Why Aucklanders will need to get used to living in apartments

The Auckland Council will unveil its 2000 page Unitary Plan today and with it will go the hopes of the Government for some restoration of sanity to the Auckland housing market.

But in an exclusive interview with POLITIK, on the eve of the poll, the Council’s Chief Executive Stephen Town says that whatever the plan says, the future for most Aucklanders wanting to buy their first house will be an apartment.

“I think what we have got to do in Auckland is get property purchasers in a frame of mind where their first dwelling is a smaller proposition,” he says..

“Someone looking for their first home will be saying I can live in an 80 square metre property, and it will be with other people because it is going to be off the ground.

“It isn’t going to be a standalone dwelling on at 200 plus square metres with a double garage and grass around it.”

He says the problem with the 200 square metre houses on greenfields sites is that the major component of their price is the land cost.

So the only way the city could see the current price to income ratio of nine fall to around five would be for the real estate industry and home buyers to adjust to smaller, more intensive houses.

Currently, the city has seven years supply of sections that can be built on.

But there has been criticism that property developers have been rationing the release of land for building sites on the city outskirts – land banking.

“Clearly, developers position their release of land to the market around their predictions of how many dwellings they can sell and how they can maintain a particular price point.

“We are going to have a look at what options we might have to incentivise earlier takeup of appropriately zoned land to get houses and dwellings built faster because that land is generally already serviced.

“We’ve got capacity that is not being used as well a sit could be.”

Those options are likey to follow the Productivity Commission’s recommendations that Councils used the rating system to regulate land baking.

But if the high land price is a major constraint on building affordable housing, the construction industry;’s inability to build more than about 5000 houses a year is a second problem.

He expects the city to grow by 400,000 people over the next 25 years which would require an annual build of 12 – 13,000 houses.

That figure would not be much influenced by reducing immigration, he believes.

Currently, the industry is building about 6000 dwellings a year.

“The great hope is that the Unitary Plan will provide for that capacity and will provide for a variety of dwelling types to be built in different locations.”

That is shorthand for arguing that it is more efficient to build multi-unit dwellings rather than stand alone houses.

“It is quite clear that we have got to encourage people who want to own property to accept that a smaller dwelling on a smaller footprint might be the best way to get started.”

To speed the build up, it’s no secret in Auckland, that the Council has itself been trying to attract foreign construction companies to Auckland to build houses on a big scale.

“We think that there’s definitely more room for competition in the construction market here, and we hope that it is taken up by people who maybe want to establish themselves in New Zealand,” he says.

“A number of big players here have got a foothold in Australia, and they’ve had a presence in Australia for quote some time.

“We would say Auckland is a pretty easy place to do business.”

And he believes that the certainty that will come with the Unitary Plan will add to that certainty.

The plan itself will be made available around mid-day today after Councillors and Local Board members have been briefed.

In two weeks, over seven meeting days, the Council will make its decisions on the plan. Submitters to the hearings process will have limited rights of appeal to the Environment Court, and there are also rights of appeal to the High Court on points of law.

At the same time as the Council is considering the Unitary Plan the other defining planning document for Auckland, the final report of the Transport Alignment project will report.

Mr Town says this will spark a debate on the question of road pricing once the Waterview Connector is completed next year.

Obviously, transport and housing are going to go hand in hand together.

But Mr Town’s blunt assessment that most first home buyers will in the future be buying apartments challenges the Government’s mantra that the “city needs to grow out and up.”

It will be how the Unitary Plan addresses that balance that will be the critical factor in judging it when it is released later today.