As reports of record property prices and rental shortages continue, future supply of low cost housing is to receive a much-needed boost.
Launched in November, Community Finance is a new initiative that's gearing up to make a dent in New Zealand's affordable housing crisis by raising low-cost finance for local community housing providers to use to get affordable housing projects off the ground.
Partnering with the Lindsay and Tindall Foundations and other investors, together with community housing providers like the Salvation Army and Habitat for Humanity, Community Finance reduces the cost of short-term finance to enable homes to be built more quickly.
James Palmer, chief executive of Community Finance, said that New Zealand's housing need has never been greater.
"We now have over 13,000 households on the waiting list for Government-assisted rental housing and for those in extreme need, there are now thousands of households in motels," Palmer said.
Community Finance's first project is using a Salvation Army Community Bond, requiring $40m to fund 118 new homes in the Auckland suburbs of Royal Oak, Westgate and Flat Bush, to people most in need.
With a 50-home social housing complex in Mt Albert Road, Royal Oak now complete and fully owner-occupied, a further 22 houses in Westgate are expected to be ready in early 2020. Additionally, civil earthworks are underway to develop a further 46 homes in Flatbush.
Money is provided to Community Finance by investors, which is then provided to community housing providers at a reduced cost compared with conventional lenders.
"The benefits of that lower cost money are passed onto households in a number of different ways: the most significant benefit is the construction of new, affordable homes and communities delivered in partnership with community housing providers," Palmer said.
In the Tauranga suburb of Bethlehem, there are plans underway to provide homeless families with a new home, supported by a local community and Government assistance to pay the rent.
"Over time, through community housing partners and their budgeting and social services, that household will be [given] the opportunity to transition from [an] emergency to [a] social rental and then, if they choose, to take ownership of their home, in the same house and place without moving," Palmer explained.
While mixed-use housing can be typecast as suitable only for beneficiaries, a recent development at Waimahia Inlet in Weymouth, South Auckland is an example of a project offering scaled community living with a mix of social, affordable and privately-owned homes.
"The 1200-strong community lives in 295 homes and includes 48 percent Māori, 18 percent Pacifica and a large number of youth (29 percent are under age 15 and [almost half] are 25 and under), together with kaumātua.
"Of the 70 percent of non-private homes, 29 percent are in a shared equity scheme, 20 percent in a rent-to-buy scheme, 2 percent in long-term community rental, and 18 percent [are] in ownership by the community housing providers for their tenants," Palmer said.
Although social and community housing makes up around three percent of New Zealand housing stock, Palmer said that this is out-of-line with the international average of six percent in developed countries.
To help reduce the ever-growing need for affordable housing, the initiative relies on the willingness of socially-conscious investors to be part of the solution.
"Impact investing, which focuses on making a beneficial impact in the community while also receiving a financial return [to a similar level as corporate bonds and term deposits], is becoming more popular in New Zealand," Palmer said.
While community housing providers are at the core of the development process, the strategy for delivering each housing project varies.
"Community housing providers give strong consideration to the long term sustainability and community building elements of the master plan and design of developments.
"This means thinking about and delivering 'bump spaces', shared spaces, green spaces and community rooms or lounges where people can bump into and socialise with each other," Palmer said.
As a community housing provider, the Salvation Army contracted architects and builders to deliver the Royal Oak development, while Habitat for Humanity utilises a range of paths that lead to completion, including involving households in the building process.
"[As] each location and community is different and has unique needs, Community Finance work[s] with partners in each place to deliver the solution that best fits [their] needs, Palmer explained.
For some people, a hand up - and advice on budgeting and finances - may be all it takes to get them going under their own steam.
"Many of the households we assist are working people: teachers, nurses, policemen and women who simply can't afford to rent or buy a place to call home," Palmer added.
As demand continues to push up house prices, Community Finance is among the initiatives taking positive steps to increase the supply of affordable homes, so Kiwis in need a safe and secure place to live may finally receive a helping hand.
