In the second part of a series looking at inclusionary housing as a solution to the housing crisis, Matthew Scott reports on what extreme weather events may mean for housing availability.
A lack of housing availability and affordability in New Zealand has stimulated decision-makers to move towards different levers to get people on the housing ladder.
But now as extreme weather events like Cyclone Gabrielle and the Auckland Anniversary weekend floods raise questions around insurability and managed retreat, it seems an already pressurised market is about to be stretched even further.
READ MORE: * Queenstown leads the way in affordable housing * Queenstown rips at the seams
Community Housing Aotearoa CEO Paul Gilberd likened it to Christchurch post-quake, where thousands of low and middle-income properties were rendered inhabitable, driving a nascent affordability crisis in the Garden City.
Large swathes of affordable housing stock were taken out of the equation by quake damage and liquefaction.
Land supply constraints and consenting difficulties slowed new builds and exacerbated the problem further.
Gilberd warned there could be similar problems on the horizon following this year’s extreme weather - and with similar events forecast to occur more frequently in the future, they aren’t problems likely to just go away.
“Evidence from 12 years of observing the post-quake trends in Christchurch gives us some deep insight into post-crisis patterns,” Gilberd said. “For example, the thousands of low and moderate-income working households - the intermediate market - who were stressed renters before the quake and who have now permanently abandoned central Christchurch.”
He said the floods could speed up urban drift from places like the Far North and Te Tairāwhiti, where vulnerabilities of transport routes and infrastructure were exposed once the winds began to blow and the heavens opened.
“We think there's going to be a lot of movement,” he said. “On a broader level it could play out quite significantly if people don’t trust the place they live.”
Greater scrutiny on the safety and longevity of the places Kiwis call home comes at a difficult time, where issues around the fluctuating demand and supply of housing are already making life difficult.
In Auckland more than 2000 homes were consented in environmental hazard zones during the last year - that could be a flood zone, an erosion zone or near enough to the top or bottom of a cliff to be considered precarious.
For a city with a housing shortage, tightening the approach to these rules right now may well be necessary, but to some it will feel counter-intuitive.
Luckily, there are a whole suite of levers that the public and private sector can reach for to try and alleviate the difficulties imposed by the housing market.
Gilberd points to the inclusionary housing policies that allow community housing trusts to get people into homes as one option.
The principle behind this is that developers wanting to parcel out land into lucrative chunks need to put a certain amount of money or land aside for community housing trusts if they want consent from the local authority.
It’s an initiative that’s well underway in Queenstown, where Queenstown Lakes Community Housing Trust is fighting the tremendous difficulties of housing in a tourist town where land is in very high demand.
“The idea is we capture some of the massive increase in value that occurs after an authority gives permission to the developer to build houses on the land,” he said.
It’s a policy that’s been going on at-scale already in many places around the world.
Former New York City mayor Bill de Blasio brought in a mandatory inclusionary housing programme for the city in 2016, joining around hundreds of communities across the United States in having some sort of inclusionary provision.
Gilberd said without such policies, the market will continue to fail to provide people with affordable housing.
“The ‘market’ does not provide affordable housing for our key workers, so if not inclusionary zoning provisions, then who or what will?” he said.
“There'll be different solutions that are appropriate for different cities in terms of which affordable housing products are going to work but if you leave it to the market forget, it's not happening. If we accept in a NZ context that we have market failure for the provision of affordable housing, then what are the options? Usually that's when the Government steps in to try and fix things up.”
Community Housing Aotearoa has a few different strings in its bow when it comes to getting people in homes - they have rent-to-buy programmes, public housing, shared equity plans and affordable rentals.
Property Council CEO Leonie Freeman agreed that problems had heightened in the wake of Cyclone Gabrielle - but she stressed that it will take a range of solutions rather than a reliance on just inclusionary housing.
“The cyclone and the floods add a lot more pressure to an already pressured housing market,” she said. “There is a real challenge about how we house those people on top of a lot of housing issues that were already there.”
And for those temporarily out of a home, they may find themselves entering a rental market that is currently pretty cut-throat.
“There’s been a lot of people getting out of the rental market because of the changes to the Residency Tenancy Act,” she said. “I understand why the Government’s done that but for a lot of the mum and dad investors, they’ve said it's too risky and the unintended consequence is that it’s reduced the rental pool.”
Freeman said there’s no simple answer to these issues, but a co-ordinated approach from different sectors is definitely needed.
“I look at it and the thing that strikes me the most is we've got a lot of people doing amazing work in housing but it’s really disjointed - finance, central government, local government, housing trusts, iwi,” she said. “It’s a bit like we're all rowing the boat in different directions.”
She wants to see a clear housing strategy that will give players in the field the confidence they need to keep developing, even if it involves meeting the social contributions of inclusionary housing (a cost that would likely be passed onto the buyers of other properties in the development in question).
“The main thing for developers is clarity and certainty,” she said. “If you’re going to change things and put things in place, you need to be really clear about what it means and how it works. You need long-term plans that aren’t driven by three-year local or central government cycles, so everyone's committed and if you do pull a lever like that.”
She said the policy seemed to be working well in Queenstown, where the community housing trust has managed to get 244 households into homes over the past decade and a bit.
However, she said there wasn’t one silver bullet for the issue - a sentiment shared by the Queenstown Community Housing Trust CEO, Julie Scott.
“I think it’s one possible option but we need to develop some affordable housing solutions that are both supply and demand housing-driven,” she said. “I’d love to see a really clear affordable housing strategy for the country that is clear, open, transparent and gives quite a few options.”
Right now, extreme weather will be exacerbating the ability for some Kiwis to get into a house - but just because the sun has finally come out doesn’t mean it’s the light at the end of the tunnel.
There’s a lag-time to residential development that means we’re yet to feel the ravages of increased construction costs and interest rates.
Developments begun in the early days of the pandemic are opening around now - take 45 Mt Eden Road in Eden Terrace, Auckland.
A 14 apartment-development is soon to open its doors just up the hill from the future Mt Eden station of the City Rail Link.
Projects like this began when the weather was milder for developers.
Since then, Freeman said a lot of smaller developments have found that they just can’t stack up the costs of building.
“The sale numbers are dropping for people selling housing and land packages,” she said. “It’s costing them more to build than they can sell them for. It takes a few years, but soon we will begin to notice.”
