Inside the new Hobsonville model of house-building

Can any Government really build thousands of quality houses in Auckland quickly at a price first home buyers can afford to buy? Bernard Hickey looks at whether the Hobsonville Point project has already done it, and whether the model can be replicated across Auckland by either National or Labour.

The Government-owned Hobsonville Point project is now the largest single housing development in Australasia and its model of master-planned and medium density housing is set to be rolled out across other chunks of Housing New Zealand land in Auckland in the coming months and years. The Government announced this week that the Hobsonville Land Company (now renamed HLC) would organise the bulk of its Crown Building Project, which aims to build 20,600 new homes for private buyers over the next decade. HLC is already in charge of the redevelopment of Housing NZ sites in Northcote and Mt Roskill that will transform 640 state houses into thousands of houses.

So I went out the former air base in West Auckland before that announcement this month to find out why the Government has confidence in the model and plans to use it to ramp up house building across the isthmus.

Driving into and around the 167 hectare Hobsonville Point project was like nothing I'd seen anywhere else in New Zealand. Hectare upon hectare of new and attractive apartments, town houses and standalone homes being built at a furious rate. Everywhere I looked, there was machinery clearing space for roads and buildings, and a plethora of building sites in various stages of completion. Amid all the scaffolding and security fences, scores of trades people decked out in high viz gear and hard hats swarmed over the sites. All of this was happening next to an already large and occupied residential area, complete with shops, cafes, a primary school and fresh parkland and gardens.

Unlike a large privately run development less than a kilometre away, there were no empty sections waiting for houses or fields of land-banked grass. There were very few of the usual stand-alone 250 square metre homes on 800 square metre sections built by one man and his dog and a ute. Hobsonville's houses are tightly knit and a masterplan is clearly being rolled out by large scale builders. This is a vision of a new type of house building industry, one that is concentrated and delivers at scale, rather than the dispersed and inefficient collection of small building firms that were made that way by successive booms and busts.

HLC and its development and construction partners have already built and sold 1,000 homes and are on course to reach 5,000 homes within the next five years. The Hobsonville development is headed for an annual build rate of over 500, which is unlike any other New Zealand has seen and the level of Government involvement is at a new larger scale for a housing project.


So how did it come about and where does it go next?

The Hobsonville Project was actually launched under the previous Clark Labour Government in 2005, but struggled to get off the ground through the finance company collapses, the Global Financial Crisis and the house building bust that happened in Auckland from 2008 to 2010. It's hard to believe now, but house prices were actually falling through 2008 and 2009 in Auckland and few thought there was a major housing shortage that needed fixing.

But by late 2011 it was clear to the Government that extra housing supply was needed and Hobsonville had a broad plan in place, although it needed a $250 million lump of capital to build the under-pinning infrastructure of earthworks, roads and pipes. The green light was given to ramp up the plan and stump up that capital in a way it could be repaid over time.

Chris Aiken was then employed as the Hobsonville Land Company's CEO in early 2012 and he has been the driving force ever since as the scale of the project has been progressively increased. The current Government initially planned in 2012 to build 2,500 homes on the site, but that was increased to 3,500 in 2015 and to 4,500 last year. A further 500 homes will be built on the adjacent Panuku Airfields site.

"We thought we had a bicycle light coming at us down the tunnel, but it was actually a steam engine,"

Aiken is no typical bureaucrat. A former technology industry executive with a couple of decades experience in private property development, Aiken and his board were given the freedom to ramp up developments in tandem with privately owned developers and builders and make more than 20 percent of the homes affordable, as long as the overall project was commercially viable.

He drove me around the site over a couple of hours to explain how the master-planning worked, and how HLC was working with partners such as AV Jennings, Fletcher Building, Willis Bond, Jalcon and Universal.

Nearing the end of his career, Aiken is passionate about leaving behind a legacy of thousands of houses in a community people that want to live in and that is more affordable than the very large and very expensive stand-alone houses that have typically been built elsewhere Auckland. He doesn't want to cut any corners on design or create any eyesores that future generations will not want to live in.

"We're unashamed about driving in the quality. It's about building a community," he told me.

"You have to be a good ancestor."

He described what faced the Hobsonville project in his early years as it became clear that Auckland's population was growing very fast at the same time as housing supply was not.

"We thought we had a bicycle light coming at us down the tunnel, but it was actually a steam engine," he said of the rising demand.

Aiken sees Hobsonville's master planned approach to medium density housing and the combination of more affordable homes being built in tandem with more expensive houses as the key to its success.

Aiken said just over 20 percent of the houses built at Hobsonville were classed as affordable at below $650,000, with around 80 percent of the total being sold for less than the median for Auckland ($905,000 in March).

He was particularly concerned to help fill the gap for new homes just above the affordable category, but for less than the $1 million-plus level that most new homes sell for elsewhere in Auckland.

"That's the piece that's missing. It's the missing middle," he said.

Aiken is keen on the car manufacturing analogy, referring to building 'Corollas' for the missing middle, and that building well designed and attractive Corollas will not devalue the larger and more expensive 'Lexus' homes built elsewhere at Hobsonville.

This mix of Corollas and Lexuses is the key to Hobsonville's economic model. The profits from the Lexuses and high end Camrys help keep the Corollas more affordable and ensure the Government doesn't have to subsidise the development. Aiken also thinks the mix of affordable and more expensive homes makes Hobsonville a more attractive place for all its residents and helps protect values, hence the focus on urban design and high quality landscaping and parklands.

He points the various different types of medium density 'typologies' as the way to go.

"It doesn't have to look like Coronation Street," he said.

It's certainly worked so far with houses selling quickly. The ferry that travels to the CBD from the wharf at Hobsonville Point is now full every day.
 

So why not more affordable?

The major criticism levelled at Hobsonville is that not enough of the houses being built are at the level classed as affordable below $650,000. Hobsonville's current price list does include homes for less than that, particularly in the Axis type of apartments, but many more are being sold in the range from $650,000 to $1.1 million.

Labour Housing Spokesman Phil Twyford criticised the Government's announcement for lacking ambition and cited the experience at Hobsonville, which is the Government's model and is also at the lower end of the Government's 20 to 50 percent affordable target for the Crown Building Programme.

"National took a billion dollar slice of publicly owned real estate at Hobsonville and have essentially sold it into private ownership, It's been a brilliant success in terms of design and commercially, but what's the public good benefit there?" Twyford said.

Labour wants to take the master-planning and mixed  lessons from Hobsonville and multiply them across Auckland, but with a much larger share of affordable housing.

"Our model is large urban development projects, master-planned by a master planning agency like the Hobsonville Land Company and with development companies that would be set up by our affordable housing authority," he said.

"The model is for large master-planned, mixed use and mixed income developments. Imagine Hobsonville with a much bigger share of state and community housing, and a bigger share of affordable housing."

Labour is planning to build 50,000 Kiwibuild homes in Auckland in similarly mixed income and mixed use developments that also include private developers. Twyford talks of doing 10 to 15 developments of the size of Hobsonville or the Tamaki Redevelopment Corporation.

The Government argues Labour's plans are not commercially viable and would require large subsidies.

In response to the criticism about not enough of Hobsonville's homes being affordable, Aiken preferred to focus on the wider group of homes in the "missing middle," and that 80 percent of the homes are being "price designed" by HLC in tandem with the developers and builders.

The Axis homes are also sold in a ballot, with half guaranteed to be sold to first home buyers and the rest to owner-occupiers who must guarantee they will stay for at least two years. HLC also has the power to force the sale of an Axis home that was bought by a rental property investor pretending to be an owner occupier. Aiken said that had been done three times out of the 200 sold through the ballot.

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