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Tuesday
Nov082016

"District's Housing Affordability Crisis" by 'Lets'

"Housing in the Thames Coromandel District is just as unaffordable as it is in Auckland.  Auckland is the 5th least affordable place for housing in the world.  By any measure that makes Thames Coromandel housing unaffordability a major crisis.

Housing affordability is measured by dividing the average current house price by the average annual earnings for the District.  This gives a ratio – the higher the ratio the more unaffordable housing is.  The ratio for Thames Coromandel is 12.2.  For Auckland it is 12.5, and for New Zealand as a whole it’s 8.8.  Internationally a ratio over 3.0 is deemed to be not affordable.

Auckland’s average house prices are substantially higher than here, but so too are their average incomes.  Thames Coromandel incomes are close to the lowest in New Zealand, while house prices are relatively high.  This accounts for local affordability being as bad as it is in Auckland.  Rentals are also higher locally than the National average.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

So there you have it.  Housing in Thames Coromandel is less affordable than almost any other place on the planet.

Belatedly, Central Government has recognized that housing affordability is a crisis issue.  A National Policy Statement (NPA) on housing has just been announced making the provision of sufficient housing supply a matter of “national significance” under the Resource Management Act.  This NPA now requires all local authorities, including TCDC to provide “for a greater supply of houses, so prices rise more slowly and houses are more affordable” (Nick Smith).  Also Councils must “monitor and respond to housing affordability, building consent and land value data.”

So, we have a housing crisis as bad as Auckland’s, and a government directive to TCDC to respond to housing affordability data, and to provide greater housing supply. 

How should the Council respond to this challenge?

1.         With assistance from Community Boards, urgently assess what council-owned land might be suitable for housing (including for apartments close to, or in the CBD’s).

2          Encourage/cajole land bankers to release land for development, and landlords to rent out unoccupied housing rental properties.

3          Seek funding for affordable housing from the New Zealand Superfund. 

Chief Executive Adrian Orr recently told TVNZ’s Q&A program that the Fund :-

“is keen to be an active investor….. including providing capital to help build affordable housing ….  that’s with a capital A, not pretend affordable….  so entry houses”.  “We really need access – good access to land, good access to the capability.  We’ve got the capital and we are open for business”

4          Invite expressions of interest from housing contractors/developers, enlist the support of the local MP, and take an urgent business case to the Superfund.  It has to be a compelling case when houses here are as unaffordable as they are in Auckland. 

Mayor Goudie – here is a fantastic opportunity to show leadership and enterprise – get on a plane, knock on Adrian Orr’s door and grab a slice of that funding.  Helping to provide affordable housing will do vastly more to retain young people, and to raise the quality of life of your constituents than any other project."

 

 

 

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Reader Comments (5)

In his "pre-post" below Bill suggests that the Council is unlikely to make any major change in direction on this issue.

The difference with this issue in particular is that Central Government has issued a directive through its National Policy Statement which requires Council to have actively take steps to make housing more affordability in its District. They do not have a choice - even more so because housing affordability is so extremely bad here.

November 8, 2016 | Unregistered Commenterlets

I do not think the figures you are using are very applicable to the Thames Coromandel area where (quote) "Housing affordability is measured by dividing the average current house price by the average annual earnings for the District".

Think about it.

Firstly, in Pauanui for example, where the most expensive houses in the District are, probably 90% are holiday homes financed not by money earned in this District but from other places (Auckland and Hamilton primarily) where wages and salaries are way higher than our average earnings and where most have been employed in high paying professional jobs. And that truth in Pauanui also applies to great degrees also in Hahaei, Matarangi, Whangapoua, Cooks Beach, Tairua, Whangamata and the ThamesCoast.

Secondly, There is a huge number of retirees living in the Thames Coromandel District (about 26% of the permanent population) who have given up high earning jobs in outside areas (again Auckland and Hamilton primarily) and used the equity from selling their homes there to build or buy a home here, so housing affordability is not a problem for them. And generally speaking they do not compete for the cheaper housing stock in the more 'residential' areas of our main settlements where most other permanent residents prefer to live and where comparative affordability based on locally earned income should really be made.

So I am sorry 'lets', but your calculations do not paint an accurate picture of housing affordability here and a lot of modifications would need to be made to the broad spectrum modelling that you are seeking to apply before it would contain any meaning at all.

November 9, 2016 | Unregistered CommenterReality Check

Reality Check - there are always going to be small anomalies in various Districts but the problem is that both of the "issues" you raise do apply in other Districts also. They are not unique to Thames Coromandel. For example in Kapiti Coast District 25% of its population are retirees yet its housing affordability ratio is 9 - significantly lower than TCDC.

You also make the false assumptions that most retirees are property owners and largely do not live in urban centres . In fact a large proportion are renters who live hand to mouth on the Super. Many - including house owners live close to CBD's because they no longer drive and wish to be close to services. There is thus very strong competition for homes for both renters and buyers for homes on the flat near to town centres - ask any real estate agent in Thames for example.

The housing affordability index is universally accepted as a robust measure both internationally and in NZ. Central Government has accepted that it is a problem and has directed Councils to address it. The time has well past for quibbling over the methodology of the index. The reality check is that we have a crisis locally and need to urgently address it.

November 9, 2016 | Unregistered Commenterlets

Sorry 'lets', but the population dynamics here are very unique and failure to address that 'uniqueness' renders your conclusions to be over exaggerated and of therefore limited use (although I am not denying that there is a housing affordability problem here of some degree). As someone once said "there are lies, damn lies and statistics". Statistics only measure given inputs and when those inputs are faulty, the conclusion is wrong, or at least misleading.

November 9, 2016 | Unregistered CommenterReality Check

The oft expressed notion that making more land available will solve the problem seems rather too simplistic - especially in light of the possible / likely effects of global warming and sea level rise and [constant?] population rise. The issue is, surely, much bigger that just affordability?
Putting aside (like this is possible) the relatively catastrophic effects of sea-level rise for the Coromandel Peninsula and the (consequent) need to relocate substantial areas of urban and domestic residential activity and associated road and infrastructure issues, it might be that a greater Government commitment to shared social housing, the down-sizing of expectations around the floor area of houses, moving away from our constant desire to fill our homes with desirable objects that need rooms and garages and sheds full of space, a move to intensification of housing development with multi-level and apartment style living, a move away from life-style blocks and beach 'baches', disentangling Kiwis notions of house-ownership and the 1/4 acre pavlova paradise mentality, redirecting older retirees back into (extended) family homes and away from retirement villages (especially big developments 'by the sea'), and developing communities self-reliance and sustainability (from local resources), are among a plethora of substantial changes and radical (?) rethinking that is required.
Good luck to the Mayor and Community Board members with that...

November 10, 2016 | Unregistered CommenterRussell

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