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Govt to force sprawl?

The governments new housing minister, Nick Smith has hit headlines this morning saying that he is going to smash Auckland’s Metropolitan Urban Limit (MUL) in a bid to make housing more affordable. But the more you look into his statements, the more it appears that he has arrived at his position purely based on ideology rather than facts.

New Housing Minister Nick Smith is vowing to break the “stranglehold” of Auckland Council’s policy of containing urban sprawl – a policy he says is “killing the dreams of Aucklanders” by driving up house prices.

In his first major interview on how he plans to tackle the housing affordability issue handed to him in January’s Cabinet reshuffle, he said his focus would be on opening up land supply because land prices were the biggest factor putting home ownership out of reach of many Aucklanders.

“There’s no question in my mind that we have to break through the stranglehold that the existing legal metropolitan urban limit has on land supply,” he said.

But Auckland Mayor Len Brown hit back last night, saying Dr Smith was advocating a flawed Los Angeles model of “suburban sprawl and unbridled land availability”.

“I’m pretty disappointed in the minister’s positioning, and I am disappointed because it reflects a philosophy or view of city development, and particularly development of our city, that goes back to the forties and fifties,” he said.

Nick is using some fairly emotive language here and what’s more, it seems to ignore the work that has been going on about this issue. For starters by being so focused on only one aspect of the issue, land supply, he seems to be ignoring all of the other factors that go into the price of housing. He also seems to ignore another key factor in mix, demand. The reality is that Auckland’s population is growing, and growing faster than the rest of the country combined, more people flooding into the city is always going to put more pressure on house prices.

population-growth-comparisons-nz

Projected Population Growth

And on that subject, these days more and more people are wanting to live in the suburbs closer to the city, the very places where we can’t create more land, not flung out to the outskirts of town. This is especially the case for young people who don’t share the utopian vision of the house in the suburbs that our parents, or even grandparents were sold on in the post war years. The article continues:

“When we are looking at growth in Auckland of 2 per cent a year, we are going to need sections at the rate of 12,000 a year,” he said. “The metropolitan urban limit is a stranglehold on land that is killing the dreams of Aucklanders wanting to own their home and we have to work with the council to find the tools to increase that land supply and bring section prices back.”

He said the council’s plan to contain 60 to 70 per cent of new housing within the current built-up area would fail due to “community angst over intensification” and economic reality that squeezing two houses on to one existing quarter-acre section could knock $200,000 off the value of the existing house.

First of all, we don’t need 12,000 sections a year, we need need 12,000 dwellings, the two are not the same thing. He is also kidding himself if he thinks that we are building quarter acre sections. In fact it would be interesting to find out when the last subdivision was built that contained quarter acre sections. A quarter acre is ~1000 sq meters yet most recent housing developments tend to have sections less than half that size. In fact many of the houses going in at Hobsonville are on sections of less than 300 sq meters. So If you look at the current development patterns, we have already moved away from the quarter acre paradise that people claim when opposing intensification. Speaking of which, any GIS wizards out there able to work out just what the average section size is in Auckland?

Further his comments about infill housing miss some key details. Yes the value of the existing section will drop but overall both pieces of land will have a higher value. Also he seems to be suggesting that someone who owns a quarter acre of land isn’t capable of making a decision on whether they want to subdivide their land and along with the trade off’s that entails. After all no one is proposing that the council is going to go in and force people to split their land up. I also don’t agree with the suggestion that there will be a lot of community angst, yes there will be some in specific cases but by in large, most of the intensification that will occur over the next 30 years will be medium density developments, that is town houses, terraced houses and low rise apartments.

But Mr Brown said Aucklanders had already agreed on the city’s “compact footprint” through developing the first Auckland Plan, and Dr Smith should stop debating it.

He said the plan was based on “a model that is developing truly internationally competitive cities with strong economic bases to them and that give rise to outstanding transport operations within a more compact framework”.

“Have a look at Melbourne,” he said. “Have a look at Hong Kong. Have a look at London. All of those cities, by and large, are operating off what is regarded as best practice.”

As Len says in this bit, there has already been plenty of debate around housing and by in large, I think that most of the community do agree that Auckland should get denser. When I attended a discussion group about the Unitary Plan late last year, I was quite surprised by the discussion around this topic and how much everyone, of all ages and backgrounds agreed with the direction we are heading. This leads me to believe that the majority of those complaining about increased density are very much a vocal minority.

I do have to disagree with Len’s example cities though, Melbourne is more sprawling, with a lower population density than we have. Hong Kong is the complete opposite and not exactly the example we are planning to follow either. What we need is somewhere in between. I also think we need to be talking more about the advantages of having higher densities in Auckland, particularly the additional amenities that it enables, like having more local shops, cafes, dairies or better parks etc.

Both Nick Smith a Len Brown were also on Radio New Zealand this morning talking about this topic.

or Listen here.

Nick brings up another issue that needs to be addressed. The Unitary Plan which gets released for discussion next week proposes to remove the MUL and open up more land. Yet recent announcements from the government will likely prevent those changes from coming into effect for a number of years. Something also picked up by reporter Todd Niall in this report:

Or listen here.

Overall it seems to me that that Nick Smith has come into this debate with a massive agenda focused solely on removing the urban limit rather than looking at the whole picture. He appears to be planning on using his powers of government to get enact his ideological agenda. As Steve C said this morning “it’s interesting how the democratic process imposed on local government, i.e. consult, consult, consult, differs from the deomocratic process for central government, i.e. we’re elected and we’ll do what we want”

93 comments to Govt to force sprawl?

  • Trev

    Does he want all growth to be through sprawl? If so, adding another million people means Auckland will reach Hamilton!

    • Fast express trains to Hamilton would buck up their housing market, and the towns on the way, while taking some of the heat off Auckland’s. Dormitory towns seem to work well in other parts of the world. But I don;t think this is what Smith means

      • Ben S

        Fast express trains to Hamilton is far too sensible an idea to ever get any oxygen.

        Breaking the MUL amounts to heaping more failed suburbs on top of the piles of failed suburbs we already have.

        Which, given the dominance of the car, will heap more transport (and social) misery on everyone.

        There’s plenty of scope for tons more mixed density housing inside the MUL – it’s just a bit harder and a bit beyond the capabilities of our bureaucrats…

        • The support for electrification from Pukekohe to Frankton would be nonexistent, I imagine, and without that we’d be back to having to pay for and maintain a diesel fleet; diesels with a much higher performance profile than our current ones, too.

  • Daighi

    What are Labour’s policies with regards to developing affordable housing in Auckland?

  • Brendan

    National won there “mandate” to sell assets with 47% of the votes, and Len Brown won his mandate to contain urban sprawl with 48.7% of the votes, so surely Len Browns mandate is stronger. (3% stronger to be exact).

  • Ash

    The silver lining to this is that despite the damage it will cause to the social fabric to keep throwing up far-flung communities, it will fail terribly, particularly when the NZ dollar falls or oil supply starts to fail to meet demand.

    But God, a change of government can’t come soon enough!

  • Nick R

    Why do they all think that rural land that is zoned for housing will stay cheap if the MUL is scrapped. Surely the outcome will be that fringe rural land becomes as expensive as that inside the MUL.

    The only reason rural land is cheap is because you can’t subdivide it!

    If they are going on the supply and demand theory then they are also wrong, there is a huge supply of fringe suburban land available already. That does nothing for prices where the demand is. The only thing that will fix that is more housing in the areas with high demand!

    • Swan

      “If they are going on the supply and demand theory then they are also wrong, there is a huge supply of fringe suburban land available already.”

      Not true. Len Brown himself said not long ago we have 15000 sections ready to go. That equates to may a couple of years supply. Imagine if all the operational oil fields in the world had only 2 years supply between them. What do you think that would do to the price of oil?

      • Except that that’s two years ready now, but with plenty more available. If the world had two years of oil supply left in total the panic would be incredible. That’s not the situation with our land supply, though, even with what’s inside the MUL. When Len says “ready to go”, he means zoned, permitted, and only in need of construction.

        • Swan

          But there remains considerable uncertainty about the timing of future availability. My analogy was about operational oil fields, I think it’s a fair one.

          • There’s a lot more available land within the MUL than the two years’ supply that Len mentioned. Lots, lots more. It would be ready to go by the time it was needed.

          • Frank E

            If there is land inside the MUL already than I don’t see any purpose in it remaining.

          • There’s plenty of greenfield land inside the MUL. Getting rid of the MUL will just encourage more sprawl, which the Council will end up being nagged into supporting, and which will continue to impose significant costs on taxpayers. What problem would getting rid of the MUL solve? Not one, except for an imagined political problem that National with their anti-city bias cannot recognise as requiring different solutions to the ones lobbied for by their Property Council mates.

          • Swan

            You seem to have a lot of faith in the system. The figure from this report had around 70000 sections available with the MUL (more if you count rezoned and redeveloped commercial, but that is very uncertain supply)

            http://www.dbh.govt.nz/userfiles/file/publications/sector/pdf/adequacy-auckland-region-residential-land-supply.pdf

            So that is maybe 7 years supply. Not what I would call lots and lots. And there is plenty of research supporting the effect of the MUL on land prices.

  • Max

    We (my girlfriend and I) are searching for a house at the moment, and – to a good degree because of my girlfriends wishes – are searching for one with a relatively large section where she can do some gardening (400sqm would probably be our minimum). So in theory, I should be liking Nick Smith’s talk.

    Yet I absolutely hate his agressive nonsense, because while, yes, I am looking for a larger section, I am also looking for something close to the city, not out in the greenfields sticks. If I can’t find a large section here for the price I can pay, I will compromise on the section size, NOT on the location. This nonsense talk from this government is really making me angry.

    • Nick R

      I am the same, I had a pretty low budget but location was most important, so I compromised on land to the point where I have only a large balcony. My tomatoes grow well though, and my little potted lemon tree is coming along.

      • Frank E

        While you may compromise on section size, others will compromise on location.

        Overall I think the best way to increase housing affordability (to the extent to can be) is to get rid of a bunch of regulations. This includes the ones supported on the blog like minimum parking requirements, minimum lot sizes etc. and also the MUL.

        I don’t see any need to set a arbitrary limit. Let the market deliver what the market wants

        • Anna

          Perhaps if the market paid for what it wants, Frank E, you may have a point. But it doesn’t. Growth is heavily subsidised by both the rate payer and by fuel excise. From memory the Development contributions review revealed that in Auckland developers contributed just four percent towards the total cost of growth. Additionally the use of a network contributions. Fot things such as transport mean that there is little incentive to develop where infrastructure is ready in place cause someone else is paying the lions share of new infrasstructure

          • David V

            “Growth is heavily subsidised by both the rate payer and by fuel excise.”

            That’s interesting Anna. How does this subsidy occur? How much does each extra house on the fringe cost ratepayers? What is the breakdown of the cost? How can these costs be avoided or lessened?

        • I agree as long as all the densification controls are gone (minimum lot size, minimum coverage, minimum set back, minimum parking – not so sure about height controls but I suggest less than 5 stories should be allowed everywhere) as well as the sprawl controls.

          I dont know if this happens anywhere in the developed world but I would love to find out. As I understand, the cities in the SW USA (e.g. the darling of sprawl advocates, Houston) all have controls that limit density (as listed above but no zoning controls) but none that limit sprawl.

          Then we will really see what the market wants. Until then releasing any urban limits will only encourage the auto dependent friendly city we have now.

  • dan again

    I don’t see what you guys are worried about. You always preach about how people are wanting to move into these large, spacious, super affordable apartments with no carparks in the middle of the city. If your claims are correct the market wont make any sprawl at all.

    • tuktuk

      No Dan again, the higher density housing we want to shift into are those old tram era villas, bungalows and cottages in the Auckland isthmus. These are perfect case studies of attractive higher density city homes. And, the market has already spoken – the price for a Mt Eden bungalow or villa is sky-high. Because, the government is so intent on interfering in the marketplace by preventing more innovative housing where the market has demonstrated people want to live….. we are going to be stuck with suburban ghettos on the fringes of the city.

    • Max

      Dan, you are either brand new to these discussions, or willfully ignore the half of it that doesn’t fit your mindset. The fact is that opening up greenfields is NOT just market forces. if it was all about letting developers pay the costs of developing a new subdivision out in, say, Kumeu – many here could maybe live with that.

      The real result of a new major subidivison in the greenfields is:

      People buy cheap houses there

      People complain that Council hasn’t provided them with any services (schools, roads wide enough for their many cars, sewerage, broadband)

      People complain, complain, complain

      Local government caves in, and starts to provide the services, at enormous cost, and relatively low efficiency (because those greenfields are far away, and not so densely settled)

      Local government tries to make people PAY for the cost of the new infrastructure

      People complain how their rates are rising horridly, yet they still haven’t got their broadband, and their rural mainstreet is clogged every morning at 8am

      NZTA builds them a new motorway, telling the inner city folks there’s no money for PT, and the local government minister threatens Len Brown that he better keep his extortionate rates down

      • dan again

        I’m fully aware that previous discussions here suggest any new developments will be purposely designed to be some worst in the world. The point is however is that people here claim that nobody wants such a house, regardless of how cheap it may be.

        • Max

          Gosh, I am unable – no, unwilling – to discuss the major false & misleading statements you are making here. Maybe someone else is, but I am finished.

        • tuktuk

          No Dan again, people want choices. The Auckland Unitary plan provided the ability for people to make choices in their housing preferences with a mix of greenfield developments along with opportunities inside the city limits. Nick Smith’s comments suggest that he is going to offer only two choices – a Mac-mansion or First-home style box on the fringe of the city. The reason that this pattern will emerge is that large residential construction companies, the government’s choice of modus operandi prefer the path of least resistance or imagination on enormous bare blocks of land. And, the reason why financially it stacks up, is as Max has pointed out, the real costs of providing infrastructure to serve these new suburbs do not fall on the developer.

          The motorway infrastructure to service these city fringe developments – ah yes – a P.P.P. What that means is that NZ gets contractually locked into multi-billion dollar roading contracts where scrutiny of the process or economics is not possible due to commercial confidentiality, but where the ultimate down-side financial risk, along with all those interest payments in the meantime, falls on taxpayers. Now – if the terms of those P.P.P contracts were to change to instead load the risk, and loan financing costs onto the developers and owners of all those new greenfields housing sub-divisions, I wonder how cost effective those new developments would look then?

          So, come on government, in the interest of ideological purity how about making those developers of these new sub divisions pay for roads like the Holiday Highway? If that were to happen, then it would be worthy of a name other than Holiday Highway.

      • conan

        Be interesting to see how the government is planning to have the council fund infrastructure to these new areas given they are keen to reduce or remove development levies. I think the short answer maybe is existing ratepayers. Lucky us.

  • Gian

    well if you pay to put up a nice school and university, bars and restaurants and theatres in Kawakawa bay, and you also move my job, I’m happy to buy a cheap huge house there, Nick. Would help a fast connection to the airport and fibre broadband as well. Thanks.

  • obi

    Brown would have more credibility on this issue if he didn’t live in a semi-rural area on the outskirts of the city, miles from useful public transport. I don’t know what Brown’s home is like, but the average section size in the area is about 100x50m and plenty are even bigger. That’s almost the size of an entire block in the CBD.

    Mapnificent, mentioned here in the past, suggests Brown’s home and office are around 2.5 hours apart using public transport. No wonder his chauffeur drives him to work.

    I’m not commenting about the merits of the argument. I just object to being lectured to by politicians who say one thing and then do another.

    • Max

      “I’m not commenting about the merits of the argument. I just object to being lectured to by politicians who say one thing and then do another.”

      Yes, you are commenting about the merits of the argument. Unless Len Brown is asking for special planning exemptions for himself/for mayors (or for his particular patch of Auckland), his situation is pretty irrelevant.

      In the same vein, you could consider me as lecturing you about roads, because I have no car. What right do I have to support one roading project over another?

      • obi

        Errr, no. I’m not commenting about the merits of the argument because I’ve mostly been convinced by posters and commenters here that there is plenty of scope to intensify inside the MUL, and also plenty of undeveloped greenfield land inside the MUL. But if Brown is a believer in urbanism then he shouldn’t live in a lifestyle block area. It’s like a Green MP owning a Hummer while telling everyone else they should take the train.

  • Yes, busting the MUL is an “option”. Not a smart one, and not the best by far.

    The Gummint could always take the heat out of the market by restricting immigration OR

    cutting the depreciation deductions

    OR adding a CGT

    OR adding an Oz like duty.

    But they won’t. It seems helping out yer developer mates is always more rewarding…

    • tuktuk

      Restricting foreign ownership of property would also certainly take the heat out of the housing market in certain parts of Auckland. Note the issue is that we are talking about overseas investors with a visa only, no permanent residency let alone a New Zealand passport. No xenophobia here, just a call for fairness.

      • Frank E

        I don’t how you can tell the difference between ‘investors with a visa’ & ‘potential residents with a visa’.

        • How about “Permanent Residents or Citizens only”. You know- like China and Japan and Fiji and Samoa and all those countries smart enough not to sell themselves to foreigners?

          • That’s what I’d like to see. We shouldn’t be selling property (residential, commercial, industrial, agricultural, it doesn’t matter to me it’s all land we can’t re-create) to people who don’t have close and enduring ties to this country. I don’t care if they’re black, brown, white, yellow, or iridescent, if they don’t intend for NZ to be their home and weren’t born here they shouldn’t be allowed to own real property here except as shareholders in a listed fund.

    • JohnP

      Most of Auckland’s growth comes from births minus deaths, not immigration.

      • Dave Westie

        Is that why 40% of Aucklanders were born overseas…….? The growth is partly from immigration per Massey University demography studies. It is mostly controllable through immigration caps, just as house prices could be managed by requiring residential purchases to have residency like many other countries already do. Who wants this extra 1million people?

    • Swan

      Restricting immigration? For starters immigration has been modest for several years. Secondly, don’t the utlilty functions of the would be migrants count. Or is this another case of a cat and his cream?

      I mean, seriously, what business of yours is it if an immigrant wants to build a house on the outskirts of the city, and a land owner wants to sell him the land, sand a builder wants to build it for him? Where do you get off telling people what they can and can’t do?

      As for depreciation deductions, they have already done that several years ago.

      And no demand side solution affects the actual physical reality of x people vs y dwellings.

      • Swan- “Where do you get off telling people what they can and can’t do?”

        Er- I don’t. Council and Parliament do that, I’m just making suggestions. You know this is a blog right not Hansard?

  • Kevin

    If mass urbanisation is so wonderful why are you all living in Auckland rather than say Sydney or London? Both have better public transport and much higher population densities.
    Could it be that the government is trying to avoid Auckland being turned into just another soulless overcrowded city where kids recreation involves a play station as they have no back yard and despite living on top of them nobody knows their neighbour?

    • Max

      Yeepers, that crack again? I live in Auckland because I LOVE the place. I want to improve it, not flee it.

      And no one here is asking for “mass urbanisation” – intensification is, seen over a whole city, a very gradual process, and leaves a lot of different choices. But it still is very affected by the large-scale drivers, and this government is doing their best to keep those drivers stuck in 1950s mode.

      And the crack about not knowing my neighbours? Absolutely false flag / straw man argument. If one has more people around you in close proximity, of course you know fewer and fewer of them personally. A human being only has a finite time for friends & acquaintances. If you only ever meet 50 people in your daily life, chances are you are going to know most of them reasonably well. If I regularly meet 500 or 5000, chances are I still will only know 50 people.

    • tuktuk

      Gawd – an argument of hyperbole again! We’re not talking mass apartment blocks, we’re talking about offering choices. I have lived in Sydney in a nice terraced home in Glebe, and in Grey Lynn in nice old fashioned cottage. Both were considerably denser in population than mac-mansions on the fringe, both had back-yards, and the neighbours were friendly!

    • Can I ask what “soulless overcrowded city” you lived in?

      I have lived in 9 cities in 6 countries (incvluding high density cities like Prague, Bucharest) and the most soulless area I have ever seen was Ellerslie in Auckland. Horrendous. Nothing but traffic sewers everywhere and noone spoke to their neighbour.

      In contrast, Prague was a vibrant ubercool city with great transport links and kids walking around everywhere with footballs or hockey sticks. And they didnt have to be driven to practise by their parents.

  • Cam

    The thing is I and many people like me who are currently house hunting can already buy cheap house on the far flung edges of city. How exactly is this going to change anything? This will do nothing to make housing more affordable in places where people actually want to live.

  • Cam

    ‘Could it be that the government is trying to avoid Auckland being turned into just another soulless overcrowded city where kids recreation involves a play station as they have no back yard and despite living on top of them nobody knows their neighbour?’ – Take out the overcrowded bit and you have actually described Auckland as it currently is.

  • Kevin

    From what I’ve seen it’s not soulless, very friendly and feels spacious. In fact the best city IMHO bar none.
    Compared to London and to a lesser extent Sydney it’s paradise.
    My earlier post is based on real observations not opinion! Both unbelievable and unfortunately at the same time true….

    • But again, what compact, transit oriented cities have you lived in? And dont mention any Australasian city as almost none of them meet that criteria and few US cities either.

      If the answer is none, but maybe you have done a Contiki tour of Europe, you dont really have anything to compare it to.

      I can compare living in a dense transit city (Prague) to living in a less dense (though actually still quite dense by Australasian standards) auto-dependent city (Auckland). Both have about the same population and I can tell you Prague was a pleasure to live in compared to most areas of Auckland and had much more of a civic spirit.

      NZers have done their best, despite Auckland’s fantastic natural setting, to slowly strangle to death with cars a nice compact city of lovely streetcar/tram suburbs. Such a shame.

  • Oriel

    I would be interested to know if Nick Smith can point to a successful example of his ‘plan’. Is there a city that he can name that proves that sprawling suburbia is the answer to unaffordable inner-city property prices?

    These new suburbs will demand new roads, which means that anyone who goes in search of the ‘dream’ out in the sticks, will probably find it takes an hour each way along a congested motorway to get it.

    Thankfully, I won’t be around to see it happen. I’m off to Melbourne.

    • obi

      “Thankfully, I won’t be around to see it happen. I’m off to Melbourne.”

      I hope you’re joking. I’ve spent a lot of time in Melbourne and love the inner city… But the place is absolutely huge. The degree of sprawl is astonishing and as you take off from Tulla you can see new suburbs being built all around the edge of the city, along with new motorways. Even then, people commute from Bendigo and Geelong and other distant cities, turning them in to satellite towns. I don’t know if all this sprawl “proves that sprawling suburbia is the answer to unaffordable inner-city property prices”. Inner city Melbourne seems to be more affordable than Sydney, even if it isn’t cheap in absolute terms. However I think it would be valid to say that the sprawl has helped contribute to a vibrant regional super-city that attracts plenty of NZers, Including Oriel.

      • I think with some of the suburbs of Melbourne (and yes there does seem to be new ones each time I fly into Tullamarine) it doesn’t really matter how far out you actually live if you can live your whole life in the burbs and never need to go to the CBD, nor to suburbs on the other side of the city. I spent some time working in Burwood East and getting there from a neighbouring suburb and life was OK for the duration. I also had another Melbourne stint, this time in the CBD, and couldn’t find a place to rent or buy where I was happy with the commute. Same when I lived in Adelaide, having a job in the burbs made it OK, but I never wanted a job in the CBD because of all the hassle of getting into town each day.

        Suburban office parks have a lot going for them, especially if they are on a cycleway.

  • Malcolm M

    Two other cities are listed in the post as examples based on their past rather than their current direction.

    Melbourne is an example of sprawl, but now, “apartment approvals in Melbourne comprise almost 50 per cent of all approvals, higher than the national average of 40.4 per cent.” http://theage.domain.com.au/home-buying-tips/ripples-in-the-heartland-of-suburbia-20130228-2f6z6.html

    Los Angeles is also an example of sprawl, but who would want to be selling a house on the edge ?
    Palmdale (edge) $40-$300k http://www.homes.com/Real_Estate/CA/City/PALMDALE/
    Burbank (inner) $400-$800k http://www.homes.com/Real_Estate/CA/City/BURBANK/p3/

    There are even edge house lots as low as $9k. Yet despite these ultra-low edge prices, there are plans for apartment towers in the more inner areas such as Hollywood.

  • DAS

    The argument should be about what you need to spend to buy what you want. So if you wish to buy high density you want to do it at the most affordable price possible, as does someone who wants to buy low density. There is a direct correlation between prices on the fringe and the inner city. This correlation exists in any city worldwide. The more affordable the prices on the fringe, the more affordable they are (relative) in the inner city. Having less restrictive zoning is the ‘valve’ that allows lower prices on the fringe, which over time will follow into the city. Prices are lowered by not allowing speculators to achieve non-value added profiteering. Other non-value added profiteering is also achieved by councils with not allowing land to be developed at the rate of demand, and also by their monopoly on what they charge for services and development levies. These restrictions also need to be removed. This lowering of prices could come about with a real drop in prices or a relative drop by where prices will not rise (or more slowly) and inflation will over time restore housing to the affordable of 3 to 4 times annual medium household income. Higher house prices force new home owners to do one of two things when they purchase. They either stay in the location they are in but lower their expectation of what they can buy, or they drive outward to qualify for the type of property they want. Lower prices reverse this. Relaxing restrictive zoning allows this lowering of prices across the board to start to take place. There are some provisos to this. If it does not happen in the right way, then prices will not be lower eg if council and/or the developer capture this saving before it reaches the purchaser, then all that is achieved is a super profit for the council and developer. Also one of the intents of less restrictive zoning is to flood the market with potential development land and thereby lower prices via supply and demand. However, this could trigger a bigger demand boom from the likes of the unrestricted foreign buyer market. As much talk there is of foreign buyers forcing up prices, we ain’t seen nothing yet if they really take an interest in us. Since the beneficiaries of any lower prices should be NZ home owners, this restriction on foreign owners (and speculators of any nationality) needs to be considered. As buyers of any type of housing can more affordably move closer in, then the ability of public transport to work is enhanced. Len Brown’s comment about turning Auckland into another Los Angeles is true if he sticks with his model, as Los Angeles uses exactly the same type of restrictive zoning policy as does Auckland. Better cities to make the comparison with would be Dallas and Houston, both of which have great public transport systems, and give their residents a very affordable choice of whatever density they wish to live in. Reducing the cost of housing gives the homeowner more disposal income, which could be used to fund their travel at a far less subsided rate on both private and public transport.

    • Dallas and Houston! What complete nonsense. These are the poster cities for unrestrained sprawl, recent ineffectual Light Rail projects that can’t compete with the vast road and parking over-supply not withstanding. At least they’ve got their own oil industry in Texas.

      See below; this is Nick the Hick’s vision; sprawl and motorways and a huge cost burden for Aucklanders. Nothing other than faith based nonsense from the corrupt hillbillies currently surprised to find themselves in charge of a nation. Read it and weep:

      • DAS

        Well, at least you were quick to admit that given a level playing field public transport cannot compete with private transport. This graph also illustrates that mobility and productivity go hand in hand as these cities are the fastest growing cities in the USA at present, with Texas GDP at about 8.5% per annum, and its residences having one of the highest disposable incomes in the world. But you miss the point I was making in the rest of my article. Len Browns compared Auckland with Los Angeles, in a negative way, if restrictive zoning was relaxed. To reiterate, Auckland already is a smaller version of Los Angeles now, because it has already the same type of restrictive zoning. Yes I understand that for public transport to be less uneconomic, density has to be a lot higher, but there is no need for this to be at the expense of house prices – unless you are promoting that by causing people to spend the majority of their income on shelter (which takes precedence over mobility) then they will not be able to afford private transport and will be forced to take public transport. Having to spend so much on housing also robs families of taking care of other needs like health, education etc. But depending on your ideology, maybe it’s not too much of a price to pay if they will use public transport more.

        • Public transport is already ‘less uneconomic’ than the auto-highway transport, but that’s by the by. No one is planning to force anyone to use Transit, but it would be good to have the option. Currently we are all forced to own and run cars and fund vast and uneconomic over-built road infrastructure.

          The GPD of Texas has much more to do with a local boom in natural resources than urban form. However the urban form and the subsidies in the form of cheap to free parking and federally funded roads do indeed making driving the rational choice in these cities. Level playing field?: You’re very funny.

          Look again at the chart above, energy is wealth; that they currently piss it away in Texas is their business, we just shouldn’t be so damned stupid to try to copy it.

          • DAS

            And I assume that you were also kidding when you said force was a good option to have. The main point of my article is that non-valued added cost, for costs sake, is theft by another name and is robbing NZ’ers of a better life, and the choice of a better life. Remove the non-value added costs, lower land prices, give people more disposable income, and give them the choice, not one or the other but both choices to use when they want and at a less subsidised rate. Of course if you could not trust them to make the right choice, you could always force them to.
            And the GDP of Texas is due to nearly 50% of new USA company relocations choosing Texas due to the affordable commercial development costs and affordable housing costs for their employees. Companies can pay their Texas staff less, and yet staff have more disposable income due to the lower housing costs. A win for both parties. Imagine companies wanting to relocate to NZ because of our affordable housing/higher disposable income. NZ manufacturing might have a chance. Having a great outdoor lifestyle in NZ only goes so far when you have to work some of the longest working hours in the OCED to affordable the indoor lifestyle.

          • No, no, no, force is not a good option, an efficient and appealing Transit system would give us the option of not always having to drive. That’s the option that would be good to have. We don’t yet. And we could, so easily, with about 3bil over ten years diverted from unnecessary overbuild of roading.

            You have an overly sunny view of Texas that fails completely to grasp some key differences. For example the current resource boom and the fact that it is part of this bigger thing called the USA. Very poor comparison for NZ.

          • Frank E

            I don’t know if you’ve been to Houston but it does have a good chunk of dense housing close to the centre. It’s not Europe or New York but it’s better than most ‘new age’ cities.

            Also remember that gas in the US is about half of what it is here so you’d expect sprawl to be more prevalent. Especially with the free market model they have in Houston.

      • SteveC

        Houston is not a good example to emulate, almost completely unrestricted land development, someone could build a cement batching plant next to your house, no footpaths in many suburban areas, but it does have exclusive bus/hov lanes down the centre of many freeways with massive park and rides at the extremities

        not one of my favourite US cities

        • Frank E

          While someone could build build a cement batching plant or whatever it pretty much never happens. While it may not be one of your favourite cities it clearly is for others as it is one of the fastest growing cities in the US & despite that it doesn’t have a housing affordability crisis.

        • DAS

          Good example regarding concrete batching plants because if you go to the end of Bushlands Park Drive subdivision in Albany and look over the bank to Tawa Drive, that’s exactly what you will see. So what was your point?

      • David V

        Patrick Reynolds,
        Your chart shows that Houston has far less people per unit area than Hong Kong and also shows that Houston people use far more petrol per person than people in Hong Kong. Neither of these facts should be very surprising.
        Singapore has a denser population than Vancouver and they use more airconditioning and eat more Laksa there too. What is your point? Do you wish Houston people to use less petrol? Would electric cars make you happy?

  • Richard Horner

    Tuk Tuk has touched on the real problem with Auckland housing and it’s nothing to do with a lack of land. My Wife and I recently sold our Auckland house and evacuated back to New Zealand. Estate agents will tell you it is immigrants who are forcing the prices up and builders are building houses to suit as well. Auckland is already far too big for its population and must be contained.

    Our house sold for well over the valuation and there appeared to be no New Zealand born citizens at the auction with about 50 people in attendance. This apparently is a common scenario created by Government’s immigration policy which becomes Auckland’s problem.

    • Swan

      “Our house sold for well over the valuation and there appeared to be no New Zealand born citizens at the auction with about 50 people in attendance.

      I’m sorry were they unable to produce their papers on demand?

  • Cam

    “From what I’ve seen it’s not soulless, very friendly and feels spacious” Ah by “not souless” you mean bland. Well whatever floats your boat I guess.

  • RedLogix

    Sighs. Nick Smith’s argument is something like this. Cars are made of steel therefore if we dig up more iron ore they will be cheaper.

    The cost of the raw undeveloped land is about 10-15% of the retail cost of a section. Even an infinite supply of land will make only the smallest difference to the cost of housing.

    Nick Smith is an intelligent man and knows this perfectly well. Draw your own conclusions.

  • jonno1

    Just a comment on the inner vs outer infrastructure costs for new development, albeit simplistic for the sake of brevity. I am not making a case for or against either sprawl or intensification (in my view there’s room for both), but it’s a little unrealistic to assume that one (outer infrastructure) is inherently more expensive than the other.

    Firstly, greenfields subdivision development is very straightforward – you set out your roads then lay the pipes and cables etc in long runs with no traffic or reinstatement issues. Where the development abuts existing infrastructure the developer usually meets the costs of betterment (eg kerbing, channelling and resealing a former country road). Similarly, the land for building is contoured to minimise building costs and any necessary geotechnical work is done. So apart from the high level stuff based on total population (eg water supply, sewer works, telephone exchanges, substations) I don’t see how the general population of ratepayers is subsidising these developments.

    In the city, however, the present infrastruture (particularly water, wastewater and sanitary sewers) is already heavily loaded in many areas. I don’t know how far sewer separation has progressed in, say, Remuera, but a development I did there some years ago involved many thousands of dollars just to separate and upgrade the council sewers, and this all for a single infill house. More recently a nearby apartment block required several hundred thousand dollars of expenditure to reroute a dodgy council stormwater sewer before work could even start on the building.

    Lastly, it’s been mentioned before on this blog that multi-storey apartment blocks cost approximately 50% more per square metre to build than low rise (up to four storeys). Someone recently linked to an Australian construction index to demonstrate this point – the absolute numbers will be different from Auckland but I suspect the ratios are similar.

    Please note that I’m not discussing here transport costs, travel time or lifestyle issues which will vary widely depending on personal circumstances.

    • I think one of the traps that is often fallen into is assuming it is just roads, water and power etc. expanding cities will often require more schools, hospitals, fire stations, police stations and all sorts of other social infrastructure to enable our way of life. While we do need more of these things with a growing population, much of it can come from using existing resources more efficiently e.g. it is generally much easier to add a few classrooms to a school than it is to build a brand new one from scratch. Even if you ended up having to rebuild much the existing school, it would probably still be better as you can do it over time and it provides benefits to existing pupils and teachers and has other benefits i.e. one principal instead of two. Same thing goes for that other social infrastructure.

      Another factor not often considered is the maintenance costs over the life of the assets. Roads for example may be initially built by the developer but after say 25 years, will probably need redoing. That isn’t a cheap task and if you have traditional sprawl, it is unlikely the amount of rates paid by the owners would come close to covering the replacement costs. In higher density areas those costs can be better paid for and shared amongst the population.

      • jonno1

        In respect of social infrastructure Matt I agree that incremental growth works to a point, beyond which there needs to be a step change. It’s interesting that both Hobsonville Point and Stonefields, as examples of recent subdivisional developments, have both included new schools.

        I’m not a roading engineer so don’t have an understanding of their lifecycle, but I live on a private road which is about 20 years old with no noticeable deterioration to date, apart from having replaced footpath pavers due to parking issues (oh, and a bit of road-marking paint every few years). I would be very concerned if a local road built to modern standards lasted only 25 years, but in any case local road maintenance is a shared cost over the whole city – there’s no connection to individual property rates.

        • TimR

          Interesting to note that Hobsonville schools include PPP models, another example of greenfields being subsidised at point of delivery by deferring the costs…

        • Flat Bush also included a new high school, at a cost of $50m. That’s a whole hell of a lot of upgrading existing schools to handle extra pupils, and has much higher ongoing costs because it involves a full set of executive, administrative and support staff. The taxpayer is wearing the whole cost of that bit of sprawl-mandated engineering.

    • Mr Anderson

      Fair points jonno, though Matt has pretty good answers to all of them too!

      On the issue of multi-storey apartments costing much more to build than low-rise, that may be true but remember often it’s the land that makes up the bulk of the cost of a dwelling and with a multi-storey apartment you only need to buy a pretty tiny amount of land. I think Nick worked out that his apartment’s share of the site it’s on is something like 35 square metres of actual land – which he costed out as being worth around $40k or something. So even if the apartment is expensive to build, he’s spending such little money on the land that it’s more than counter-balanced.

    • TimR

      This is one good précis of the greenfield economics… I have found more, can’t lay my hands on the lins right now.

      http://www.urbanophile.com/2011/04/15/replay-the-power-of-greenfield-economics/

    • Mr Anderson

      Tim that piece seems quite accurate if we were looking at things 5-10 years ago and if we were looking at the US rather than NZ. One could hardly argue that Auckland’s outer suburbs are “doing better” than the inner suburbs. The article has that whole 20th century “move outwards” assumption sitting behind it which really doesn’t seem like it’s true anymore.

      My feeling is that greenfield development these days will only stack up if it’s subsidised to the hilt. Which is my huge worry – that we’ll be so keen on getting some greenfield development happening and for it to be affordable that we’ll end up spending scarce public funds there rather than on the inner areas where we’d get much better “bang” for that buck.

      • TimR

        Did you read it too quickly? Aaron pretty much takes the point of view that sprawl is bad- he’s just unpacking how it acquired economic advantage for those playing the development game…

  • JeffT

    I recently attended a meet n’ greet with the Reserve Bank Governor, Graeme Wheeler, and one of the questions I asked him was whether there were any regulations being considered for non-residential property investment in Auckland, as the increase in house prices is one of the two inflationary threats seen by the Bank.
    His reply was that they are looking at a range of measures including reducing the debt to equity lending ratios.
    Great, all that will do is make it harder for locals to buy houses.

    I believe the strong demand has as its engine room, foreign purchasers. Countries including the UK have restrictions on non-resident property ownership. It’s time we followed suit.

    Nick Smith’s solution will do nothing to address the causes. We deserve a better standard of politician in NZ.

  • Of course what the gov must see off is the crazy thinking that failure to sprawl produces like this:
    http://www.guardian.co.uk/commentisfree/2013/mar/06/live-city-dont-need-car

    Whaaaaaat!?

  • Jennifer

    Wouldn’t t it be great if people had the sort of options they do in larger cities with decent transport links then one of the key drivers for inner city demand is mitigated. Friends and relatives of mine in the UK, working in London – live in Farnborough (Hampshire), Horsham (Surrey), Stowmarket (Suffolk). The transport links may cost a bit but they are there, are rapid, relatively frequent, and folk get to live in a bit more space. In fact my cousin in Horsham has around 2 acres of land. We all have stories like this. A rapid transit link to the south would provide a wider range of options for folk here. Huntly could be less than an hour away.

  • AC

    Funny I was just going to post the exact same link!
    Boris, a Tory, wanting to promote CYCLING as a major flagship project all over London. Who’d a thunk it?

  • Sanctuary

    I was talking to my friends from Washington DC, who love where they live – three of them in an 1800 sq ft. apartment in a complex of eight in four floors, part of a wider architecturally coherent group around a central circle of shared land. 1800 sq ft apartments. Architectural coherence. Central shared open space. Seemingly not that hard, but a bit much for Nick Smith it seems.

    The key to understanding Nick Smith’s outburst (or, indeed, the would-be shady deal with Skycity or the way contracts have been let in the Christchurch rebuild, etc etc) is grasping the cronyist nature of NZ’s incestuous capitalist class, and how that translates into a total policy capture by the vested interests that make up the ambient National party support base.

  • Steve D

    Some very basic GIS wizardry: of all privately-owned sections under 1 acre in urban Auckland, median size is 703 sqm, mean is 793 sqm. This will be a bit of an overestimate as it includes commercial zones, and unit title developments are counted as a single section. But the median should be pretty close. A few not-formally-statistically-random samples of areas I knew were residential gave a median of 680 sqm. Either way, well under a quarter acre (1012 sqm.)

    If I had some GIS data for district plan zoning types I could do a bit better, but can’t find any.

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