AUT Professor says the Government can't rely on the private sector to develop affordable housing in Auckland and will need to do it itself

One of the country’s leading academics in the building sector says the Government needs to get more directly involved in housing development to solve Auckland’s housing crisis.

Professor John Tookey, Head of the Department of Built Environment at Auckland University of Technology, said simply rezoning more land for residential development or for higher density housing was unlikely to increase the supply of affordable housing in Auckland.

Tookey said there was already land in Auckland that was zoned for high density housing that wasn’t being developed and simply increasing the supply of land wouldn’t solve the problem.

“Builders and developers go to where they can make the most money and at the moment they can make the most money with the higher priced properties and that’s all we’re getting,” Tookey told in a Double Shot video interview.

“The apartments being built now are not affordable by any stretch of the imagination,” he said.

Tookey believes the solution is for the Government to directly commission large scale affordable housing projects in Auckland.

However this did not necessarily mean ramping up construction through existing state agencies like Housing NZ.

One of the options the Government could consider would be the use of Housing Associations, which were common in the UK, he said

Under that model, a Housing Association would receive government or council funding to develop large scale affordable housing projects, and would co-own the individual dwellings with the people who lived in them.

People on low incomes could purchase a stake of 40% or so in their individual dwelling from the Housing Association, which would own the remaining 60% stake.

The residents would finance the purchase of their 40% stakes with a mortgage and would also pay the Housing Association rent for the share of the property they didn’t own.

The residents would also have the option of buying the remaining 60% stake from the Housing Association if their financial situation improved, or of selling back their 40% stake if circumstances demanded it.

Tookey said one of the problems facing New Zealand’s residential construction industry is that it’s dominated by small firms that aren’t able to generate economies of scale that would help bring prices down.

If government agencies, whether they be Housing NZ, Housing Associations or some other model, were to directly commission large scale developments, that would give bigger building firms a pipeline of work that make it worthwhile for them to invest in developing high volume/low cost construction methods such as using more prefabricated building technology.

Housing Associations, or similar organisations would also be able to form Public/Private Partnerships with developers/building firms to undertake large scale developments, with some of the resulting housing stock being sold on the open market and some being retained by the Association.

Amending the Building Code to allow three to four storey timber framed tenement housing would also help lower costs, Tookey said.

He also had a warning about the high level of investor activity in the Auckland housing market.

“There’s an awful lot of investors who are, from a cash flow perspective, just covering their costs,” he said.

“All it’s going to take is a minor correction in interest rates, a minor upward upward tilt, and all of a sudden folks are going to be under water.”

Tookey’s comments come with Mike Greer of Mike Greer Homes calling on the Government to substantially increase its involvement in funding the building of tens of thousands of new homes in Auckland.

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