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Outlook: Residential

Resolving the Housing Crisis

We constantly hear in the media about the Auckland housing crisis. We believe the crux of the matter is a basic supply and demand issue. That is to say a lack of supply of housing, plus excess demand, equates to the current housing crisis.

While that is simplistic and easy to say, the solutions are somewhat more complex.  This situation hasn’t just arisen over-night, rather it has slowly developed over many years.  And so it is for the remedies – there is no single magic bullet that will solve the problem over-night. Many well-meaning comments have offered possible solutions, but in reality the majority of these are unable to be completed quickly.

One key solution is to free-up and provide more land for housing development.  A Government-commissioned report by the Productivity Commission titled “Using Land for Housing” has looked at the challenge of freeing up land. This draft report has made 38 recommendations with the full report available on documents/2104853/using-land-draft- report.pdf. Top recommendations  in this report are:

•  Allowing large cities to undertake integrated spatial planning as an alternative to current statutory planning mechanisms.
•  Removing costly regulations that prevent the efficient use of land for housing, e.g. mandatory balconies for apartments.
•  Giving greater priority to cities and housing in the Resource Management Act.
•  More user charges, particularly for water services, and the removal of prohibitions on tolling and congestion charges.
•  Greater use of targeted rates to fund growth infrastructure.
•  Levying rates on Crown-owned land. Currently core Crown land is exempt from general rates. Rating Crown land would provide agencies with a disincentive to unnecessarily hold land.
•  Identifying and pursuing opportunities to develop Crown and local authority land in high growth cities.
•  Establishing Urban Development Authorities to assemble sites, master- plan scale developments, and partner with the private sector to deliver them.

To ensure local authorities deliver the key outcomes the government wants, it has introduced the Housing Supply Accords and Special  Housing  Areas  Bill. The purpose of the Bill is to enhance housing affordability by facilitating an increase in land and housing supply in the regions or districts with housing supply or affordability issues. Key features of the Bill are:

•  Providing that the Government may enter into a housing supply accord with a territorial authority in a scheduled region.
•  Allowing for the establishment of “qualifying developments” which are defined as predominantly residential and must meet certain height and capacity requirements.
•  Allowing “special housing areas” to be established in a scheduled region.
•  Create a new resource consent process for qualified developments in special housing areas.

While Auckland remains the main focus of the above initiatives, the Nelson Tasman region also has similar background issues. These include:

•  Foreign buyers – Auckland City’s population has a significant proportion of Asian people. Some of these people are Chinese and have been the target of media focus. Nelson remains a key destination for many immigrants with Golden Bay being popular with Europeans, Brightwater with the English, and recently the Burmese refugee community with Nelson City’s Victory Square area. None of these groups have had any significant impact on the residential property market. 
•  Rising population – Nelson’s population increased by 8 percent between 2006 and 2013 and Tasman’s population increased by 6 percent. The total population for New Zealand also increased by 5 percent over the same period. By 2031, Nelson’s population is projected to be 51,200 and Tasman’s will be 53,900. Source: Census
2013 and Population Projections 2006 (base) – 2031 medium series (October 2012 update), Statistics NZ.
•  Housing Accord – Nelson City Council and the Government signed an accord on 11 June 2015. This will see both parties working together to support an increase in housing and improve housing affordability
in Nelson. It sets a target of consenting 720 new dwellings and 300 sections created over the next three years. The full accord is available on Our-council/Downloads/housing-accord/ Nelson-Housing-Accord.pdf.
•  Housing Accord – Tasman District Council and the Government signed an accord on 15 May 2015. This sets a target of consenting 620 new dwellings over the next two years and 260 sections created, an increase of 17 percent and 30 percent, respectively. The full report is available on
centre/news/housing-accord-reinforces- councils-commitment-to-community/.

At the signing of the Nelson  City Council’s Housing Accord, Building and Housing minister  Nick Smith said: “Nelson’s housing issues are not as acute as those of Auckland, but we still need a focus on increasing the supply of more affordable homes particularly for young families. Our ratio of house price to income in Nelson
is 6.8, as compared to Queenstown’s 8.9, Auckland’s 8.4 and a national average of 5.5.

“The Government and the Council agree a collaborative approach is needed to improve Nelson’s housing affordability and productivity to ensure a greater supply of homes priced for first home buyers.”

The challenge has been laid down to both local councils to deliver on these accords. Previous work done by Nelson  City Council includes the Nelson Urban Growth Strategy (NUGS) finalised in 2006. The full report is available on Our-council/Downloads/NUGS%20Strategy%20Document-00.pdf.

The Council’s preferred growth options were:

•  Provide for residential  intensification in the key residential areas of Stoke, Tahunanui and Central Nelson, and investigate other potential areas for intensification.
•  Work with developers  in the Stoke foothills (Ngawhatu and Marsden Valleys) to provide for integrated
residential developments through private plan changes and resource consent applications.
•  Allow private residential  development proposals to be processed for South Nelson (the area immediately north of Champion Road).
•  Provide for further residential development in Atawhai through private plan changes or resource consent applications, and prepare a structure plan to help integrate these developments.
•  Provide for Hira to be a long term residential growth option, estimated as being needed in approximately 20 years – 2026.

NUGS has identified some of these areas for future growth. As Nelson  City is geographically constrained with foothills to the east and Tasman Bay to the west, new growth can realistically only be developed to the north or south.

Tasman District Council’s new residential growth is centered on Richmond. Richmond Development Study (RDS) was circulated for community feedback in 2003. This consultation feedback was acknowledged and is reflected in the RDS planning approach and the Council decisions for the urban development of Richmond. As a result of the RDS, the strategic approach to Richmond’s future development,  Council planned to provide for:

•  Defined southwards expansion of Richmond, between State Highway 6 north of Hope and Hill Street to create a high amenity residential environment (Richmond South Development Area).
•  Residential and business intensification of central Richmond.
•  Defined residential  intensification in suitable locations in Richmond East, including land south of Champion Road and east of Hill Street, and support for defined northward residential expansion towards Stoke in Nelson City, north of Champion Road (Richmond East / Nelson South Development Area).
•  Defined westward expansion of Richmond to create a high amenity urban environment for business and
residential development (Richmond West Development Area).

With the benefit of hindsight, one can see most of these developments have been achieved, some more comprehensively than others. But considerable efforts are still required with the Nelson Tasman region continuing to face a lack of supply of housing with excess demand equating to the current housing situation.

So the next time you hear the media report about the Auckland housing crisis, just pause and think do the same issues apply to our Nelson Tasman region?