Archive | Housing

300ha Paerata Rise subdivision opens first homes

Paerata Rise, the 300ha urban development on Wesley College’s farmland between Karaka & Pukekohe, opened its doors to the public on Saturday.

The subdivision was approved as a special housing area in 2015, with plans for up to 5000 homes in 10 stages (now reduced to 4500 homes).

75 of 86 sections in stage 1 have unconditional buyers and are with builders. Earthworks for stage 2A have been completed and 54 titles are expected to be issued in August 2019.

Owned by the Wesley College Trust Board & Grafton Downs Ltd, the development will feature a train station & transport hub, a relocated Wesley College, and a primary school which will be complete by 2021.

10 new show homes on Jonah Lomu Drive have been opened.

Also opening was the Rise ‘n Shine café, made from shipping containers that had been part of the Christchurch Container City project.

Grafton Downs executive director Chris Johnston said boutique shops were planned for south of Wesley College’s current site and a smaller set of shops would be located near the Glenbrook roundabout, which the NZ Transport Agency will start building next year.

Paerata Rise

Earlier story:
11 September 2017: Wesley College developer selects build partners & new subdivision name

Attribution: Company release.

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Housing NZ takes Mt Albert townhouse land to market

20 residential sections in 5 development blocks in Mt Albert have been put on the market with resource consents in place, 4½ years after Housing NZ was granted special housing area status for a total 8094m².

The 5 blocks at 33 Asquith Avenue, corner of Burch St, Mt Albert, have been put up for tender through Bayleys, closing on Wednesday 21 November.

Each block contains 2-5 sections and they all have resource consents for 4-bedroom townhouses. They’re being offered individually, as one super-block or in any combination of lots. Housing NZ will continue to oversee construction.

Special housing areas were introduced in 2013 through an agreement between then-Housing Minister Nick Smith & Auckland Council. This one had 3 blocks of flats housing boarders at the nearby Mt Albert Grammar School, which were demolished in February 2015.

Housing NZ named the builders for a 40-townhouse project on the land in November 2017 – 20 of them designated one-bedroom units for its tenants and the other 40 to be sold on the open market.

It’s the open-market part that’s up for sale.

Earlier story:
9 May 2014: Third tranche of special housing areas unveiled
Accord tranche 3 adds 41 special housing areas

Attribution: Agency release.

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Updated: Construction starts on next north-western subdivision, West Hills

Published 17 October 2018, clarified 18 October 2018:
Half a kilometre west of the Westgate & NorthWest retail & business centres at the top of Auckland’s North-western Motorway, Universal Homes Ltd has started work on the first block of 7 units in its next subdivision, West Hills, which will ultimately yield about 1200 homes.

The 41ha development is unusual because it allows construction to proceed alongside the provision of infrastructure, a consent provision which vice-general manager Andrew Crosby reckons will save about 9-10 months in getting the project to market.

Image above: West Hills, where construction has started as infrastructure works continue.

Clarification on pricing:

On Wednesday morning I wrote: “The first batch of 7 terrace houses will include 4 56m² one-bedroom units without a garage, priced at the bottom of the Universal scale, about $5000/m², which will see them marketed for $285,000.”

Universal told me later in the day the 4 56m² one-bedroom units would come later in stage 1, haven’t had their prices set yet, but they would exceed $285,000.

In the first batch of 7, one with a floor area of 82.5m² has 2 bedrooms and the rest have 3 bedrooms.

The table below sets out prices for the first 7 homes released. I’ve added a column to show the range of prices/m², without distinguishing between living & garage space:

West Hills pricing, first batch of 7 homes:
Lot Beds Price Floor area*  Price/m²
1 3 $849,000 131 $6,481
2 2 $695,000 82.5 $8,424
3 3 $851,000 131 $6,496
4 3 $799,000 113.2 $7,058
5 3 $799,000 113.2 $7,058
6 3 $845,000 131.8 $6,411
7 3 $850,000 131.8 $6,449
* Floor area including garage where applicable

But most of West Hills won’t be in the sub-$600,000 “affordable” category, although they’ll come in comfortably below much of the $1 million-plus construction at nearby Hobsonville Point – the standard homes of 2-4 bedrooms will be priced between $695-851,000.

Those prices include rises in Auckland Council development contributions & water service charges.

“For the level of quality which we want – which is not super-luxury – this is as affordable as a good builder can make it,” Mr Crosby said.

Universal Homes vice-general manager Andrew Crosby onsite at West Hills, with concurrent drainage & earthworks & construction underway behind him.

Universal’s West Hills block off Fred Taylor Drive will form about 10% of the Redhills special housing area precinct, land held by a number of developers and all rezoned under the new Auckland unitary plan to allow for a mix of building.

Mr Crosby expects Universal will take about 8 years to build out its project, providing some standalone homes but with an increasing focus on terraces & duplexes, including about 90 one-bedroom units but dominated by 2-bedroom homes.

Both Mr Crosby & sales manager Mike Pearce attribute much of the improvement in what buyers will get to Universal’s participation in the development of Hobsonville Point, including the Axis energy-efficiency programme led by Government company HLC (2017) Ltd (the former Hobsonville Land Co).

Mr Pearce: “The high quality of urban design, energy efficiency & value-for-money pricing of the homes is due to Universal’s extensive experience at Hobsonville Point with urban designers Isthmus, a key partner at Hobsonville Point, leading the masterplanning, along with Avery Team Architects & Construkt Architects.

“The community & environmental dimensions are a major emphasis in the planning of West Hills, with the vision for the development described as green city living.”

Hobsonville Point led the way towards intensification, though generally not multi-level apartment projects (that said, a multi-level project there is up for hearing today).

“Hobsonville Point changed the thought that you’d have a standalone 5 years ago, but it took about 3 years to start building apartments,” Mr Crosby said.

Now, at West Hills, terraces & apartments are the first structures to go up, and terraces & duplexes form about 80% of Universal’s overall business.

For inter-tenancy walls, Universal uses Speedwall, a lightweight, quake-resistant & fire-resistant slab produced onsite.

Site works to break up the intensity include opening up watercourses for streams, wetland areas, a 5000m² pocket park, playgrounds (smaller ones vested in the owners’ society) & walkways.

My biggest question about the recent expansion of suburban housing developments – and greenfield plans further out on the fringe – is the access to shops & amenities. West Hills answers that question with its proximity to Westgate & Northwest.

The first homes at West Hills will be completed early next year, and the first stage will contain 94 homes.

Attribution: Site visit, company releases.

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KiwiBuild prequalification opens

The Government opened the prequalification process on Monday for first-homebuyers & second-chancers wanting to buy a KiwiBuild home.

Aspiring homeowners can apply online at to determine if they are eligible to enter a ballot for a KiwiBuild home.

Image above: Artist’s impression of housing being built at McLennan, Papakura.

The target is 100,000 new homes over 10 years, half of them in Auckland.

Housing & Urban Development Minister Phil Twyford said the production rate would take 3 years to rise to the annual target of 10,000 new KiwiBuild homes: “In the first year we will build 1000 KiwiBuild homes, with the full ramp-up reaching 5000 homes by June 2020 and 10,000 homes by June 2021. KiwiBuild will build modest starter homes, initially focusing on areas with high housing demand & affordability pressures.

“First-time buyers & second-chancers will be given plenty of notice about homes that are coming on the market so there is no rush to prequalify.

“But this is a great opportunity for people to familiarise themselves with the KiwiBuild system and seek trusted, professional advice before entering a ballot to buy their first home.”

The first ballot will open next month for a limited number of KiwiBuild homes in Papakura. Kiwis will have over 6 weeks to prequalify & enter the ballot before it’s drawn in October.

To ensure KiwiBuild homes go to the people they are intended for, applicants must:

  • be a first-time buyer or a ‘second chancer’
  • have an income below $120,000 for a single applicant, or no more than $180,000 for more than one buyer
  • be a New Zealand permanent resident or citizen, or a resident visa holder who’s ‘ordinarily resident in New Zealand’, and
  • intend to live in the home as their main place of residence for at least 3 years.

The online prequalification process will ask for specific documentation including:

  • proof of residency
  • proof of income
  • statutory declaration signed by an authorised person (e.g. a Justice of the Peace, lawyer), and
  • financial pre-approval from a bank or other lender

The Government has committed $2 billion for KiwiBuild and said it intends to work with iwi, councils & the private sector, establishing a home-building programme, undertaking major greenfield & urban development regeneration projects and driving innovation to develop new ways to build quality affordable homes.

KiwiBuild work programme
Unitec land for housing
McLennan development, Papakura

Attribution: Ministerial release, KiwiBuild websites.

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Institute highlights lower apartment medians to switch buyer focus

An odd news release on Friday from the Real Estate Institute exhorts buyers looking to gain an entry point into some of Auckland’s top suburbs to consider apartments “rather than a residential property”.

It’s a release that:

  • demonstrates why you should be wary of comparisons using median prices
  • says nothing about the differences between houses & apartments in size & utility, and
  • doesn’t define “a residential property” to distinguish it from an apartment, which you might have thought was also a residential property.

The institute suggests buyers could save over $1 million by buying an apartment in suburbs such as Parnell, Epsom & Takapuna instead of, I presume, a house on a section.

The institute cited its research on median prices for apartments & “residential” (including or excluding apartments?), but didn’t acknowledge differentiating factors: “The median price for apartments in Parnell was $772,500 compared to a residential median price of $2,067,500 – a difference of $1,295,000. For Epsom the apartment median price was $865,000 compared to a residential median price of $2,100,000 – a difference of $1,235,000, and for Takapuna the median price of an apartment is $817,500 compared to a residential median price of $1,870,000 – a difference of $1,052,500.”

Institute chief executive Bindi Norwell said: “For those wanting to gain an entry point into some of Auckland’s top suburbs, considering an apartment rather than a residential property is a much more affordable way of getting into some of these areas. Apartments have come a long way in the last 20 years to having top-end fixtures & fittings, eco-friendly/energy saving features & extensive communal areas.

“A saving of more than $1 million to live in a fantastic location or a good school zone is not something to be ignored.”

“For first-time buyers, apartments are an excellent way to get a foot on the already expensive Auckland property market. Apartments are usually close to public transport & other amenities such as cafes or restaurants, gyms & other retail outlets. But most importantly, they’re in a price bracket that people can more realistically actually afford.

“An apartment may not be the property that a young couple end up living in their whole life, but it allows them the chance to build up equity in their apartment and then, further down the track, if they plan a family it means that they can then look to make the next step to a larger home with more room.”

Ms Norwell said the research uncovered one anomaly in the Auckland market, Orewa, where the median price for apartments was $11,500 above that for “a residential property”.

Attribution: Institute release.

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Wesley College developer selects build partners & new subdivision name

The Wesley College Trust Board & the developer of its subdivision on the college farm at Paerata, Grafton Downs Ltd, announced 12 build partners & a new name for the project last week.

300ha around the college was approved as a special housing area in 2015, with plans for up to 5000 homes in 10 stages.

Grafton Downs sales & marketing manager Shaun Millar said: “We have chosen the build partners because of the outstanding quality of their workmanship. In the interests of creating equal opportunities for builders in the community, we selected to work with large franchisee companies & small family businesses, all of whom are local.”

The build partners named last week are 4 widely known businesses – GJ Gardner, Jalcon Homes, Jennian Homes Ltd & Signature Homes Ltd – and local builders Capital Homes Ltd, DW Homes Ltd, Emandee Homes Ltd, Mark Price Builders Ltd, Navigation Homes NZ Ltd, Nick Bosanac Builders Ltd, Palladium Homes Ltd & Precision Homes NZ Ltd.

Grafton Downs executive director Chris Johnston said the development would be named Paerata Rise, after initially proposing to call it Wesley. That had upset residents of the isthmus district of Wesley in the Mt Roskill suburb, which doesn’t have a postcode but does have primary & secondary schools and a community centre bearing the Wesley name.

Grafton Downs applied to the NZ Geographic Board to disestablish use of the Wesley name in Mt Roskill so it could be used for the new town being built on the college farm, but withdrew the application in May last year.

Mr Johnston said of the new name last week: “As well as acknowledging the existing Paerata community, the name is a nod to the meaning of Paerata in te reo, that is, ‘horizon of the rata’. It was important to those involved in the development that the name was in keeping with, as well as inclusive of, the area’s heritage.”

The new development is 20km south of the Auckland cbd and 4km from Pukekohe, the main centre in Auckland’s Franklin ward. The development company is owned by the college board & 2 Methodist Church trusts, the Pact 2086 Trust and Te Taha Maori Property Trust.

Mr Johnston said: “We will be working closely with approved build partners to create, as prescribed under the Paerata Rise design guide, a new unique place to live where homestead architecture is envisaged. Homes will be carefully placed on their sites to maximise the natural landscape settings, creating comfortable living environments & quality streetscapes.”

Plans for the development site were designed by San Francisco-based Surfacedesign Inc, co-founded by Kiwi urban designer & sustainable landscape architect James Lord. The company is responsible for the abstract landscaping at Auckland Airport.

“Surfacedesign Inc are a great firm to work with. James Lord & his team grasped our vision to create a development that embraces the environment and creates a good relationship between sections, houses & green space.”

Stage 1 earthworks are complete, waste & water pipes are being laid and the onsite civil work is underway. The 12 build partners will have access to roads in mid-December and the first residents are expected to move in by mid-2018.

Earlier story:
15 July 2015: 300ha Wesley special housing area approved

Attribution: Company release.

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3 Kings quarry plan change almost in place

Fletcher Residential Ltd’s proposed private plan change for the Three Kings quarry precinct ran into a minor timing hiccup yesterday on its way to being adopted by Auckland Council as if it were a council plan change.

Council plans & places general manager John Duguid told the council’s planning committee that, because of Housing NZ’s application for court costs against the 2 local societies which had opposed the quarry subdivision, as of yesterday the council couldn’t adopt the plan change.

That position was expected to change within days after Housing NZ withdrew its costs claim. The societies withdrew their appeal against the subdivision in May and, with the costs issue out of the way, the court could finalise the hearing.

The council committee unanimously approved a course to completion of the agreed plan change process.

Puketapapa Local Board chair Harry Doig said the challenge had cost the community “something like $200,000”, but it had achieved a better outcome and the local board now supported the council taking over the plan change.

The committee chair & deputy chair have delegated authority, along with an Independent Maori Statutory Board member, to approve adoption of the plan change once the precinct provisions have been made operative.

Fletcher Residential owned 15.2ha of former quarry, and the council owned about 6ha of former quarry, some of it used as sportsfields. In a change from some of the proposed land swaps, Fletcher wants to acquire council depot land instead of the sportsfields and intends to build up to 1500 new homes, plus a whare manaaki (a community educational & cultural facility).

Much of the development will be apartments, up to 5 storeys, with a minimum average apartment size of 55m² in buildings of 20 or more units. 30 garage lofts known as “Fonzie flats” are also planned, with a minimum size of 30m².

The development will also have cascading apartments built above the quarry rock faces and cascading over them.

Agenda item:12, Auckland unitary plan (operative in part) – private plan change request by Fletcher Residential Ltd – Three Kings 

Earlier stories:
6 September 2017: Council starts public process for city centre & waterfront planning refresh, plus 3 subdivision plan changes
2 February 2016: Minister takes Fletcher side on 3 Kings, and local politicians cry foul
25 November 2015: Three Kings development protest continues
Propbd on Q Th11Jun15 – Auction result, 3 Kings land exchange, decisions on plan changes, council model for elderly housing
14 November 2014: Three Kings debate goes to & fro, council to continue negotiating just with Fletcher
22 September 2014: Fletcher adds detail to 3 Kings plan change proposals
12 September 2014: 3 Kings plan changes approved for notification
4 May 2009: Winstone applies to cleanfill 3 Kings quarry

Attribution: Council committee agenda & meeting.

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Ardern follows well researched overseas thinking on rentals, some responses over-edgy, and 5-year-old Ahuri research is helpful clarification

Jacinda Ardern in her policy broadcast yesterday.

Labour leader Jacinda Ardern announced a set of new terms for residential tenancies yesterday, and was immediately – and predictably – told this would badly affect landlords and would have the opposite effect on New Zealand’s housing crisis to that she intended.

The Labour policy is along the lines of what is the norm in Germany, where tenants enjoy long-term occupancy, and also follows the thinking of AHURI – the Australian Housing & Urban Research Institute – in a paper written 5 years ago, How can secure occupancy in rental housing be improved in Australia?

Below: First the Labour policy, then some adverse comments, followed by the AHURI view.

A quick note: I’d thought of paying more attention than I usually do to election policy announcements, then thought better of it. For starters, I have more than enough to write about already. Second, a high proportion of wishlist & splurge electioneering has been vote-buying which can mostly be dismissed – or, if it does eventuate, watched extra-critically. This one, though, is a policy which will affect a large investor sector. If it follows the AHURI line of thinking it ought to be beneficial all round.

A family constantly on the move

To deliver her policy, Ms Ardern said down with a family who’d moved 4 times in 3 years, whose children had to move schools, and whose attempts to save to buy their own home had been set back.

“About 50% of Kiwis now rent their home, but too often their living situation is precarious,” Ms Ardern said.

Her promise: “A Labour Government will strengthen renters’ rights so everyone can have more stability. Not only will Labour increase the notice period for ending a tenancy, we’ll also end letting fees, limit rent increases to one/year, make all homes warm, dry & safe to live in, and much more.

“And for landlords who need to move on tenants who are breaching their agreement, we’ll make sure the tenancy tribunal is properly resourced, and that issues like anti-social behaviour are much clearer in the law.

“It’s about making renting fairer & more stable for both tenants & landlords – and is part of our comprehensive plan to fix the housing crisis.”

Policy: Making life better for renters

“For most people, renting used to be a short stage of their life before they bought a house and started a family. Now, it is becoming the norm. 3 out of 4 people under 40 years old rent, compared to one in 2 in 1991. Among older New Zealanders, the home ownership rate has fallen from over 90% in 1991 to 75% today. All up, half of New Zealanders now live in rental properties.”

Ms Ardern said renters’ rights were still designed around the assumption renting is a short-term arrangement for people without children and that renters will move frequently, rather than set down roots in their community.

The policy:

  • Increase 42-day notice periods for landlords to 90 days to give tenants more time to find somewhere else to live
  • Abolish “no-cause” terminations of tenancies
  • Retain the ability of landlords to get rid of tenants who are in breach of the tenancy agreement with 90 days’ notice, or more quickly by order of the Tenancy Tribunal
  • Limit rent increases to once/year (the law currently limits it to once every 6 months) and require the formula for rental increases to be specified in the rental agreement
  • Give tenants & landlords the ability to agree tenants on a fixed-term lease of 12 months or more can make minor alterations, like putting up shelves, if they pay double bond and on the basis the property is returned to the state it was in at the start of the tenancy
  • Ban letting fees
  • Require all rentals to be warm, dry & healthy for families to live in by passing the Healthy Homes Bill, introduced as a members’ bill by Ms Ardern’s predecessor as Labour leader, Andrew Little, and in the committee stage when the parliamentary term ended in August, and
  • Give landlords access to grants of up to $2000 for upgrading insulation & heating.

Notice periods

Ms Ardern said notice periods would be used where a landlord required the home to live in or had sold the property, the tenant had breached the agreement such as anti-social behaviour, failure to pay rent or causing damage to the property; or the landlord didn’t want to continue a fixed-term tenancy past its expiry: “This will mean landlords are still able to give notice to evict bad tenants. Landlords will still be able to go to the Tenancy Tribunal to ask for evictions or other remedies in the event of breaches of tenancy agreements.

“Most landlords operate with integrity and seek to provide decent accommodation at a fair price. These reforms will not affect them. What they will do is stop exploitative behaviour by a minority that is blemishing the reputation of landlords as a whole.”

Property Institute: It will worsen housing crisis

Ashley Church.

Property Institute chief executive Ashley Church said: “Labour’s new housing rental policies will scare existing landlords out of the rental market and will make the current housing crisis even worse – particularly in Auckland.

“The timing of these proposals couldn’t be worse. Auckland is currently in the grip of a serious housing shortage which affects both buyers & renters – and anything which deters investors from providing housing can only succeed in compounding that problem.

“If you’re an existing landlord, the deck is already stacked against you. The market has flattened, loan:value ratio (LVR) restrictions mean your equity position is worse, and bank credit rationing means that it’s now much harder for you to borrow money to do renovations & improve your position.

“Now Labour is telling you that, if elected, they’ll take away your right to terminate a tenancy and they’ll regulate the circumstances under which you can increase rents to make them comply with some as-yet-undefined Big Brother formula.”

Mr Church said these moves would come on top of a capital gains tax, pending a report from a yet-to-be-formed tax working group: “It doesn’t take a rocket scientist to recognise that Labour are already committed to a capital gains tax and that their tax working party will be made up of others who share that worldview. So, if you’re a property investor, the very clear message is ‘We’re going to get you’.

“That might make for good politics – but it risks doing long-term damage to the property market by scaring off mum & dad investors who are currently putting a roof over people’s heads.”

Mr Church said private investment was the key to solving the housing crisis and providing incentives to get people building new homes was the way to overcome the supply issue: “But no one is going to do that if they’re worried that they’re going to be regulated & taxed to death. Existing landlords will abandon the market and people who might otherwise have invested will stay away. Which means the State – which is just you & I as taxpayers – will be left holding the bag.”

First National chief also makes lopsided call

Bob Brereton.

First National Real Estate chief executive Bob Brereton said Labour’s proposals to change tenants’ rights “will severely, and negatively, impact on a landlord’s ability to protect their investment and will result in increased rents for tenants.

“The pledge to outlaw letting fees is a good example of a poorly thought-out policy with an unintended consequence: Letting fees are charged by professional property management companies to cover the costs associated with securing the right tenant. They then act as advocates for both the landlord & tenant to ensure comfort, safety & protection of the investment. If you remove letting fees, many management companies will be forced to increase management fees to compensate. This will simply force up rents.”

He was also concerned about the proposal to remove the right to end a tenancy, with 90 days’ notice, without cause: “This is simply ludicrous. There are many reasons why landlords might want vacant possession of a property, and infringing on these is a direct challenge to private property rights.

“A similar proposal to increase the provision to end a tenancy after 42 days, in certain circumstances, to 90 days will have a significant impact on property values. The 42-day provision is used, particularly, when a landlord sells a property and the buyer requires vacant possession or where the landlord needs to move back into it urgently, so this provision could impact on a landlord’s ability to sell.”

Brereton says regulating rent rises a no-no

Mr Brereton said one of the biggest challenge of Labour’s policy was the proposal to regulate market rentals by passing legislation to cap the amount by which rent can be increased. His example:

“A landlord buys a house, putting up say $200,000 of their own cash or equity, to provide a home for someone without one. They borrow $450,000 for the purchase at 5% interest and, paying only interest, it costs them $22,500 in interest, another $2000 for rates and $1500 for insurance ($26,000/year). This means they have to rent the property for $500/week, just to cover costs. Add in a 5% return on their equity and its $692. Anything less than that and you are just providing social housing.”

Overall, he said: “This risks being ‘the straw that breaks the camel’s back’. Landlords are facing negative returns, flat prices & the threat of a capital gains tax. If interest rates go up, as predicted, it would only take a small move in a flat market to convince many landlords to get out of the market.”

Australian research indicates similar issues left to fester

AHURI – the Australian Housing & Urban Research Institute – introduced a paper published in May 2012 this way: “More Australians are renting for longer periods, yet do not enjoy the benefits of secure occupancy. Changes to improve the security of occupancy in the Australian private rental system can be informed by international experiences.”

The paper was based on research conducted by Professor Kath Hulse at the AHURI Swinburne-Monash Research Centre, and Associate Professor Vivienne Milligan & Dr Hazel Easthope at the AHURI UNSW-UWS Research Centre. They examined the provisions for secure occupancy across rental systems in Australia & other similarly developed countries, and considered the potential to adapt these provisions to Australia.

Key points:

  • Secure occupancy is important in creating a home, regardless of tenure, and is a foundation for many aspects of wellbeing
  • The Australian private rental sector is characterised by relatively insecure occupancy compared to either social rental or home ownership
  • International experience demonstrates that it is possible to have a large private rental sector with smallscale investors & higher levels of secure occupancy for tenants. Changes to the regulatory framework and policy settings are required to achieve this.

This study argued that secure occupancy is linked to whether households are able to:

  • participate effectively in rental markets
  • access & remain in adequate, affordable & appropriate housing with protection of their rights as consumers & citizens
  • receive support from governments or other social service agencies if & when necessary to obtain &/or sustain a tenancy
  • exercise a degree of control over their housing circumstances and make a home, to the extent that they wish to do so.

European examples

Provisions for secure occupancy are stronger where rental systems are large, such as in Germany, the Netherlands & Austria, where, respectively, 60%, 43% & 30% of households rent. All of these might be categorised as integrated systems, with more uniform policy & regulatory approaches to rental housing.

While the latter 2 prioritise the social rental sector, the German system relies mainly on a private rental system. In these countries, secure occupancy in rental housing has been supported by supply subsidies. By contrast, other jurisdictions (Scotland, Flanders, Ontario, New Jersey & Australia) tend to have highly differentiated systems with strong security in social housing and relatively insecure occupancy in the private rental sector.

Largescale investment & professional management

Countries with large social renting sectors (the Netherlands, Austria, Scotland & Ireland) or higher corporate/institutional investment (Austria, the Netherlands, New Jersey, Ontario & Germany) also have a stronger tradition of professionalised management than in Australia.

This enables investor risks to be pooled and decisions about occupancy for individual households to be made at arm’s-length from decisions about investment.

Germany provides an interesting example, where, although there is larger-scale investment, most landlords are smallscale but are investing for the longer term, enabling more secure occupancy for tenants.

Legal provisions for secure tenure

There is a range of lease types across the countries studied. The typical practice in Australia of offering short-term fixed leases followed by month-to-month arrangements was only found elsewhere in Scotland & Ontario. New Jersey also has month-to-month arrangements, though these renew automatically unless a notice to terminate is given by either party. Other countries have the practice of longer-term or unlimited lease terms.

Of the jurisdictions studied, only Scotland compares with Australia in terms of having short-term tenancies that can be terminated readily without grounds. Even jurisdictions like Ontario & New Jersey have specified grounds for ending a private sector tenancy.

Supporting lease terms that meet the long-term needs of householders

Some jurisdictions have also been better at assisting people to personalise their dwelling and use the property according to their wishes, and so improve their autonomy. In the German private rental market, the standard lease provides capacity to personalise or even renovate the house and facilitates access to people with disabilities. These are only found in other jurisdictions on a lease-by-lease basis.

Links: Labour policy: renters
Ahuri, 14 May 2012: How can secure occupancy in rental housing be improved in Australia?

Attribution: Labour policy & release, Property Institute & First National releases, AHURI research paper.

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Wilshire celebrates first home completions at Richmond development

Wilshire Group Ltd celebrated completion of the first homes in its 600-700-home masterplanned Richmond subdivision this morning with a ceremony onsite at 33 Panama Rd, Mt Wellington.

Wilshire is 66% owned by Vincent Wan of Hong Kong through another local company, Vincent Group Ltd. Local directors & shareholders are Huang Sishuo & Li Quan.

Wilshire bought Springpark stages 2 & 3, on a 10.5ha former quarry site in Panama Rd, from Tony Gapes in August 2014 and the balance from the original development’s receivers in April 2016, then started afresh.

An overview of Richmond stage 1.

Isthmus Group Ltd has done the Richmond masterplan and Brewer Davidson Ltd are the architects for stage 1. The construction contractors are KN Building Ltd (Lee Keun Hong) for the 33 homes in stage 1A and Capri Construction & Residential Services Ltd (Bryan Symes) for the 66 in stage 1B. Other designers have been appointed for later stages.

Wilshire sales manager Christie Wrightson said Richmond was a contemporary terraced home subdivision which would be developed in 7 stages. It’s expected to house about 2000 residents on completion.

Prices for stage 1 started at $680,000 for a 2-bedroom home (which have since been sold), 3-bedroom homes at $770,000, and ranging up to a 5-bedroom home at $975,000. Only 5 homes will be over $1 million.

The first of the 99 terrace homes in stage 1 are complete and the rest will be finished by the end of the year.

Miss Wrightson said: “At Richmond, we’re wanting to create housing that delivers on all fronts: location, quality, community, lifestyle & design. Homes are customisable and lend themselves to modern home styling & self-expression.”

“Most importantly, though, Richmond provides a great opportunity to live in a new masterplanned community and enjoy a superb lifestyle for below the Auckland median house price and at a time when more & more people are being priced out of the central suburbs.”

Richmond is near the Sylvia Park mall, transport hubs and parks & sportsfields at Mt Richmond.

Maungakiekie-Tamaki ward councillor Denise Lee said there was a real need for more housing developments in central areas that are well connected to the rest of Auckland: “With Auckland’s congestion challenges, it’s wise we don’t just focus on the outskirts of the city to accommodate growth. Richmond is the sort of centrally located quality living option we need and, in the process, will create vitality & an important economic stimulus within the local community.”

Consent has been granted for stage 2 and designs are well underway for further stages. A showhome & display suite will open daily on site.

Link: Richmond

Earlier stories:
9 September 2016: Wilshire launches Richmond on Gapes’ Springpark site

1 July 2016: Whillans records 2 land sales in Mt Wellington & Tamaki
24 March 2016: Wilshire takes full control of Gapes’ Springpark development
27 June 2014: Gapes secures Singapore funding to regain Springpark control
23 May 2014: Springpark receivers seek new developer after settling stage 1 land purchase
18 October 2013: Redwood’s Springpark gets consent

Attribution: Company release. Images are by Brewer Davidson.

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Housing taskforce report conclusion: Not fit for purpose

Nice to go into booklet publishing, but where do these hefty documents get Auckland Council?

Mayor Phil Goff presented the 47-page work of his taskforce on housing on Monday, just 18 months after former council chief economist Chris Parker wrote his 86-page tome that put Auckland’s housing issues into an economic context and proposed policy interventions.

One feature of the taskforce report is an intention to investigate capturing value uplift. Mr Parker wrote in his December 2015 report: “Upzoning itself is not value-adding; rather, it is the cessation of value restriction.” He believed the council should, instead, focus on using targeted rates to capture the benefits of improvements to fund infrastructure.

Along with development contributions (based on cost of infrastructure), targeted rates are a consideration in the taskforce report – except that the reference is generally to “targeted ‘value capture’ rates”, which is a combination of 2 different concepts. The council sets some targeted rates now for an area seen to be benefiting from specific work.

Value capture is a tax on the windfall from rezoning or development – such as rezoning large swathes of suburban Auckland to enable more intensive residential development, and the new unitary plan has done that, or construction of a railway station, around which other parties will see the potential to make gains from consequent development, and that was happening down on Albert St, below the mayor’s window as he presented the taskforce report on Monday.

I asked Mr Goff why the council would investigate a concept it had steadfastly refused to implement in its first 6 years of existence (before his term began), and he gave a long response but didn’t answer the question.

A baffling failure

This failure to not just investigate how to extract a return from others’ windfall gains from the council’s work but to get on with extracting it baffles me, because in Auckland Council & Auckland Transport’s cost:benefit analysis of the city rail link, it was the value of development around these new stations that would make the whole project viable.

The Ministry of Transport, on the other hand, ignored these obviously beneficial consequences of the $3 billion-or-so rail project, and thereby produced a much more marginal benefit analysis.

Equally, there has been scope to extract a share of the windfall from changing suburban zones to enable intensification. Go to any auction since the unitary plan’s approval (and most of it is now approved), and you will see what “the market” thinks of the upzoning: a windfall to be shared between vendor & investor, where the investor looks at perhaps building 4 units on a section where a solitary house now stands.

The fact that this change is already well underway – you will see change occurring in every suburb if the Reserve Bank & the out-of-step Australian banks don’t block investors from transforming properties – was missing from the taskforce report, as far as I could see.

Industry players – private & public sector – were focused on stated overall shortfalls of housing, how to fill in a big picture of required infrastructure if a lot of new development is on greenfields, how to encourage big builders and advantage them, and how to speed up (which doesn’t necessarily mean improve) the bureaucratic processes.

Congestion charging

I’ll address one other point in the taskforce report in today’s story: transport infrastructure funding & congestion pricing.

Traffic congestion has been building steadily since New Zealanders started importing second-hand cars from Japan in the early 1980s, so we’ve had nearly 4 decades to work out how to deal with an obvious problem.

Most people who work go to one place for the day to do it and don’t need their own car. They (I) use it for convenience, but incur large costs in doing so: fuel, car wear, parking. In property transaction items, I keep citing parking provision in North Shore business areas as an example of a disparity which encourages single-occupant private car use – a cost of perhaps $10-20/week to park in an area like Rosedale, against $80-100/week to park for the day in a city centre parking building. Many of those parking building charges will be met by an employer, again encouraging private car use – and congestion.

The wrong answer

The taskforce report stumbled on the problem and went to the wrong answer: “Transport infrastructure is the primary challenge. According to the Auckland transport alignment project, Auckland needs to spend $23.7 billion on transport over the next decade, against an expected $19.8 billion from existing funding sources. This amounts to a deficit of $400 million/year.

“Transport funding is constrained in significant part because it is difficult to recoup the full cost of new infrastructure from users.

“Development contributions recover some transport infrastructure costs, but it is difficult to determine which parts of the network new residents will actually use.

“Similarly, toll roads rarely make enough money to cover their full costs as users often have the option to take untolled alternative routes.

“Congestion pricing has been identified by the Auckland transport alignment project as a potential opportunity to overcome this issue, as it will better manage peak transport demands and provide an automatic funding source for upgrading busy routes.”

From this answer, you can see the thinking goes like this: We need more roads, more lanes, tolls priced to peaks & troughs will force commuters to vary their work hours but that’s their problem…

Options to progress

Instead? Encourage more business operations outside the city centre, provide more varied communal transport (it needn’t be ‘public’ as in the provider) and particularly at start points, carry on improving the rail network, provide more amenities in those transport options, price travel to shift people out of cars (even at a loss on the fare, that kind of change would save millions of dollars in congestion, road construction, car ownership & maintenance in a short time).

Those are all options the taskforce might have considered.

In sum:

  • You will see from individuals picking up opportunities to build in suburbia that more housing will be built by a multitude of builders and the housing deficit will shrink
  • As the windfall from section sales reduces through competition, residential development costs can be shrunk (as the whole cost is based on the initial land value) but construction will continue because there is still scope for profit from the reduced input
  • You will see, if the right encouragement is given, more business conducted in suburbia, more communal transport, less congestion, an economy spread more widely
  • And when windfall taxes are judiciously applied, development will still occur at hotspots while at least some of the new infrastructure is paid for by new levies.

The $400 million/year shortfall should be regarded as a myth and the focus should go on alternative solutions (but not on the alternative solutions under the Building Code, mentioned in the taskforce report and a topic that needs discussing at a later date).

12 June 2017: Mayoral housing taskforce report
30 September 2015, Council chief economist Chris Parker, Housing supply, choice & affordability:
Chief economist’s paper
Chief economist delves into Auckland housing
Action on price-to-income ratio the key issue for housing affordability, says chief economist
In depth: What’s fuelling Auckland’s house prices?

Earlier story:
2 October 2015: Council economist lists potential housing price solutions

Attribution: Taskforce report & presentation, Parker report & interview.

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