October 2014
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Novotel New Plymouth Page 8
Auckland prices continue to climb Chris Hutching Success in the polls takes the pressure off the National government for affordable housing even as prices soar past previous peaks. A few weeks before the elections the government commissioned a Productivity Commission report into housing affordability due by September 2015. It will build on similar Inquiry into Housing Affordability in 2012. The earlier report inquiry identified councils’ land constraint as a major factor in of unaffordability. The scope of the new inquiry includes how local authorities’ make land available, including infrastructure provision, water and transport infrastructure funding and governance, and accountability of the planning system.
Overblown house prices mean ownership has slipped back to about 65% from more than 75% a couple of decades ago. The annual Demographia International Housing Affordability Survey uses a measure calculated by dividing the median house price by annual household income. Under this measure New Zealand overall has a multiple of 5.5 while Auckland is 8 and Christchurch 5.8. However it is unclear from Demographia’s information how the current measures equate historically, and whether post-war generations have enjoyed a window of cheap housing for various reasons, particularly land availability. Demographia’s solution includes liberal zoning eliminating “green belts” and different methods of funding infrastructure such as bonds. Christchurch affordability may be improving
with the large number of sub divisions coming on stream, but Auckland remains a magnet for immigrants from outside and within New Zealand. Other affordability measures look at the percentage of wages required to pay a mortgage, or the length of time comparable mortgages will take to pay off. The researchers also debate whether comparisons of houses are valid because of size – commonly 250sqm in new sub divisions nowadays compared with around 120sqm decades ago. A summary of the problem is contained with the 2012 Productivity Commission. “There is an urgent need to increase land availability, to ease supply constraints and price pressure, particularly in Auckland, where section costs now account for around 60% of the cost of a new dwelling, compared with 40% in the rest of New Zealand.
“High section prices may also explain why new housing is concentrated at the top end of the market – who is going to put a $150,000 home on a $300,000 section? “In addition, councils should ensure that their planning policies, such as height controls, boundary setbacks and minimum lot sizes, are not frustrating more efficient land use. Such policies put a hand-brake on greater density and therefore housing supply. “As well, councils should review regulatory processes with the aim of speeding up, simplifying and reducing the cost of consent processes. “Central government should also consider the case for reviewing planning-related legislation to reduce the cost, complexity and uncertainty associated with the interaction of the Local Government Act, the RMA and the Land Transport Management Act.”
Apartment sizes ‘wrong’ Auckland Council has got it wrong when it comes to apartment sizes. This is the view of City Sales managing director Martin Dunn. He wants the council to drop its stipulations on apartment size. All new builds must measure 35sqm for studios (comparatively large), 45sqm for one-bedroom, 70sqm for two-bedroom, and 90sqm for threebedroom apartments. While he says he is no fan of “shoebox apartments”, Dunn thinks more appropriate measures would be - one bedroom units of 30sqm, two bedroom units at 50sqm and three bedroom units at 70sqm-plus. This is partly because of the cost of new units at $7000 sqm to $9000 sqm, meaning a new studio starts at $280,000, one bedroom unitss at $360,000, twos at around $560,000 and threes at $720,000. He says smaller apartments allow first home buyers to get a foot on the property ladder from around $160,000. But Dunn wants the council to stipulate there should be a mix of suites – preferably studios, one bedroom and two bedroom units to encourage a mix of tenants and owner-occupiers. Sales of mid-priced central Auckland apartments have dipped slightly, rents continue to slowly rise, and investment returns have declined as a result. Data from City Sales shows the average sales price in August was $320,000, recovering from a dip in June, and down from a high of $375,000 in February. But the overall trend is still for prices rising faster than rents.
INSIDE
Golden harvest for Hawke’s Bay Crossroads’ winemaker Miles Dinneen checks the tanks at the Hawke’s Bay winery. The small boutique winery, which is now part of the Yealands Group, has received further international kudos with its Crossroads Winemakers Collection Syrah 2012 receiving the Best New Zealand
Training boost for oil and gas sector - PAGE 2
New Zealand firm tackles food fraud - PAGE 3
Red Wine and Best New Zealand Syrah trophies at the prestigious 2014 International Wine Challenge held recently in London. In a scoop for the Hawke’s Bay region, Pask Winery’s Declaration Chardonnay was declared New Zealand’s Best White Wine at the event. See stories, pages 6-7
StretchSense explores new ground - PAGE 5
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