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Auckland will soak up all of Govt's $1b housing infrastructure fund, major builder says

city_houses.jpgPrime Minister John Key has revealed a $1 billion infrastructure spend-up to speed up the construction of tens of thousands of new homes.

Councils in Auckland, Christchurch, Queenstown, Tauranga and Hamilton will be able to use the pool of loans for roads and water infrastructure in new housing areas.

Large-scale home builder Mike Greer said no-one outside Auckland should expect to see any of the fund, while Christchurch city council leaders pushed for a state-backed "social equity" scheme, where government put cash into home purchases.

The Government has been under pressure on two fronts in the ongoing housing affordability crisis – soaring house prices in Auckland have pushed prices beyond the reach of most first home buyers, and have also triggered price rises in other centres. The average Auckland house price is now pushing $1 million. The other flow-on effect has been a rise in homelessness.

Mike Greer Homes owner, Mike Greer, said Christchurch needed a state-backed infrastructure fund but wouldn't get it. "It will all be used in Auckland. There won't be a dollar leaves Auckland, for sure."

Greer, whose Canterbury-based company builds about 1000 homes a year, has started building homes in Auckland in the past two years. He said it wanted to build homes at the "low-end" of the market in the upper North Island, including emergency housing, but it wouldn't happen without the government putting up cash to give developers, builders and homebuyers confidence. "Government has to pay for the land and provide the housing, otherwise it's too hard to do it."

Christchurch city councillor Raf Manji said Christchurch didn't need cash for new roads and sewers but it did need government to underwrite the cost of home-ownership.

Ad FeedbackThe council started zoning areas for new housing a decade ago and used debt, then development contributions, to pay for subdivision infrastructure.

Christchurch had a lot of subdivisions ready for development, but not enough people able to afford the house and land, Manji said. "It's houses that are in short supply." Cash for new roads and sewers to these development would be better spent on directly funding home ownership, he said.

"I'm struggling to see what problem it [the fund] is solving." The new policy seemed to be part of a "slow, tortuous route" toward the Government accepting that the Labour Party's state-backed national homebuilding scheme was the way to go, Manji said.

"One billion would get you 3000 houses."

Manji, a member of CCC's finance committee, expected the infrastructure fund would be more useful in Auckland, where the council's debt-to-equity balance was was about 270 per cent. Christchurch City's debt was expected to peak at about 190 per cent in 2020, he said.

Christchurch City deputy mayor, Vicki Buck, said the Government should be flexible enough to use the fund differently in the five cities. Christchurch needed "social equity" schemes for new housing. As happened in Scotland, a homebuyer would put up 30 to 40 per cent of the cost of a new home and the Government would contribute the rest and be repaid over time.

Buck wanted the Government to instead set aside the remaining $5m in the joint city council-government Christchurch Housing Accord. She doubted the infrastructure fund would do much to build new homes in the city.

"I don't know that it's going to have massive application in Christchurch."
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