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The land supply issue

The question of how many available sections there are in Auckland for development has yet again raised its head in the last couple of days, with much debate over whether there are 15,000 or 2,000 or some number in between of sections available to build houses on. This from yesterday’s NZ Herald:

Auckland has 2000 new sections ready to build houses on, says Mayor Len Brown, who last month claimed there was enough land for 15,000 homes.

As debate grows about housing and land supply in Auckland, Mr Brown is no longer claiming the city has enough new land to build 15,000 houses “right now”.

Instead, he is saying there is capacity for 15,000 homes on ready-to-go greenfield land in areas such as Flat Bush, Takanini and Hobsonville, but only 2000 sections have reached the building stage.

“The remainder require subdivision and internal servicing by private sector developers to create sections,” Mr Brown said.

Much of the debate seems to be around semantics – what constitutes ‘ready to go’ land? What is the role of Council in delivering land to that point? What is greenfield land?

Clearly there’s a process that developers go through to turn what starts out as countryside into urbanised housing. I’m not really an expert but it seems like it probably goes along these lines:

  1. Land is highlighted as suitable for future urban growth (i.e. placed inside the urban growth boundary). Usually this land seems to get a ‘future urban’ zone or something similar to prevent further subdivision that would make it difficult for that land to be comprehensively redeveloped in the future.
  2. Structure planning occurs to highlights where roads, parks, schools and other facilities should go as well as which areas should be zoned for what activities/intensities in the future.
  3. Rezoning occurs to enable redevelopment. Bulk infrastructure (water mains, arterial roads etc.) is provided.
  4. Land is subdivided down to section sizes and internal roads and pipes, electricity and phone lines are provided to each site.
  5. House is built and then occupied.

At some point (between steps three and four it would seem) the job of council is done. The main roads have been built, the land has been rezoned, the bulk water supply, wastewater pipes and so forth have been put in. Unless the Council is fulfilling the role of land developer, which in some cases they might well be (like Flat Bush town centre, which I think the Council owns) then it’s hard to lay too much blame at Council for not forcing developers into the final processes of subdividing and building on their land. Ironically one of the biggest greenfield developments on the go at the moment is at Hobsonville – where the government is effectively ‘the developer’. Maybe they need to tell themselves to hurry up and develop that land a bit quicker?

So it seems to me as though something is clearly going wrong between the ‘rezoning’ step and the actual land subdivision step – the difference between the 15,000 figure (which is quite a lot of capacity) and the 2,000 figure (which really isn’t that much). Some developers are sitting on land that has been rezoned and has been provided with bulk infrastructure yet for some reason they’re not subdividing it down to urban sized lots and either building the houses themselves or getting someone else to build the houses. It would be really great to get a better understanding of what’s needed in that process and what’s going wrong at the moment.

Of course Housing Minister Nick Smith’s proposal to get rid of the urban limits doesn’t do anything about resolving the issues that are clearly holding back the supply of sections in current greenfield areas. It’s way back at step one – vastly increasing the amount of land highlighted as potentially suitable for future urban development. Not too dissimilar from seems to already be happening actually.

Dr Smith vowed to break the “stranglehold” of the council’s policy of containing urban sprawl – a policy he says is “killing the dreams of Aucklanders” by driving up house prices.

The minister wants to open up more land outside the existing metropolitan urban limit to peg back land prices which, he said, were the biggest factor putting home ownership out of reach of many.

Mr Brown hit back, saying Dr Smith was advocating a flawed Los Angeles model of “suburban sprawl” going back to the 1940s and 1950s.

The mayor said the new unitary plan – a draft is being released on Friday – provided for a balanced approach of intensification of existing land and releasing new land to house a further million people in Auckland over the next 30 years.

Ironically of course the government’s process for the Auckland Unitary Plan means that no new greenfield land highlighted in the Plan will actually become rezoned for development (i.e. step three) until quite a few years from now – as pointed out by Phil Twyford in parliament today and by Brian Rudman in the NZ Herald last week.

Hopefully the release of the draft Unitary Plan at the end of this week will start to shed some light on all these issues.

42 comments to The land supply issue

  • Christopher T

    As is usual with most pronouncements by National party ministers, Smith’s ideological windbaggery is apparently rejected by his own ministry: http://www.radionz.co.nz/news/regional/130289/govt-report-backs-auckland-council's-housing-position

  • JohnP

    There’s a good guide to the subdivision process here: http://www.ccc.govt.nz/thecouncil/policiesreportsstrategies/landavailability/landavailabilityinchch.aspx. I also thought Nick Smith’s comments were pretty stupid, and there is a lot of land zoned and ready for developers to finish off their part of the process, i.e. putting in the local roads and services. The Council has very little to do with that. Development is a high-risk business and the developers won’t provide services faster than they expect to sell sections. Since there’s limited demand out on those fringes, and limited numbers of people who can afford the houses, the final stages don’t happen that fast.

  • bbc

    I find it ironic on the one hand that this government is passing laws left right and centre to restrict what the council can do, and restrict the areas they are allowed to spend money on as well as restrict their sources of revenue and yet on the other hand plan to try and force the council to spend vastly more money on expensive and inefficient sprawl. It’s purely ideological pandering to their mates who have been land banking on the city’s edge all these years, furthermore, even National’s main constituents, farmers, are calling for Auckland’s sprawl to be pegged back before we lose all land for cultivation around the Auckland region. I only hope National takes long enough such that a change of government brings some reasoned discussion to the table, and I am hoping we for once start to then see policies based on actual evidence rather than merely ideological madness.

  • It seems that Nick Smith is only focused on how many sections are ready to build on but as pointed out, that is largely up to the role of developers who are most likely staging the release of their land in order to extract the maximum revenue. Smashing the MUL is unlikely to change this as developers will still only release just enough land to keep their prices high. That RNZ report is also telling. It says

    It says the rate of building generally larger, more expensive, homes on the city fringes is relatively constant, although below the peak of ten years earlier.

    In other words the housing being built on the fringes is not the cheap and affordable type housing people claim will occur, it is more “executive” type homes aimed at the upper middle class buyers

  • Dave West

    Large developers land-bank farms etc on the urban fringe so price drops will be unlikely, as they can set the price in many areas, similar to a monopoly situation. Amazing how there is minimal vision for transport in central government plans to reduce costs from both of the main political parties, for example faster links between existing towns. Hamilton commercial development for example is already booming due partly to proximity to Auckland. Seems quite common in Europe to have cities with fixed urban boundaries and then commuter villages on less productive land with rapid rail links.

    The loss of farmland should be a concern given a huge portion of New Zealand’s exports are land based. Maybe that is why John K. went to South America – to see if can user their land as we will have little productive land left soon…..

    • OrangeKiwi

      Did you mean heavy rail instead of rapid rail? Not really affordable to link to commuter villages by rapid rail. I can see what you’re trying to saying though, but Auckland has already spread out towards most outlying centres at distances suited for a feasible commuter network so that any growth there under current circumstances would be sprawl in disguise.

  • Gazzamac

    I like the system I saw in place in and around Frankfurt, where by every country cross roads were allowed 5 sections/houses on sections about 800m2 or less; this didn’t impinge too much on the surrounding farm lands; whereas here the farms are being broken down to uneconomic production units of about 10,000m2

  • OrangeKiwi

    I’m only nitpicking about modes to try to dispel the myth that all succesful overseas cities are megapolises linked by high-speed rail, which is often used as an argument by comparison in discussions about Auckland transport and urban issues. Not accusing Dave West of this I have to add, just correcting him. Sorry if it sounds a bit pedantic.

    • Dave West

      No you are very correct – was in need of coffee so sorry for the typos! Gazzamac is right as there is a big issue in the form of uneconomic “lifestyle/residential” expansion. This is now at about 10% of New Zealand’s productive land which is pretty concerning.

  • NZPlannerBoy

    It’s largely people talking past each other. Sections or houses? Houses or residential units? There’s a big difference between them all. 2,000 sections could easily contain 15,000 residential units, in which case they’re arguing different sides of the same coin. Numbers of residential units (and their location) are more important than numbers if sections when it comes to affordable housing. It’s the same with land. One hectare of land could contain c.10 quarter acre sections with stand alone houses, or one section with 30 (or more) terraced homes. The debate shouldn’t be about making more land available. It should be about what one can do on the land that is already available – i.e. increasing efficiency.

  • A couple of humdinger, bang-your-head-against-a-wall opinion pieces in the Herald today. Dick Quax saying:

    Aucklanders have never embraced the kind of concentrated living arrangements envisioned in the Unitary Plan. At the end of the 19th century Aucklanders, tired of overcrowding and the associated pollution in the downtown area moved further out for a better lifestyle on a small plot of land, usually less than 500sq m in size rather than the mythical quarter acre of urban legend.

    And Bryan Leyland says:

    A revolution in personal transport is imminent and will bring large fuel savings. You can now buy cars that can park themselves and, in a traffic jam, will follow the car ahead. The major manufacturers are all developing automatically guided (driverless) cars. They will reduce accidents by 50 to 80 per cent, and double or treble the capacity of motorways.

    Apparently to get an opinion piece in the Herald these days you need to write articles as illogical as these.

  • conan

    There’s also the issue of finance. The collapse of finance companies and GFC in general has affected the ability of developers to borrow to fund their developments. Given what has happened to city boundary fringe property in the USA and to a lessor extent some developments here I doubt banks are queueing up to fully fund that gap.

    • Greg N

      A point made in the RNZ report rhis morning, that the MBIE report says the number of “developers” has shrunk by 2/3rds over 10 years.
      One could say (tongue in cheek) thats because they and their finance company mates are in jail doin’ time for fraud.

      But it is something pointed out before that houses don’t build themselves, there is a whole infrastructure of developers/finance outfits and the like that need to put money in longer before anyone can buy a section or a finished residence. And that infrastructure has disappeared over the last 10 years, so even if we had 150,000 section to build on now, the isn’t the money around to fund the building on them, of whatever type of house.

      So Smith, Quax, and the rest need to take a deep breath, stand back and look at the bigger picture for a moment, then come up with some proposals to manage all the issues as a whole.

  • Duncan

    Len brown was talking about this on bFM this morning, saying the Herald spun that story, there is right now 2000 plots available with the others needing minor work, but then they would be ready.

  • Luke C

    If there were many more than 2000 plots available then the developers would be bust because they werent selling! The more important number is probably how many are consented. Having 2000 ready tells me there isn’t a huge demand for new sections on the edge of town!
    Of course none of these numbers matter in the MUL debates, either way there is plenty of land inside the MUL to keep us going for a few years. However because of Auckland’s geography and fragmented nature of much of this edge land due to previous rural-residential subdivision, it is easy to monopolize land supply, and hard to amalgamate blocks into large units. I think a very important thing to do would be to have multiples MUL’s, signalling land release in the long term. An issue is land directly outside the MUL gets cut up into lifestyle blocks, making future development difficult, and ending up with poor urban form becasue of it. Lifestyle blocks should be effectively banned in the urban growth path.

  • Tamaki

    The land cost won’t change that much. X new plots proposed over y existing plots in auckland will be a very small percent.
    The unit cost of the houses needs to be brought down. After the war there were many people to house, and insufficient labour and materials in nz. Plantation forests being relatively undeveloped at the time. The answer in the early 1950s was Austrian pre-cuts. Complete knock down (CKD) houses. Labour from Austria, redwood from northern Europe, company from England, frames and trusses sent to nz on ships holds bolus, thousands of cheap houses in Wellington and Tamaki, most of which are still there and sound. The ones that Housing nz have owned have fallen into disrepair, but the basic 90sqm plan has been very good in private hands, although many have been extended over time.
    Let’s go international and see what unit cost we can get, again.

  • Nick

    I must confess I haven’t researched this issue to any great extent, but I do wonder what demand there is among average people (whatever they are) for a house outside the limit of the current Auckland sprawl. For those people lucky enough to not have to commute and with plenty of cash I can see the attraction of building a nice big house with plenty of space on the edge of the city, but for the rest of us mortals, why would you want the huge commuting times it would entail?

    Surely there’s diminishing returns at work here. The value (not just in $ terms) of a plot of land in a city has a relationship to how far away it is from the centre(s), or places where employment, commerce, leisure activities etc are happening. You have to reach a point where expanding outwards doesn’t fix housing supply shortages any more. To take it to ridiculous extremes, if it was always the answer why aren’t people who work in Sydney buying up land in NZ to commute from?

    The quarter acre / kiwi dream / Dick Quax 500m2 section entitlement is irrelevant nowadays. Sure, there will always be people who aspire to that and are successful enough to afford it in a nice area in Auckland, but it should be seen as a niche exception rather than the rule.

    While I’m at it, another thing that’s struck me as a fairly recent (12 years) immigrant to NZ, is how come there are quite a few of these 1960s-ish brick and tile rows of 3-4 units, even in upmarket areas like Devonport, but then virtually nil high density housing in these areas built more recently? What happened?

  • Tamaki

    Re the sausage flats, as some call them, they were built on old quarter acre sections pre circa 1990 as zoning rules allowed it. After that zoning rules were changed, people could easily subdivide from eg 1000 sq m to a shared title of two houses on the same land, but it was difficult to get approval to build more densely. Some love them, some hate them. Around here we could fit in 1000s of new units if res 5 was amended to allow flats, and we are 12 km to the cbd. No need to build in Pokeno.

  • Nick

    cheers tamaki, thought there probably had been some sort of rule change

  • Tamaki

    Keep your ears open this Friday when the new unitary plan is announced. There will be a bunch of zone change proposals following.

  • swan

    I dont think 15000 is very much. It is about 2 years supply or so.

    The advantage of dramatic liberalisation, is land bankers no longer are sitting on a one way bet. If there is a large amount of alternative land that could be developed, then there is a much higher likelihood that someone else will satisfy demand if the land banker doesnt. In which case the incentives for the land bankers change dramatically. It becomes more a case of “a bird in the hand is worth two in the bush”. Or in other words if the market is currently in a state such that they can profitably develop their land, they will be much more keen to do so.

    • Luke C

      Geography and servicing costs ensure it is easy to monopolise land supply. For example the North Shore is largely built out, and then you have to jump to Coatesville or Dairy Flat. However these places are packed full of lifestlye blocks which makes residential development difficult, and will require council to build 6km trunk mains for sewer, storm water and water supply over the top and back down a large hill. Henderson Valley is an option, but again broken land supply, and hilly country makes development costs high, and then the MUL is stopped by the Waitakere Ranges Protection Act to the south. Flat Bush is the best bet as is zoned, but while economy is poor no one really wants to build as due to low economic confidence will get low sales.

      • Yes I note that among the idiocies that that old fool Bryan Leyland trotted out in the paper this morning as he tried to dress up 1950 planning as ‘futuristic’ was that no productive farmland will be lost because it all lifestyle blocks in the countryside around Auckland. That makes it easier how? A law to make Steven Joyce and his fellow 1%ers subdivide their land for affordable houses- yeah right!

    • Tamaki

      Interesting point. The Nats are being really dogmatic about opening up certain land, a lot of it in the north. And the land owners stand to gain a bundle. Does anyone know who owns it… ?

  • It isn’t, of course, all about the land:

    • swan

      This is exactly right.

      If the government is truly interested in sorting out the “supply side” of the housing market, I expect them to support the council in their bid to liberalise development of higher density units within the existing city. As far as I am concerned (and I know others round here will disagree) there are two “fronts” in the war to liberalise development which are both worth fighting on. These are of course liberalising development within and beyond the existing city. If battles can be won on either front then it is good regardless of what happens on the other front. And we all know the council is going to need all the supporters it can get when it attempts to do battle. So I believe that will be the true test of the government.”street cred” when it comes to sorting out the supply side.

      • I disagree, I think the regulation on exurban development is a necessary response to the regulations that restrict intensification, although the two together create a stranglehold. Once we’ve let people develop the existing city land in more efficient ways then we can consider the land outside the city.

        Releasing the exurban before the urban would be problematic.

      • Well this is one case where i think the market will ultimately win whatever the government, local or central, try to force.

        What really is important though is that expansion whether out or up can be well done or poorly done, and that is what I would prefer both sides to be focussing on more….

        Agree with Nick [not Smith!] that the Council need to look at their own restraints on development… I guess that’s what the UP is all about…? MPRs anyone?

        • Greg N

          Case in point – the new redeveloped GI former state houses – well it seems some of these former state house sites with new houses on them are targetted at “low income” earners are expected to sell for up to $700K.

          See this link http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10871111 (State housing revamp unveilled).

          Seems to me that the market is voting for expensive houses and thats what the developer is building.

          Meanwhile Housing NZ trades in 18 houses and land for a total of 49 dwellings on the sites and gets half back – a mixture of 24 terrace houses and stand alone houses.
          The rest is flogged off for private enterprise to make a buck on.

          While I see the need to reduce the amount of Housing NZ tennants in one area for social reasons, putting 10 of them into the terrace houses doesn’t seem to me to be actually fixing this issue.
          More like crowding all the former residents into one corner to allow the rest of the houses to be flogged off.

      • I agree Swan, there is no silver bullet for this and we need to have a variety of responses.

        That is why I am so sceptical about the people who point to places like Houston and other SSW USA cities as an example of how to solve our housing problem. I realise the housing is cheap but most of the examples of cheap housing in Houston I have seen are located about 25 miles (so c.40 kms) from the Houston CBD. This is presented as the result of a free market but from what I have read Houston still has a lot of density controls similar to Auckland.

        Until it is really a level playing field where Auckland has no minimum parking, no minimum lot sizes, no minimum set backs (minimum heights??) etc, we cant say the market has had an opportunity to really respond and we dont know what people really want. Fom my anecdotal experiences (and I am at the prime age where most of my friends are having babies and buying first homes) I have never had someone say “I just cant find an affordable house in Flatbush”, it is always Kingsland, Onehunga, Mt Roskill, Sandringham. Ponsonby and Grey Lynn are spken of in hushed, awed tones.

        I also realised that there is no point in debating with some of the pro-sprawl, low density people when they have links to things like this: http://www.theobjectivestandard.com/exploit-the-earth-or-die.asp

        I was pointed to that from a link on the website for Hugh Pavlevitch, one of the co-authors of the Demographia housing index study. IMHO, the world has a sad future if that philosophy rules our decisions.

  • Dave West

    Even LA is starting to see infill housing – around 68% of new builds between between 2005 and 2009
    http://www.epa.gov/smartgrowth/pdf/residential_construction_trends.pdf

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