Govt announces Auckland house-building blitz, $1.1B bond issue

The Crown-owned housing agency, Housing New Zealand, will build a net 17,207 new affordable homes over the next decade in the government's biggest new state housing announcement in more than eight years in government.

Social Housing Minister Amy Adams took over the portfolio from Nick Smith this month and said it represented “construction on a scale not seen since the 1950s.”

The programme represents a direct political as well as policy response both to the government’s growing vulnerability to a backlash over Auckland house price inflation and shortages in the booming city, and the Labour Party’s promise to build 100,000 new affordable homes over 10 years.

Adams told a Property Institute luncheon in Auckland that HNZ would budget $2.23 billion for the first four years of the programme and would be allowed to raise an extra $1.1 billion through new domestic wholesale bonds to do so.

Of the new homes built, 8,300 would replace run-down existing state housing stock, 13,500 would be so-called ‘social housing’ for vulnerable families and 20,600 would be “new affordable and market homes” available to first home buyers “and the wider market”.

When combined with the existing Tamaki, Hobsonville, Crown Land Programme, and Ministry of Social Development social housing reform programme, the total number of new houses to be built will top 34,000.

“This programme will make a significant difference to the whole Auckland market," said Adams.

The announcements coincide with a report from investment bank Goldman Sachs warning that Auckland’s housing market has reached ‘bubble’ status with properties over-valued by some 40 percent, and a risk of prices falling in the next two years.

The pre-Budget, election year announcement also reflects growing concern among government ministers that high immigration into Auckland is exacerbating house prices and shortages, and that the combination of the two issues is threatening its re-election prospects.

Labour has a long-standing KiwiBuild policy to build 100,000 affordable houses over 10 years over the whole country, with a heavy bias towards Auckland.

Labour leader Andrew Little also announced a crackdown, under a Labour-led government, on the ‘negative gearing’ tax treatment that allows landlords to offset losses on rental properties against income tax owed on their other income.

Once the 8,300 demolitions are taken into account, the HNZ building programme will add a net 25,396 new homes to Auckland housing stock over the next decade, although net additions in the next four years will be just 4,961.

The second phase will add a further net 12,246 homes for a total 17,207 homes of the total of 34,000 new homes covered by the various government-assisted programmes currently under way.

(BusinessDesk)