Housing Minister Heatley eyes 500-600 homes at Hobsonville to be sold for NZ$485,000 or less; 'Considered more affordable in Auckland context'
See the release from Housing Minister Phil Heatley:
Hundreds of new houses are to be built at Hobsonville Point as part of the Government’s moves to bring more affordable new housing on to the market, Housing Minister Phil Heatley announced today.
The Hobsonville Point development complements a number of other Government housing initiatives. These include increased investment in social housing; reconfiguration of the $15 billion state housing portfolio to better meet need; $2 billion a year in subsidies such as the Accommodation Supplement; and measures in response to the Productivity Commission report on improving housing affordability, Mr Heatley says.
“This initiative will both add to Auckland’s housing supply, and demonstrate innovative commercial market-based solutions that could be replicated in the affordable housing market elsewhere in New Zealand.
“Twenty per cent of the 2500-3000 new homes at Hobsonville Point will be priced at $485,000 or less. This means 500 to 600 more affordable homes will be built in this Auckland development alone,” he says.
“The Hobsonville Land Company, a subsidiary of Housing New Zealand, will introduce a simple scheme to prioritise home-ownership access to some of the houses.”
Under the inflation-indexed targets, of all homes built at Hobsonville Point:
· 10 per cent will be sold for less than $400,000
· a further 10 per cent will be priced between $400,000 and $485,000.
“It’s generally understood that these price ranges are considered more affordable in the Auckland context,” Mr Heatley says.
Mr Heatley says it is up to the company how it achieves the targets in a commercial development environment. The Hobsonville Land Company will release further details about the home-ownership access scheme when they become available.
The Government has also provided the company with greater flexibility around accelerating development in order to bring more supply to the market faster.
Mr Heatley says that the Government and the company have clear expectations of the development's value.
“To protect taxpayers, the project's lifespan will be determined by market conditions and the need to achieve a reasonable rate of return on the taxpayer’s investment."
He says the Auckland Council has been very supportive of the innovation needed to build more affordable houses at Hobsonville Point.
“Their positive involvement has been critical. The council and the company are also working together on a demonstration project for smaller houses on smaller sections to show their commercial viability and market appeal,” he says
24 Comments
Well BigDaddy, considering even these "affordable" houses would be ranked as "severely unaffordable" by Demographia's survey, maybe the other houses can be classed as "ridiculously unaffordable". It makes me shudder to think how many people are advocating the government go on a massvie state house-building spree, they'll probably cost a million each...
So Auckland house prices are so high that $485,000 for a small house on a small section in a fringe suburb is considered affordable? Even at current low home loan rates of 5.5% a $400,000 mortgage on a 20-year term costs $634 a week ($33,000 a year) according to the interest.co.nz calculator. At 8% it rises to $771 ($40,000). And the average Auckland household income is, what, $70,000?
So the bottom 20% of houses in a new development on the outskirts of the city will cost about half the average household's disposable income, and if interest rates rise back to their recent average it rises to 60%. I suppose these houses are affordable if you don't waste money on luxuries like electricity and food...
Two incomes - one full-time for $50,000, one half time for $25,000 earns $59,310 after tax. Less your $33,000 for mortage then less another $2000 for rates and $750 for house insurance leaves $23,560 for all other bills/food/transport/living expenses.
To put it another way 60% of their income goes on the housing costs above. Affordable is 30%
"The Hobsonville Point development complements a number of other Government housing initiatives.... $2 billion a year in subsidies such as the Accommodation Supplement;"
If this wasn't so sad and scary, it would be funny... In what world is an accommodation supplement to help keep up yields on rental properties a "housing initiative"? If only that 2 billion was used to increase supply and decrease demand rather than prop demand up
Hi there midgetkiwi, I'm pretty sure the Accomodation Supplement was only available to first-time buyers who were going to be owner-occupiers. It was also only available on the "entry level" homes built so far at Hobsonville Point.
There weren't many of them (2 bedroom town-houses, no garage) and I think they were around the $400K mark. They all got snapped up instantly, I think by the first time buyers they were aimed at.
I tend to agree with your sentiment though. I couldn't understand why first time buyers were being encouraged and subsidised into relatively "high-end" property by the government. Nobody has ever subsidised me into anything!
Surely the funds are better spent investing in increasing supply, as you say.
I actually live on the new Hobsonville Point development, and I'm not sure that it can be succesfully argued that the government can hold this up as a great example of what they're doing to provide "affordable" homes for Aucklanders.
Don't get me wrong - I love it here, the houses are great, nicely built, fully insulated, double-glazed, we've got fibre-to-the-door, the houses have some great technology features and are extremely energy efficient. They're building a wonderful little community here. I doubt I'd live anywhere else in NZ right now, because this suits me and my lifestyle perfectly.
However, this is clearly a development for the well heeled who want a specific style of living. The houses aren't cheap and the prices are going up as each phase comes through. I've got no idea what type of properties they'll be building for "under $400K" based on the current price lists and developments but my guess is they'll be beautifully built, but very small apartments or town-houses with little or no section.
If the government is holding up Hobsonville Point as a shining example of a government initiative aimed at fixing the housing affordability problem, then regular first time home buyers are screwed. This place is squarely aimed at a high earning demographic with modest 3 bedroom homes on very small sections starting at well over $600K. If you're looking for 4 or 5 bedrooms with any sort of garden you'll be looking at over $800K - and remember, these are early phase prices. The schools aren't even built yet - when that happens next year, watch the prices climb higher....
As I said, I'm not criticizing the place because I actually love what they're doing here. I'm just saying that you can't point to a $120K Porsche Boxster and say "Look! Porsche are now building entry level cars for learner drivers! In a Porsche context, that's incredibly affordable!"
Sure, it's great that the developers have agreed to build a proportion of properties at a lower price point. That helps. But it's not the answer to the problem.
No, the government needs to be opening up swathes of land and factilitating the building of entire "modestly priced" developments with thousands of starter homes with up to 4 bedrooms or so available from between $300K and $400K. I know it's more complex than that, but they need to get started. That level of development might actually make a difference for all those poor buggers wondering how the hell they're ever going to afford their own house and raise their own family.
Doesn't sound like it's happening any time soon though....
Closer to town apparently this is entry level housing:
http://www.realestate.co.nz/1889608
Is that the style of affordable housing that would be in demand for the first home buyer?
That price is laughable! In rural New Zealand that house would be selling for around $150,000 if that. If you think logically the house itself its probably worth around $80,000 but the land - ah greed its called. .
I feel for people who are mortgaging themselves up to the hilt if this all comes crashing down - but then ask the question - are they being greedy too at the moment?
A work mate and I spent a lunch time looking at houses on line as he wants to move out of wellington itself. I went a little further and looked at say Blenheim -ish wow what you can get for your money.......if only I could get a job there-ish.
Its not an if it comes crashing down its a when......
Is it greedy to own your own home? I wouldnt say so......where is the gain really? if my house is 100% over-vlued then the next place I buy will also be that much over-valued...Hence as a single owner occupier no......as a PI looking for the "easy kills" well yes.....but isnt it human nature / sensible to maximise your investment/effort?
My concern is really for the ppl who just want their own home...they are likely to be decimated when the crash comes.....utter misery I suspect.....just look how spain is doing for that right now.
regards
Cldn't agree more with all your sentiments Steven. Perhaps the answer does lie then in getting productivity and jobs going in the smaller towns of New Zealand. We need to come up with ideas of what industries/work needs to be done to get New Zealand back on track. House costs need to come down, wages (especially for the middle income earners) need to rise, and we need to find something that the world needs other than milk, beef and lamb. Having said that when the sh... hits the fan worldwide we will be there to feed them won't we? But then, depressingly, how will the rest of the world pay for our food? By selling us more big flat screen TVs, all the crap you see in the malls - so unnecessary.
I came back from Canada (Alberta - oil rich) three years ago after holidaying there and thought then how third world New Zealand felt. However, I'd still rather live here than anywhere else in the world. If only we had leaders with vision, and policies in place to help those with vision to build a better New Zealand then we would really be in heaven.
Oh and if your friend is interested my house in Greytown is still for sale. On offer at the moment but still for sale. And we are not being too greedy. http://www.trademe.co.nz/Browse/Listing.aspx?id=524661883 as we believe the QV is way over the top. Greed again from the Council!!!!
why talk about pre-tax income? usual spin to make it look not so bad.....
So $27.5k of your pre-tax income on mortgage. Roughly 2.3k a month on payments $500ish a week,
Take out tax....roughly the same...
So your income after tax is 92k.
Then all your living costs....
ouch
regards
Personally I dont think we will see in our life time Interest rates of 8%+ not as a long term OCR dictated trend. I think if this blows into a real depression and frankly Im as sure of it as I can be then, the OCR should be <1% for 1 or even 3 decades. However what the retail rate we pay will be is another matter.. The other side is afforadle with a huge downward pressure on wages from a depresion. Meaning less actual income means less actual ability to pay.
Fools rush in.....
The dynamics of the socail aspect are fasinating...no matter the bubble signs many ppl repeat the mistakes of previous generations...
Like ground hog day really.
regards
Yet the govns mark up of 15% is really minor....and what would it do? well allow ppl to get an even bigger house in many cases....they just leverage that % up even more....
The only way to get the pricedown is to make it non-speculative...no easy task when fools are gambling.
regards
Again, this is a sad indictment of the quality of Government thought that is put into making housing more affordable. High price (by international standards), basic quality (by international standards) and poor value for money (by any standard). And to even get it this good, it has to be subsidised.
Hello NZ
Reading all the posts about expensive homes in Auckland.I was in Millwater,an brand new finished big modern houses selling very good prices.If you can not afford to buy in Auckland than buy further out.If you can not afford a new house then buy a cheaper old one in a cheaper area.Auckland is full cheaper areas,the young people do not want to live in the cheaper areas
If you want a house then start saving,dump the massive wish list.
I tell my 18 old son,start saving now, buy a apartment which can have a room rented out.
This will pay most of the bills,which will allow to save for another better house.
Fast track the system while everybody else is blowing there money on crap.
Adjust your life style,spend less save more.
There is no free rides to the top
There speaks someone who's completely out of touch.
Young people are quite happy to live in some pretty average suburbs. Fine, I'm sure you can find places in Otara, Manurewa, Ranui etc that are quite affordable, but I'd rather not live there as I'd like to go out to my letterbox without fear of being stabbed because my T-shirt is the wrong colour.
When ex-state houses in the middle of Glen Innes, in need of restoration on average sized plots are selling for 550+, then you know you've got issues,
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