1 Aug 2016

Unitary Plan: Most new homes over $800k

8:37 pm on 1 August 2016

Modelling suggests most Aucklanders won't be able to afford to buy new homes built under Auckland's Unitary Plan.

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Modelling showed that of the 247,000 new homes planned within Auckland's existing urban area, 85 percent would cost more than $800,000. Photo: Pixabay

The research said of the 247,000 new homes planned within Auckland's existing urban area, only 15 percent would cost less than $800,000 and less than 2 percent would be priced under $600,000.

The modelling was carried out for the Independent Hearings Panel that made the recommendations on how Auckland should be developed over the next 24 years.

The Labour Party has warned that was a big fail in delivering affordable housing for families.

"Thirty years ago, we celebrated being one of the countries with the highest level of home ownership in the world, said Labour Party leader Andrew Little.

"That part of the Kiwi dream is slipping away.

"Things like the Unitary Plan were an opportunity for those in authority to actually do something about that."

However, leading independent economist Shamubeel Eaqub described the report as pessimistic, and said the modelling assumed land prices, and what developers would build, would not change.

"In reality we know that if the capacity opens up we will see significant increase in supply, in variety, (and) far more innovation.

"This is really a big game changer for the development industry ... the outlook is actually far more optimistic than is in the model," Mr Eaqub said.

Housing Minister Nick Smith speaks to reporters after the release of the revised version of the Auckland Unitary Plan.

Housing Minister Nick Smith speaks to reporters after the release of the revised version of the Auckland Unitary Plan. Photo: RNZ / Belinda McCammon

Housing Minister Nick Smith said most first home buyers would not be purchasing a new build.

He said a quarter of homes currently sold in Auckland were under $600,000.

"The modelling from the IPH report shows that 6 percent of homes are expected to be built in that range. That's 20,000 homes. That's actually more than what we are projecting to deliver through the HomeStart scheme."

Dr Smith said he had had very positive feedback from developers looking for investment to build houses in the $650,000 price bracket.

"That means getting 40 percent of the apartments or town houses being built off the plans and they are confident they can achieve that in that $650,000 bracket."

Andrew Little announces Labour's new emergency housing package, at Monte Cecilia Housing Trust. 7 July 2016.

Andrew Little Photo: RNZ / Claire Eastham-Farrelly

Mr Little said the government had been misguided in urging the hearings panel to drop the requirement that new developments over 15 units included 10 percent affordable houses.

"Given the level of the crisis this was a great opportunity to put in some conditions about making sure, in the future at least, there will be a commitment to more affordable housing.

"Now I know some people say the risk is that developers would be able to get around the rules. Actually if you set it up properly and you say there has to be a certain proportion, a certain percentage, have to be houses at an affordable price, actually you can make that work, you can make that happen," Mr Little said.

From Monday, the government's KiwiSaver HomeStart scheme increases income caps from $80,000 to $85,000 for a single person, and from $120,000 to $130,000 for a couple.

The house price caps will also increase by $50,000.

Dr Smith said those changes, coupled with the plan, would help first home buyers.

"The number one thing the Unitary Plan needs to do is to increase supply. The whole problem in Auckland has been that it is a nightmare of 90 different residential zones for people to be able to get on and build houses.

"I share the confidence of the independent hearings panel that if that plan is adopted by the council it will in time deliver a lot more affordable houses."

David Gibbs, director at Construkt Architects, a leading advocate for higher density development in Auckland, also said it was likely the Unitary Plan would bring down prices in the long run.

"It increases supply in house types that are most likely to be affordable - terraced houses, apartments and also small and affordable houses."

Auckland Council has until the middle of August to consider the recommendations in the Unitary Plan.