NZ Treasury: Government lacking Auckland land supply plan

By Leith van Onselen

The New Zealand National Government’s single-minded focus on solving Auckland’s housing crisis by boosting supply has already taken a hammering courtesy of record immigration easily eclipsing dwelling construction, leading to worsening housing shortages.

Now an independent report prepared for Treasury that the Government tried to keep secret claims the Government lacks “an overall plan” in terms of land development and housing in Auckland. From Radio NZ:

The external review of the Social Housing Reform Programme noted that, in Auckland, three ministers and four government agencies lacked an overall plan to boost housing supply.

It found the government needed to “increase the overall supply of housing, particularly in Auckland”.

The 135-page review, done for Treasury, was finished in December 2015.

Last September, then-Minister of Social Housing Paula Bennett refused to release the report to RNZ.

She said to do so would “prejudice the quality of information received” and “the wider public interest of effective government would not be served”.
RNZ obtained the report only after an appeal to the Ombudsman under the Official Information Act.

Here’s more from Interest.co.nz:

“Currently Treasury, MSD, MBIE and HNZC are all involved in a variety of initiatives that aim to bring under-utilised land into residential development with the objectives of increasing overall housing supply, of which proportions will be earmarked for affordable and social housing,” the report says.

“Lacking is an overall plan to coordinate and align strategies across agencies and to provide needed clarity and certainty to commercial and other stakeholders to enable them to effectively participate”…

Some of the many criticisms in the report in terms of the Government’s programme included:

  • Weak programme-level leadership with no single person or agency with clear accountability,
  • inadequate programme governance,
  • insufficient though improving programme management practices,
  • a fragmented delivery model,
  • the need for enhanced programme-level relationship and management communications,
  • the programme is under-weight in some important areas of expertise,
  • some areas are under-resourced,
  • there are inadequate programme level frameworks,
  • real time monitoring and evaluation needs to be implemented.

Among many recommendations, the report said the Government needed to agree to develop a 10 year plan for Auckland land development for both Housing New Zealand and Crown land “with a focus on how to create momentum in housing supply, balancing core financial, risk and social outcomes as a matter of urgency”.

The pressure continues to build on the incumbent National Government in the lead-up to the 23 September General Election.

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Comments

  1. Shhh !!! No one mention the bubble. I mentioned it once but i think i got away with it !!

    http://www.news.com.au/finance/economy/australian-economy/oecd-issues-warning-for-australian-housing-market/news-story/0b21f51e64e346827ea20abd6ea1c913

    THE OECD has warned of a “significant” rout in Australian house prices, in a market correction that could spell economic gloom.

    In an otherwise positive assessment of the nation’s economy, the Organisation for Economic Cooperation and Development noted in its biennial survey that house prices have increased by 250 per cent in real terms since the 1990s — and that a downturn could cut household consumption and lead to mortgage defaults.

    “House prices and household debt have reached unprecedented highs,” the report released on Friday said.

    “A continued rise of the market, fuelled by both investor and owner-occupier demand, may end in a significant downward correction that spreads to the rest of the economy.”

    • Like many before him, English knows what the problems are and knows what the solutions are. Like many before him, he has pussied-out of fixing the problems, once he found himself in a position to call the shots.

      Everything is running to expectations. We must sit back and wait for the external shock to smash things to smithereens, because each successive captain, while seeing the massive iceberg, refuses to move the tiller!

      • Helen didn’t have a clue what the problems were; John did, and when he tried to address the problem of excess debt he was taken out the back and given a central banking hiding for even suggesting deleveraging, and yes, Bill knows too. But he can’t do anything about it except smile and wave, because to do so now will bring unimaginable individualized economic horror. There is no way out now except your ‘shock to smash things’, and that may not necessarily be external……
        (eg: “Housing sales slumped in February for Auckland’s largest real estate agency, with most of the fall off occurring in the middle to bottom end of the market..the lowest number of sales it has made in any month since December 2010 and the lowest number of sales in the month of February for at least 16 years.)

      • TailorTrashMEMBER

        Janet ……..interesting observation on the volume of sales in Auckland …….could that be the kiwi in the coal mine ?

      • Housing should not exceed about 1,2 times GDP … screaming tops 1.5 … not the current 3.9 times …

        … mid January 2017 report …

        New Zealand residential property hits $1 trillion mark – Business – NZ Herald News

        http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11781028

        I explained at the time of the release of this years Demographia Survey 23 January, what John Key should have done … but failed to do …

        http://pc.blogspot.co.nz/2017/01/auckland-worlds-fourth-hardest-to-buy.html

        … The late May 2016 Newshub / Reid Research poll … thankfully finished off John Keys wasted political career …

        Opinion: John Key’s Govt has failed New Zealand on housing | Newshub

        http://www.newshub.co.nz/home/politics/2016/05/opinion-john-keys-govt-has-failed-new-zealand-on-housing.html#axzz49XsDT0NS

  2. … Auckland housing bubble bursting …

    Barfoot & Thompson says uncertainty over whether current prices provide value for money has seen sales volumes dive | interest.co.nz

    https://www.interest.co.nz/property/86308/barfoot-thompson-says-uncertainty-over-whether-current-prices-provide-value-money-has

    Housing sales slumped in February for Auckland’s largest real estate agency, with most of the fall off occurring in the middle to bottom end of the market.

    Barfoot and Thompson sold just 556 homes in February, the lowest number of sales it has made in any month since December 2010 and the lowest number of sales in the month of February for at least 16 years.

    The agency sold 698 homes in February last year and 843 in February 2015. Last year’s February sales volumes were 142, or 20%, higher than February this year. … read more via hyperlink above …

    NEW ZEALAND: Housing affordability improving in most parts of the country as prices fall faster than interest rates are rising, our latest Home Loan Affordability Reports show | interest.co.nz

    https://www.interest.co.nz/property/86117/housing-affordability-improving-most-parts-country-prices-fall-faster-interest-rates

    NZ house prices to fall 12% – Leith van Onselen – Infometrics / MacroBusiness Australia
    … behind paywall …

    http://www.macrobusiness.com.au/2017/02/nz-house-prices-fall-12/

    … extracts …

    After last year forecasting an 11% fall in New Zealand house prices by 2019, economic analysis and forecasting firm, Infometrics, has forecast a 12% decline in house values by 2020 on the back of falling population growth (net migration) and rising interest rates: …

    … New Zealand housing is easily the most expensive in the Anglosphere, valued at a whopping 3.9 times GDP and 9.2 times employee compensation (income):

    • MediocritasMEMBER

      There must be someone out there keeping long term stats on these. If anyone has a link, I’d love to see it.

  3. ANZ raises their floating mortgage rate by +10 bps to 5.79%; also raises some term deposit rates | interest.co.nz

    https://www.interest.co.nz/news/86324/anz-raises-their-floating-mortgage-rate-10-bps-579-also-raises-some-term-deposit-rates

    ANZ has followed BNZ, Westpac and ASB by raising it’s floating mortgage rate by +10 bps to 5.79%.

    This leaves their floating rate below two of their main rivals and above the other two.

    The last time ANZ raised their floating rate was on January 6, 2017 and this latest change pushes this rate back to levels we last saw in December 2015 when the rate was 5.99%. … read more via hyperlink above …

  4. THE GRUMPY LANDLORD CLASS OF CHRISTCHURCH …DID THEY EVER GIVE A FIG FOR TENANTS ?

    Christchurch housing paradox – the downside of a building boom (?) … Michael Wright … The Press

    http://www.stuff.co.nz/business/property/90012513/christchurchs-housing-paradox–the-downside-of-a-building-boom

    … comment on thread …

    Bush Telegraph

    Just a moment! I recall he Government (Nick Smith) and Demogaphia,blaming Councils for creating chronic unaffordability – demand and supply and all that. Now it seems, at least in Christchurch, planning has increased supply, prices are dropping, affordability is increasing – where is the problem for the first time house buyer?
    … ticks … +30

    Christchurch bucks trend in Demographia housing affordability survey | The National Business Review

    http://www.stuff.co.nz/business/property/90012513/christchurchs-housing-paradox–the-downside-of-a-building-boom

    How to make housing affordable? Political parties draw battlelines | Stuff.co.nz

    http://i.stuff.co.nz/business/money/89189951/political-parties-draw-battlelines-on-housing-affordability

  5. DominicMEMBER

    Just been chatting to a couple of guys who work for major developers here in Bris. The banks are clamping down and access to credit isn’t anywhere near as easy as it has been in recent times. The banks are trapped — supply easy money and pump up the bubble even more, cut off supply and pop the the bubble in the process. Damned both ways. There is no middle ground for ponzi schemes.

  6. In normal markets housing does not exceed 3.0 times annual household incomes requiring SENSIBLE mortgage loads of about 2.5 times …

    The horse SENSIBLE bolted long ago … but at least they are (well and truly) belatedly discussing the issue ! …

    Macro-prudential tools must be permanent features of the housing market landscape, Murray Jackson argues | interest.co.nz

    https://www.interest.co.nz/opinion/86289/macro-prudential-tools-must-be-permanent-features-housing-market-landscape-murray

    By Murray Jackson*

    The Reserve Bank of New Zealand (RBNZ) has asked Minister of Finance Steven Joyce to modify their Memorandum of Understanding (MoU) on macro-prudential policy to add debt-to-income (DTI) restrictions to the toolbox.

    In response, Joyce has asked the RBNZ for a rigorous cost-benefit analysis (CBA) on DTI limits. The RBNZ has indicated the CBA will commence in March.

    The issue is important: Excessive house price appreciation fuelled by easy credit not only has a very high cost when the inevitable credit crunch arrives, it also has the potential to create allocative inefficiency and inequity between sectors of society.

    A DTI tool should be in RBNZ’s toolkit … read more via hyperlink above …

    … GOING BACK TO THE 2007 CALIFORNIA LED GFC …

    Straight Talk on the Mortgage Mess from an Insider – Herb Greenberg – MarketWatch

    http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/

    … At the time due to long term gross under-building, on an adjusted population basis,. California had about a million less houses than Texas. It was California that had the bubble that burst … of course …

    Housing Bubbles: Jumbo Mortgages = Jumbo Problems | Scoop News

    http://www.scoop.co.nz/stories/WO1003/S00019.htm

    The lending multiples of necessity must approximate the Median Multiples of specifific markets … check out the Demographia Survey .