Affordability is in the eye of the beholder

Silly and meaningless as the category “affordable housing” is, perhaps this  –  which my wife spotted last night – must be what Nick Smith had in mind when he claimed that affordability was in the eye of the beholder?

$990,000, and supposedly aiming at first home buyers……

What have our governments brought us to?

Attention First Home Buyers

  • Asking price: $990,000
  • Listed: Thu 1 Jun, 10:20 am
  • Watchlist

Listing #: 1338386026

Location: 12 Quadrant Road
Auckland City
Rooms: 3 bedrooms, 1 bathroom
Property type: House
Land area: 663m2
Price: Asking price $990,000
Parking: 2 offstreet carparks
Open home times:
Sat 8 Jul, 1pm – 1:30pm
Sun 9 Jul, 1pm – 1:30pm

10 thoughts on “Affordability is in the eye of the beholder

  1. One of the most reprehensible things the govt has done to keep the housing ponzi going is to allow FHBs to dip into their Kiwisaver funds to buy houses. Lunacy.


  2. How did we get here a combination of stupid planning laws, the RMA, and a flood of cheap money via the Central Banks. Markets always revert the long trends there are no new era’s


    • Colin, just stop at “stupid planning [rules]”. The RMA is actually very liberal and does not force councils into writing highly restrictive district plans. The councils choose to do this themselves without any encouragement.

      And yes cheap money has enabled prices to soar in places like the UK, Australia and here but in places where housing supply is highly responsive to demand there has been no house price inflation. Consider that the world’s largest urban agglomeration, Tokyo-Yokohama, is twice as affordable as Auckland despite the fact that Japanese banks virtually pay you to take a loan their money is so cheap.


      • Donald thanks for your comments point taken about the RMA however surely the RMA gives councils cover for their highly restrictive district plans ?


      • It took me 2 years for a Resource Consent to be granted on a 3 site subdivision in Mt Roskill. I would call it stupid planning rules.


    • Hi Colin. I’m not a planner but a read of the RMA legislation shows that the 680 pages mainly concern themselves with the powers and duties of Ministers, regional and territorial councils, and the Environment Court. With the exception of extensive sections on managing marine environments there is virtually nothing telling councils what to put into their plans. Section (5) says the Act exists to maintain sustainability of natural and physical resources and (in general) protect the environment. Section (7)(c) also refers to protecting amenity values amongst other things. But it’s a giant leap from there to prescribing the size of balconies on apartment blocks for instance.

      District plans have ended up doing three jobs at once: (i) the main environmental protection job they must carry out, (ii) managing nuisance (the old Noise Control Act was folded into the RMA for instance) and (iii) setting rules for urban design.

      So yes in the sense that our district plans have been developed and operationalised within the RMA context they are legal. But blaming the RMA for council planners’ mission to save us all from ourselves is not actually warranted.

      FWIW I made a submission to the Productivity Commission a couple of years ago trying to convince them that planners are really the stooges for the elected members, engineers and accountants who need development slowed down so they can control the cost to the council of managing growth.


  3. Smith is trying to exploit/create ambiguity in the definition of “affordable housing”. He and fellow politicians (in all parties) want affordable housing to be one sector of the market. So the government’s housing development at Hobsonville Point includes x number of “affordable houses” at $660k. This approach is just rationing in disguise. And, as long as housing is rationed, we will get $990k FHB houses.

    The better way of looking at it, obviously, is assessing the affordability of the whole market. If housing were affordable in Auckland then the median price of a house there would be somewhere in the $250k – $350k range. Auckland Council bought into this concept a couple of years ago setting the goal of getting to a median multiple ratio of 5 by 2030.


    • Nick Smith and Council have doubled the Auckland housing stock overnight once the Unitary Plan was approved. Now the question is how to get people building that extra housing stock because the Reserve Bank has squeezed credit with their 40% equity LVR restrictions.


  4. The conversion of a principal dwelling existing as at 30 September 2013
    into a maximum of two dwellings
    Purpose: to enable a dwelling existing as at 30 September 2013 to be converted into
    a maximum of two dwellings and to provide for sufficient outdoor living space for
    each of the dwellings.
    (1) Where a dwelling existing as at 30 September 2013 is proposed to be
    converted into a maximum of two dwellings each dwelling must have an
    outdoor living space that is:
    at least 5m2 (a) for a studio or one-bedroom dwelling and 8m² for a two or
    more bedroom dwelling; and
    (b) at least 1.8m in depth; and
    (c) directly accessible from the dwelling.

    Minor dwellings
    • to provide accommodation that is limited in size and secondary to the
    principal dwelling on a site;
    • to ensure that sufficient outdoor living space is provided for the minor
    • to ensure there is no more than one minor dwelling on each site.
    (1) A minor dwelling must not exceed a floor area of 65m2 excluding decks and
    (2) A minor dwelling must have an outdoor living space that is:
    at least 5m2 (a) for a studio or one-bedroom dwelling and 8m² for a two or
    more bedroom dwelling; and
    (b) least 1.8m in depth; and
    (c) directly accessible from the minor dwelling.
    (3) There must be no more than one minor dwelling per site.

    The site is Single House zone under the Unitary Plan. But allows for a a second dwelling with a separate kitchen. In other words it is a Home and Income or discretely 2 rentals. A small development cost adding perhaps another bedroom or 2 could secure a 10% rental return even at $990k plus extension costs.


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