Government pushing up land and house prices

The Herald reports:

The Government’s winning $70.4 million offer for rural land known as Ferncliffe Farms trumped private sector bids because it constituted a “huge upfront payment” with no conditions to mitigate risk, sources close to the process have told the Herald. …

In order to outbid private sector developers, the agency obtained two valuations for the land, both of which were likely to inflate its value, and one of which made the “significant and special assumption” that rezoning was already achieved.

Critics, including opposition parties National and Act, say the case illuminates how the Government is using taxpayer funds to bid up land prices, unnecessarily baking additional cost into the “affordable” homes it hopes to build.

Yep the Government is so desperate to be seen to be making housing better that they paying over the top prices for land, which of course just pushes the price up.

In July 2021, the Treasury advised Minister of Finance Grant Robertson that the programme would overlap considerably with other government housing initiatives and was likely to “increase the risk of public funds maintaining or increasing urban land prices rather than reducing them”.

Treasury were right.