Unaffordable houses

While Government and opposition parties try to claim they have the  solutions for ‘affordable housing’ the numbers simply don’t stack up for a lot of people, especially those who want to buy their first house.

Neil Binnie, manager of the Bays Community Housing Trust, does some calculating to point out what should be obvious.

NZH: MPs’ notions of ‘affordable’ insult to poorer home-hunters

… the issue of affordable housing is not well explained.

Kiwis in upper wage brackets can always afford the high prices especially when they are buying and selling on the same market. It is the first home buyers and those with lower wages who are in trouble.

“Affordable housing” is a phrase that has been used in the media in different ways. A common definition is that a house is said to be affordable if its asking price is 75 per cent of the median selling price of houses in the area.

In a few months the median house price in Auckland will be a million dollars. Does that mean that a house costing $750,000 dollars is suddenly “affordable”? Likewise we are told 20 per cent of houses at Hobsonville are “affordable”.

Binnie’s number crunching:

  • Statistics NZ gives the median family income in Auckland for 2015 as $1575 a week.
  • Using the IRD tax calculator and taking 3 per cent for KiwiSaver leaves $1183 take-home pay.
  • Taking 40 per cent of this gives $473 a week to pay the mortgage (or rent).
  • If interest on the mortgage is 5 per cent this will sustain a mortgage of $350,000.
  • With a 20 per cent deposit, a house costing $440,000 is therefore affordable under this definition.

(Prudence suggests you should be prepared for an increase in mortgage rates to 7 per cent, meaning you should only spend $360,000 on a house.)

When National came to power mortgage interest rates were over 10%.

This is consistent with the analysis by Simon Collins, “Affordable houses a Dream” in the Herald on July 12. He stated that only 46 per cent of people aged 20 to 65 are able to afford a house priced at $500,000. Incidentally I am wondering how these families save the $100,000 deposit while paying an unaffordable (median) rent of over $500 a week.


When Labour promises 10,000 “affordable homes” a year costing $500,000 to $600,000, the discussion above shows they are not affordable to more than half of the population. In fact Labour have shut out exactly the families they are claiming to help.

And in the main those who don’t yet own a house will be the ones who are shut out.

There are properties for sale in Auckland with prices less than $440,000. The vast majority of these are one-bedroom apartments with body corporate fees of at least $50 a week which will blow the budget. These one-bedroom units are inappropriate for young families.

Half of Auckland’s families have less income than this, so they have no hope of ever buying their own home. This is the reality for a family on the median wage or less.

There is one obvious solution to families wanting to buy their first home – start somewhere other than Auckland (or Queenstown or Hamilton or Tauranga). Once you have a house you can grow your equity (with the help of inflation) and then some time in the future you may be able to upgrade to a big city

There are still a sizeable proportion of houses in Dunedin selling for between $200-$300 thousand (some are less).

The problem is a limited supply of jobs in the regions. In part this is due to Governments over the last thirty years gutting regions of Government departments and jobs, choosing to concentrate them in a few large cities. There is no sign of that changing.

But for many people if the want an affordable house they can’t rely on the Government, nor the opposition.

Perhaps they have to choose an affordable town or city for themselves.

Q & A today

On NZ Q & A today:

Morena we’ll bring you the latest update from Turkey & Nice at 9am on TV1 along with the latest #nzpol

A rare TV interview with richlister Stephen Jennings on why education & inequality in NZ must be fixed.

tells what he wants in AK’s Unitary plan + his advice for first home-buyers

Also on the show talks and with Prof. Margaret Wilson.

Fran O’Sullivan has also written about Rich-lister sends message to Key

Rich-lister Stephen Jennings’ warning that “we are facing an iceberg” deserves to shatter business complacency on housing.

It should also shatter the complacency of the Prime Minister – if he allows himself to hear it.

Jennings has confronted the business elite with some unpalatable truths: rising house prices and immigration-fuelled economic growth are masking an underlying “iceberg that lies ahead”.

“We are sleepwalking into an economically ugly place,” he warns. “How can we look at ourselves in the mirror and say how can we live with having one of the most unequal education systems in the Western world – and even if you are very selfish you better say to yourself that is not sustainable.

“Those chickens are going to come home to roost.”

Does someone labelled as a ‘rich-lister’ deserve as much attention as a ‘celebrity’?

The Jennings interview is very interesting.

He says that our education system is a serious problem (and so is housing but everyone’s saying that). He says that education seriously disadvantages the lower deciles and poorer achievers. He slams the teachers’ unions and the system of rewarding just about all teachers regardless of their performance.

He also has interesting things to say on politics here, how we do it and warns that we will have Trump/Brexit type reactions if serious issues aren’t addressed adequately.

Social inequality is an important issue that needs to be addressed in a by-partisan way.

Penny Bright loses appeal

(Yes, she did have some voter appeal in the last local body elections, getting 4th with 11,723 votes)

I doubt that many will be surprised that Penny Bright has lost her appeal in her ongoing battle to avoid paying rates in Auckland.

NZ Herald: Activist Penny Bright loses latest battle with council over unpaid rates

Activist Penny Bright has lost her latest battle against Auckland Council over her unpaid rates.

Chief High Court judge Justice Geoffrey Venning dismissed an appeal by Bright on Monday in the High Court at Auckland.

Bright had appealed a decision, made by the Auckland District Court in February, which required her to pay her rates, which have been outstanding since 2007.

The summary judgment obtained was for outstanding rates and penalties of $34,182.56, as at 30 June 2015.

In the decision, Venning said: “Ms Bright, like other ratepayers, has an obligation to pay the rates that have been validly assessed as payable by her. Her refusal to do so simply increases the administration costs of the council.”

The court also awarded the council costs.

Cost may add up to a bit on top of her rates arrears and penalties.

It is also quite odd that someone who doesn’t pay their rates stands for election for the mayoralty.

Her campaign slogan is “stop corruption”at pennybright4mayor.org.nz


If she misses out on the mayoralty she could always stand for the by-election on Phil Goff’s Mt Roskill electorate should he win – she could campaign there on not paying tax.



Transport tolls in Auckland

A comment from Alan on transport tolls in Auckland.

Toll roads for Auckland?

AA spokesman Barney Irvine said feedback from members showed there was support out there for tolls – as long as people saw direct congestion benefits.

“But there’s also a lot of scepticism.”

There was an important distinction between using tolls to manage demand on the roads and raising revenue, Mr Irvine said.

No, there isn’t. Both are anti-competitive monopoly exploitation. User pays is entirely different and an honourable principle which the politicians need to rediscover and auditors need to validate.

NZ Herald: Auckland road tolls: Will drivers be forced to pay 40c per kilometre?


I’m a long way from Auckland and it’s transport congestion (as much as possible), I got fed up with it forty years ago and left after a short experience in the big smoke, so don’t have strong feelings on this.

Perhaps ironically the current banner headline at the Herald:

BREAKING NEWS Crash blocks city-bound lanes ahead of Auckland Harbour Bridge…

Traffic in Auckland can be bad enough on a good day, but crashes create chaos.

The ladders of democracy should be equal

Democratic processes should be as even handed and equal opportunity as possible. The Auckland mayoralty contest seems to be far from fair.

Quinton Hogg at Whale Oil pointed out something I have been meaning to post on:

I attended the EMA candidates meeting last week where Ms Crone, Mr Goff and Mark Thomas spoke. And Penny Bright stood outside in the cold as she wasn’t let in.

Of the three Mark Thomas was the most impressive. I had heard Ms Crone previously without being impressed and Mr Goff wandered through the platitudes.

Slater added:

The EMA refused to allow John Palino to participate.

This stinks, regardless of how anyone may rate candidates at this early stage of the pre-campaign campaign.

It is sad to see the Employer’s and Manufacturer’s Association picking and choosing candidates to give exposure to.

Penny bright may have limited appeal, especially to an EMA audience, but she’s prepared to put herself forward and should be given an equal opportunity in a democratic contest.

John Palino (who has Slater as an adviser) and got off to a poor start with a launch that was treated as a bit of a joke by media, but he is one of the choices so should be in the mix at any election meeting.

But this does have some irony as Whale Oil is not exactly an equal opportunity blog for candidates. Slater seems to have been quiet on Palino but has been predictably critical of Goff, and frequently very critical of Crone who happens to have a good chance of keeping Palino out of the contest.

Slater is also often critical of ‘the media party’ and how they influence politics, but this is even more ironic given his claim to be serious media but is far more biased and attack orientated than the MSM are ever likely to be.

The Auckland mayoralty and democracy are being poorly served all round.

The ladders of democracy should be as even as possible.

A Clayton chief of staff?


Good heavens! @RMAHarman suggests in this morning’s Politik that Clayton Cosgrove is likely to become @philgoffmp’s Chief of Staff if Mayor

That’s a big Good Grief! if true. Not exactly a team of young guns.

But I can’t find it at Politik, nor anywhere else.

Twyford praised for call to abolish Auckland urban growth boundary

Twyford today:

The Government should rule out any possibility of an urban growth boundary in Auckland Council’s Unitary Plan if it is serious about fixing the housing crisis, says Labour’s Housing spokesperson Phil Twyford.

Business NZ praises this:

Proposal to ditch Auckland growth boundary welcomed

Labour Party housing spokesman Phil Twyford’s proposal to abolish Auckland’s urban growth boundary as a way to rein in ballooning land prices in the country’s biggest city has attracted the support of business lobby group BusinessNZ.

David Farrar at Kiwiblog:

A great policy from Labour

Twyford had been showing signs of getting it for a few months now, acknowledging that land supply restrictions were a huge issue. Every expert report into housing says the artificial restriction of land for housing is the biggest factor, and other measures will be ineffective if you don’t fix this.

This is excellent they have. Huge kudos to Phil Twyford for getting Labour to agree to this.

National needs to get some balls, and come out with the same policy. Auckland Council should be left under no mistake – abolish the boundary, or Parliament will step in and do it.

There is a less dramatic way to abolish it. Labour’s candidate for Mayor Phil Goff could adopt this as policy.

UPDATE: You can sign a petition here (from the Taxpayers Union) calling on the Government to adopt Labour’s policy on abolishing the Auckland Metropolitan Urban Limit. The more people who sign the petition, the more pressure on National to do the right thing and sign up to Labour’s policy.

Good policy and good politics.

Minister of Housing has weighed in with his support.

Labour support on city limits welcomed

The new position by the Labour opposition calling for an abolition of city limits has been welcomed by Building and Housing Minister Dr Nick Smith.

“This is a welcome repositioning by Labour. Tight city limits and not allowing intensification is at the core of Auckland’s housing problems. It is limiting new housing developments, driving up section and house prices and encouraging land banking.

“A broad political consensus that the policy around city limits needs to change is helpful to progressing the necessary reforms to increase housing supply and to make them more affordable.

Rare cross party support should get the message across to the Auckland City Council.

Twyford’s media release:

Government should abolish Auckland urban growth boundary

The Government should rule out any possibility of an urban growth boundary in Auckland Council’s Unitary Plan if it is serious about fixing the housing crisis, says Labour’s Housing spokesperson Phil Twyford.

“Over 25 years the urban growth boundary hasn’t prevented sprawl, but it has driven land and housing costs through the roof. It has contributed to a housing crisis that has allowed speculators to feast off the misery of Generation Rent, and forced thousands of families to live in cars, garages and campgrounds.

“Labour’s plan will free up the restrictive land use rules that stop the city growing up and out. It will stop land prices skyrocketing, and put the kibosh on land bankers and speculators.

“Nick Smith is talking up his soon to be released draft national policy statement under the RMA. But to avoid it becoming yet another of his long list of his ineffective stunts, he needs to stop land bankers by doing away with the urban growth boundary – and make sure it doesn’t re-emerge under a different name.

“The urban growth boundary creates an artificial scarcity of land, and drives up section costs. Land inside the boundary is up to ten times more valuable than rural land.

“It is not enough for the Council to progressively add more land zoned for development here and there. That just feeds the speculation that is an inevitable result of having the boundary.

“There is a smarter way to manage growth on the city fringes by properly integrating land use with transport and infrastructure planning. There should be more intensive spatial planning of Auckland’s growth areas in the north, north-west and south. Land of special value can be set aside, like the northern coastal strip or Pukekohe’s horticulture soils. Corridors should be acquired and future networks mapped for transport and other infrastructure.

“This requires bold reform. Freeing up growth on the fringes needs to go hand in hand with allowing more density – so people can build flats and apartments in parts of the city where people want to live, particularly around town centres and transport routes.

“It is also essential to reform the way infrastructure is financed. The cost of new infrastructure must rest with the property owners of new developments to prevent the ratepayer carrying the can for expensive infrastructure investment in places where it’s too expensive to build. Labour proposes using bond financing paid back by targeted rates over the life of the asset. This can range up to 50 years in some of the jurisdictions using this mechanism.

“Nick Smith and Bill English have been playing politics with the RMA and Councils for years, blaming them for expensive housing. However, National have done next to nothing meaningful in eight years in government to tackle restrictive land use rules that drive up land prices and choke off the supply of affordable housing.

“Fixing planning rules on their own won’t solve the housing crisis. It also needs to go alongside cracking down on property speculators, and a massive government-backed building programme.

“With the Budget coming up, the Government has a chance to finally do something to genuinely rein in Auckland’s housing crisis. But unless Nick Smith deals to the urban growth boundary –
and its proposed watered-down replacement – integrates transport planning and investment, frees up the density rules, and reforms infrastructure finance, his national policy statement won’t amount to much,” Phil Twyford says.
Background Questions and Answers:

Won’t this lead to more sprawl?
No, it will manage sprawl because development and investment decisions will be carefully planned. Auckland must grow to accommodate another million people over coming decades. However arbitrary lines on the map where land owners can virtually strike it rich thanks to the stroke of an Auckland Council planning pen is clearly not delivering a quality, compact city – or affordable housing for young families.

Are you saying the Government should override Auckland’s Plan?
Restrictive land use rules like the urban growth boundary and density controls are a major contributor to the housing crisis that is locking young people out of home ownership. It is entirely appropriate that central government should have a say on behalf of them and future generations. While the detail of planning decisions is a matter for local councils, housing affordability is a matter of national interest.

Hasn’t Auckland Council agreed to get rid of the old Metropolitan Urban Limit?
Auckland Council has replaced the old Metropolitan Urban Limit with a new more flexible rural urban boundary which progressively releases more land for urban development. They are now talking about replacing the rural urban boundary with zoning. It is nothing but a semantic response.

“Civil rights of neighbouring property owners”

A stoush between Housing Minister Nick Smith and Auckland councillor Mike Lee illustrates problems with both the housing problems in Auckland and the hijacking of the RMA by NIMBYs.

Patrick Gower: Govt, Auckland Council at odds over housing

Housing Minister Nick Smith has attacked an Auckland Councillor, calling him a “Nimby” for blocking a housing development.

A corner in Herne Bay is a small battlefield in the war between the Government and Auckland Council over how to speed up housing supply. The Government wants 70 apartments built there, but Auckland Councillor Mike Lee is trying to stop it, and that’s got Dr Smith angry.

The Government has designated the site of the old Gables pub a “special housing area”. That allows for fast-tracked development, with between four to seven of the apartments “affordable housing”. It’s about getting more housing into inner-Auckland’s “urban intensification”.

But neighbours don’t like it, and, local councillor Mr Lee is on their side. Mr Lee wrote earlier this year, saying the development was “overriding the civil rights of neighbouring property owners”.

Lee seems to be ignoring the rights of property owners to develop their properties. If councillors oppose new housing developments because neighbours don’t like them then it’s no wonder Auckland has a major housing problem.

Dr Smith responded, saying he found Mr Lee’s position “ironic”, “odd” and “part of the problem”.

“We cannot have that sort of Nimbyism. That’s at the core of where Auckland has gone wrong. That’s why I’ve politely written back to Mr Lee and said ‘actually, you are being a hypocrite’.”

The problem of using one’s ‘rights’ to oppose what other people do with their own property is a not confined to Auckland.

In Dunedin it has not been uncommon for ‘neighbours’ – people living kilometres away – to use the RMA to oppose applications to build on properties because they don’t want the landscape to be ‘degraded’.

They have been successful in stopping the civil rights of owners to do what they want to with their properties.

And it’s about to get worse if proposed changes to the new district plan go through (objections are currently being heard).

Someone in the council has drawn lines on maps of the city on the 100 m contour line in many areas, and they are saying that if you want to build a house above this altitude you are  restricted in what you can build (size and appearance) and need to apply through the RMA to be able to build.

This is supposedly to retain the ‘character’ of the city  – so people won’t have to look at houses on hills. Despite the fact that a lot of Dunedin suburbs are already built up hills.

So in other words NIMBYs who already have houses on their properties don’t want other people to be able to build what they want on their own properties.

It’s no wonder Dunedin is stagnating – except for on the Taieri where ex councillors have been able to subdivide some of the best farmland in the area.

It’s no wonder Auckland has a housing crisis if people, especially councillors, are opposing the building of new residential properties.

And it’s no wonder the Government is getting frustrated with Auckland and with the RMA.

The Nation on property problems

Yesterday The Nation looked at ongoing serious property problems in Auckland. All that seems to be changing is the stories being told, in this case the ‘hidden homeless’, which is a growing problem due to very high property prices and rental rates.

Auckland’s hidden homeless

A growing numbers of families are being forced to live in cars because of unaffordable housing.

Government figures show rents for three-bedroom houses across Auckland have increased by 25 percent in five years, and that’s spawned a new type of property market — garage rental accommodation.

Social workers say some families are paying almost $400 a week to put a garage roof over their heads, and a social policy analyst says one in 10 south Auckland properties has a garage tenant.

“What you will notice is that if you drive down any road, probably every second or third garage has curtains in and windows in and people living in it,” says social policy analyst Alan Johnson.

Newshub spoke to a group of 50 social workers who said families living in garages is common. We heard of one case with a family with two young kids had been living in a garage for two years. Their weekly rent? $380.

The squeeze on housing stocks is driving the demand for garage space. There are 4500 people on the Housing New Zealand waiting list, and emergency accommodation providers like the Monte Cecilia Housing Trust have been turning families away for years.

“We house 12 families here,” says Bernie Smith of the Monte Cecilia Trust. “We have another 32 families in long-term properties, but we have 30 families waiting to be here today who are in crisis.”

Sounds dire – and it is for people who are having to live in garages and cars.

But the Government maintains it’s doing what it can to address the problem.

Are they doing enough? The problems seem to be getting worse if anything.

Freeing up more land and building more houses – many more are needed – is a long term project that has been with Auckland for many years.

And it’s not just Auckland with extreme housing problems. RNZ looked at Queenstown and elsewhere:

Queenstown rental problem worsens due to Air BnB

A Queenstown landlord says he has taken a big financial risk to buy properties in the resort town which traditionally has emptied out over summer.

Tourist workforce’s accommodation struggles

With annual tourist numbers set to rise to over four million within the next six years, the issue of accommodating the workforce that supports them is a hot topic with local mayors for Housing Minister Nick Smith.

Housing remains the Government’s biggest challenge, and they don’t seem to have risen to the challenge yet.

Vision for ‘best city in the world’

Auckland mayoral candidate John Palino has released a manifesto book titled A Vision for Auckland (PDF) in which he outlines how he thinks he can make Auckland “the best city in the world”.

Auckland has an amazing opportunity that many cities around the world could only dream of. While some may be opposed to growth, the alternative is far worse. So let’s take advantage of our challenge and make Auckland the best city in the world.

In ways an aim of ‘best city’ may be admirable, but it’s an impossible overall goal – impossible to judge and impossible to achieve.

The purpose of this book is to lay out a very clear choice between the current council’s strategy, which I am convinced is not working and will not work, and an alternative strategy I will put before you. I appreciate your reading this book and allowing me to paint a picture for you of my vision for Auckland.

Palino’s key strategy planks:

  • To implement a comprehensive and transparent budget that reduces rates by 10% over my first term
  • To introduce an Auckland Ratepayers Bill of Rights that will hold Council responsible for meeting and managing within budgets
  • To make Council spending transparent to Ratepayers so they can judge whether or not their money is being spent sensibly
  • To ensure Council priorities are focused on core services and resolving the key problems facing Auckland
  • To provide a planning and regulatory framework that allows and encourages the private sector to genuinely provide affordable new housing in the numbers required
  • To promote economic growth by ensuring business friendly policies and a pragmatic regulatory environment and associated processes
  • To provide a long term city plan that reduces traffic congestion by creating an environment that encourages and allows businesses to develop in locations and provide employment opportunities near where people want to live
  • To abandon the current council ideology that increasing housing density in existing suburbs will solve traffic congestion problems and provide affordable housing
  • To provide an Iwi consultation process for resource consents that is limited to genuine cultural issues, that is speedy and cost certain
  • To hold council officers to account for poor or tardy decisions by establishing a Citizens Decision Review Panel, including relevant external experts, that ratepayers can appeal to

Most of those are fairly general political palaver.

Will anyone believe that it’s feasible or possible to reduce rates by 10% in one term?

A mayor doesn’t have the power to do what they promise in an election campaign. The full council votes on everything, so to achieve what the want a major has to win majority vote in the election, and majority vote for everything in council.

So rates reduction and everything else Palino has in his book is aspirational rather than a promise.

Palino will have to convince voters he can manage a mayoralty and manage the council, and have his say along the way.

‘Best city in the world’ is over the top unattainable. ‘Best candidate for mayor’ might be possible.


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