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Developers’ response predictable but out of touch

5 December

Developers’ response predictable but out of touch

Over 300 cities in the United States alone have introduced tools similar to those contained in the government’s housing affordability bill and the sky hasn’t fallen in on the property market, Housing Minister Maryan Street says.

The minister said she was disappointed by the Property Council’s criticisms of the Housing Affordability: Enabling Territorial Authorities Bill introduced yesterday, which suggested it was out of touch with community concerns.

“But I’m not surprised by its response because it has a vested interest in maintaining the status quo, which is profit-focused and fails to adequately account for the needs of the aspiring first home-buyer.

“Over the past 15 years the size of new houses has increased by 50 per cent, which has placed homeownership further out of the reach of the ordinary New Zealander.”

Similar problems have been experienced overseas and over 300 cites in the United States, large and small, have now equipped their territorial authorities with tools similar to those in the government’s bill to create more affordable housing, the minister said.

“In addition, cities throughout the United Kingdom and some in Canada and Australia are also using similar mechanisms.

“Overseas developers initially voiced similar opposition to that expressed today by the Property Council, but many of those claims were not borne out.”

The Property Council argues the cost of councils requiring developers to create more affordable housing will be passed on to other homebuyers. But overseas evidence show this is not necessarily the case, Maryan Street said.

“Developers can only pass on costs when the market lets them. House prices are not simply a function of construction costs but a reflection of the housing market, which is influenced by many factors.


“In the United Kingdom a similar policy has been in place and has moderated the rate of increase in land prices over time. Rather than pass on the cost to homebuyers, developers have moderated the costs of how much they are prepared to pay for land, so they can accommodate other costs.”
In addition, the Bill introduced yesterday enabled councils to offer a range of incentives to developers in exchange for the provision of affordable housing, the minister said.
“For example they may be given density bonuses, which will enable them to build additional houses in a development in return for providing affordable housing. Other options, such as the waiving of development contributions, are also possible.”

“If the Property Council thought this Bill was designed to lower land costs or free up land supply, it is confused. This is just one of a number of initiatives being undertaken and considered by the government to address a complex issue.”

“There are great opportunities in this Bill for developers and I urge those who are opposing it to take a more open-minded approach.”

ENDS

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