Land should be released: Commerce Committee

Not surprisingly the number one recommendation of the Commerce Committee enquiring into housing affordability was that land should be released if housing is to become affordable. The Committee noted that the median price of a section in Auckland has increased from $139,000 in 1992 to $443,000 in 2007 an increase of 218%.

In relation to the metropolitan urban limits (MUL) which places an artificial boundary around Auckland the report had this to say:

“We consider that interventions to constrain the supply of land for new housing force up
section prices. We believe that the Auckland Regional Council should carefully assess this
dynamic, taking into account issues such as infrastructure. We believe a more deliberative
approach that focuses on making more suitable land available for new subdivisions would
lead to lower section prices and more affordable housing.”

Many of us such have been saying for years that it is the politicians strangling the supply of land that has led to economic stagnation and the social ills that we see all too often in places like Manukau.

Compare the situation that we are facing in the Auckland region with a dynamic city such as Houston, Texas where land supply is not constrained and housing rises only at the rate of inflation even with the inflow of refugees in the aftermath of Hurricane Katrina.

Supply of Land Determines Prices

It’s an irony that politicians screech loudly that something must be done to take care of this or that.

With an election coming up the Labour led government now want to fix is housing affordability. A Bill has been introduced to Parliament to make housing more affordable. They are willing to impose draconian measures on councils, rate payers and developers to achieve just that. If only they stopped for one moment realised that it is the pols that have caused the problem in the first place. It is the restriction on the supply of land that causes the price of it the go through the roof. Politicians have strangled the land supply with growth restrictions such as Auckland’s Metropolitan Urban Limits. It’s supply and demand. It’s not rocket science - increase the supply and the price will come down.

News Release from Owen McShane The Centre for Resource Management Studies

On the face of it, all the signs are that house prices will fall across the board – and indeed have already started falling.

Given that the CRMS has been predicting the bursting of the housing bubble for many years it would seem reasonable to expect the Centre to expect the market to finally correct itself and restore the "good old days" when the median house price was no more than three times the median household income.

However, price is largely determined by the relationship between supply and demand. While demand may well be falling it may also be that supply is continuing to fall just as quickly.

The global financial uncertainties which are squeezing home buyers are also squeezing those who supply both the sections and the dwellings to build on them.

All around the country, proposed residential subdivisions, both large and small, are being abandoned because the developers, large and small, cannot afford to service the holding costs or pay the compliance costs and development contributions, especially in advance of any sales.

Their financiers are increasingly unwilling to carry the risk.

We have long had a situation where any proposal to develop residential property of any kind in any location attracts objectors – and whether they number in their ones or twos, or in the thousands, they can delay projects for years.

Many of those objectors are now "dancing in the streets" because developers are withdrawing their proposals. Needless to say these happy objectors are already comfortably housed and have enjoyed their capital gains.

However, these withdrawals from the market may mean that supply remains so constrained that house prices will remain high and a jumbo load of New Zealanders will continue to leave for Australia every day.

Those who are delighting in abandoned developments in their neighbourhoods might soon begin to wonder who will be left to staff the hospitals and schools, and to build the houses, and to manage the farms, and even to pay their own pensions or for their own increasing demands on health care?

We can only hope that Councillors will realise that this is the time to make life a little easier for those who house our population, and our young skilled people in particular, rather than regard them as greedy

Brisbane to get 30,000 extra new homes - Breaking News - National - Breaking News

More than 30,000 new homes have been earmarked for Brisbane under a strategy to tackle a severe lack of supply.

Queensland not only faces a housing affordability crisis, but commercial space is at a record low, with the CBD market the second tightest in the country behind Perth.

The state government's Urban Land Development Authority was established last year to get land and housing on the market quicker.

Brisbane to get 30,000 extra new homes - Breaking News - National - Breaking News

Regulations Are at the Root of U.S. Housing Mess

With the U.S. economy on the ropes and esteemed financial institutions such as Bear Stearns Cos. and the Carlyle Group suffering major losses, policy makers are outdoing one another in the search for creative intensive care. The irony is that the latest research suggests that government policy makers started this mess in the first place.
Mr. Hyde put us in the hospital. Dr. Jekyll has met us at the operating table.

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Bloomberg.com: Opinion