Bay of Plenty Business News February/March 2017

BAY OF PLENTY BUSINESS NEWS February/March 2017 9
Accord signs off on Tauranga growth spurt
Tauranga’s rapid growth to be ranked New
Zealand’s fifth largest city shows few signs
of slowing with extra fuel added to the
growth tank, thanks the city signing off with
government on a Housing Accord late last year.
By RICHARD RENNIE
In one of his first significant
civil tasks new mayor Greg
Brownless and Minister for
Building and Construction Dr
Nick Smith signed the Accord
in December.
The move marked the second
such accord Tauranga has
entered into with the government,
and it opens the door to
providing developers more time
to approach council to consider
zoning new special housing
areas.
Andrew Mead, acting manager
for city planning and
growth said developers now
have an additional three years
to lodge requests for the special
housing areas, coming on top
of the two years covered by the
previous Accord.
The previous Accord
resulted in 11 special housing
areas being established, with
total potential for 2970 new
dwellings, well in excess of the
original target of 1400.
By October last year a
total of 989 new sections had
been consented and 198 building
consents issued, and more
applications are in the planning
pipeline.
Andrew says the new
Tauranga Housing Accord will
continue to deliver targets based
on current market conditions,
and assumes these conditions
remain similar for the coming
three years.
“Should there be a change in
market conditions these targets
may be reviewed,” he said.
The targets of 1700-1800
A practical approach to
systems and processes
dwelling consents for this year,
1750-1850 next and 1800-1900
for 2019 are relatively consistent
but come against the background
of a red hot property
market in the city and the wider
Western Bay area.
Tauranga’s population now
exceeds Dunedin’s by 1200,
reaching 128,200 based on
Statistics New Zealand data.
While Tauranga’s urban population
had exceeded Dunedin’s
for several years the latest figures
cover the population estimate
for the larger territorial
district.
The city’s median house
price hit $600,000 in December,
based off Real Estate Institute
of New Zealand figures, up a
massive $130,000 on December
2015 and representing a 27 percent
gain over only a year.
In signing the Accord
Mayor Greg Brownless said
the continued implementation
of the Housing Accord was an
important means for council to
support the provision of more
affordable housing for the city.
Housing affordability in
Tauranga has long run behind
the national average. Early this
year the city claimed the dubious
honour of being ranked the
ninth most unaffordable city
out of 450 around the world
by Demographia International,
putting it ahead of the likes of
Los Angeles, London and San
Francisco.
“Tauranga has issues related
to housing affordability.
The median house price is now
7.45 times the value of the
median income. To be considered
affordable I am told this
should be three or less,” Mayor
Brownless said.
“Housing affordability is a
complex issue that requires consideration
of wider issues, all
of which this Accord does not
address. What the Accord will
do is assist in providing a wellfunctioning
housing market
with sufficient housing supply
to meet the demand.”
Under the Accord development
over the next three years
will be mainly taking place
at the Lakes in Tauriko as the
western corridor and Wairakei
in Papamoa East.
Like Hamilton city which
has also signed an Accord,
Tauranga City Council is eligible
to make an application
to the Housing Infrastructure
Fund to seek support to fund the
infrastructure required to cater
for growth.
Andrew Mead said the council
is considering this option in
coming months.
He said it was likely the
council would be forming special
housing areas and zones.
Green fields large scale urban
growth areas such as Te Tumu
in the east and Tauriko West
were likely to be zoned housing,
rather than designated as a special
housing area.
But the move to more housing
growth comes with some
constraints around it.
Andrew acknowledged the
short term constraint was the
building industry’s capacity,
with the market already buoyant
and a shortage of related skills
in the region.
“In the longer term, funding
infrastructure will become a
major challenge.”
But Johnny Calley, president
of Tauranga Registered Master
Builders is relaxed about the
impending demand for building
services the Accord is likely to
bring to the region.
“I think 12 months ago the
local industry struggled to keep
up with demand but progressively
businesses have upsized
or re-scaled to deal with that
growth. There is still pressure
on the smaller sub-contractors
especially around electricians,
painters and bricklayers, but the
bigger trades including builders
have been able to cope.”
He sees a shift in the type
of demand for houses making
the Accord something the local
construction sector can adjust
to.
“With greater restrictions on
lending for investors, we are
seeing a drop in investor activity,
and the Housing Accord
work will take up from that.”
He is confident there is
ample land area to accommodate
future expansion, particularly
through eastern Papamoa.
However at this point supply of
houses is slightly behind where
it needs to be, giving legs to the
current surge to keep running
for some time yet.
“We are also seeing a lot
more building activity through
the Western Bay of Plenty, in
Omokoroa and Katikati.”
However he is not so certain
affordability in the Bay is likely
to improve any time soon.
“In the last 12 months we
have seen land costs double.
Unless they can control the
price developers are charging, it
will be hard to control the price
of house and land packages.”
He does however believe
Tauranga prices may be nearing
a peak as affordability issues
start to pinch potential buyers.
MONEY MATTERS
> BY MICHELLE HILL
Michelle Hill is director and partner at BDO Rotorua, Chartered
Accountants and Advisers. To find out more visit bdorotorua.co.nz or
email rotorua@bdo.co.nz
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