MONDAY MAY 23

Top-10 national residential builder Generation Homes looking for freeing up of land in budget announcement

Generation Homes chief executive Kevin Atkinson says unless the Government and councils act soon to increase land supply, the long held Kiwi dream of owning your own home will disappear.

Like others, he is hoping the Government Budget 2016 announcement on Thursday (May 26) will provide clarity for building firms and subdivision developers on extra land.

The right rule changes could give real hope to ordinary Kiwis, particularly those in Auckland who have been competing against international buyers and investors in some instances.

As a top-10 national residential builder Generation Homes wants be part of the solution to Auckland home affordability issues. It is one of the most expensive home purchase cities in the world, given our relatively low incomes.

The intense debate on freeing up land for development at the boundaries of Auckland City and intensification of existing suburbs, is a very necessary discussion to have, Atkinson says.

Dumping an urban growth boundary is not the sole solution, but needs to be investigated, he adds.

Now there are as many as 800 extra residents flowing into the Queen City each week according to the higher estimates, though official figures are considerably less than that.

New Zealand’s biggest city accepts by far the majority of new migrants to New Zealand, but because of the impact of the global financial crisis particularly in the years from 2008 through to 2011 there has been a shortage of new housing projects in Auckland.

The city has a shortfall of many thousands of homes. That is stretching to breaking point the social fabric of a country, once seen as one of the most egalitarian societies in the world.

The Generation Homes team have not been a passive onlookers to this problem. In the last 12 months they have had intense negotiations with land owners in the North Island with some success.

But for real progress on a widely felt problem the company wants more focus on freeing up land.

Sections have been in short supply partly because some developers have been land banking, compounded by Resource Management Act issues. Some councils around New Zealand have stung subdivision projects with onerous development contributions.

“Our observation is that there are still bottlenecks in some council processes. Obtaining consents in some areas is still taking too long. We want councils to review their signing authorities. For example, senior staff should operate at a higher level such as in the area of infrastructure provision, rather than lower level staff who don’t have authority to make decisions and have to go and get approval from their bosses causing unnecessary delays to the building process.

The shortage of affordable housing, highlighted by the stories of Kiwis living on the streets, has helped drive up home prices. This has meant other initiatives like the Government Home Start initiative has not been as effective as it could be, Atkinson says.

The $435 million HomeStart scheme came into effect on April 1, 2015 for KiwiSaver contributors. Couples can apply for grants of up to $10,000 for a deposit on an existing home and up to $20,000 for a new-build.

Atkinson is a big fan of the scheme and says Generation Homes has a strong emphasis on customers getting on to the property ladder, and adding their “own personality” to a first home.

Since its establishment in Tauranga in 1997 Generation Homes has partnered with landowners to develop residential subdivisions exceeding $340 million in value across the country.

So holding a “working land supply” has always been core to the high quality packages the building group offers. Efforts to secure extra land have not been instantly rewarded. Instead it is a long, therefore costly process.

Generation Homes uses a collaborative approach with landowners on what can be complex developments. It often passes on development margins to land owners as it works to lower the risk they face.

“Our objective this year is developing a co-ordinated strategy around land mapping in the regions,” Atkinson says.

Atkinson says well created subdivisions lead to high value communities. Buyers know they will be sitting alongside neighbours who also want to care for their properties.

“Given the shortage of land around Auckland, customers are typically paying $850-$900k for mainstream new build projects. There needs to be more attention to affordable solutions below that level, with land values being the key to affordable housing”, Atkinson says.

ENDS

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