Saving $92m in cost of housing developments – Len Brown on affordable homes

Press Release – Auckland Council
Mayor Len Brown told a meeting of Auckland businesses today that targeted reductions in council development contributions would reduce the cost of new housing developments in Auckland by $92 million over 10 years, promoting the growth of more affordable housing.

Speaking to the North Harbour Business Association Len Brown said more private sector development was needed to deliver affordable homes in Auckland.

“These steps will save at least $92 million on the cost of new attached housing developments for Auckland and will ensure we get progress on the affordable housing Aucklanders need.

“The reality is we can’t solve Auckland’s housing challenges by land supply alone. This is not a case of move the cow-sheds and the market gardens and they will build. Unless land is being subdivided, serviced and built on by the private sector, we won’t get the affordable homes we need for Aucklanders.

“Overall , the council has reduced the cost of development contributions by 10 per cent over the past two years. We have also introduced a lower rate for smaller or affordable housing and are allowing developers to defer payment so they are not faced with an upfront cost.”

Len Brown said the council had seen a 20 per cent increase in residential building consents over the last year: “This is encouraging but it’s still below the rate of development needed to meet targets in the Auckland Plan.”

The council is continuing to work closely with government and private developers to look at options for increasing private sector development, including through the council’s Housing Action Plan.

The targeting of development contributions reflects the aims of the Auckland Plan and will not result in any additional cost to ratepayers.

Notes to Editors

Development Contributions

From 1 July 2012, the Auckland Council reduced the development contribution payable on its two categories of attached dwellings.

The two categories of attached dwelling are:

1. Low-rise of up to four levels containing three or more attached dwelling units.

2. Medium to high-rise of five or more levels containing three or more attached dwelling units.

The typical development contribution payable on a standard dwelling to Auckland Council is around $21,000, effectively reducing 20 per cent to around $16,800 for low-rise dwellings. We are forecasting around 240 of these types in 2012/13 and around 17,000 over the life of the Long Term Plan.

For the medium to high-rise category the standard dwelling price effectively reduces 40 per cent to around $12,600. We are forecasting around 30 of these types in 2012/13 and around 2400 over the life of the Long Term Plan.

The council will be working with the development sector to see whether other types of development should have separate categories and therefore further refining the policy together.

This demonstrates Auckland Council’s determination to avoid distorting input prices in the housing market and to keep them as low as possible. It also sends the market a clear signal about the relative costs of supplying council infrastructure and services to different types of housing. Medium and high density housing places less demand on infrastructure than detached housing.

Applications lodged prior to 1 July 2012 but granted after that date will be assessed under the policy that requires the lowest charge.

Auckland Housing

Auckland could need up to 400,000 homes, or dwellings, by 2040, around 13,000 a year.

There were 3400 residential building consents in 2011-12, an increase of 21 per cent on the previous year.

The Auckland Plan sets a target of an average seven years supply of ‘ready to go’ greenfield land for housing. Auckland currently has around 3-4 years supply.

Ministry of Business, Innovation and Enterprise report on Auckland land supply – “It is not clear that increasing urban fringe zoned land by itself would increase new housing volumes” (MBIE, pg 7)

The council estimates it has capacity in Auckland for 15,000 homes on ready to go greenfields land.

The remainder requires subdivision and internal servicing by private sector developers

In addition there are likely to be more than 4000 vacant sections within the existing urban area.


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