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Alternative explanations for Auckland house prices

Last week I took a look at the economics underlying Demographia’s “International Housing Affordability Survey” and found them severely lacking. As it turns out, Demographia’s data isn’t much good as a measure of the costs of poor planning rules – but it does seem to provide some information about people’s “revealed preference” for urban amenity.

To recap: urban economics suggests that differences in the level of the median house price to median household income ratio between cities can be interpreted as differences in livability. All else equal, people should be willing to pay more to live in cities that offer better quality of life.

But how should we interpret changes to the median multiple from year to year? If a city’s median multiple rises from 5 to 5.5, does that mean that the city suddenly got 10% more livable? Or did something else happen?

Demographia is very certain that higher median multiples are the product of one thing, and one thing only: limits on sprawl into greenfield areas. Here’s Don Brash, former Governor of the Reserve Bank of New Zealand and former head of several right-wing political parties, laying out that view in Demographia’s 2008 report:

Once again, the Demographia survey leads inevitably to one clear conclusion: the affordability of housing is overwhelmingly a function of just one thing, the extent to which governments place artificial restrictions on the supply of residential land.

With that in mind, Demographia’s data seems to indicate that housing in Los Angeles and Las Vegas (as well as many other US cities) suddenly became a lot more affordable in the late 2000s. It’s obvious that they must have removed their Metropolitan Urban Limits – how else to explain such a big drop? Oh, wait…

Demographia Los Angeles Las Vegas median multiple

(It’s slightly disturbing that our Reserve Bank used to be run by a man who doesn’t believe that interest rates and credit conditions can affect house prices. But I digress.)

Here’s a graph of changes in Demographia’s median multiple estimate for Auckland since 2004. We haven’t seen the same drastic swings as in the US, where the housing bubble and bust was pronounced, but house prices have risen relative to incomes. (Although, as Stu found in his analysis of different measures of housing costs, this hasn’t flowed through to rents or mortgage payments, due in part to changes in interest rates.)

Demographia Auckland median multiple

This change has been especially pronounced in the last few years. Since 2012, Auckland’s median multiple has risen roughly 22%. Does this mean that we’ve become 22% more “livable” during that time?

With all due respect to the good work done by Auckland Council and Auckland Transport since their inception, probably not. So we need to look for alternative explanations, of which there are several. I’ll focus on three in particular.

The first potential explanation is that there has been a market failure. Residential construction slumped massively during the Global Financial Crisis, with the most significant reductions occurring in the supply of apartments and attached dwellings. Here’s a graph that John Polkinghorne put together illustrating that trend:

NZ building consents

Incomes and employment have mostly come back from the recession, but construction has been a bit slow to respond. I suspect this reflects technical constraints within the development sector, as it takes a while to organise finance, find sites, and hire the cranes, bulldozers, and blokes/blokesses in hardhats. Until they get into gear, there may be a bit of an undersupply – but one that will tend to sort itself out.

The second potential explanation is that the introduction of Auckland’s Unitary Plan has caused people to expect housing supply to be more constrained in the future. While the Unitary Plan envisages the gradual expansion of the city’s Metropolitan Urban Limit to meet new demand for greenfield suburbs, it maintains extensive controls on the supply of new dwellings in accessible, high amenity areas. Moreover, the plan actually got significantly more restrictive following the consultation process.

Transportblog has highlighted this issue a number of times before. To recap, here’s a map (from Koordinates) that shows where the Unitary Plan got more restrictive as a result of consultation. The areas in red have been down-zoned to restrict development, while areas in green have been up-zoned. The large orange areas show future greenfield land. As you can see, there are not a lot of opportunities to develop new dwellings in the isthmus and lower North Shore, while West Auckland has been happy to facilitate growth:


Unitary Plan changes from draft to proposed version on Koordinates

Timing is important here. Demographia’s figures suggest that there was a jump in house prices relative to incomes between the end of 2012 and the end of 2013. This coincides with the notification of the Unitary Plan in September 2013, which, as described above, will ease greenfield land supply while limiting development opportunities in the inner suburbs.

However, there is also a third potential explanation: that our rising house prices reflect increasing awareness of Auckland’s great quality of life. For most of the last decade, our city has been near the top in Mercer’s Quality of Living Survey. It’s been ranked third for five years running.

So maybe the story is that potential migrants and investors have observed that, by international standards, Auckland offers high quality of life at an affordable price. And they are in the process of arbitraging that away.

I’ve illustrated that process in the following graph, which shows the relationship between Demographia’s median multiple (X axis) and Mercer’s Quality of Living Survey (Y axis). The trend-line is estimated based on 2012 data. I’ve also plotted Auckland’s median multiple and Mercer index in 2015.

The red dot that represents Auckland is moving towards the trend-line, suggest that its prices are catching up with its livability.

Demographia Auckland median multiple change 2012-2015

Previous studies have found that growth in New Zealand house prices is strongly correlated with net migration – i.e. migrants tend to bid up house prices. Net migration to New Zealand did, in fact, start picking up in 2013 – around the time that Demographia’s estimate of the price to income ratio began to rise. Perhaps this is evidence for the “amenity arbitrage” hypothesis?

NZ net migration Feb 2005-2015

So, which explanation is true? Honestly, it’s impossible to say without a lot more detailed analysis. My point in writing this is not to argue that there is a single explanation for changes in Auckland’s house prices, but to point out that there are many possible explanations. Housing markets are affected by a number of factors, and it’s inappropriate to focus on one without controlling for the rest.

This is, essentially, why Demographia’s analysis fails. Rather than articulating a model that encompasses all of the potential explanatory factors, they have settled on a single number and insisted that it must be interpreted in a single way. It’s hard to see the value in that approach. And it’s definitely not good economics.

AT March Board Meeting

Tomorrow the Auckland Transport board meet once again. I’ve already covered the new network consultations for West Auckland and Pukekohe as well as the patronage results so here are the highlights from the rest of the reports available.

First to the items in the closed session that caught my attention

  • Parking strategy – this follows the consultation on it last year.
  • Rail operator EOI shortlisting – it will be interesting to see how this compares to the shortlist from Wellington.
  • Deep Dive – NZ Transport Agency – presumably a detailed description of just what role the NZTA plays.

At the start of the open session Councillor Dick Quax is going to present on the Reeves Rd Flyover. I’m aware he and the local MPs (Maurice Williamson and Jamie Lee-Ross) have been very unhappy that the flyover was delayed and have been lobbying for it to be re-instated. That includes complaining about it to the Minister of Transport and pushing for it to become a State Highway and therefore funded by the NZTA.

reeves-rd-flyover

The business report which gives updates on a whole range of items.

Otahuhu Bus-Train Interchange

There is to be some more enabling works to deal with settlement issues due to the peat under the site and another round of works over Queens Birthday weekend to move the old signal box off the platform and install foundations for two more canopies. The main works are due to start in July on the interchange.

Electric Trains

By now there should be 47 electric trains in Auckland and the final one is due to leave Spain in June. At the time the report was written 35 had been provisionally accepted. They note that routine testing has been impacted by driver shortages which is what I understand is partially why it’s taking so long to get electric trains rolled out on the Southern Line.

In addition it’s noted that Siemens Spain has spent two weeks investigating the new signalling system in a bid to improve reliability. A software update is/was due late March for this.

One thing worth noting is that AT seem to now be referring to rail services as Rapid Rail Services which perhaps suggests a bit of a re-branding of them is happening.

Pukekohe Bus Rail Interchange

The design work is almost complete on an upgrade to Pukekohe to enable bus and train transfers. Physical works are due to be completed by the end of June.

Integrated Fare System

AT is working through to transition the ownership and support of the Integrated Fare System to the NZTA subsidiary that will manage the back-end system nationally (this has long been the plan). Of note AT say that the work has identified implications for some of the plans that they have for future development of the system including parking integration and mobile top ups. I understand that AT have a number of updates planned like those mentioned that will improve the HOP system and get it in the hands of more people so it is critical that they make sure the system being managed nationally doesn’t hinder this.

AT also say that they are planning on updating the Regional Public Transport Plan to accommodate the proposed zonal integrated fares. System development by Thales for Integrated fares is under way and they are negotiating with the operators as to how fare revenue will be allocated between them

The New Network

The update suggests the New Network roll out in South Auckland has once again been delayed with the report stating it will now happen in April 2016 compared to previous reports which had suggested February 16.

AT are hoping to get final sign-off from the NZTA for their PTOM contracts soon so they can go out to the market to tender for South Auckland services in May/June. The first official parts of the New Network implemented are likely to be on the Hibiscus Coast though and will be done by negotiating directly with existing operators. That is likely to be implemented later this year or early next year.

The next consultation to happen is meant to be the North Shore which they say will happen in June this year.

Capacity

As readers will know, there’s been a lot of capacity issues on the network over the last month and a half. In the report they note that patronage on buses is up 12% (I wonder if this is just at the peak). They note that a few corridors have seen exceptional growth and need “corrective action” to address capacity constraints. These corridors include

Onewa Rd where 776 services across the week were added recently as part of the timetable changes.

The Northern Express which has had two additional buses added to the fleet and has more capacity on the way in the form of two double deckers of which one each are due in April and May. Talks are under way with Ritchies to get even more.

Mt Eden/Dominion/Remuera Roads where 11 extra buses have been used to deliver 45 extra services (a day?). The services are used as a contingency capacity that AT say can be moved to where demand is greatest. Some of the common routes they are used on are the Northern Busway (881), Hibiscus Coast (897), Remuera Road (625), Mt Eden Road (274), Dominion Road (258), and New North Road (220). The extra capacity is only meant to be till this Thursday however they say the results will be reviewed and highly patronised services are likely to be retained at least until June.

Double Decker

More Double Deckers needed

 

There are a number of projects which seem to have had a similar status to what they had in February or for which we had an update during March. This includes:

  • AMETI
  • Manukau Bus Interchange
  • Newmarket Crossing (Sarawia St Level Crossing)
  • Half Moon Bay Ferry Upgrade
  • Puhinui Station Upgrade (The upgrade should be started in April)

Sunday reading 29 March 2015

Every week we read more than we can write about on the blog. To avoid letting good commentary and research fall by the wayside, we’re going to publish weekly excerpts from what we’ve been reading.

Chris Parker, “Auckland Economic Quarterly March 2015“, Auckland Council Chief Economist Unit:

The price of land is driving high house prices

As Figure 1 shows, it is the price of land that has ballooned relative to incomes, not rents, nor construction costs. Rents as a fraction of income has been largely unchanged, whereas the ratio of section prices to income has doubled since 1998.

As Figure 2 shows, the price of land is highest on the isthmus and south-eastern parts of the North Shore.

High prices are not evidence of the failure of markets or public policy

Very generally, even well-functioning competitive markets can experience extreme price spikes. It can be a market’s ‘call to arms’ for people to invest, innovate, and repurpose resources (in this case land) to meet unanticipated or emerging needs. The economic issue is whether or not there are barriers that prevent a market from making the adaptions that it needs to make to moderate prices.

Joseph Stromberg, “‘Roads were not built for cars': How cyclists, not drivers, first fought to pave US roads“, Vox:

From our vantage point in 2015, it seems like the dominance of cars was the natural, inevitable way transportation would evolve. But there are some good reasons to believe that may not be the case, Reid says.

One is that private, powered road vehicles came along and failed several times before they finally took off in the early 20th century. In the 1830s and 1860s, in particular, inventors in Britain, the US, and Canada came out with steam-powered carriages, based largely off the technology developed for railroads, as well as electric vehicles.

But these early cars failed for a few different reasons. There were few roads that were smooth or hard enough for them. But more important, Reid says, “There was no push for them. There was no group of people interested in popularizing them.”

Graeme Birkhead, “The New Auckland: A radical rethink“, ArchitectureNow:

Housing crises are cyclical yet there is very little planning, vision or innovation evident from leaders in this field. Successive governments and indeed many developers have responded only when we’re in a crisis, leading to higher costs, fire-fighting and inadequate planning. In short, we’re always playing catch-up.

[…]

We shouldn’t be building state houses or mixed private-public housing developments in the boom time. It is far too expensive for everyone involved. We should be building in the lulls, like in the seven-year lull we’ve just experienced. Planning smoothes out the bumps in the building industry’s cycles, doing away with housing crises and helping to make what we build a little more affordable.

The Australian Government is particularly good at this. In the quiet part of the building cycle they ramp up residential building subsidies to stimulate housing construction so not only are there houses being built, the prices are cheaper and the boom-bust impact is mitigated a little.

Dita De Boni, “Kiwis hoodwinked over state housing“, NZ Herald:

A more honest response would be the Government isn’t worried yet – it needs to find a convenient non-profit cover for the inevitable transfer of public housing stock to private concerns.

If that sounds harsh, consider how Bill English and John Key have described the performance of Housing New Zealand over successive years. As far back as 2013, Mr English was describing it as performing poorly, and saying the nationalised housing industry was a “disgrace”.

Shortly thereafter, Housing New Zealand beat six Australian social housing providers to scoop a major prize for “leading innovation”. No matter. What was said could not be unsaid, and changes were afoot.

@BicycleAdiago, “Not a parody but an actual @VicRoads advert for the introduction of Victoria’s helmet laws in 1990. HT @AusCycle”:

VicRoads helmet law ad 1990

John Lavey, “Street trees, and streets without trees“, Community Builders:

Dan Burden eloquently described the value of street trees this way:

“Indeed, street trees so well establish natural and comfortable urban life it is unlikely we will ever see any advertisement for any marketed urban product, including cars, to be featured without street trees making the ultimate dominant, bold visual statement about place.”

[…]

What if our street trees WERE gone? What a better way to see the framing of public streets than to remove the very objects – trees – that enhance the space. So I put together a few GIFs that illustrate the before & after. Seeing them, I hope, will help you renew your appreciation for our arboreal friends.



Paul Krugman, “Charlatans, cranks and cooling“, New York Times: A nice discussion of how omitted variable bias can lead to failures in policy analysis:

The rise of the US sunbelt can be understood largely as a response to the emergence of widespread air conditioning, which made places that are warm in the winter attractive despite humid, muggy summers. […]

Now, these states have several things in common besides high temperatures. They’re all very conservative. And all of them that were states before the Civil War were slave states. These commonalities are, of course, all interrelated. Hot states had slaves because they were suitable for planation agriculture; and today’s red states are, pretty much, the slave states of 150 years ago.

Now, all of this raises some interesting problems for the assessment of economic policy. Because they’re politically conservative, hot states tend to have low minimum wages and low taxes on rich people. And someone who is careless, cynical, or both, could easily take the faster growth of these states as evidence that conservative economic policies work. That is, charlatans and cranks can, all too easily, end up claiming credit for economic and demographic trends that are actually the result of air conditioning.

Nine to Noon, “Why some of our cities and towns are so ugly“, Radio New Zealand National:

Many New Zealand cities and towns are spartan, ugly and makeshift – designed with little regard to the natural world around them, urban designer Garth Falconer says. […]

Mr Falconer said Europeans came with ideas of how to design towns and cities based on what they already knew. This included the Protestant colonies of 16th century Northern Ireland and penal settlements of 18th century Australia.

But New Zealand’s terrain, ecology and climate conspired to frustrate the end results…

New Zealand Herald, “Editorial: Tunnel vision ignores real traffic needs“:

The truth is, the existing harbour bridge is not a bottleneck. Traffic generally flows over the bridge more smoothly than it does on the motorways north and south. The moveable barrier installed on the bridge some time ago has added a lane for commuter traffic at peak hours, the construction of the northern busway has removed some cars from the road, and the Victoria Park tunnel has doubled the capacity of the motorway at its previous worst choking point. All these developments have taken pressure off the bridge, as will the Waterview tunnel in a year or two.

Meanwhile, the Government remains unconvinced that a rail tunnel under the central city would be worth the cost when compared with the roading projects competing for the funds it is allocating for Auckland transport.

Would we ask motorists to tolerate this?

A few readers had some insightful comments on a recent post about Auckland Transport’s quite good plans to add safe cycle lanes on Carlton Gore Road. They highlighted how it is necessary to deliver a complete cycle network if we want to improve Auckland’s livability and choice of transport modes.

Goosoid commented that it’s often really, really difficult to use cycle facilities to get where you’re going:

How many people used to drive their car across the harbour from St Marys Bay to Northcote before the bridge was built? Not too many.

Most people will only start cycling when there is a joined up network that allows them to safely travel around. Until then we will be stuck with the usual 2-3% of people who will cycle on substandard infrastructure.

How many people would use SH1 if every few kilometres it stopped being a motorway and became a local street again? That is basically what people cycling are dealing with.

Very helpfully, David Roos illustrated this point with a map comparing the street network in downtown Auckland (left) with the nascent cycle network (right). A very big contrast in accessibility and connectedness:

Auckland incomplete cycle network

And remember: most other parts of the city have it much worse. I hope that transport agencies in Auckland and other New Zealand cities are mapping their cycle networks and looking for ways to fill the many, many holes.

Guest Post: Orange Smoothy II

This is part two of a two part guest post by highly visible e-cyclist and regular reader Greg Nikoloff

This post is about my (continuing) experiences with my Pedego (http://pedego.co.nz) electric bike (e-bike).

In part 1, I covered the basic of my e-bike experience which I’ve owned and used for over 2 years. In this second part I’ll cover in detail my daily commute, and show a bit how the e-bike fares on this route and how it enables me to manage Aucklands hills and traffic and makes it fun as I do my part to alleviate Auckland traffic congestion on a personal and daily level.

My daily commute

I use my e-bike for my daily work commute, mostly during summer months (Oct-Mar). For this, I cycle along the Remuera road “ridge” – during the morning peak traffic, anytime from 7am to 8am – as I don’t get held up by traffic, exactly when I leave home is not critical – unlike if I take the car, when it is. As half of the length of Remuera Road I cycle on has a peak direction bus lane, I use that for most of the trip. Because the cruising speed on the e-bike is about 35km/hr on the flat, and about 24km/hr on the hills, I find I can easily keep up with most of the traffic using that lane and therefore don’t get too many buses passing me. The one or two tight places where I go slow, where buses and cars can’t easily pass, so they have no choice but to wait behind me for about 30-40 seconds at most. With few buses going past me – which are always a bugger and a danger – it definitely makes for a more enjoyable ride, even though you’re in traffic still.

Here’s a Google Maps ride profile of the route, the distance & the amount of altitude I cover:

StJohns_Newmarket_RemRoadRoute

 

The map shows the usual sort of route I take from my home to work (there are extra distances at each end which I’ve left out as they don’t particularly matter). And the above route is pretty much what I cycle daily. The Google maps cycling profile shows a 49 metres climb over 6.5km, with 66m of descent. The descent is mostly in the first half of the ride going to work, so the ride to work is a steady uphill for most of the second half.

Because the start and end points are about the same altitude (some 70m or so above sea level) the ups and downs are mainly due to the topography of the intervening roads between the start/end points. Google Maps suggests 24 minutes to cycle that distance. On my e-bike at about 30-35 km/hr most of the way, its 12-15 minutes. Exactly how long, mainly depends on the number of red lights I hit (as I stop at red lights). When I cycle this I do it my normal work clothes of dress pants, shoes and an open neck business shirt and arrive “warm” from the exercise, but not sweaty or needing a shower. In spring and Autumn, I ride with gloves on as the chill factor on your hands can be noticeable.

This particular stretch of Auckland roads has some 13! (count ‘em all) traffic light controlled intersections and 2 light controlled pedestrian crossing on it. Which collectively must be a record of some sort for number of red lights over this distance in Auckland, outside of the CBD. Some lights do work as linked pairs (Ladies Mile/Greenlane East & Victoria Ave/Clonbern Road), but the rest do not and these lights change independently. If I can get green lights all the way, I can manage about 12 minutes door to door in steady/medium traffic. If I hit 3-5 red lights or heavy traffic, it can take up to 18+ minutes to go the same distance. If I crossed with the pedestrians at the red lights most of the time I’d make it probably 14 or so minutes.

If I was to drive, then I can, at best, manage about the same time, maybe slightly better – as I can drive at 50 km/hr the whole way, door to door, in the best case. Worst case, when the bus lane is in full operation, it can be over 40 minutes in stop/start traffic crawling along. So yeah, e-bike matches or beats the car just about every day – especially during Feb/March madness period.

In fact I have some co-workers who routinely see me go past them – me, legally in the “bus lane”, as they sit (fuming) in the “SOV vehicle lane” as I cycle past them on my way to work. I’ve usually having left home long after they left theirs and will beat them to the office by a good long chalk as well. And I’ll be relaxing at my desk with a coffee (reading TB, or emails), while they come in all hassled and more tired than I feel – yet I did most of the exercise!

Going home, the reverse route is basically the fastest and shortest, but it’s also the “vanilla” option. But having the e-bike means I have alternative options I can use as I desire/need i.e. when I’m sick of vanilla. As seen from this alternative route:

Newmarket_StJohns_OrakeiBasinRoute

I can divert down either Victoria Ave, or Orakei Road (shown) and then use the Orakei Boardwalk(s) if I want a nicer ride, with a lot less traffic. Although going that way is 2 km longer and also means I do have to climb from near sea-level at Orakei basin back up to 70+ metres in height. It does give me a great downhill from the Remuera Ridge down to the water at Orakei first. And that few minutes as you cycle across the boardwalk(s) with the water lapping underneath as you cycle over it – you can’t put a price on that. You’d not normally contemplate such an activity as a normal cyclist as the resultant need to climb “back up” to the ridge afterwards would make you think twice unless you were in training. With an e-bike, it’s no problem to do so. And just adds some variety to what can be a bit of a drag race going the normal way.

E-bike power means you can enjoy the many downhills, and yet you don’t have to worry about the inevitable uphills too much. It will take me at most, all of 10 minutes longer to go home this way. But I know I will arrive at home feeling 10 times more refreshed/energised than if I had to jostle with traffic down Remuera Road and usually get stuck at the many lights along the way. And if by some chance I also see an EMU or two passing as I cycle along beside the rails on the Orakei boardwalk, well that’s quite uplifting as well.

When the Meadowbank Station to St Johns Road part of the GI to Tamaki Drive cycleway opens (hopefully towards the end of this year) then I’ll be able to use that to get “back up to the ridge” at St Johns hill. I‘m sure that will be a really interesting, smooth and invigorating ride with less of the really steep gradients on it than what I face now when I use the back streets with their patchwork of road surfaces. So I’m pretty sure, once opened I’m going to add it to my daily cycle route – even if only on Fridays. And once the Orakei Point development is built, I’m sure that too will provide even more of a reason to go that way if I need to go shopping or simply savour the delights of a summer in Auckland.

Last year I told my doctor what I’d bought, he was happy to see the results in my blood tests, but also was very keen for this for his other patients as he could see, like me, that with an e-bike you can’t ever get in to too much trouble if you cycle too far, and the e-bike will get you home again if you do. So at my last doctor check up – I spent more time telling him in response to his many questions, about the e-bike and how easy it was to ride, what it cost, and how great it is to be mobile again than we did on my check-up. So I’m sure a lot of his patients will be e-biking sooner than later.

The future

The big question with these things is always the future – and would you buy one again/replace your e-bike if it was lost/wrecked/stolen etc?

And what about the rest of us?

“Sure I would get a new one” – and I would get the same brand too, just the newest model. Probably get the same colour too. I do miss not having a regular cycle on the days I don’t ride. I really miss it when Daylight Savings ends and its dark by 6 o’clock at night. While that extra hour in the morning makes cycling to work easier, getting home from work for me before its dark is harder/less enjoyable – those inattentive car drivers the main issue. On separated cycle ways and lanes it wouldn’t matter what time I went to work or home. And while the Tamaki drive to GI cycleway won’t really assist my daily ride that much, directly, using it will make at least part of the ride more enjoyable as I’m out of traffic for some of the way.

This year, I’ll probably keep cycling daily until mid April – post Easter anyway, weather permitting. Then I hang up my cycling spurs for a bit, and mainly cycle on the best days during winter – and Fridays – Friding, after all, is the best antidote to winter, or work.

Looking forward, I’d have to say that e-bikes and Auckland are a good match. And e-bikes and our EMUs (and eventually LRT) are also very good matches. It’s so easy to cycle 3 or even 6 km without breaking a sweat – even over the sort of hills you get in some parts of Auckland, if you were to overlay a map of Auckland PT stations with 5km or so wide circles, you’d cover a fair chunk of Auckland. And that’s easily and realistically the sort of distances you can cover on an e-bike to get to the nearest LRT or train station. And with the e-bike you can replace the walking or driving trip to the shops with a cycle too. The poor state of the cycle racks (if they have any at all) at most local shopping places near me testifies to how far down the scale of transport modes, that cycling has gone. But it is slowly getting better.

If I lived on the North Shore, and with Skypath coming down the path, I think I’d seriously consider getting and using an e-bike to commute to work – either directly if I lived close enough, or via a cycle to the local NEX station otherwise. I’ve told this to my co-workers, as many of them they could easily get to Britomart by cycle then use the trains to get up the hill to Newmarket to avoid that 70m height climb. In journey time, they’d be way quicker than they can get on the motorway in the morning. Even I’d admit that while I could cycle from Britomart to Newmarket easily on my e-bike – I couldn’t beat the train for speed up the hills.

So roll on e-bikes for everyone. If ever there was a 21st century take on an older technology that is truly relevant for Auckland today, and in the decades to come – it would be an e-bike on the personal level and LRT on the mass transit level.

If you don’t believe me, on the e-bikes – don’t take my word for it – head on out to your nearest e-bike dealer and take a test ride on one. Then decide for yourself. Just don’t blame me if you end up wanting to buy one as a result.

Lastly

In part 1, I introduced a tinkly bit and said that I’d explain this in part 2.

Well this comes from all those Star Trek “The Original Series” episodes, which always ended with what we call “a tinkly bit” in our house. Don’t know what I mean or never noticed it before? Well watch the end of an original series Star Trek episode, just before the credits, the last scene is designed to provide an uplifting scene or amusing little vignette, right before the credits – the actors indicate this visually and music tells you this audibly. Visually usually either via Spocks raised eyebrow, or more usually, the smirk on Kirk’s face as he says “Set course, Mr Sulu!” or some such command. And because it usually has some tinkly background music to it, is why we call it “a tinkly bit”. So, here is a slightly uplifting, Star Trek & e-bike related “tinkly bit” to end this post on.

Some of you may recall a recent post about how the recently departed Leonard Nimoy (aka Spock), told how he cycled to get his lunch each day at the studio commissary while at the on the set filming the original Star Trek series episodes – it being entirely “Logical to cycle” in his words. Naturally enough it saved Nimoy time and no doubt, got him at the front of the lunch queue – so he could have some lunch and get back to set, in time to have his make-up and fake ears and such repaired/adjusted if needed. Meaning, he’d be ready to go on set as required. Shatner on the other hand, I’m sure, just had to tighten (or loosen) his corset, and dial down his smirk a bit after lunch, so he didn’t need “time in make-up” after lunch like Spock probably did.

See how, times change, even Captain Kirk himself (William Shatner), and Mrs Shatner both ride a (Pedego) e-bike these days, see this picture of them riding one each – this is from 2012.

Shatners_on_their_Pedegos_2012

The full article is here: http://www.pedegoelectricbikes.com/william-shatner-picks-up-pedego-interceptors/

And on that note, lets hop on our collective (e-)bikes and ride “into the future” creating “Auckland Cycling: The Next Generation” as we go …

February 2015 Patronage

We’d already heard about the spectacular rail patronage results of passing 13 million trips, an increase of 1 million in just 5 months. Now we’ve got the full patronage information for February and it’s looking good.

2015-02 - Patronage Table

One of the aspects I noticed in the table above is the Western line appears to have dropped however AT say that is just because of the timing of events last year and so if removing special event tickets from the numbers of each year shows patronage growth for the month of 9.8%.

One impressive aspect about the rail growth is that the total patronage in February was higher than any single month last year despite being only 28 days and including a public holiday. Only one month – October 2011 which was the peak thank to the RWC – has higher and the difference is only around 2,000 trips.

The total patronage growth is shown below.

2014-02 - AKL - Total Patronage

Other than the rail results it’s also pleasing to see buses growing so strongly. The Northern Express (NEX) is obviously still up strongly but other buses which carry the bulk of patronage are increasing too. For the 12 months to the end of Feb patronage was 7.6% (around 4 million trips) compared to the same time last year.

2014-02 - AKL - Bus Patronage

With results so strong I’m really looking forward to seeing just how big the numbers are for March. Given what I’ve been seeing and hearing about how full trains, buses and ferries are the results could be absolutely massive. Of course we’ve also been hearing a lot about buses and trains being so full that it’s putting people off using them, especially on the rail network where issues and delays have become an almost daily occurrence.

On issues, this is showing through in the train punctuality stats which have shown a decline in recent months and it can also in part be attributed to services being too full increasing dwell times. I suspect the 78% the western line managed to achieve could go much lower in March.

2014-02 - AKL - Train Performance

We also have Wellington’s patronage results for Feb which have remained flat. The monthly figures for buses and trains were down 0.2% and up 0.1% respectively. Due to growth over the last year they were both up on the 12 month figure though.

2014-02 - WLG - Total Patronage

West Auckland and Pukekohe/Waiuku New Network Consultation Outcome

Reports to the Auckland Transport board next week gives the outcome of the West Auckland and Pukekohe/Waiuku new network consultations that occurred last year.

West Auckland

In total AT say they had 1242 submissions on the network with an equal number (41% each) supporting and opposing the changes with the rest neutral. Given the changes that have been made as a result of the feedback AT expect the number of people who opposed the change will reduce.

New Network West Support

Before going into the feedback it must be remembered that the network was essentially compromised by the delaying of bus interchanges at Lincoln Rd and Te Atatu Rd. That meant that instead of being able to implement the new network as originally envisioned an interim network was needed which retained a higher number of low frequency services as shown below.

West Auckland With and Without Interchanges

Some of the notable demographics of submitters include

  • 60% of submitters are women which is not too dissimilar to the break down we saw in the Census data.
  • 58% of submitters are over 40 years old. Young people who tend to be the majority of PT users are very under represented with just 18% of submissions coming from those less than 30.
  • Perhaps aligned with the age numbers, 59% of submitters work while only 13% of submitters are students.
  • Of all submitters only 115 said they don’t currently use PT.

In total AT say they have made changes to 11 of the 24 routes originally proposed and that will mean it does cost more to run the network. These extra costs would not likely have been needed if the two interchanges were in place which once again highlights that having the right PT infrastructure can help save on operational costs. The 11 changes are below

New Network West Changes

And the map below shows what the official network will look like.

New Network West Post Consultation Map

And for the rural services these are the maps. AT said “Extending rail services past Swanson was outside the scope of this consultation and is not currently being investigated”

New Network West Post Consultation Map - rural

The report also mentions there was a lot of support for the development of the Northwest busway with 65% of people supporting or strongly supporting it and only 12% who opposed or strongly opposed it.

New Network West NW Busway

Pukekohe/Waiuku

There seems to have been much stronger support for the changes in Pukekohe and Waiuku. All up there were 939 submissions of which 643 discussed the Pukekohe changes and 542 discussed the Waiuku changes. Of those there was respectively a 90% and 95% level of support.

New Network Puke-Waiuku Support

There has been one change made to the Pukekohe network and of the three options originally presented, option 1 has been chosen and a modified version of option 3 will also be run.

New Network Pukekohe Post Consultation Map

 

New Network Waiuku Post Consultation Map

I understand we should see the next area for consultation in a few months.

Urban Form: AKL v CHCH

For those interested in the divergence of development patterns in New Zealand cities it is hard not to be struck by this page in the weekend’s real estate section.  Auckland is still growing out, but it is also growing up. Christchurch not so much, just out. Time will tell which model better suits the demands of this century. This also clearly illustrates how Auckland is an exception in NZ in more ways than just its size:

AKL v CHCH dev patterns

Should we relocate the Ports of Auckland?

Disclaimer: in professional life I have done some work on ports, including co-authoring the 2012 PwC report on future scenarios for Upper North Island ports. This post doesn’t reflect the views of my present or past employers or clients. It’s just a quick thought experiment, based on some data and a few assumptions.

The Ports of Auckland (POA) are back in the news due to their new reclamation plans. As usual, this has attracted both critics and proponents. POA’s plans have been criticised for their negative environmental impacts on the Waitemata Harbour, the loss of views of the Hauraki Gulf, and the fact that they will limit our ability to re-use port land for other purposes. On the other hand, they’ve been defended due to the economic role that POA plays in Auckland – it’s New Zealand’s largest port of import and also a significant port of export.

Ports of Auckland

As this suggests, there are both pros and cons to having a port located right on Auckland’s front door. How should we weigh them up?

Here’s one way of thinking about the question of whether we should prefer having POA in Auckland, or whether we would rather close it down and move our freight elsewhere:

  • The costs of moving the port would primarily relate to the added freight cost for Auckland’s imports and exports
  • The main benefit would be that we could repurpose POA’s land for alternative uses, such as housing, offices and retail, or public spaces.

How large are these costs and benefits?

The costs of relocating the port

One realistic way to look at the cost of port relocation is to ask: How much more would we have to spend to get the same outcomes?

If we closed down POA and shipped Auckland’s imports and exports through the Port of Tauranga (POT) instead, we would have to pay more to move those goods by land between the two cities. This would represent a net cost to New Zealand’s economy.

We can get a rough sense of these added costs by looking at current land transport costs and port volumes. According to an NZIER report published last month, in the year ended June 2014 POA handled:

  • around 968,000 twenty-foot-equivalent containers per year, 203,000 of which were trans-shipped to other ports in NZ;
  • around 207,000 cars; and
  • some other random stuff, like bulk cement.

Now, based on figures published in the 2012 PwC report (see Table 4 on page 76), the cheapest way to move goods between Tauranga and Auckland is by rail. It costs approximately $600 to move a single container by rail between the two cities. (Or around $750 to move a container by road.) While KiwiRail doesn’t currently ship cars by rail, rail operators in other countries do. Let’s assume, therefore, that it costs around the same amount ($600) to ship a single car.

Based on these land transport costs, we’re looking at an added annual cost of around $580 million. Yikes. A quite large sum. In reality, this is probably a bit on the high side, given that some of these goods will not originate from or be destined for Auckland.

In addition, we would forego the $66 million in annual dividends that POA pays to Auckland Council. So the total annual cost of relocating the port would be around $650 million.

The benefits of port relocation

Although the costs of moving POA entirely out of Auckland are high, we might be willing to bear them if the profits from land development were sufficiently high. So: How much would the land have to be worth to justify relocating POA?

Well, we know that, in order for it to be worth doing, repurposing the port land for residential and commercial uses, or public space, would have to yield at least $650 million per annum. That figure represents the minimum annual return that we would require from POA’s land.

Let’s assume, for a moment, that Auckland Council could get an average rate of return of 8% on its port land if it were put to other uses. This suggests that in order to obtain an annual return of $650 million, POA’s land would have to be worth a total of around $8.1 billion. (Calculated as follows: $650 million in annual profits / 8% rate of return = $8.1 billion.)

According to Wikipedia, POA has a total of 55 hectares of wharves and storage areas. If that were worth $8.1 billion in total, it would mean that the land would be worth around $15,000 per square metre. That’s roughly what it would take for moving the port to be a net benefit for the economy – city centre land values above $15,000 per square metre.

Now, this is in the range of current land values in the city centre – albeit on the high side. So redeveloping the port could, in principle, provide net benefits for Auckland. The case might get stronger if land values continue increasing and if the downtown revival continues at pace.

However, I don’t think this quick, back-of-the-envelope analysis proves much. For one thing, the benefits of port relocation are probably overstated due to the fact that it would be quite difficult to redevelop 55 hectares of downtown land quickly. It might take decades to realise the value of port land for alternative uses.

For another, it would be quite difficult to compensate the “losers” from the process – the firms and workers who would be worse off as a result of higher transport costs to their location in Auckland.

So, what should we do with the port?

As this analysis has (hopefully) shown, there are both costs and benefits to moving POA. And, for that matter, to leaving it in place or expanding it.

Moreover, the costs of moving POA are not infinite, which means that the benefits of doing so may at some point be large enough to justify the move. But they are very large, which means that we would have to be confident that we could actually redevelop port land in a reasonable timeframe.

It’s also important to recognise that there are other risks in moving the port, as well as uncertainty about some of the costs that I’ve cited. In my view, there are three main limitations to this analysis:

  • First, I’ve assumed that there are no technical constraints to doubling freight volumes at POT. This is probably not realistic – expanding that port would be costly both financially and environmentally.
  • Second, I’ve assumed that shipping lots more goods by rail between Tauranga and Auckland won’t drive up the price of rail freight. In reality, KiwiRail (or the government) would have to pay for quite a few track upgrades and purchases of rolling stock, which may drive up the costs of rail freight.
  • Third, I’ve assumed that it would actually be feasible to redevelop POA’s land, and that redevelopment of port land would create added value rather than simply diverting growth from elsewhere in Auckland. This is not unreasonable, but it won’t be a rapid process. As the Wynyard Quarter shows, it can take over a decade to active and develop a substantial chunk of new land.

Lastly, there are likely to be problems with the timing of funds. In principle, land development profits could be used to pay for infrastructure upgrades. In practice, it won’t work so neatly, as infrastructure requirements will be front-loaded while development profits trickle in over a period of years or decades.

In other words, actually moving the port is likely to be a costly and risky enterprise. It will be difficult to overcome the risks and up-front costs associated with doing so – meaning that we should expect the port to stay in downtown Auckland.

Port location: What do you think?

The transport benefits of street trees in cities

A while ago Kent and I made a proposal for a tree lined boulevard in Auckland. Curiously, the biggest theme of the comments section was about the perceived lack of value that trees bring to the street corridor. It seems that most people consider street trees to be at best, decoration, and at worst a waste of time and money, dangerous even. Indeed I have seen road design handbooks whose only mention of trees was to outline all their problems in the section of ‘non-frangible fixed hazards’ (in traffic engineering terms, frangible means something that will break off when you drive into it, rather than stay solid and crumple your car around it).

I wanted to use this post to outline some of the reasons why trees are beneficial for our city streets. Not just beneficial from appearance or character, but beneficial in the sense of making the street work better in terms of its transportation and land use.

A word of clarification up front however. I am  talking about trees on city streets, particularly urban inner city streets with speed limits of 50km/h or less and ‘stuff’ around that people actually do there (like live, work or play, and not just move). Trees on rural highways and back roads with nothing going on but through traffic are a different story.

So my point is street trees are not merely decoration and can be included in street design specifically for several practical, technical reasons. In no particular order, these are as follows:

 An outer row of trees can provide physical separation between the traffic lanes and the footpath, cycleway and retail frontages.

Your friendly local highway designer will tell you that trees are a fixed hazard, according to the Austroads design manual at least, and that a high speed highway needs a wide exclusion zone either side so that speeding drivers who run off the road can careen onwards without hitting anything. While this is a very appropriate safety treatment for a state highway out the back of Waipukarau, it is completely inappropriate for a city centre arterial.

For a start we don’t want a high speed highways through our inner city. That what the motorways are for and we don’t want cars and trucks to speed through dense people-focussed places at street level. Rather we want move plenty of vehicles in an efficient manner while keeping to a reasonable speed limit for a city arterial. Consistent reliable travel times and total throughput are far more important that high speed alone.

Secondly, we certainly don’t want vehicles running off the traffic lanes at high speed. In an urban context this means running over whoever happens to be walking on the footpath at the time and smashing into the front window of a shop or office building! We want to keep traffic in the traffic lanes.

Thirdly, we don’t want to waste scarce city land on wide empty shoulders for our main roads: we can’t afford the land and don’t want the severance it creates. Nobody wants downtown to look like Albany (and in fact I’m not sure if anyone especially wants Albany to look like Albany either!), and we shouldn’t really be spending good money to create empty verges in town centres.

So indeed, one very practical reason for street trees is to keep traffic in the traffic lanes and out of the footpath and shops. We could use bollards or Jersey barriers for separation, or wide swathes of land, or we could use trees.

Better to hit a tree than a primary school?

Better to hit a tree than a primary school?

Trees provide a physical barrier to prevent vehicles being parked across the kerb.

This physically stops people from parking vehicles on the footpath, or in medians or other non-traffic spaces. Again we could install bollards all the way along the edge of the road, but trees can do the same job too.

A physical barrier to stop people parking on the footpath.

A physical barrier to stop people parking on the footpath.

 

Street trees provide shade to the footpath and cycleway.

Shade would not be of concern to someone designing a rural highway, where they don’t want nor expect any pedestrians or anyone else not in a vehicle for that matter. But if we are talking inner city streets such things must be considered. People walk, cycle, wait, linger and loiter on city streets and a little shade goes a long way in the summertime. Indeed in Melbourne they have started a program of street tree planting to mitigate the increasing number of heatwaves, and shading the tarmac is a good way to reduce the urban heat island effect and manage stormwater. Trees are a handy component of a complete street that has many simultaneous uses, and users.

Well placed trees can shade the footpath to provide a comfortable walking environment.

Well placed trees can shade the footpath to provide a comfortable walking environment.

Trees can visually screen heavy traffic from the footpath and adjacent buildings.

…and to a lesser degree provide some containment of noise and fumes. Once again this is a very practical concern if we are discussing inner city corridors, particularly those that are ripe for commercial development. Heavy traffic is a necessary evil on city arterials, generally speaking, but it’s impact can be mitigated through design elements such as this.

Trees provide a perceptual barrier that visually narrows the the carriageway.

Perhaps most importantly, a rows of trees can be used to visually narrow a simple two way street or split the opposing directions of a multi-lane arterial with a physical and perceptual barrier. In the case of a multiway boulevard a row of trees can be used separate the local and through lanes from each other.

Overseas, using trees to separate lanes is an intentional feature designed to break up the wide roadway into discrete sections, each section being relatively narrow. The purpose of this is to perceptually narrow and contain each piece of road to no more than two  narrow lanes to remove the visual cues that encourage speeding. In effect the trees act like side walls, narrowing each part of the road and forcing drivers to maintain limited speeds. Without them, any multi-lane street would present you with a wide, straight, flat roadway many lanes wide, all if which tell your subconscious mind that you are able to put your foot down. Of course the highway handbooks define this as the problem of ‘shy lines’, assuming lanes should be as fast and wide as possible and describing anything less in terms of reduced capacity. But this capacity reduction comes from lower speeds, which is precisely the thing we are after on streets, if not highways. Furthermore the shy line effect is almost negligible on 50km/h arterials, it’s really a highway thing.

The literature is quite clear on this topic: people drive fast on big wide roads, and creating a visually constrained roadway is the best means to keep then to the speed limit (ever been infuriated driving on the highway behind someone who is slow on the single lane sections, but who speeds up second they get to the passing lane? That’s them simply responding to the form of the road: going slow and cautious on the narrow winding bits, and driving faster when it goes wide and straight. Its a simple, instinctive perceptual response…)

So we prefer to see this ‘problem’ as part of the solution. Here the trees become a perceptual traffic safety device for reducing speeding and keeping traffic moving efficiently at the proper speed limit.

Octavia Boulevard, SF. Rows of trees turn an eight lane monster into groups of two lane streets.

Octavia Boulevard, SF. Rows of trees turn an eight lane monster into groups of two lane streets.

But what about simple beautification? 

Finally however, what if the trees were just ‘useless’ beautification? And what of the potential for ‘useless’ good quality paving, street furniture, artworks even? Is it a waste of time to make things attractive? Should we spend money on a nice looking and pleasant urban environment?

In the case of the city centre or other town centres, absolutely we should. Recall what we are talking about here are on the whole prime commercial redevelopment sites, where we should aim to maximise both the sale value of the land release, and the intensity and value of the subsequent developments. Simple ‘beautification’ would reap big dividends on the final form of development in the corridor. That’s not to say street trees are all you need to create a blue chip commercial precinct bringing in rates and business investment, but they definitely contribute. Beautification is a practical function when it comes to catalysing redevelopment.

 

An "un-beautified" road. What sort of development would this attract? Hat tip stroadtoboulevard.tumblr.com

An “un-beautified” road. What sort of development would this attract? Hat tip stroadtoboulevard.tumblr.com

 

So there we are, several reasons why street trees should be considered as technical components of street design with specific transport outcomes. For a wider discussion of all the benefits of street trees, transport and otherwise, check out the 22 Benefits of Urban Street Trees by Dan Burden.