Auckland transport have released the timetable for the new Hobsonville and Beach Haven ferry services that start next week. As we found out a month ago, there are only two services in the morning and three in the afternoon. The biggest issue is the cost of the services, adult passengers will pay a cash fare of $12 from Hobsonville and $8 from Beach haven with HOP fares a little less at $9.20 and $6.40 respectively. One thing I do like is that the buses that will connect to the Hobsonville ferry wharf appear to have been timed to meet the boats however with passengers having to pay an additional bus fare it isn’t likely to be popular.
As the debate over intensification versus urban sprawl seemingly intensifies, there is one assumption that seems to underpin a lot of the discussion – from both sides of the debate actually. That assumption is that achieving most of Auckland’s future growth through intensification will be an enormous challenge, a ‘step change’ from what Auckland has done before, requiring a huge change in mindset away from living in a traditional (mythical) “quarter acre paradise” and towards living in different housing typologies like terraced housing and apartments.
Over time, the viability of attached and higher-density housing will improve, and provide choice for Aucklanders. Chapter 10: Urban Auckland shows examples of housing types across a wide range of densities and formats, and indicates the types of locations where we can expect them to be built. This is also explained in the following section on the Development Strategy maps. A healthy supply of high-density housing has the potential to address the challenge of housing affordability, through efficiencies in land use and infrastructure provision. The delivery of housing choices depends on many organisations, notably the private sector.
While it’s true that detached housing has typically constituted the majority of dwellings built, this doesn’t mean that Auckland’s recent growth has predominantly been through urban expansion – therefore making a “70/30 split” between intensification and expansion supposedly aspirational. Well some information we have managed to obtain from the councils research unit shows that when you look at the proportion of housing comprising either ‘intensification’ (additional dwellings within the existing urban footprint) or ‘expansion’ (additional dwellings outside the existing urban footprint) over the past 15 years a significant majority of new dwellings are ‘intensification':
Source: Auckland Council research unit – covers April 1996-December 2011
Looking at the numbers in terms of proportions it’s clear that in every single year many more dwellings have been consented inside the current urban area than outside – with 2005 being the year with the lowest proportion of intensification at 61%:
While of course many of the ‘easier’ intensification opportunities, such as infill housing, have been used up over this time (and the decades before it – Auckland has been significantly intensifying since the 1970s), what this information clearly shows is that achieving most growth through intensification is not really a challenge. We’ve been doing it quite well for quite some time. Clearly Aucklanders seem to have preferred the choice of living somewhere within the existing urban area – even if it meant a smaller section or an apartment or some other form of housing – than the urban edge.
Given this background, the Auckland Plan aspiration of 70% of development being within the 2010 urban limits (which actually go significantly beyond the 2010 urbanised area) seems nothing but business as usual and anything below that is actually a shift away from what Auckland has been doing for the past 15 years towards a greater focus on urban expansion. A focus on most growth through intensification is not revolutionary or aspirational or ‘requiring a step-change’ at all – it’s what we’ve been doing for quite a long time.
Hearings on the Regional Public Transport Plan started today and while I will probably cover this in more detail tomorrow, it is probably worth addressing the article in the Herald today. Of the more than 700 submissions the one that they decide to pick out is from a ferry company whining about trains, and to a lesser extent buses.
Auckland ferry operator Sealink says trains are gobbling up too much public money, depriving the two-harbour city of superior water transport.
It claims in a submission to Auckland Transport that billions of dollars are going to the least efficient transport service – one “generally located in the least desirable parts” of the city.
“Auckland’s defining feature is its maritime environment and ferries historically played a far more significant role in the city’s public transport than they do currently,” the submission says.
Sealink managing director Todd Bolton told the Herald that 70 per cent of Aucklanders lived within 3km of the coast.
The company wants Auckland Transport to back a wider network of passenger ferries to reach suburbs such as Howick and St Heliers in the east and Browns Bay and Takapuna to the north.
It also proposes circular routes in Waitemata Harbour similar to successful operations in Sydney, and vehicle ferries to Wynyard Wharf or Mechanics Bay from Devonport, Bayswater and Birkenhead.
“With relatively little effort and expenditure, certainly in comparison to the [$2.86 billion underground] City Rail Link, many vehicles can be taken off the severely congested choke point of the harbour bridge.”
The comment about Auckland being a water city gets brought up fairly frequently but the more you look at it, you realise that it doesn’t necessarily make ferries the best solution. For PT to be effective it needs to be both frequent while at least a bit competitive with other modes and looking at a map there aren’t really any serious locations where that may be possible. Many of the ferries that run currently tend to be focused on only running during the peak and outside of that the level of service is so infrequent it is not able to be relied on for PT. Sealink then point out that the cost recovery for ferries in total is much higher than either bus or train but that is due to that peak running and even just upgrading our existing ferry network to have frequent services (i.e. at least one service every 15 minutes) would involve substantial investment from both a capital and operating expenditure standpoint. Expanding out to new wharfs would increase these issues even further and that is before you even consider that probably most of the easy to service routes are already covered.
Ferries also have another huge disadvantage, like all other forms of PT people have to be able to get to them and we will need as many people as possible close to them to get patronage numbers up. By their very nature though half of their catchment is not able to be developed for people to live in as it is water which makes it that much harder to get patronage. One last comment from me on this, Sealink say that 70% of all people in Auckland live within 3km of the coast. That’s a pretty broad brush and do they honestly think that people will travel 3km just to use a ferry service?
But putting all of the above to the side, where could we actually run new ferry services to, here is part of a guest post that was submitted to us by reader Louis on the issue.
Ferries do not play much of an “everyday” role in public transit in most cities. They do have many disadvantages over land based modes of transport, including their relatively slow speed, lack of coverage and poor accessibility, not to mention that some people are put off by fear of sea sickness. Ferries are also more likely to be cancelled due to foul weather and are more suited to more direct routes, without stops, as docking can be slow.
In saying that, ferries can be very useful. They do have an appeal of comfort that buses cannot match and are the most scenic way to travel. They have their own right of way and will not get caught up in traffic. They also can take more direct routes than by land, for example the 12 minute ferry crossing is by far the quickest way to get to Devonport. It’s also much easier to take your bike on the ferry, than on the bus. I think ferries do have some potential in Auckland, a city with a long association with the sea, to develop as a convenient way of transport. Modern ferries are more stable and faster.
It would be very interesting to see data comparing fuel consumption and CO2 emissions between ferries and road transport.
I was thinking of possible places where routes could be expanded, I have marked existing services in red, the new Hobsonville Point / Beach Haven stops in blue, and future stops in Green.
Western Harbour area:
Currently there is one ferry service between Downtown and Westpark Marina. However next week a new ferry service, operated by 360 Discovery will begin between Downtown, Beach Haven, and Hobsonville Point. The downside is the poor frequency – only two return services each weekday (none on weekends), and the high fares. I would like to see a half decent all day frequency, say once an hour. Adding a stop somewhere around Island Bay could be worth considering.
I think a ferry service to Te Atatu could be a winner. It would be faster and more relaxing than going via road in peak hours. Ferries to Point Chevalier have also be suggested in the past, however that would be impractical in my opinion and unlikely to be faster than land transport.
Mission Bay / Saint Heliers:
There have been suggestions of ferry services to Mission Bay and Saint Heliers. I am not sure this would be a great idea, as it would require new wharves to be built. I worry about the major disruption to recreational swimmers,etc. But it would provide a useful service.
There has been talk about new ferry services along the Tamaki Estuary. Stops could be at Glendowie, Bucklands Beach, Point England, Farm Cove and Panmure. I cannot see this working very well to be honest. The service would be extremely slow and I suspect that the train would be a faster option for residents of Glen Innes and Panmure and for Bucklands Beach, a short feeder bus ride to Half Moon Bay. Also the estuary is very tidal and would probably require expensive dredging. A better option would be to improve frequencies on the existing Half Moon Bay run.
Howick / Beachlands:
Including a Howick stop on the current Pine Harbour / Beachlands run would be very useful. But I think the costs and inconvenience of building a wharf at Howick would be prohibitive. Once again, an improved frequency would be good to see.
East Coast Bays:
Ferries along the East Coast Bays have the disadvantage of not being as competitive with roads. A service to Takapuna would be nice, but a new wharf would cause great disruption to boaties, swimmers and so on. Other possibles could include Mairangi Bay, but that can be exposed to large waves when the wind blows from the Northeast. Murrays Bay is also an option, but the existing wharf would probably not be suitable for a ferry service.
Further north there is more potential. A service to Browns Bay could work very well and would be far more appealing than sitting in traffic. It could be included as a stop on the Gulf Harbour route, with a boosted frequency.
So as you can see, while there are a number of opportunities for expanding services, I think the most opportunity could be gained by improving existing services, in two ways:
1) Integrated fares: It is extremely disappointing to hear that ferries will not be included in the integrated fares scheme. Personally I think that would be a mistake. Ferries have a problem that a lot of their walk up catchment area is the sea, so have a greater reliance on feeder buses to deliver passengers, something that becomes unappealing when one has to pay to change services. I see no good reason why ferries should be priced at a premium rate, they should be included in the zonal system.
2) Improving frequencies: As I mentioned above, frequencies on ferries are currently very poor. I think we need services every 15 minutes on the Devonport run and half hourly off peak services on most other routes. This would be a great way to get a larger patronage base, as it could be relied on as being reasonably frequent.
There was an article in the NZ Herald yesterday about the price of parking in the city centre. This is always a pretty sensitive issue as nobody likes paying for parking, leading to some rather interesting statements.
New Zealanders living in the country’s largest cities are paying up to $32 more for casual private parking than those in smaller towns.
In Auckland, the private carpark company duopoly of Tournament and Wilson have come under pressure to lower their rates to match the council’s.
Four hours’ casual parking at one of Tournament’s sites in Auckland’s CBD costs $32 ($4 per half hour) – the same as the carpark’s daily rate. And in Wellington, the same amount of time costs $40 ($5 per half hour).
But in Dunedin, four hours costs only $8 at a rate of $2 an hour.
Well duh of course parking in Auckland will be more expensive than in Dunedin – because there’s much greater demand in Auckland and probably a much higher willingness to pay for parking. The price of parking in Sydney would probably make our eyes water, I imagine the same is true in London and other very large cities.
And of course trust Cameron Brewer to enter into the discussion:
Mr Brewer, chairman of the Business Advisory Panel, said the council had “done well” to reduce its charges in its three main parking buildings in the central city.
On November 19, Auckland Transport made its first changes to pricing since 2005. The change was part of an effort to steer people away from on-street parking for long periods in the central city and towards parking buildings.
Parking in the city after 6pm used to be free but the start time is now 10pm. Auckland Transport also reduced the peak casual hourly rate from $5.50 for the first two hours and $4 or $5 per hour thereafter to $3 an hour in the Civic, Downtown and Victoria St carparks. A daily maximum charge of $17 replaced the old maximum of $29.
“However if the private providers keep ramping theirs up, they run counter to the mayor’s vision of creating a world-class city centre. They will only put people off the CBD,” Mr Brewer said.
Along with most others on the blog, I was reasonably supportive of the parking changes – especially as on-street parking will eventually be charged in a way that relates to the level of demand in that area. I also think that short-stay parking in the city centre has been over-priced in the past (and long-stay under-priced) leading to daft outcomes like people being better off if they drove into the city at peak times to take advantage of the cheap earlybird pricing. Also from observation the price of earlybird parking hasn’t actually changed particularly much in the past decade, probably reflecting a decline in the number of vehicles entering the city during peak times.
And some interesting points are made by Tournament Parking:
Tournament’s national business manager, Matt Ryan, said the “huge disparity” in pricing across the country was due to demand on parking resources.
“In saying that, the carparking market across the main centres is actually very competitive … so the reality is that if a parking company prices too high, customers will walk.”
Mr Ryan said the Auckland Council’s plan had become “very focused on short-term parkers in an attempt to increase patronage in the CBD”.
“We applaud this move as it is breathing more life into the CBD. However their strategy does not appear to provide any recourse for daily commuters who actually comprise most CBD parkers.
“The reality is that until Auckland’s public transport services are improved, motor vehicles shall still pour into the city each morning at increasing rates, and these commuters do need to be catered for – and that’s where the private parking companies have a significant role to play.”
Mr Ryan said more than 85 per cent of Tournament’s daily parkers pay Early Bird rates which are cheaper than Auckland Council’s daily rate of $17.
There’s an interesting dynamic in the parking business where declining demand (due to better public transport) will probably lead them to lower parking prices, potentially attracting people back from public transport to using their car. Hopefully Auckland Transport (who operate the council’s parking buildings) will remove themselves from the commuter parking business in the not too distant future so they stop undermining the public transport we’re subsidising and also so they can focus on short-stay parking which actually provides some economic benefit through encouraging shoppers into the central city. In the longer run it would probably be good for Auckland Transport to get out of the off-street parking business completely and leave it to the private market as there doesn’t seem to be too much public benefit in having them involved.
Finally, most of the sites managed by Tournament Parking are absolute blights on the cityscape so hopefully over time those sites get redeveloped while the declining number of car commuters into town will mean these aren’t replaced.
The release of the CRL designation documents has definitely helped clarify a few key facts surrounding the CRL. One of the biggest happens to be that the Inner West Interchange (IWI) has been dropped in favour of the Eastern link and that was picked up by the Herald yesterday. With that interchange gone it should mean AT can now hopefully start to put a bit of effort into what service pattern we can expect to see. I think that if they get that right, it is something they should be able to start using to help promote the project. It would help to show that the it isn’t about looping trains around and around in circles or just about improving access to the city centre but that by routing trains through the tunnel that we can open up new destinations.
First for the sake of comparison, here is my understanding as to the thinking was with the IWI. It was largely driven by the fact that the majority of passengers in the city centre would be going to either Aotea or Britomart so the focus was on getting them to those destinations first. That means sending all trains from the southern and eastern lines through to Britomart and then up the tunnel on to Aotea and eventually the IWI. Eastern line trains would then head out west to Swanson while Southern and Onehunga line trains would terminate at the the IWI. They would then have to travel back down the CRL, likely mostly empty before either going to a stabling yard to be built at the strand or back out to Onehunga or Papakura. Off peak a shuttle would run between the IWI and Newmarket however during the peak it would be extended to Henderson. Just to make things even more confusing there would also be a handful of trains from the west at peak times that would do one run then terminate at Britomart before going to the previously mentioned strand stabling depot. For the sake of making it easier to show, I have shown this without special peak services.
So what can we do now that we know the eastern link instead of the IWI is being designated. By sending the Onehunga trains via Grafton it then gives us two routes that enter at the southern end and two at the northern end. Linking then together so they don’t end up going back on themselves means the western and southern lines get joined while the eastern and Onehunga form the second line. People from the west who want to get to Newmarket would still be able to do so either be staying on the train or swapping at the new Newton station like described in this post. Any trains that are not needed off peak would likely finish their run out to the suburbs before heading to a nearby stabling depot (there are now a number which fairly close to end of each of the major lines).
Going a step further, I think the next rail project off the rank shouldn’t be rail to the airport but the comparatively cheep branch line to Mt Roskill. The reason for this is that the route is all ready designated (was done in the 1940s) while the more recent motorway works have included providing for the line at most places. With the exception of Dominion Rd, all bridges have a clear space or extra span for the rail corridor so the line should be fairly easy to build. It may not seen that important but the route ends up serving a couple of useful purposes. Stations at Dominion Rd and Stoddard Rd could serve as a focal point for the local buses from the southern end of the isthmus. That should either help free them up for their run to the city and/or allow the number of buses that need to run all the way to the city centre to be reduced. The other big benefit would be that services that run on this branch would add capacity on the inner parts of the Western line at the parts it is usually at its busiest and the area most likely to benefit from the CRL due to the vastly reduced time to the city centre.
The question of course is where you would run this line to and when you think about other major PT developments that are going on, and you instantly turn to Panmure. With the AMETI busway feeding into the Panmure station having extra capacity, and frequency is probably going to be extremely useful. A turn back station at Panmure (or possibly Sylvia Park) which is just used by the driver to change ends, would allow those trains to terminate here without getting in the way of other trains using the tracks.
What we end up with is a network with three main lines going West, East and South and with a series of short lines that work to boost capacity on the inner parts of the network. The Mt Roskill branch would also allow us to look at other through routing options but I won’t explore that further in this post.
News emerged the other day about the Manukau Golf Club moving to a new location with their existing site having been sold to Fletchers who plan to turn it into housing.
More than 700 members of one of Auckland’s best-known golf clubs are upping sticks and moving south.
The Manukau Golf Club, off Great South Rd near the Southern Motorway at Manurewa, is shifting 8km away to Alfriston-Ardmore Rd near Ardmore Airport, after more than 80 per cent of members voted to leave their 45ha site.
Fletcher Residential is understood to be paying more than $40 million for the site, which could take 500 to 800 houses and is already zoned residential.
Here is the area being talked about.
But it is perhaps the last line of the article that has got a few people annoyed.
Conifer Grove Residents Association chairman Jan van Wijk said people had enjoyed beautiful views across the greens for many years but this would all change once Fletcher moved in. Homeowners on Keywella Drive, Chippewa Place and Aristoy Close would be worst affected and concerns had been raised about traffic and congestion once the new places were built.
“I don’t think everyone is thrilled about it but we can’t object to it. If it comes up for consultation, we’ll certainly make some noises, asking for decent quality housing,”
Mr van Wijk understood a 600- residence low-density development was planned.
It is fairly widely acknowledged that Auckland will need to increase its density to help with accommodating the expected population growth over the next 30 years. The Auckland plan has a focus on on getting 60-70% of all dwellings built in the next 30 years within the existing urban limits. As such I have seen a few comments from people saying that we should be putting medium to high density dwellings in here but I think that ignores a few realities. The first is that the council seems to have realised that one of the key things to making density more attractive to people is that a location needs to have good amenity, particularly in the form of a local centre and good transport links. Unless the council and/or Fletchers decide to put a town centre in here (which isn’t necessarily a bad idea) then there is unlikely to be the needed amenity to really support higher density.
The issue of transport links raises another interesting debate. The North Eastern corner is semi close to the existing Te Mahia however according to the RPTP that is set to close. Even it if were to stay open, which I don’t necessarily agree with for a number of reasons, only the closest of the houses would be within walking distance while the vast majority would still need to use other methods if they wanted to catch a train. That means for public transport, buses feeding into Manurewa are likely to be key so any development whether it includes a town centre or not really needs to take that into account. One big opportunity with the development is that it could enable much better connectivity from places like the nearby Conifer grove. Currently that area has only one access point which happens to be a motorway over bridge so one bad bridge strike by a truck could cut off the neighbourhood for days. This development provides the potential to solve that problem while at the same time potentially providing more feasible bus route and a quick look at the roads suggests that Brylee Dr was designed from the start with this in mind.
One last comment on the issue of density. A quick calculation shows that the density in Auckland as a whole is roughly 2400 per square km while the average house size is 3 people per dwelling. With those figures in mind and the minimum number of potential dwellings being 500, the density of this development would be around 3300 people per square km so while it has been described as low density development, it is not likely to be quite as low density as Auckland is used to. That could change further as it is likely the unitary plan that the council is currently working on will be in place by the time construction kicks off and the new rules will hopefuly dramatically change things like minimum lot sizes and setbacks which would allow for more dwellings.
Personally I think a mix of terraced houses and traditional standalone houses are what is needed here but really we will need to wait to see what plans Fletchers produce (Fletchers feel free to get in touch with me if you want to share your plans). One thing I would almost bet on is that we will see a whole heap of roads in this development with golf themed names.
Someone at the Herald must have let John Roughan back at the typewriter because today’s editorial on another harbour crossing appears to have his fingerprints all over it.
No one seems to doubt Auckland will need another harbour crossing to the North Shore within a generation. The chances of it being another bridge are dwindling but plans for a tunnel under the Waitemata are cautiously being progressed. Too cautiously, in the view of former North Shore mayor and current Auckland Council member George Wood. He has half a point.
Mr Wood believes transport planners ought to be engaging now with community groups as they move to protect a likely route for a tunnel or tunnels east of the harbour bridge. The Auckland Council 30-year plan favours the tunnel option with provision for a rail line to future-proof its capacity. Since that plan’s publication, the Transport Agency has said it would base any application to the council next year for route protection on that premise, despite its judgment that no crossing would be required until 2030.
So it starts out innocently enough and was obviously driven by the article last week where the NZTA confirmed there was no immediate need for another crossing. I’ll start by saying that I think a new crossing will be needed at some point, just not one for cars but I will talk more about that shortly. It then goes on to talk for a bit about how Georges fears of the project being left to drift are probably not needed as the NZTA has proven that they are able to get big projects pushed through both consenting and construction phases. But it is after this that things go down hill pretty quickly suggesting that the biggest threat to the project is the talk of future proofing it for a rail line.
The bigger threat to timing or funding for a tunnel might be any requirement that it include rail, even if it is only on paper to “future-proof” the project. The rail option would work only if the tunnel project was preceded by Auckland mayor Len Brown’s push for a CBD rail link, the multi-billion-dollar tunnel pushing through Britomart station and up-town to Mt Eden. In current conditions it is unlikely both can be funded in the next decade or two even if Auckland ratepayers and motorists accept high tolling and regional charges to carry much of the burden themselves.
Aucklanders and their elected leaders need to prioritise these projects and de-couple them so that at least one is digestible. Development and liveability of the North Shore could well be harmed if the second crossing is tied to the more politically controversial CBD rail link and delayed. The National-led Government believes no such rail link is justified for 30 years: the Auckland Council sees it as a cornerstone for the city’s transport, housing and economic progress.
Which is the more efficient and vital recipient of the nation’s economic resources? The case is clear for a harbour crossing, only timing is in dispute. The case for the CBD rail link is persuasive but unconvincing, a costly, nice-to-have project which in theory would relieve traffic congestion and alter residential development.
Does the North Shore want or need rail in any case? The Northern Busway has been a successful public transport option and would presumably be more effective if the harbour bridge is decongested by a parallel road tunnel.
About the only think I agree with is that it is unlikely both can realistically be funded in the next two decades and that we need to prioritise both our funds and focus on the one that will have the most impact. To even suggest that the most important project is another harbour crossing is the most important is laughable. For starters it is a duplication of a route that already exists and who’s only purpose is to increase capacity to allow more people to drive to the city centre, flooding it with cars when we are trying to make it a more pedestrian friendly place. The CCFAS also confirms that it is expected to absolutely destroy patronage on the busway undermining the investment made in it so far. The CRL by comparison provides a new route that speeds up trips to the city centre without putting any extra cars on the road and that helps to maximise the otherwise underutilised rail corridors. At $2.2 billion all up including things like new trains, it is also considerably cheaper than $5.3 billion harbour tunnel which is the one that more and more looks like “a costly, nice to have project”.
Lets also not forget that due to the sheer cost of another crossing both the new and existing routes would need to be tolled with estimations from a few years ago suggesting that $8 per crossing would be needed.
On the topic of rail to the North Shore, there was a bit of a discussion last night on how the CRL designation docs don’t make any mention of how a North Shore line integrate with the CRL. A couple of years ago the plan was to also put the trains through Britomart with a junction under the downtown mall however thankfully that has now changed. My understanding is that the more detailed designs for the Aotea station include the provision for a connection to platforms that would be under Wellesley St. As that would be under a road anyway, it would probably only serve to complicate things with the designation so as long as the station is designed and built in a way that enables it to happen in the future, there is likely no point addressing it now (although it would be nice if AT were to officially confirm this).
My first post suggested Demographia’s primary findings were not supported by independent evidence, such as alternative “rent-income” and “home affordability” indicators. My second post then outlined some issues with their “median-multiple” indicator (calculated as the median house price divided by the median household income).
This post will now refine some of these criticisms, before outlining some of my own ideas on the causes of housing affordability issues in New Zealand. First I wanted to tease out some of implicit assumptions that underpin Demographia’s “median-multiple” indicator, namely:
Median-matching: This issue was best articulated by James H: “the median-multiple indicator carries an assumption: that the income-earners at and around the median are the same group who demand the houses priced at and around the median, and that result can be extrapolated for other price-income pairings. As mentioned in the post, that excludes measurement for a large group of earners at many income levels who are in fact happy to rent for a range of reasons. Also I doubt whether median houses are often bought by median earners for a variety of reasons including life stages, geographical differences etc.”
Independent inputs: This issue relates to the fact that the two inputs into the median-multiple indicator (house prices are income) are actually not independent of each other. Consider a situation, for example, where most of the houses in New Zealand were being bought and sold by relatively wealthy households, and that these households subsequently experienced high income growth, while incomes for the general population remained broadly unchanged. In this situation the median house price (and median-multiple indicator) would rise simply because income growth was concentrated within the same people that were purchasing properties, rather than because housing was becoming less affordable.
The second issue is quite important, because it implies that changes in income may in fact impact on house prices. The figure below illustrates the input data used by Demographia for Australia. In this graph, we find a strong positive correlation between median household income (x-axis) and median house prices (y-axis).
This suggests that locations with high incomes have more expensive housing (surprise surprise!). More specifically, it suggests that for every $1 increase in median household income there is a corresponding $5.1 increase in median house price. While that sounds like a lot, note that income is measured p.a. whereas house prices are “total.”
My final comment is on the relevance of Demographia’s indicator. i.e. the “so what” question? It seems that the parts of New Zealand with the highest median-multiple ratios, such as Auckland, are actually attracting the fastest population growth, as illustrated below. Of course, this may reflect other factors that are at play, but it does suggest that our housing affordability (at least as measured by the median-multiple indicator) is not yet significant enough to drive people away.
Thus, population growth in these places seems to be going the other direction from what Demographia would expect – we are increasingly moving to areas that they consider to be unaffordable. Based on this evidence, I’d suggest that the median-multiple indicator used by Demographia is not a good measure of housing affordability. Instead, it seems to measure:
The degree to which income growth is invested in housing; and
Population growth (which will tend to push up property prices but suppress income growth).
It’s not clear to me that the median-multiple indicator measures housing affordability, and nor is it clear to me that the urban containment policies pursued by local governments are binding to the degree that they have major impacts on property prices. They may be – but Demographia’s indicator does not, and cannot, tell you that.
My personal view is that the primary impact of local government regulations is not through the constraints they place on land supply (i.e. urban containment), but actually through the barriers they create to the development of more compact and affordable housing. Here’s some examples of regulations pursued by local governments in New Zealand that seem likely to restrict the supply of affordable housing:
Minimum lot sizes – i.e. “all ye who have less money shall be forced to purchase land you don’t want.”
Minimum apartment sizes – i.e. “all ye who have less money shall be forced to purchase living space you don’t want.”
Minimum parking requirements – i.e. “all ye who have less money shall be forced to pay for vehicles you don’t own”.
Maximum height limits – i.e. “all ye who chose to live like rats are consigned to perish like rats – on the street.”
Heritage protections – i.e. “all ye who don’t have the money to renovate a villa shall live elsewhere.”
In my experience these policies are often more binding constraints than the availability of land. So my suggestion is that housing affordability has less to do with policies that favour urban containment (as Demographia and the National Party would have you believe) than they are to do with the plethora of policies that suppress more intensive and affordable housing. I’d go as far as to say that most of our policy settings have a systematic bias against the development of compact and affordable housing.
In this light, it seems that recent political announcements have missed the mark. National are deluding themselves into thinking that the release of land on the urban periphery will deliver meaningful and sustained reductions in the cost of land, and by extension housing. Labour and the Greens, meanwhile, seem intent on using government capital to build our way out of the problem – which is not only expensive but also runs the risk (at least on the surface) of building the wrong kinds of houses in the wrong places. None of these three parties seems to yet acknowledge that some of our issues with housing affordability may be the result of policies that prevent urban intensification.
So instead of writing the foreword to next year’s (deeply flawed) Demographia report, I’d suggest that Bill English – and other National cabinet Ministers – should be writing letters in support of proposals to develop apartments, town houses, and units in places like Milford and Orakei. And more importantly, they should be making submissions on aspects of the draft Unitary Plan that support and/or prevent more compact and affordable accommodation options. Onya Bill.
Submissions to the Board of Inquiry hearing of the Kapiti Expressway project have highlighted what seems to be a pretty critical hole in the cost-benefit analysis process: that the impact on land values of transport projects is simply ignored when it comes to assessing whether they stack up or not – that is whether they lead to an economic gain or not. This is pointed out by a Wellington Scoop article which quotes an opponent to the project Dr Christopher Dearden.
Dr Dearden says the following:
“Our objective has been to stop the implementation of a hugely wrong solution to a relatively minor traffic problem for which there has already been an agreed, locally supported and considerably cheaper answer – the Western Link Road. A road which would have added to the country’s assets rather than depleting them…
“We have been caught in a situation which is not of our making. It’s a situation where argument is difficult because the proposed expressway has no economic rationale, no practicality in traffic numbers or need, is not geographically or sustainably justified, and flouts all cultural sensibility. It relies on pure political whim and it’s difficult to mount rational arguments against that.
“We ask you to reject this application, return the Western Link Road to us, and recommend enhancement of the existing State Highway 1. If you do allow this white elephant expressway to go ahead, then … the rest of our lives will be a time of suffering noise, light and pollution damage as well as vibration. So will all the 1400 households which live within 200 metres of the expressway, and there will be enhanced pain from all those factors relentlessly during the next five years while this monster is built. As many have pointed out, all our properties will lose their value and be unsaleable. Ironically, we will make the biggest contribution to the cost of this road that destroys our lives.”
I have put the really interesting bit in bold – the likely impact of the project on the value of nearby properties. The great irony of motorway projects is that if it runs through your house then you’re the lucky one as you’ll be bought out – the really bad situation to end up in is if the project runs just over your fence. That way you get no compensation but the value of your property property is likely to decline.
Of course all transport projects have positive and negative impacts, with the positive and negative effects felt by different people in different locations. However I think it’s really problematic that the cost-benefit process ignores a potentially significant impact of transport investment, the impact on land values both in a positive and negative sense, because these impacts may end up being potentially some of the most significant effects of the transport investment. A good cost-benefit analysis should attempt to quantify all likely impacts of an intervention so it just seems weird (or mightily convenient for the motorway builders?) to ignore effects on land values.