Prime Minister John Key announced a $1 billion infrastructure fund yesterday, available to Councils in centres experiencing high growth and delivered in the form of interest free loans repayable over 10 years.
Opposition parties said the infrastructure fund won't solve housing problems, according to the NZ Herald.
The Labour Party said a loan for infrastructure wouldn’t help first home buyers and the Green Party pointed out the houses built need to be affordable, saying no mention of building affordable houses was made in the annoucement.
"The market typically builds bigger houses that target high-income earners, so the Government needs to put conditions on its loan to ensure affordable housing actually gets built," Greens co-leader James Shaw said.
But Property Institute of New Zealand
chief executive, Ashley Church
, is in support of the move and says it will go a long way toward overcoming Auckland Councils major objections to opening up residential land on the fringes of the city.
Church says that, taken in tandem, the two measures have stripped Auckland Council of most of its excuses for inaction. But he has also repeated a warning that 'nothing short of a clear and unequivocal signal to the private sector will bring about the scale of new home construction that will be required to slow down house price inflation'.
"Council and Government housing initiatives are a useful demonstration of leadership - but neither the Government, or the Auckland Council can, or should, build the volume of new dwellings that will be required to address the extreme shortage currently facing Auckland city,” said Church.
Church says what should follow now is a series of initiatives from the Government designed to encourage the private sector to step up to the plate and do the 'heavy lifting'.
"Moves such as these would very quickly create private and investor activity in new home construction and would lead to a focus on the construction end of the market - which has got to be preferable to the current situation where 42% of all purchases in Auckland are made by Investors selling existing homes to each other."
Church acknowledged that the high cost of land, particularly in Auckland, meant that these measures would help in slowing down the growth of house prices rather than reduce them.
"Talk of moves to 'crash the market' or bring down house prices are naïve - that simply isn't going to happen. Instead, we should be focusing on using the private sector to end this boom by building thousands of new dwellings as quickly as possible".