The Unitary Plan will not solve the Housing Crisis

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The Government has put a lot of weight on the Unitary Plan dealing with the housing crisis that clearly Auckland is in the middle of.

Last week Minister of Housing Nick Smith said this:

It’s not for me to be trying to influence the Council as it now works its way through those recommendations and comes to a decision. So today I’m not going to be expressing a view on the plan and trying to influence the Council’s decision.

“I just want to emphasise the importance of the Council concluding the process,” Smith told those gathered at a media briefing.

“It is certainly the Government’s view that a failure to provide adequate supply and plans, is at the core of the housing supply and affordability issues that Auckland has.”

His comments are similar to those made by Bill English a month ago.

“We’ve known about housing stress in Auckland for a number of years,” English said. “It’s why the Government has made some very direct statements about the obligations of the city council to change the planning rules, to enable more supply so we can get more houses. The only people who can agree to get the house built are Auckland City Council.”

He said the rate at which completed houses are entering the market – which he put at 40 a day – is not enough.

“We have got to work hard with the Auckland City Council to get more houses because the Government can’t just magic up houses. They have to be built by real people on real land, and that’s controlled by the Auckland City Council.”

So after last week’s release of the Independent Hearing Panel’s the question has to be asked what will the Unitary Plan do about the housing crisis?

The answer appears to be very little unless the definition of an affordable home is one that is worth $800,000 or more.  Because as noted by Labour the modelling used by the Independent Hearing Panel predicts that only 15 per cent of new homes under Auckland’s Unitary Plan will cost less than that amount.

“The majority of these houses will be out of the reach of most Auckland families. The modelling found that, of the 247,000 new homes planned within the existing urban area, 85 per cent will cost more than $800,000 and most will cost more than a million dollars.

“Less than 2 per cent will cost less than $600,000 and just one house is expected to be sold for under $500,000.

“If this is National’s brave new world then they are even more out of touch than anyone suspected.

“The mortgage on a $600,000 home costs nearly half of the median Auckland income, meaning 98 per cent of these 247,000 houses will be unaffordable to the typical family.

“Lacking any credible plan of its own, National is relying on the Auckland Council’s Unitary Plan to tackle the Auckland housing crisis. But these numbers show that under the Plan very few affordable homes will be built.

The other problem is that the plan will not have an instantaneous effect.  Houses will not magically spring up out of nowhere offering shelter to those in need.  It will take years to get resource consent, let tenders and build homes that are badly needed,

The Government also announced changes to the Homestart scheme.  Income caps have been increased from $80,000 to $85,000 for a single person and from $120,000 to $130,000 for a couple.  The maximum price of a qualifying house has been increased from $550,000 to $600,000.  As a sign of how out of touch the scheme is a secondary school teacher’s aspirations of owning a home are not improved.  He or she already qualifies income wise but increasing the potential price of the house he can buy is of no assistance at all as his income will not sustain the mortgage that would be required.

The size of the problem is such that concerted action needs to be taken now.  The state building houses has worked before.  And selling Housing Corp houses in the middle of a crisis is clearly not the sort of thing to do if you want to deal with the problem.

There needs to be concerted action by the Government. Leaving it to the market and blaming Auckland Council will not suffice.

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