Lack of infrastructure impeding development, affordability

The recently released Demographia International Housing Affordability Survey has painted a damning picture of New Zealand’s property market: Auckland houses are pricier than those in Los Angeles, and Tauranga’s household income vs. housing price disparity is worse than New York’s. Survey co-author Hugh Pavletich says that development is stunted by infrastructure not being financed properly.

Auckland property developers also identify a lack of infrastructure, such as adequate sewerage, stormwater and fresh water connections, as a roadblock to building new subdivisions. In Tauranga, there is no shortage of available land, but Tauranga Mayor Stuart Crosby considers that building the necessary infrastructure to support additional housing is the biggest issue for the city.

Others contend that adding infrastructure to support further development is not the answer to NZ’s affordability issue. Transportblog.co.nz editor Matt Lowrie notes that freeing up urban land for development (including infrastructure) promotes urban sprawl. Further, University of Auckland professor of property Laurence Murphy says that freeing up land for development will not result in more affordable housing ‘[a]s long as New Zealanders [use] their house as a way to make money and [expect] price appreciation’. (See more on their views here).

Further areas of ‘severe unaffordability’ identified by the survey include Christchurch, Wellington, Palmerston North-Manawatu and Hamilton-Waikato. Other forces that have been identified by developers as impeding residential new builds include:

  • The wait for RMA reform (the outline and approach to reform is expected to be announced this week).
  • Labour shortage.
  • The high cost of building materials.

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