Otago Property Investors Association Inc
Some of Housing New Zealand's new housing developments are running into trouble as the economic downturn impacts on its private sector development partners - and it is already in discussions over the future of a 450-house development in Papakura.
Housing NZ chief executive Lesley McTurk told the social services select committee yesterday that the downturn in the property market and impact of the economic downturn on developers had affected many of the developments the agency was involved in.
She said the project on old defence land at Papakura was one of the projects affected. Housing NZ is in partnership with property developers McConnell Property. Planning was only at the preliminary stages, but HNZ had tagged about 30 per cent of the 450 new homes for state housing with the remainder to be community and private housing.
"We are in discussions with the developer there as to how we might be able to keep the progress on that development apace so that we can get the outcomes we want in terms of the acquisitions of state housing that we were anticipating," Dr McTurk said.
HNZ chairman Pat Snedden said developers needed to be able to sell homes to the private homeowners to be able to fund developments - but as the market slowed and house prices dropped this was becoming difficult.
He said one option was for HNZ to take a greater stake in such developments to provide more certainty about funding. As a Crown agent in development partnerships, it had more flexibility to deal with the downturn. "In a sense there is a chance to provide something of a counter-cyclical force when things are looking a bit dim."
Dr McTurk said a development in Weymouth was "more positive" partly because the land was owned by the Crown and HNZ was the agent for the development, rather than relying on private developers.
Mr Snedden said Hobsonville was progressing well and earthworks were expected to begin later this year. Housing NZ planned to use 1000 of the 3000 homes for affordable and state housing. While John Key has since ruled out state housing in the Hobsonville development, Mr Snedden said there was a "strong signal" from the Government that it should be used instead for the Government's affordable housing scheme.
Mr Snedden said as demand dropped in the private sector, numbers on the waiting list were likely to increase. While nationally numbers on the waiting list were relatively stable at around 10,000, over the past six months there had been a "creep" in numbers in the highest need category, especially in South Auckland.
The briefing immediately followed the Government's announcement of fast-tracked infrastructure spending to help combat the recession. State housing was a major part of the package with $124.5 million to be spent, including $104.5 million to upgrade 10,000 existing state homes over the next 18 months and $20 million to build 69 new state homes within six months.
Housing Minister Phil Heatley has said upgrades will be a priority after discovering an estimated $2 billion backlog in bringing older state houses up to scratch.