surely needless write-offs of state and council housing.

The Government has had 18 months to back its “social investment” policy rhetoric about the superior, wrap-around social services to be offered to the vulnerable and low-income by private housing providers. Demonstrably, there are not enough of them and the Government needs to think of something else in quick order. Further housing measures were likely to be a ­talking point of the Budget, which was being delivered as we went to press.

It’s also vital that greenfields development complements, but does not replace, councils’ urban densification push. The latter has been a prime culprit for price pressure, but it’s still a vital part of the answer to our pernicious housing shortage.

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