Housing affordability is a hot topic in Auckland right now, and has been a key area for economists and policy makers.
We can’t allow the median house price to skyrocket above the median household income. Currently the median house price in the metropolitan Auckland area is almost 10 times greater than the median household income – that’s far too high.
There’s no easy fix. However Auckland Council has a number of positive initiatives underway to help steer housing affordability in the right direction.
What is Auckland Council doing?
To help combat this issue, the Auckland Development Committee has endorsed a ‘Five by 2030’ target as a housing affordability goal. The target aims to peg back the median house price to five times the median household income.
Some of the areas identified that will help us reach ‘Five by 2030’ include:
• Refreshing the Auckland Plan to include ‘Five by 2030’ as a housing affordability target
• The Future Urban Land Supply Strategy, which makes ready 11,000 hectares of greenfield land available for residential development
• The establishment of Panuku Development Auckland to boost residential and commercial development of council-owned land.
We’re also focusing on areas where we can reduce costs and risks to developers, improve building productivity, infrastructure and increase the supply of cheaper attached dwellings.
Why does housing affordability matter?
There are a number of reasons. Some of the major factors to consider are:
• Reduced prosperity: There can be dramatic reductions in output and wealth creation by people not having good access to labour markets and firms not having good access to workers
• Risk of economic instability: The risk of a property market correction that affects the wider economy
• Social issues: a loss of social cohesion from a line being drawn between those in the housing market and those outside, increased overcrowding which can result in health issues, and reduced security of place for families who are forced to rent
• Taxpayer costs: The government spends around $2 billion per year on rental subsidies nationally.
For many Aucklanders, and future residents, the chance of owning their own property has slipped out of reach.
What’s next?
The ‘Five by 2030’ goal will be reviewed under a housing affordability programme which covers the next two years. This will help gauge the progress made with housing policy targets.
We will continue to work with the key leaders in the government sector on how we can achieve ‘Five by 2030’.
My unit has a focus on understanding and overcoming barriers to funding and financing infrastructure to open up land for housing.
Some cities overseas solved this long ago and, as a result, unleashed growth and maintained housing affordability. The prosperity that their cities provide is not captured in the price of land (and of homes). We need to learn from them.
I’m confident we can make some real changes to ease housing affordability and look forward to updating you on the progress of ‘Five by 2030’ next year.
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