It’s supply not demand

Auckland’s housing issues can’t be solved by fiddling with demand.

Taxes and high LVRs don’t work, and the proof already exists.

That’s because demand outstrips supply so much that even with the possibility of tax, or with a high LVR, the growth curve is so large it negates the effect. There is still plenty of cash to be made on the upside.

Demand levers won’t change a thing. Only supply will.

Which brings me around to it. So far supply hasn’t mustered any more capacity than 8,000 dwellings.  It’s possible that the property industry is peaked out on capacity.

Except that in 2003-2005 the supply curve did hit 12,000 dwellings.

The main difference was that the majority of it was standalone houses on sections. Whereas now there is a vastly greater proportion of intensive housing.

Hint: greenfield development is the easiest way to increase supply.

The Government pretends to want it with talk of SHAs but isn’t really doing much more than sabre rattling.  

Council plead poverty and hope the Government will pay for the big interconnecting pipes and roads if they have to release greenfield land but secretly hope they can stave it off and continue to compact the city.

But, in the end, the buyers of houses pay all the costs. So what’s the issue? Short-term pain for long term gain.

But no matter there are 480 houses coming…in 2020.

A Maori tribe has agreed to build 430 new houses at Hobsonville with 80 per cent priced below the Auckland median price.

Ngati Whatua o Kaipara investment committee chairwoman Anita Mazzoleni said the tribe had committed “a reasonable chunk” of its 2013 Treaty of Waitangi cash settlement of about $30 million to buy 9ha at Hobsonville for the project.

Thirty per cent of the houses will be sold at set prices at or below the KiwiSaver Homestart loan maximum price of $550,000.

Another 50 per cent of the homes will be priced between $550,000 and the Auckland median price, which is now over $800,000.

The other 20 per cent will be high-end houses selling for whatever the market will bear.

Iwi development company chief executive Daniel Clay said construction would start next year, the first houses would be completed in early 2018 and all 430 houses would be built by 2020.

Witness the utter stupidity. Those so-called “affordable houses” will cease to be affordable 5 minutes after they are sold the first time. After that they will go on the market with everything else…at market rates.

But it’s all good; there are going to be 430 new houses, so really cheap and pouring into a market that has massive demand and no supply…so figure out for yourselves what will happen.

Yep, some lucky people are going to make windfall profits from their “affordable house”. Well done Ngati Whatua o Kaipara.

 

– NZ Herald


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

To read Cam’s previous articles click on his name in blue.

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