Getting more diverse views on housing

Reposted with thanks to our friends at Greater Auckland

Transportblog became Greater Auckland to reflect our wider focus on urban issues – transport and housing being the biggies. But we’ve written less on housing this year, and I wanted to ask you our readers: what are we missing? I mainly write about housing, but I’m not writing as often as I used to, and I’m just one person with one viewpoint. We’d love to get a wider spread of views.

As a start on that, I’ve enjoyed reading three perspectives on housing recently – one from a social housing provider, one from a developer/ builder, and one from a group of builders. I’ve linked to each of them below, with a summary of each one. They’re worth reading in full if you’re interested in housing issues.

Bernie Smith is the CEO of Monte Cecilia Housing Trust, and The Spinoff published an abridged version of a speech he gave recently:

We need a 25-30 year strategy that every political party agrees to and that every voter holds every political party accountable to achieve. A strategy that’s not created by politicians or bureaucrats, but by the homeless, renters, community housing providers, people who are living the experience, by Māori, Pasifika and other ethnic groups; a strategy that is not Canadian or Australian, but a New Zealand strategy that recognises housing design suitable for Māori, for Pasifika and other ethnic groups, intergenerational living, affordable rentals, affordable home ownership and does not forget a strategy that includes building strong, healthy and safe communities with clear milestone targets.

We have I believe a housing volume focus at the moment, instead of a community value focus. A community-value focus is where people – no matter if they’re in state housing, a private renter or an owner occupier – are seen as an equal. Communities where people feel they belong can put roots down, get their medical, educational, social and religious needs met, a community where every man, women and child can stand tall in their culture, their faith, their gender and feel valued.

KiwiBuild is great for middle class New Zealanders with higher household incomes. We are missing the middle part of the housing continuum – affordable rentals and affordable home shared-equity ownership packages.

The increase in emergency, transitional supply is great and the extra funding into Housing First is awesome. They are all necessary parts of reducing homelessness, but the present struggle is affordable housing supply so people can be housed in warm, secure and sustainable housing long term, not KiwiBuild properties that are out of reach.

We need good quality homes with mixed tenure, homes that are affordable enough to be in reach of teachers, police, nurses and every person who keeps this city running, whose total household income is only about $100,000.

And then let’s not forget affordable rentals for our working poor who are equally important in keeping our city running but with a household income of only $40,000 – $80,000, where every dollar earned is spent just on living and saving for a home deposit is near to impossible.

Most of the pain of Auckland’s housing shortage has been felt by the people who can afford it the least. People who are living in damp, crowded homes with insecure tenure, because they can’t afford something better or are afraid to ask the landlord to fix up the place. The Government is making some encouraging moves on rental reform and on “community value” too, but there are aspects that are being missed. Kiwibuild is not the whole answer. Mixed tenure, and affordable rentals, are a part of the housing continuum that hasn’t really been present in NZ so far.

30 apartments for emergency housing, to be completed in 2019

Peter Cooney heads Classic Group, one of NZ’s largest builders and developers. In a recent commentary paper (hat tip Bob Dey), he talks about whether the Government can achieve its goal of 100,000 Kiwibuild homes in the next decade, and raises a number of issues, including the below:

Financing is not the problem… the root of the problem with speed [in getting homes] to market is the ever-increasing mountains and mountains of red tape and slow council decision-making or non decision-making.

To be successful the Minister [Phil Twyford] must understand that leading this initiative he needs experienced people who have developed land and built houses, not policymakers, bureaucrats and endless academic opinion.

Paradoxically we have got to the point where burgeoning regulation designed to reduce risk is instead creating risk. We still have the problem where officials don’t want to take the risk of deciding, so they will simply ask for more information and more reports and ask for more modification of our plan. That all must stop if 100,000 houses are to be built.

A new ministry is being formed right now specifically focused on housing. It can be a blank canvas. Populate it with people with commercial development and housing experience… shape it from the beginning and laser focus it on the 100,000-house goal.

Our experience of large scale redevelopment projects illustrates the need for [Housing] Czars… In one large Government housing project, to participate developers were required to go down a commercially non-viable pathway. Those in the government department leading this process felt they were able to do that because they perceived they had the power over developers who wanted to win the work. The commercial operators in the room could see immediately the densities being required could not work commercially. Financially it was not going to work, and
practically it was not going to work, so one week before the tender closed we pulled out – after spending $1.8 million on the tender process we pulled out… We explained the problems to the key government people, but they just continued down the path they were on. The result was both major consortiums pulled out after collectively spending something like $4 million on the tender process prior to that decision to walk away. Neither we nor other tenderers got the desired outcome which was to be building those houses. The Government didn’t get its houses built, and New Zealanders have made no progress toward solving the housing shortage.

In effect councils abrogate their role of shaping urban areas and rely on developers and builders to take the time to push through changes. What is required is a new attitude that has government looking ahead and driving innovation. Councils should be becoming future focused and creating the opportunities for developers and builders to bring forward innovations that can quickly be acted upon.

“Red tape” is a common bugbear for developers, but what it comes down to is that NZ’s system is set up to encourage risk-averse behaviour in councils. Councils carry the can for when things go wrong (leaky homes, NIMBY backlash etc) but don’t really benefit from growth.

Government tender processes that fizzle out are another thing that I’ve heard a few people mention.

Lastly, Phil Eaton of Greenstone Group summarises the Great Construction Debate, an event put on by the Property Council and featuring some of NZ’s largest commercial builders:

There were many issues discussed. A select few are:

  • The fragmentation in the industry which creates inefficiencies, blocks collaboration and reduces transparency in the supply pipeline and as a result of all that does not encourage innovation, training and development.
  • The poor set up of projects at the outset due to inexperienced teams or undercapitalised projects results in a lot of inefficiencies and false starts.
  • Stability in the industry has been a key inhibitor of creating controlled growth, collaboration and training. The boom bust nature of the industry is a massive roadblock to creating a better industry.
  • Skill shortages right across the full spectrum of roles [labour through to senior management]
  • Trust in the construction sector is a big issue. Everyone has had their fingers burnt and are a bit more than weary. However, we must continue to create partnerships and move forward.

The main issue for all parties is that the market is at its absolute peak capacity yet more work needs to be done. Resources are stretched which means they are busy trying to deliver what is currently being developed and built and not change the market or even further develop their businesses.

A main issue for the builders is the ability to predict their forward workload. So, more transparency in the construction pipeline is required. However, this is difficult to achieve due to the market forces and cycles.

[Compared with Australia] the market is very fragmented with many small business and sub-contractors. With a fragmented market it is very difficult to create transparency and through that strong partnerships. In turn that prevents the industry developing and reinvest in their businesses. They tend to be in a more protective mode. Training and innovation are less likely to be carried out as the small businesses cannot afford it or do not have the confidence in forward work to do so.

Builders often talk about the boom-bust nature of their industry, making it hard to plan and invest. They argue that the Government to smooth out the peaks and troughs, by commissioning more buildings during the downturns. The previous Government was against this approach, but the current one is all for it. The Kiwibuild programme expects to build fewer homes when the industry is flat out (as it is currently), and more when the industry is quieter.

Skills training comes through here as well, and looking at the supply chain – including what products are allowed to be used in construction.

Although these three people are coming from three different perspectives, and looking at different issues, I wouldn’t be surprised to learn that they agree with much of what the others are saying.

And when I look at my own perspective, which is pretty economics-y (how many homes are being consented, or built, and how many are needed?), the thing that I’m missing is the qualitative side: the social housing end of the housing continuum, or the stories of people who are struggling to find a decent home, or to hang on to it, or to find a home at all.

What do you think? What can GA do to give better coverage on housing in 2019? Can anyone offer a fresh perspective, or are you keen to write guest posts, or can you suggest anyone else to shoulder-tap for guest posts or more regular writing?

And while we’re at it, besides transport and housing, what other topics would you like to see covered on GA, that will help with our goal of creating a better city?

 

Thanks again to Greater Auckland for their post. 

 

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