Council planners, regulations blamed for housing unaffordability

Bill English.
Bill English.
Finance Minister Bill English hit out yesterday at local body planners and councillors for contributing to the growing unaffordability of housing in the country's least affordable cities.

The Government is under attack from Opposition parties over the issue of affordable housing and Mr English used a pre-Budget 2014 speech yesterday to deflect some of the blame on to local authorities.

He said it was difficult to build some types of affordable housing in some of the country's cities.

House prices doubled between 2001 and 2007, and prices had resumed their upwards march in most areas since the global financial crisis (GFC).

''There are a number of reasons for this but there is little doubt that planning processes and rules are important drivers of land and housing costs.''

Giving two examples, the Finance Minister said planning rules in Auckland required apartments to be at least 40sq m and balconies to be 8sq m.

Other rules set minimum subdivision size, ceiling heights, bedroom size and even the width of the front door. All of those pushed up the cost of housing.

''Local body planners and councillors are not aware of the wider social and economic effects of their complex rules and processes.''

The consequences included higher prices created by excessive planning rules putting pressure on interest rates, reducing business investment, lowering productivity and hitting household budgets, Mr English said.

Housing supply that was unresponsive to demand caused price volatility.

''Secondly, as the cost of housing consumes a greater proportion of income, pressure goes on councils and the Government for greater assistance.''

Around 40% of households that were renting received accommodation support from the Government.

That would increase if housing became less affordable.

The third consequence was that rising house prices drove inequality, he said.

Inequality in New Zealand had been flat since 2004, but the situation could have been better had housing been more affordable, he said.

''That is why we're working with councils to ensure New Zealanders have access to more affordable housing.''

The Government had signed a housing accord with the Auckland Council which was already delivering results.

It was working on accords with councils in Christchurch, Tauranga, Queenstown and the Wellington region.

The Government was reforming the social housing system to bring in community housing groups, increase competition and get social houses where they were needed the most, Mr English said.

''We're reforming the Resource Management and Local Government Acts to cut red tape and reduce costs. And we're continuing to invest around $2 billion annually in accommodation support for Kiwi households.

''So, we're making steady progress to deliver more affordable housing to more New Zealanders.''

It took time to change the way councils made decisions on housing and for developers to get more projects up and running, he said.

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