National to build 34,000 houses in Auckland over next decade on land currently with 8,300 state homes on it; 60% to be sold off into the market

The National-led government has outlined plans to build 34,000 new houses on Crown land in Auckland over the next decade.

The net addition to Auckland’s housing stock will be just under 26,000 new houses. Minister responsible for Social Housing and Housing New Zealand, Amy Adams, said the properties would be built on land currently with 8,300 state houses on.

Of the headline number, 13,500 will be social houses and 20,600 will be “new affordable market homes.”

The bulk of the properties – 24,000 – will be built under the government’s Auckland Housing Plan (AHP). Of these, 11,500 will be social and 12,800 under the ‘affordable’ and ‘market’ categories combined.

‘Private bond funding will mean commercial discipline’

The AHP will require gross capital investment by Housing New Zealand of $2.2bn over four years.

Housing NZ will borrow $1.1bn of this from the private market for the first stage of building through a domestic wholesale bond programme. The second phase of building will be funded through sales of houses and land, and rental returns.

“Given Housing New Zealand’s strong credit rating, a domestic wholesale bond programme is expected to cater for the full AHP financing requirement, and represents the lowest cost option in terms of facility set up costs and interest costs.”

In a Q&A, Adams said the use of private debt for the state-led building programme was decided on because, “we believe that external financing will deliver additional commercial discipline for Housing New Zealand.”

“The AHP will deliver long-term rental returns that enable it to repay the debt required to fund construction,” Adams said.

“Because of Housing New Zealand’s large balance sheet it is able to borrow privately in a relatively economical manner. It also enables the Crown to commit more of its capital to supporting wider infrastructure, like transport and the Housing Infrastructure Fund.”

Mixture of housing

Housing New Zealand will build a mix of apartments, houses, and terraced housing through the programme “to align with demand and opportunity afforded by Housing New Zealand’s landholdings,” the Q&A sheet said. 

Meanwhile, Adams argued Auckland’s infrastructure would be able to handle the increased capacity.

“Auckland Council’s budgets and long-term plans show that it is continuing to make investments in infrastructure to accommodate the increase in housing proposed,” it said on the Q&A sheet.

“Further policy actions by central government, such as the Housing Infrastructure Fund, will also accelerate the provision of infrastructure in to better accommodate rapid population growth.”

More soon.

Read the release from Adams below:

The Government today has announced a Crown land and building programme that will see tens of thousands of new houses built in Auckland over the next decade.

Social Housing Minister Amy Adams announced that the Government’s Crown Building Project will replace 8300 old, rundown houses in Auckland with 34,000 brand new purpose-built houses over 10 years. 24,300 of these will be built by Housing New Zealand through their Auckland Housing Programme.

Over the next ten years, the Crown Building Project will deliver around:

13,500 newly built social houses

20,600 new affordable and market homes.

“This is a significant undertaking for the Government, for taxpayers, and for our Social Housing reforms. It’s the equivalent of three and a half new houses on every street across Auckland,” Ms Adams says.

“These houses will be for our most vulnerable families, for first-home buyers, and for the wider market. We are building more social houses for Aucklanders and helping provide a pathway into independent, affordable housing.

“The Crown Building Project is the Government making the most out of the available residential land it owns to meet Auckland’s social housing needs.

“These 34,000 new houses are a substantial redevelopment and construction programme on a scale not seen since the 1950s.

Phase one of the Auckland Housing Programme, which covers the next four years, will cost $2.23 billion and will be funded through Housing NZ’s balance sheet and new borrowing of $1.1 billion that the Government has approved as part of the business case. Phase two in the latter years will be funded through the market housing development part of the programme and rental returns.

Ministers have also agreed that Housing New Zealand will retain dividends and proceeds from state house transfers, to help fund the building programme.

“Our plan to build 34,000 new homes over the next ten years has been carefully scoped and designed, is fully funded, and builders are on site getting on with the programme already.”