🏘️ Brilliant analysis from Bernard Hickey on Auckland’s housing costs
Just read Bernard Hickey’s excellent piece on how Development Contributions are strangling housing supply and shifting wealth from young to old. The numbers are staggering – some Auckland areas will see developer charges jump from $25,000 to $72,000 per new home 📈. Certainly much better than the first proposal of up to $119,000 per home but still harmful.
Hickey perfectly captures how we’ve fundamentally changed the game since the 1980s. Before then, central government simply funded infrastructure through borrowing and taxation. Now we make developers pay, who pass these costs straight onto homebuyers 💷. Council don’t agree and seem to think that developers are proceed with negative feasibilities.
The core inequity here is crystal clear: Development Contributions inflate new house prices, which pushes up all existing home values. Current homeowners benefit through increased property wealth, whilst first-time buyers face even higher barriers to entry 🏠
As Hickey explains, this system has become “one of the key tools in a suite of measures that have shifted wealth in a one-off way from the young to the old.” It’s a deliberate policy choice that protects existing ratepayers and taxpayers whilst making housing affordability worse for those who need it most 📊
The magical thinking behind this approach – that private borrowers can fund infrastructure for 1.5% annual population growth – is unsustainable. We’re essentially making future generations pay twice: once through higher house prices, and again through the infrastructure debt 🔄
Time for some honest conversations about who should really fund the infrastructure that benefits us all.
https://thekaka.substack.com/p/one-way-housing-supply-growth-is
