Special Housing Areas made homes 5pc more expensive, research says

Saturday, 13 October 2018

Special Housing Areas were supposed to help young families into affordable homes, but research found they increased the cost of housing.

The previous government's solution to the housing crisis in Auckland actually made homes less affordable, research has found.

Special Housing Areas (SHAs) were created in 2013 and touted as 'crucial' in 'enabling young Kiwi families to get into their own home'.

Developers were offered fast-tracked consents on the proviso a portion of the development would be 'affordable'.

But the creation of Auckland's SHAs have now been found to have pushed up prices by 5 per cent within the area.

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In Price Effects of a Voluntary Affordable Housing Program, researchers said limited incentives were given to developers and there was lax monitoring of the affordability requirement.

One of the authors, Mario Fernandez, is part of Auckland Council's Research and Evaluation Unit.

Then-Auckland mayor Len Brown and Housing Minister Nick Smith signing the Auckland Housing Accord in 2013.

In the draft paper recently published online, the researchers wrote that the Auckland SHAs relied almost solely on the fast tracking of consents as an incentive for developers.

However, the shorter construction times allowed developers to charge more.

'The SHA programme simply allowed developers to offer new homes with an additional attribute (a shorter delivery time), which allowed developers to set higher prices,' the researchers said.

It became 'a governmental incentive that benefited developers through allowing them to extract a greater surplus of the consumer'.

'In [other] words, this programme, instead of meeting the objectives of affordability, that would increase the welfare of consumers, favoured a transfer of wealth from the consumers to the developers … an unintended consequence of the programme.'

Under the SHA legislation, 154 developments across Auckland were fast-tracked, and those in urban developments often faced resistance from neighbours due to limited consultation being needed.

National housing spokesperson Judith Collins said on Friday SHAs were a stopgap measure while long-term solutions were sought.

Homes in Hobsonville Point are among those those built using an SHA.

'Special Housing Areas were about fast-tracking RMA [Resource Management Act] processes so that supply could grow more quickly across Auckland,' Collins said.

'They were only a short-term solution until comprehensive RMA reforms could be implemented, but other parties, including Labour, wouldn't support RMA reform.'

Judith Collins, National's housing spokesperson, said the SHAs were just a stop-gap measure.

Collins said she would be pushing for wholesale reform of the RMA to allow for faster development.

When the special housing areas were being introduced in 2013 then Minister of Housing Nick Smith said they were 'crucial to tackling the barriers to the supply of housing and enabling young kiwi families to get into their own home'.

Planning consultant Jon Maplesden said the theory behind the SHA was disconnected from fact.

'In theory, it meant council would fast track consents. Only thing is, you could get a fast resource consent but not service the land where infrastructure was needed,' Maplesden said.

'You would go knocking on Watercare's door to get pipes laid to the development and they would tell you to go to hell. Not because they didn't want to, but because there was no money to do the work.'

Maplesden said developers also quickly realised that adhering to the requirements of SHAs would reduce profits for little gain.

Other centres in New Zealand have also used the SHA model, but Wellington City Council voted in August to end the initiative after public resistance.

Auckland Council has been approached for comment.