AUCKLAND CITY COUNCIL

MEDIA RELEASE

13 September 2007

Council partnership to help Aucklanders buy new homes

Auckland City Council’s innovative assisted home ownership programme reached a major milestone today with a partnership that will see the construction of affordable houses, beginning with a development in Mt Roskill.

The move is a first for an Auckland local authority and means the council enters into an agreement with the New Zealand Housing Foundation (NZHF).

Under the assisted home ownership programme, the council will pay regular contributions to the NZHF in return for the development of about 100 homes over the next five years.

The first development is proposed for a site in Denny Avenue, Mt Roskill, where the NZHF plans to build seven homes and make them available as part of the assisted ownership programme.

Chairperson of the council’s Community Development and Equity Committee, Councillor Cathy Casey, says the Denny Avenue demonstration project is an exciting step forward.

“This is an important first step in demonstrating what local authorities can achieve in partnership with third parties to address the issue of declining home affordability in our city,” Dr Casey says.

“The continual escalation of Auckland house prices means working families on low to moderate incomes are literally unable to afford their own homes and this project is designed to help that group achieve the dream of home ownership.”

“In conjunction with the NZHF and McConnell Property Ltd, we’re looking at innovative models of housing development and subsequent home ownership.

“This project will not solve the all of the city’s housing affordability problems, but it’s an example of what can be achieved to build and sell affordable homes that are within the reach of the majority of ordinary Aucklanders.”

A March 2007 study by global real estate advisors, DTZ, called “The Future of Home Ownership and the Role of the Private Rental Market in the Auckland Region” shows that:

• home ownership rates in Auckland are projected to decline from 64 per cent in 2001 to 58 per cent in 2016
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• house price to income ratios have increased across the entire Auckland region
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• about 21 per cent of owner-occupier households in Auckland are paying more than 30 per cent of their gross income on housing costs
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• a decline in housing affordability affects wealth accumulation, social cohesion, and education and health outcomes.
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The chairperson of the NZHF, Ken Stevenson, says this makes for a difficult situation for ordinary Aucklanders looking to buy their first home.

“The New Zealand Housing Foundation recognises the stress that increasing house prices are putting on ordinary families,” Mr Stevenson says.

“We’re at the forefront of efforts to address this issue and we already have affordable housing projects under way in west and south Auckland.

“We’re excited to be joining forces with Auckland City Council to progress this scheme in a city which has faced some of the more severe house price increases in the country.”

McConnell Property Managing Director Martin Udale says, “We are proud to be part of this programme aimed at finding ways to deliver an enduring and affordable housing solution for those who might otherwise never be able to own their own home, and we are looking forward to getting started.”

Under the assisted home ownership programme, the council has confirmed it will provide funding of up to a total of $9 million to the NZHF.

This is the maximum the council will invest in the programme over the next five years and it will be used to help fund the development of at least 100 homes, terraced houses or apartments.

The NZHF will have to meet strict programme targets to receive funding which will be determined annually and linked to development proposals that address the council’s concerns about affordability, urban design and sustainability.

The council will halt grants if the NZHF does not meet the programme targets. The NZHF will cover all development, construction and management costs and will work with McConnell Property Ltd on larger developments.

The NZHF will be responsible for matching eligible candidates to each development as it is completed. Candidates must:

• be low to moderate income households (earning between $50,000 and $90,000)
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• be experiencing an affordability gap in their efforts to buy a home
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• not own any property
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• have a good credit history
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• have at least one member of the household working in Auckland city.
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Those selected to participate in the Denny Avenue assisted home ownership programme can work to buy homes through a shared ownership scheme.

This involves households buying a portion of a dwelling, expected to be about 60 to 75 per cent, with the remainder being owned by the NZHF. When the property is sold, both the householder and the NZHF get their share of the property’s value.

Other assisted home ownership models may also be used in future developments carried out under the programme.

Members of the public wanting to register their interest in taking part in the assisted home ownership programme can visit the NZHF website at www.housingfoundation.co.nz

The NZHF is about to apply for resource consent for the development in Mt Roskill. The development plans have been reviewed by the council’s urban design panel.

Ends

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