By Bernard Hickey
Speaking less than 24 hours ahead of Budget 2015, Building and Housing Minister Nick Smith has given more details of the Government's plans to free up large tracts of Government-owned land in Auckland for new housing, including a plan to sell up to 430 hectares of land already zoned residential in Auckland.
Smith told reporters in Parliament that an audit had found many vacant parcels of land, including in Reserves and on land owned by the Ministries of Defence, Education and Social Development.
MBIE then jumped the gun on an expected Budget announcement of a plan to offer up to 430 hectares of this land, issuing an invitation on the GETS system for Government tenders that invited potential buyers and developers to the programme's launch by Smith next Friday in Auckland. A spokeswoman for Smith said the Minister instructed MBIE to release the invitation on Tuesday.
Smith said many would be surprised at how under-utilised many Government owned reserves were.
"A good example would be the land we are using at Weymouth for the substantive housing development there. That land stood vacant, firstly owned by the Ministry of Education, then by the Ministry of Social Development for over 20 years during which period there was high housing need in South Auckland and, frankly, government agencies should have gone into action a lot earlier in utilising that land," Smith said.
Smith said some reserves were precious nature reserves that nobody would consider changing.
"There are other areas which are just vacant land that's under-utilised that could assist with the challenges we have around housing and are the sorts of areas that I am having a pretty hard kick of the tyres of in terms of the government's broad housing programme," Smith said.
"At the moment I am in the investigation stage and we are looking at hundreds of parcels of land and looking at every possible opportunity to create new housing for Auckland."
Smith said there were no plans to turn playgrounds into housing areas and many reserves were also controlled by the Auckland Council.
"What you would be surprised by is local purposes reserves that are used as a construction yard. You'll have others that are just plain vacant and don't have any use at all," he said.
"What I have been surprised by is how poorly public agencies, generally, manage land holdings. That you can have quite significant blocks of land sitting around unused for large periods," he said.
"I would say that the land that we are looking at in Auckland is principally not reserves, just land that is sitting in departments like Defence, like Education, like NZTA, tertiary institutions, hospital boards, that may at one stage have been intended to be used for that public purpose, yet hasn't, and that is why the government is wanting to have a hard look at those and see where there is further potential for housing development."
Audit conducted
Smith pointed to the development of ex-Defence land at Hobsonville and at Weymouth on Education and Social Welfare land.
Asked if the amounts were worth billions of dollars, he said: "We are talking big numbers. This is large land holdings."
Smith then detailed an audit done to find vacant land.
"The government's having a pretty hard kick of the tyres. Government agencies have been looking and have under-stated the amount. We've employed some independent consultants to help identify those areas that we think can contribute to additional housing in Auckland," he said.
"If you looked at the majority of areas of land that we are exploring they are previous areas of land that had a public purpose like Defence, like New Zealand Transport Agency, like the area health boards or universities or other institutions where it is simply sitting either vacant or under-utilised and offers opportunities for housing."
Asked if thousands of homes could be built on the land, he said: "Certainly the government is interested in scale, so you would be right to assume that we are talking thousands of homes."
Risk of land banking?
Smith denied that the Government owned land would end up in the hands of land bankers, pointing to the deferred sale process used at Hobsonville, Weymouth and in Christchurch.
"In those cases what the government has done is have a deferred sale process to a housing developer at which point, when the housing are on sold to New Zealanders - with extra conditions around affordability so we get the right sort of houses that we want - then that takes place," he said.
"The Crown then receives fair market value for the land."
78 Comments
This idiocy of burgeoning growth has to stop somewhere, Auckland can't cope with another million, what do they plan to do for drinking water, draw more out of the Waikato? What do they plan to do with all the extra waste? Will rates increases force the subdivision of some of the best growing land in the country - the Bombays?
I think we need to have the how many people talk, and why, frankly.
Stop importing people its just a ponzi scheme and stop foreigners buying houses and land, if all those empty houses were presently occupied, what's the bet we wouldn't have anywhere near the shortage of houses we see now
Yes they plan to take more water out of the waikato.
https://www.watercare.co.nz/about-watercare/our-services/waikato-river-…
If the people moved to Gore instead, they would still need water.
Personally, I think the government should do the sub-division (i.e., sub-contract the physical work but retain the landholdings). Then they should offer them for sale as sections, exclusively to New Zealand citizens who meet a particular criteria set. The purchasers can then build with whomever they like and whatever size/spec of house they like. Time to take the responsibility for development off these large-scale developers, as the profit expectation simply makes the final product unaffordable and in many case undesirable (e.g., track housing style).
Let's grow some organic neighbourhoods!!!
A similar model was previously used to by government to allocate farmland - it was called the ballot, if I recall correctly.
And this may produce some nice looking houses but won't do anything for prices.
Any attempt to ration or control or subsidise these sections will simply result in a privileged group making windfall profits instead of the current open membership group. Of course people will actually build cheap 'n' cheerful so they can quickly realise the biggest possible windfall gain and then will move on. But if, as I suspect, the government, sells their sections at the market rate (median in AKL is $475K) then they are just another land banker same as the rest and its business as usual.
The problem is this proposal is just a drop in the ocean of land supply. How many sections does 500Ha generate? 5,000 or 10,000? Auckland needs about 500,000 dwellings over the next 30 years to clear the deficit and accommodate growth. This typically timid government initiative is too small and too late to influence the market.
Mind you it may help tip National over the line to a budget "surplus" in time for the next election.
It's a cynical fudge to hide the failure of the Housing Accord.
I have crunched a few numbers. The Housing Accord has been on track to be 13,000-15,000 houses short by the time it wraps up in September 2016 (just 16 months away).
Originally AC and the government were OK about slow building stats because they gave themselves some soft targets in the form of resource consents for subdivision that they could also include in their measures. The problem is applications for subdivision consent haven't exactly rocketed either.
If the government maintains control over the subdivision process then it will be able to flood AC with applications over the next year. So when the Accord wraps up they will be able to declare success.
I think when the seriously delayed monitoring report for the Housing Accord Jan-Mar period is finally published it will miraculously contain some glowing commentary on how applications for resource consent are about to flood in.
I assume it would be easy to solve the windfall gains/problem of speculation by title encumbrance or contract. For example, caveat the title such that any land value capital gain over and above the cumulative rate of inflation would go back to the original title holder, the government. Kind of like a capital gains tax of 100% less inflation on re-sale.
Unfortunately.
Now, if we could combine Anarchy with Socialism....
From Wiki:
"A socialist economy is based on the principle of production for use, to directly satisfy economic demand and human needs, and objects are valued by their use-value, as opposed to the principle of production for profit and accumulation of capital.[8]
In the traditional conception of a socialist economy, coordination, accounting and valuation are performed in kind (using physical quantities), by a common physical magnitude, or by a direct measure of labour-time in place of financial calculation.[9][10]
For distributing output, two alternative principles have been proposed: to each according to his contribution and from each according to his ability, to each according to his need.
The advisability, feasibility and exact way of allocating and valuing resources are the subjects of the socialist calculation debate."
Hear ye: A defamation case brought by capitalism in the matter of socialism's accusation that there exists a land price bubble on the isthmus known as Auckland in the land of the long white cloud, and for socialism's subsequent creation of a means by which the resident proletariat, in their pursuit of shelter, might bypass capitalism's windfall profiteering profligacy.
It could set any number of new precedents, for example, closing down this anti-capitalist initiative;
http://www.3news.co.nz/tvshows/campbelllive/kaibosh-eliminates-food-was…
Surely NZ has never had a previous government sell so much, and yet still perform so badly, this has to be NZ's worst ever financial performance by any government.
Labour managed to get two out of two surpluses during the financial crisis 2007-2008, the nats can't get one out of seven, even with all the money coming in from the Christchurch rebuild, the GFC over, and years of record diary prices, they are completely out of excuses.
you could do that in CHC because it was stable or shrinking, its the opposite in Auckland they are building more schools, roads etc to cater for the immigration. They are paying for the expansion by selling, but then comes the problem how to fund the on going costs, especially as they have done nothing to improve a low wage economy so the tax take will not be enough
Asset sales?!?!.....more like several Ministries have been land banking to me.....I for one don't want my taxes wasted on incompetence.....I mean crikey the Government had to have an audit to find out what the State owns......it tells me that heads should roll at all those Ministries where the land has been sitting and that the bookwork undertaken by them obviously has glaring holes.....
They keep taking it to a whole new level, but it's all good their propaganda machine is in full force now, Henry a former nat on prime time in the morning, Hosking a nat best buddy on prime time at night, and now one of Keys best buddies running TV3 trying to get rid of anyone who criticizes them, and TV3 beholden to the government after being bailed out by them.
They've got 50,000 state houses in the City on an average of say 400m2 is 2000ha!!
Sell some to the market and add replacement state houses on fringe land close to transport routes.
Sell 1 old dunger and replace it with 2 new greenfield homes for no extra cost.
Do this plus cut immigration and ban foreign buyers from Auckland and the market will correct.
Only problem is that now prices are so out of line with yields and incomes that when it slows it will send the market into reverse as buyers won't tolerate 2% returns if capital gains are 0%.
In short Auckland is set up for a price correction sooner rather than later. (Time to sell down now!)
Yes. First one going up for auction next month. Yield was 2.5% gross on estimated market value. (I shouldn't really be talking the market down, but home buyers aren't exactly going to be listening to doomers on here! And who knows I could be wrong - we did sell a nice double grammar Epsom bungalow for only a bit over $900k 3 years ago which obviously was a bit of a mistake...a unit in that street went for almost that recently...)
Still a mistake, could have sold it this month for $1.3m probably. Say it saved $30kPA by selling = $90k over the period (saving from reduced debt servicing less net rent lost), and the capital gain would have been about $350k resulting in being about quarter of a million better off by selling now rather than in 2012, who needs lotto??
That was Wood St wasn't it? It doesn't appear to have resold since when we looked at it in May 2012 (although it may not have gone through yet if it sold recently), out of interest what were they trying to get for it and had there been any improvements to it? From memory you were asking 1.4 weren't you?
The problem is - this Government don't want to develop/build the replacements .. instead they want the private sector to do it, but look - these guys and gals can see the price correction coming and rightfully so - they are cautious about debt and general volatility where financial markets are concerned.
So we have a burgeoning bureaucracy without any useful real world skill sets - and a private sector which is becoming more risk averse by the day.
Welcome to Peak oil.
The private sector wont invest if it sees no profit and there wont be much legit going forward. All that is left then is Govn spending to prop the economy up, or the Govn grants rentier monopolies to private companies, ie guarantees a huge profit short term to make them look good.
Frankly with the TPPA etc that is all I see in our future, is being raped by the Govn or corporates with monopolies. They tried that with the roman empire didnt work the "empire" still shrank.
As long as foreigners are allowed carte blanche in our market this will continue. Problem is the main buyers today really do not care what the price is, they are buying for different reasons than you or I would. It should never, ever have been allowed and it should never, ever had been made worse by including residential property into the Investor category for prospective immigrants (changed in May 2011).
I believe now that the foreign buyer is the MAIN driver of Auckland's ludicrous prices, there really can be no other, so illogical is it.
It will have to be stopped, I am prepared to put money on most of these new houses ending up in foreign hands.
Len Brown 1 - National 0
This, Ladies and Gentlemen, is what capitulation looks like. Even though the government holds four aces and the King of Hearts they have folded in the face of Auckland Council's pair of two's.
To break the iron grip of the land bankers and bring Auckland house prices down the government needed to use all its advantages of motorway ownership and compulsory acquisition to deliver normally priced sections to Auckland residents. Instead they have decided to play the Auckland Council game.
Not only will motorway tolling be next but the blank cheque for the toy train set is in the mail.
"To break the iron grip of the land bankers and bring Auckland house prices down the government needed to use all its advantages of motorway ownership and compulsory acquisition to deliver normally priced sections to Auckland residents"
The govt. doesn't want to bring house prices down (nor do the citizens). The economic model demands borrow and spend. Consumers have to feel wealthy to do this and the only way is to increase the price of their houses. They certainly aint gonna get paid more as slave labour.
well what are the options?
slave labour (especially outside of Auckland)
start a business and become a target for every piece of legislation this government and it's departments and quangos can dream up?
Invest in farming so the big corporation can get wealthy?
Invest in dead land, for a pittance?
buy shares during a wobbly economy?
buy even more expensive financial instruments with money you don't have, to make money you wouldn't need if you had the money in the first place?
Create art or a patent (on demand)?
join the government certification gravy train?
In-bound wave of hot money hasn't crested yet - it's going to escalate
Sale of a 2 bdrm 1960's brick & tile unit in Mt albert for $797,000 was the first salvo
That was the wake up call - govt can't move fast enough
Instruction Manual - Video - How its done
http://www.businessspectator.com.au/businesstv?channel=149816
Mangere Bridge
Knock-down derelict sold for $677,000 - the week after the Mt Albert $797k
Real estate agent Michele Farnham says Investors, particularly those from overseas, seem willing to pay anything to get into the NZ property market. Although the property was in a less desirable area of Mangere Bridge, it still had some selling points for its six bidders.
http://www.stuff.co.nz/life-style/home-property/68598011/auckland-house…
easy to see how it pays :)
Mr X has 20M picked up of loan differentials while selling his business to another Chinese country, he declared 5M of it. It he puts the rest into somewhere the Chinese government will find it they will execute him. putting 15M into derelict properties that will eventually be needed by Auckaldn highrises, and borrowing against the land security (through a foreign bank of course) is clean way to launder money. If his 5M declared gets ceased he's still got the Auckland property and can claim the profit was from capital gain. Even when he's forced to pay capital gain tax on it he still comes out better off and gets to keep his head on his shoulders. Seems pretty straight forward figures to me.
doesn't matter what Nationality Mr X is, or whether it's the Chinese, European or US government chasing him. Only difference is the Eu and US would just steal everything he owns to pay their own bonuses and kick him to the street (or jailed, all the sex with Bubba you can eat). Perhaps the Chinese option is more pleasant....
What was the $ range being thrown around by this government for what they expected to get selling down our power companies and what did they end up with?
I wonder what estimate they'll put on all this land they just discovered in their audit? They might want to tread carefully here...
430 ha found thus far. lets not try to figure out where and why it was hidden from view--never too late to free this up.
what sort of crises will we need to eliminate all the road widening designations unneccessarily imposed on zillions of land titles, thus limiting their development potential, including potential for new apartments. some of these designations, dreamed of decades and decades ago with no talk of removing them. if the title holder wants it removed and his reasons for removing them will be for exactly the same reasons as the current ministers move here--its may not be a good enough reason and will be sent to apply for a long and unneccarily expensive removal process, despite no move to use designated land for road widening has even been in proposed for many many moons. lets not wait for another crises. lets do it now--at least for designations sitting in place for say over 20yrs (5 yrs would be more
sensible) be scrapped--it can only do good just as the current plan to free up unused govt. land.
"430 ha found thus far. lets not try to figure out where and why it was hidden from view--"
Yes I read it as hey trust us we're experts who are qualified and selected and paid good taxpayer/ratepayer money but oops we're so incompetent that we lost a BILLION dollars worth of land. golly gee whiz. What are they going to do when they re-find that someone else owns it.
Memo to PM - its not about supply, it never has been. We know that you are making it out to be so that the GDP figures look good but can you tell us how you are going to accommodate all these extra people in your ponzi scheme wrt health, education and roading....? Sounds like all the spare land that could build for these issues is being teed up for sale already.
Whats that - you reckon that by the time we wake up to those issues you will be riding out of town back to Hawaii with your knighthood and can blame PM Collins? Yeah - you could be right - we are a dumb lot.
The question history will ask is "Who was that Masked Man?
For all those people who think National is doing nothing - Looks like they have been working hard behind the scenes given the number of housing related issues covered in the last few days.
Have the people working inside our public institutions been deliberately working against our Government?
Yes sell our playgrounds and school fields so that we can set up migrant camps to allow another 50,000 to move to Auckland each year.
Oops ... Already being done...
Good work government for improving the lot of ordinary NZers, may as well just change their flag too, no point letting them stand up if you have already knocked them down...
My suggestion a red flag with southern cross in gold stars... Reflecting our new masters...
... you know ... I was looking over the fence into the playground ... and there was Winston , happy as , because the other children had let him back in ... playing with his lego set , building bridges ... and Russel was in a good mood , Mummy and Daddy extended his pocket-money allowance ... little Andrew was no where to be seen , hiding behind a tree I think ... Johnny was chasing the girls , tugging ponytails as per , the scamp ...Judith , to all avail , was making goo-goo eyes at him , little flirt .... and Lenny was doing unspeakable things to the foreign exchange girl , behind the bicycle shed ...
And I thought to myself , life is good in Kidzone ... very very good ... we're ever so lucky to be here in this place , and at this time ... Yeahhhhhhhhhh !!!!
But they are not building many houses at Long Bay, it's a small number of mansions on large land titles for $1M+ http://www.realestate.co.nz/2538799
We need larger scale medium density development to make even a dent in the current supply shortage.
Even at stonefields density, 450ha only makes 10,000 homes.
The great crown-land sell-off
Waitakere Ranges - gone
http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=11…
Heck, there's 1509 hectares on Motutapu, 20 minutes from the city
http://en.wikipedia.org/wiki/Motutapu_Island
and that's closer than the Waitakeres and much closer than Waiheke
As long as mankind believes the goal is "wealth and prosperity" (especially the limited concept we have of it), nothing will change. As long as mankind believes it actually creates wealth, nothing will change. As long as we believe tinkering with the status quo will achieve different results (at what point of constant tinkering does one realise that the machine actually needs to be stripped and rebuilt from the ground up?), nothing will change. It is easy to blame everyone and everything else when we refuse to acknowledge our own ignorance.
"the significant issues we face today cannot be solved by the same thinking that created them" - Einstein.
Mankind as a collective has created the world as we know it today. It's time to start thinking differently. What exactly are we trying to achieve and based on what values?
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