'Not enough infrastructure' for new Auckland houses
One of the main problems holding back Auckland's housing supply is not lack of land, but lack of infrastructure, according to a top economist.
Shamubeel Eaqub says councils do not have the funding to build the necessary infrastructure around housing developments.
"The problem is there is not enough infrastructure and the funding is not there. We fund out of development contributions, current rates, that's just not right way to do it," he says.
"What we are in right now is a period of nation building. We've got to build some serious amounts of infrastructure for future generations, and this is where leadership comes in.
"This is not about managing the politics of the day, we're making investments for 20, 30, 50 years."
He says the Reserve Bank's (RBNZ) suggested plan to ease Auckland's hot property market by introducing loan-to-income restrictions would buy some time to help with city planning.
"If we make that link to incomes, which grows far less fast than house prices have, then we will have much more time to think about fundamental issues that are plaguing Auckland," he says.
Yesterday RBNZ Governor Graeme Wheeler told a media conference that a new loan-to-income restriction could be introduced, without saying when.
Hypothetically, if the loan restriction was set at five times a person's income, someone earning $100,000 could only borrow up to $500,000.
"It's not going to have a huge impact in the rest of New Zealand, but in Auckland the amount of money we can borrow is going to be significantly diminished," Mr Eaqub says.
He says the long-term benefits of such a restriction would outweigh the initial lack of available housing.
"Right now there are going to be very few houses that are available for sale -- it's a short term problem -- but in the long term it means that the incentive is there to create housing supply that meets that market.
"So right now that's not happening. We build lots of four-bedroom 'McMansions'… but not enough one or two-bedroom houses for younger people."