It’s supply stupid!

The Auckland Housing crisis is back in full swing with reports today that investors are in like Flynn buying up more property.

Investors are back in a heated Auckland property market and rapidly rising house prices are fuelling the fire.

A summertime dip, after tax and loan-to-value ratio (LVR) changes were introduced last year, appears well and truly over.

New figures show the median price of the more than 3000 houses sold in the region last month surged $70,000 to $820,000, the first time it’s broken $800,000.

Investors accounted for 44 per cent of the sales and one in three properties went for more than $1 million.

Experts now say predictions the market would cool were premature, as investors found ways to circumvent controls.

The city’s median price was up from $720,000 in January and $750,000 in February, according to Real Estate Institute data.

And the SHA’s on crown land, announced last year, have amounted to nought.

Housing Minister Nick Smith has so far only managed to secure 25ha of spare Crown land for housing in Auckland after promising to deliver 500ha in last year’s Budget.

The plan to find pockets of publicly owned land to turn into housing in Auckland was a key plank in National’s Budget last year which Dr Smith said could result in thousands more houses. Dr Smith later took media on a tour of Auckland to inspect some of the sites. However, he revealed on One News that only 25ha had since been secured for housing and the $54 million budget for the project had been exhausted.

There are three issues at play:

1. Everyone is tinkering with demand, when increasing supply is the solution;

2. Any supply that is greenfield-related is constantly undermined by Auckland Council;

3. The Government refuse to rough arm the Council (theycreated the beast that is now out of control);

Auckland Council want a compact city and are at odds with Government requirements to let the city expand through SHAs in greenfield areas.

So, the whole SHA process has been deliberately undermined by Auckland Council.

Firstly, the process was meant to be quick with no need to undergo a Plan Change. But it’s not. Meddling and the usual issues seeped in quickly and property developers lost their will to live. SHAs are a pain in the arse.

Secondly, Council have a back-door plan to stop greenfield, which they decided was going to ruin the compact city plan. They turned off the capital infrastructure budget and cried poor: no new greenfield areas because there is no money to run pipes out to them. Of course, they hinted that the Government would have to pay the bill for SHAs. Rat cunning.

Now SHA’s are for brownfield areas. Sure, apartment consents are issued in high values, but hardly any work is underway and developers are already under pressure because of rising construction prices. Chances are that many projects will fail to get off the ground. Besides, doesn’t anyone know that getting a consent is an easy way to improve value for a quick flick?

But, the heat in the market is specific. It’s for houses. There isn’t the same kinds of pent-up buyer demand for apartments.

I predicted this early this year. House prices are gonna go nuts. And Auckland is amidst a psuedo-Ponzi scheme fuelled by cheap, easy credit and the assurance that Auckland Council are doing their darnedest to quell supply.

The answer is supply. And lots of it. In the right places.

What surprises me, is that Auckland Council could have their compact city even with greenfield locations. They’re getting exactly that at Hobsonville. So what’s the issue?

Supply more land.

 

– 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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