Dunedin housing: building up or Brown-like sprawl #intensification #costlyinfrastructure

Dunedin housing [ODT files] detail 1

There was a risk that Government intervention could actually drive up house prices in Dunedin.

### ODT Online Wed, 12 Jun 2013
DCC seeks changes to housing Bill
By Chris Morris
The Dunedin City Council could be forced to open up land for development – sidestepping long-term council planning in the process – as part of a Government push to bring down house prices. The concern was raised at yesterday’s planning and environment committee meeting, as Dunedin city councillors discussed a council submission on the Housing Accords and Special Housing Areas Bill. The Bill, which is before a parliamentary select committee, would allow the Government to create ”special housing areas” in parts of New Zealand deemed to have significant housing affordability problems. Councils would be able to enter into accords with the Government to create the new zones but, if they resisted, the Bill would give the Government the power to force the creation of the new areas.

The council had been given just 10 working days from May 16 to respond, which was “completely insufficient” to allow councils and the public to assess and provide detailed feedback on the Bill, it said. ”In our view, these consultation time frames raise serious concerns about the democratic nature of our legislative process and New Zealand’s system of representative government.”

And, while the Bill appeared aimed primarily at Auckland, Dunedin could also qualify for one of the new housing areas, city councillors were warned. Dunedin could be deemed in need of a special housing area, based on criteria proposed under the Bill, council city strategy and development general manager Sue Bidrose told the meeting. That was largely because of the high population of students and the elderly, whose economic circumstances skewed the city’s housing affordability results, the council’s submission said.
Read more

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Dunedin housing EveningPost 1.9.1937 p10 (teara.govt.nz] 32437-wnIn early 1937 the government provided new loan money for councils to build new dwellings to help meet a chronic housing shortage. The aim was to provide an affordable alternative to the government’s state-rental scheme. Dunedin was among the councils that took advantage of the measure, building hundreds of dwellings for private sale in suburban Clyde Hill. The first three houses were opened by Prime Minister Michael Joseph Savage in September 1937.
http://www.teara.govt.nz/en/document/32437/dunedin-houses-opened

Posted by Elizabeth Kerr

*Image: Dunedin housing (detail) [ODT files]

36 Comments

Filed under Architecture, Business, Construction, DCC, Design, Economics, Geography, Heritage, Media, Name, People, Politics, Project management, Property, Site, Town planning, University of Otago, Urban design, What stadium

36 responses to “Dunedin housing: building up or Brown-like sprawl #intensification #costlyinfrastructure

  1. Sue Bidrose says : “That meant there was a risk that Government intervention could actually drive up house prices in Dunedin”. She should study Economics 101: the Law of Supply and Demand. If more land is made available then the price of land and housing will go down.
    Not that the Government is likely to feel the need to quell the Dunedin property market any time soon.

      • ”So, for the first time in 18 months, raising rates has more support than cutting interest rates.” –Kirdan Lee, Senior NZIER economist

        ### ODT Online Wed, 12 Jun 2013
        OCR rise could be on the cards as house prices soar
        By Simon Hartley
        Rising Auckland house prices could be flagging a rise in the interest-driving official cash rate (OCR), which the Reserve Bank has [kept] at a record low 2.5% for the past 26 months. Economists in a New Zealand Institute of Economic Research (NZIER) survey released yesterday back up the wider consensus of others that the rate will be held at 2.5% until at least mid-2014.
        Read more

  2. Peter

    Urban sprawl. Is this what we really want? Opening up more land is the ONLY solution? It’s not as if this will solve the problem of infrastructure and transport costs for those who not only live there in the future, but for the rest of us who have to service those ongoing costs.
    How about an inventory of unused, or under utlised, commercial/industrial and even existing residential areas and seek redevelopment of those areas for housing? There must be some mechanism that could be put in place that incentivises such developments.
    I think it’s important not to grasp the cheaper land option of urban sprawl as a final solution to the panic of rising housing costs. Also,it’s about time we had a capital gains tax.

  3. I think we only have to wait for the “Burst” and then watch the market sort itself out. It doesn’t need government intervention, it can do it on its own. The only thing government should do is reign in the ‘money hucksters’, namely the banks and money lenders. A simple regulation stating that LVRs (loan to value ratios) be pegged at no more than 80% of valuation. That will immediately bring the party of 90% and 100% loans at historically low interest levels to an end. When assessing loan applicants, a genuine income assessment be made and loans requiring no more than 25% to 30% of the income to service. House sales will plummet, values will drop and find a new level. Think about it, if the heat is taken out, what is most likely to happen? Huge losses by the late entrants, mortgagee sales and squeals of pain. But that is the price to be paid for excess. I see where the latest estimate says the average price of an Auckland home is now $730,000. How on earth can people earning $50,000pa or less service that? Not possible, and governments prattling on about providing ‘cheap’ housing designed to sell for around $300,000! Absolute ‘pie in the sky.’ If wages can’t go up then housing must come down. Governments ignore this time bomb at their peril.

    • Calvin, this at RNZ News today:

      Reserve Bank hints new loan rules soon
      Reserve Bank Governor Graeme Wheeler has signalled the bank could introduce new rules to restrict low deposit mortgage loans as early as August to help curb rampant house prices in Auckland.
      http://www.radionz.co.nz/news/business/137555/reserve-bank-hints-new-loan-rules-soon

      • So why isn’t everyone moving down south to snap up a bargain in beautiful Dunedin? Is it the lack of jobs?

        ### stuff.co.nz Last updated 05:00 21/07/2013
        Dunedin: Bargain town
        Still some gold to be had in scarfie Dunedin

        By Michael Wilson
        OPINION: In a Tale of Two Cities, the metropolises in question were London and Paris. My choices are less grand – Dunedin and Auckland. In a re-working of Dickens’s opening lines – “It was the best of prices, it was the worst of prices”, with Dunedin tops for the home buyer, Auckland a distant second.

        SOLD: Property prices in Dunedin are lower than in Auckland, although capital gain is far higher up north.

        So, why compare Dunedin to Auckland? Because our fair southern city was mentioned in glowing terms by the Sydney Morning Herald as a fine investment prospect. The story appeared in response to articles in our media claiming Australians were the biggest foreign buyers of New Zealand houses. Based on some BNZ research, our newspaper articles pointed out that Australians bought 22 per cent of the homes sold to foreigners, followed by Chinese with 20 per cent and British 13 per cent. The stories also suggested foreigners be prohibited from buying in New Zealand.
        This prompted the Sydney Morning Herald’s property reporter Toby Johnstone to write a follow-up story with the headline – “Call To Ban Australian buyers from NZ Property”. It was a fascinating piece, in particular this statement by Johnstone. “Houses in New Zealand are significantly cheaper than in Australia and there is no stamp duty or land tax on property purchases”. He then went on to write of one Aussie buyer who bought a block of flats unseen for NZ$290,000 in Dunedin. “It rents for $780 a week – a gross rental yield of more than 13 per cent.”
        A revealing article I thought. One, it does back up the claims that we make it relatively easy for home buyers, with no stamp duty or additional taxes. Although the counter is that having these “penalties” does not seem to have stopped Australia having many a property boom, especially in cities like Sydney, Melbourne and Perth. The second revelation for me was that Dunedin offered such high returns. Forget Auckland, why aren’t local speculators piling into Dunedin if there are such big returns to be had?
        Read more

        ● Michael Wilson is TV3 business correspondent for Firstline and 3News@12.

  4. Hype O'Thermia

    Or, people could choose to live somewhere other than Auckland. It’s not necessary, definitely not wise, for the government to assume that enabling even more people to live in Auckland is a necessity, for the good of the country. What’s good about couples working all the hours they can get to pay a mortgage (mostly, pay interest to banks) for decades, when there are many places they could find lower paid jobs that would allow them to have more family and leisure time, and still own their own home many years sooner?
    “But Auckland’s where the jobs are.” Of course there are more jobs in Auckland! Auckland’s also where more un- and under-employed people are, competing for those jobs.

    • JOBS
      Woodlouse triumph espoused:

      ### RNZ News Updated about 1 hour ago
      Minister defends closing immigration offices
      Immigration Minister Michael Woodhouse, has defended the decision to close immigration offices in Dunedin and Sydney. Mr Woodhouse has told Parliament’s transport select committee it made sense to shut the offices and have more people apply for visas electronically. He says the Immigration Service is also reviewing other offices, including in Queenstown and Hamilton. Mr Woodhouse says what is important to him is that the network of offices is fit for purpose and cost effective. Queenstown Chamber of Commerce has raised concerns about the possible effect on worker recruitment in the town if the local office closes given more than 60% of the town’s workforce is made up of foreign employees. Immigration New Zealand’s southern regional manager, Mike Christie, says he’s taking those concerns on board and the future of the Queenstown office will be reviewed.
      http://www.radionz.co.nz/news/political/137577/minister-defends-closing-immigration-offices

      ****

      Queenstown employers want immigration office to stay
      http://www.radionz.co.nz/news/regional/137554/queenstown-employers-want-immigration-office-to-stay

  5. Peter

    Yes, Hype, I sometimes wonder whatever happened to encourage regional development instead of the present emphasis on fulfllling all of Auckland’s needs.
    I remember in Australia in the early 1970s there was a move in this direction where it was believed it would be a good idea to create a bigger centre in Albury/ Wodongo on the Victorian/ NSW border and take away growth pressures on Sydney and Melbourne. I don’t think this policy continued under the subsequent Liberal Government and now we have two cities of 4-4.5 million each. Intercity rivalry seems to take place where one city can claim greater growth over the other and brag about it. Melbourne has been crowing, for years, after years of having an inferiority complex compared to Sydney’s previous dominance in the growth stakes.
    Same kind of game, of course, in NZ cities.

    • Auckland far surpasses any other NZ city including Hamilton; there is no way Auckland will get any smaller. It’s a great place to live but you have to be clever and well-connected to manage your ‘stay’ (it’s not always a money thing to know how to be there).

  6. Elizabeth; If the Reserve Bank curbs the LVRs and also instigates income to debt servicing ratios of 25% to 30% the problem will solve itself. Not overnight, but it will rationalise the housing market.

  7. Hype O'Thermia

    Yay the Woodlouse, creepy-crawly but always neatly presented.

  8. Elizabeth; I wonder if the Reserve Bank will have the ‘balls’ to direct the lending institutions to not only set restrictions on LVRs, but also insist on prospective borrowers submitting verified income statements, in order to assess the ability to service the loan within the long established criteria of household mortgage commitments not exceeding 30% of income. I frankly will be surprised, as John Key will see that as jeopardising his chances of re-election. He says he doesn’t want to restrict the ‘first home’ buyers. This is the very section that needs to be protected for their own good. What is the point in signing folk up on the illusion that they are buying their own home when in fact all they are doing is entering into a contract to transfer a huge portion of their income to the ‘money hucksters’. They will never in three lifetimes pay for their houses. In the meantime they and their family will exist in poverty for the rest of their time. It is all part of the one per cent’s plan. We will see, but I suspect it will all be a ‘damp squib’.

    • I’m with you Calvin. As various newscasts prove, via independent comment, to rent is cheaper for many than to try service a mortgage if when there’s a (bubble-caused) lift in interest rates… we are a low-wage country!

  9. Hype O'Thermia

    Rent a house vs rent the money to buy the illusion that you “own” a house, it’s a bit of a con really when house price is so far out of scale with wages.

  10. Robert Hamlin

    I note in today’s McPravda article about the ongoing issue at Delta that they have failed to find a buyer for their building and infrastructure business in Christchurch (a city in ruins both above and below ground and awash with cash). They will therefore have to shut it down with the loss of many jobs.

    But not for long I’m sure for the ladies and gents concerned on the ground will surely quickly find work in that frenetic marketplace once the redundancy packages are safely secured (I would – wouldn’t you?). I presume that it will also involve the loss of many ratepayers dollars too, as another one of Grady’s investments gone bad.

    This is a bit like failing to find a buyer (at any price) for a get out of jail free card on death row. It sets new standards of example for civil engineering management in this town. I am truly surprised that the freshly created St. Clair free-standing seawall had such a short reign in this role.

    • ### ODT Online Fri, 14 Jun 2013
      Delta plans to lay off 40 staff
      By Chris Morris
      The Dunedin City Council’s infrastructure company, Delta, is facing fresh financial challenges as it confirms plans to make 40 staff redundant. Delta chief executive Grady Cameron confirmed yesterday the company’s hopes of finding a buyer for its Christchurch civil engineering and water construction divisions had been dashed. An expressions-of-interest process had been in place since earlier this year but had failed to identify a credible buyer, he said.
      The job losses and financial results were the latest pieces of bad news for Delta, which turned a $5.4 million annual profit into a $5.8 million loss last year. That was largely due to a $9 million write-down in property investments in Jacks Point and Luggate, as well as other investments, which led to an investigation by the Office of the Auditor-general. The company also confirmed earlier this year it had lost another $448,000 in the six months to December 31.
      Read more

      (our emphasis)

      ****

      Related Post and Comments:
      12.11.12 Delta purchases | Vandervis OAG complaint accepted

  11. Hype O'Thermia

    Failed to find a buyer. Will have to shut it down. Hmmm. I smell phoenix poo.

  12. Hype O'Thermia

    How much bad judgement can you find in ONE company?
    The other ones that have done that badly, there always seems to have been an individual or a small group of people deliberately “diverting” wealth from the company, for their own purposes.

  13. Delta seems to be repeating the Solid Energy recipe. Top salaries for all and sundry, wild ill-planned diversification, ‘bull…t’ profit projections, and eventual bankruptcy. Watch it unfold. Meanwhile the directors fiddle while the house burns and the citizen/shareholders’ stewards, the elected councillors look on mystified. They are in for the shock of their lives when it comes time to seek the $10.450m dividend, the $5.25m payment to DVL and the $3.561m Waipori dividend, a total of $19.261m. Right on election eve as well. Jeez, this is fun!

  14. Robert Hamlin

    If you mean by that that these possibly well placed but out of town ratepayer owned assets might be flogged off to certain well connected DCC/DCHL ‘habitual investors’ for a song so that said DCC/DCHL ‘habitual investors’ can use said reconstituted assets to make an absolute killing in the hottest construction market in the Southern hemisphere at present, I think that that’s a completely outrageous assertion Hype, based upon absolutely no available hard evidence of DCC/DCHL and ‘habitual investor’ transaction outcome track record whatsoever. You should be ashamed of yourself if that’s what you are implying.

    We can’t even find out who the ‘official’ DCC/DCHL ‘habitual investors’ are anyway (and God knows we tried hard enough to do so a couple of years ago), so you shouldn’t be worrying your head about it. They probably don’t actually exist (a bit like DCTL mortgage holders – until we found one). And anyway, Dave’s got it all in hand.

    I personally model my response to these developments on Sir Mike Hill’s sunny comment on the video that informed us that we were to be on the receiving end of Jingy’s gift – “Well done Dunedin!”. And I bet a few other people are saying that too, both in and out of town.

  15. Another vital point to the vexatious housing concern is the obscene profits being made by the banks. The situation of the banks being able to bring funds from overseas costing ‘diddly squat’ in interest, due largely to both the USA Feds and Japan flooding the world with near zero interest rate money. They bring this in, dump it on the ‘mug citizens’ as mortgage finance for the frenzied housing market at around 5% plus interest and pocket the difference. Ask yourself the question, do the banks want the property market to cool? Not on your Nellie! Does the government want it to cool? Never! Watch when our NZ$ drops in value against the USA$ and the Japanese Yen, then the cost of repaying these overseas loans could skyrocket. Who pays for that? Right, the ‘mug plebs’ who borrowed to buy these inflated houses. Interest rates will rise slowly but inexorably and the pain will be immense. Then the banks will, after screwing the mortgagees till the blood squirts from their ears, then find themselves in deep trouble. The profits will fall as their collateral will reduce in value as the housing market collapses. That will bring into play the fact that they don’t mark to market their assets. In fact the value of the properties on which they have advanced the monies are what sits on their balance sheets giving the ‘obscene profits’ which they have all ‘pigged out on’. If they were government legislated to have to mark to market their assets, the problem might not have run away quite so drastically. I know that I am something of a ‘Cassandra’ on this subject, but I can’t help but feel that the crash is not all that far away. I just don’t want to see it happen to so many good ‘little people’.

  16. Rob Hamlin

    You missed a bit Calvin – ‘Then we bail them out’ with billions taken from those who did and who did not indulge – and then reprivatise them at a thumping loss to those same people so that the 1% can do it to the 99% all over again.” – Take a look at the UK papers. The 1% have done very nicely since 2008.

  17. Rob; you’re on to it. But it was ever thus. Who can you think of that made his fortune in that same cess pool? A clue; he is the prime minister of a country very near you. The one percenters certainly look after their own.

  18. Hype O'Thermia

    The 1%ers are masterminds, specialist subject “doing very nicely thanks victims”.

  19. Dippieville rises, just like the mess that is Wanaka – oh, he did that too.

    ### ODT Online Wed, 11 Dec 2013
    Work going well
    By Jonathan Chilton-Towle
    Work is progressing well on the third stage of a large new housing subdivision in Mosgiel. The Heathfield Development, which is being carried out by Wanaka-based property developer Willowridge Developments, will create about 125 housing sections in the Gladstone Rd area by the end of 2015.
    [Willowridge Developments director Allan Dippie] said there was an enormous amount of home construction going on in Mosgiel. He described it as a ”mini building boom”, comparable to what was happening in Central Otago.
    Read more

    • More hoopla from the frigging Dippie speculators/developers/ruiners of pastureland. Wanaka district defilers, and more.

      ### ODT Online Thu, 19 Dec 2013
      Wingatui development continues
      Development work on the third stage of the Heathfield Development, in the Gladstone Rd area of Wingatui, continues.
      Read more

  20. ### ODT Online Thu, 12 Dec 2013
    Council declines water connections
    By Debbie Porteous
    The Dunedin City Council this week sent a clear message to developers on the city’s urban fringes who expect to be connected to the city water supply because new sections are close to existing water infrastructure, despite being out of zone. In a departure from its previously accommodating stance on pleas from property owners wanting to be connected and citing extraordinary circumstances, councillors at this week’s full council meeting rejected two applications for new out-of-zone connections to the city water supply.
    Read more

  21. “In a departure from its previously accommodating stance on pleas from property owners wanting to be connected” – about bloody time too.
    Anything to do with any particular councillor now being an ex-councillor, I wonder?

  22. ### ODT Online Sun, 19 Jan 2014
    Waverley, St Clair lure home-buyers
    By Jonathan Chilton-Towle – The Star
    Out-of-towners looking to buy a new home in Dunedin are likely to flock to Waverley, while St Clair is most popular with Dunedin buyers, a recent survey of new homeowners suggests. The survey, conducted by Anderson and Co Resource Management, targeted more than 200 homeowners in new housing developments in Waverley, St Clair, Fairfield and Mosgiel, and those who had bought their former homes.
    Read more

    The survey is still open online at http://www.RMApro.co.nz

    HOUSING FACTS (via ODT)
    • 118,683 people usually live in Dunedin city. This is an increase of 3.8% since the 2001 Census.
    • There are 44,394 households in Dunedin.
    • The number of unoccupied dwellings in Dunedin rose from 3612 in 2006 (8% of all dwellings) to 3915 in 2013 (8.4%). The total number of dwellings in Dunedin increased 3.4% from 45,072 in 2006 to 46,590 in 2013.
    • One-family households make up 63.6% of all households in Dunedin City.
    • One-person households, with 11,595 people (9.7% of residents), make up 26.4% of households.
    • The average household size in Dunedin City is 2.5 people, compared with a New Zealand average of 2.7 people.
    • In Dunedin city, 55.3% of households in private occupied dwellings own the dwelling, with or without a mortgage.

  23. Re application from RPR Properties Ltd, for water and waste water connections on its rural-zoned subdivision at 33-49 Dalziel Rd.

    NZ Companies Office – RPR Properties Ltd
    http://www.business.govt.nz/companies/app/ui/pages/companies/1580963
    Director/Shareholders (2): Emma Rayner PETERS (of Waitati) and Thomas Charles RICHARDSON (of Alexandra)

    ### ODT Online Tue, 6 May 2014
    DCC to connect water to rural subdivision
    By Debbie Porteous
    The Dunedin City Council has taken the unusual step of agreeing to connect reticulated water and waste water services to a rural-zoned subdivision on the fringes of the city. The council has recently taken a hard-line on such requests, even where existing infrastructure would allow it without much effort, wanting to stick with its policy to restrict urban sprawl.
    Read more

    ODT says “The site had been through various consent processes since to end up as it was. Cr Lee Vandervis said it was these iterations which were suspect. The situation today was the result of ”a very clever developer” getting what was desired by stealth, he said.”

    Perhaps Cr Vandervis should take a look at Wal’s Place…

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