Minister told to buy land for affordable housing and brace for "shock"

The Department of Building and Housing has warned of a lack of affordable housing and skilled builders, arguing the new government should intervene to increase housing supply in Auckland in particular. It suggested the government buy land strategically for new housing and move to reduce development costs. The department also warned in its briefing paper to incoming Minister of Housing Phil Heatley that the current housing "shock" was different to past downturns and could be worse than many expected. It said the Resource Management Act and development fees charged by territorial authorities increased building costs and limited developers' abilities to provide enough supply. Productivity in New Zealand's housing sector was low relative to the rest of the economy and the rest of the world, reflecting low training and skill levels in the industry, the department said. The industry downturn could increase the emigration of skilled builders, which will be detrimental once activity picked up again. Auckland was a particular concern and could run out of land for conventional houses by 2015. "There is a projected shortage of dwellings to meet the future Auckland population and housing affordability remains a major problem. A recent survey of land supply undertaken by the Department of Building and Housing has indicated that, in Auckland City, North Shore and Manukau, land supply for conventional-density housing may be exhausted between 2015 and 2016," the department said. The department said it was preparing advice on how to improve the affordable supply of housing, including the following areas:

• A "˜development fund' which could lower the cost of (or remove barriers to) readying land for development.
• The feasibility of strategic purchase of land by the government for the development of affordable housing.
• Ways to improve the adequacy of land supply in Auckland and reduce the costs of the development process.
• The way in which urban development can be improved.
• Encouraging more longer-term investors into the housing market (ie, institutional investors and not-for-profit providers), particularly in the areas of affordable housing, long-term rental and social housing.