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Big city life? Challenges and trade-offs for Auckland

Big city life? Challenges and trade-offs for Auckland

In a recent working paper, NZIER have analysed how economic welfare responds to changes in housing and transport costs in Auckland. Three policy scenarios were tested, specifically:

  • An increase in land supply outside of the MUL by 20%;
  • An increase in productivity in the housing construction sector; and
  • A reduction in transport costs of 2%.

In this post I want to focus on their findings with respect to the metropolitan urban limit (MUL), where they find (emphasis added):

Moving the MUL out improves land supply and decreases housing costs. Families across the city benefit from reduced housing costs – even though commuting costs increase for some. The net impact on all families from expanding the MUL is always positive (pg iii).

This statement – if true – would have major implications for land use policy in Auckland. Put simply, it suggests the economic benefits of expanding the MUL (lower housing costs) are greater than the economic costs of doing so (higher transport costs).

This may be true. However, in this post I will argue the working paper (in its current form) does not present a very comprehensive or useful assessment of the MUL as a policy. In my mind there are three key questions to consider when evaluating the economic effects of policy interventions, specifically:

  1. What are the objectives of the policy intervention? Specifically, what does the policy set out to achieve?
  2. Is there a prima facie case for market intervention? Specifically, do we have evidence of imperfectly functioning markets?
  3. What are the benefits and costs of the policy intervention? And what is the sensitivity of these results to changes in our assumptions?

The first question is fairly straightforward: it considers what the MUL hopes to achieve. Advocates of the MUL typically point to a range of benefits in terms of coordinated infrastructure planning (transport, wastewater, communications, electricity, as well as social infrastructure, e.g. schools) as well as environmental benefits from directing developing to areas where it’s external effects are mitigated or at least able to be managed. Hence, any economic evaluation of the MUL needs to at least acknowledge, and preferably quantify, these kinds of benefits. I understand that development at Hobsonville, for example, is to be accompanied by investment in ferry terminals, state highway upgrades, and investment in schools (photo source).

Hobsonville

The second question relates to whether there is evidence of imperfectly functioning markets, where individual firms and households (whom I collectively refer to as “market participants”) are unlikely to make wise decisions. Imperfect market functioning typically arises where market participants are influenced by:

  • The unintended consequences of other policy interventions, e.g. minimum parking requirements;
  • Inaccurate (i.e. non-marginal) price signals, such as road excise duties;
  • Externalities, such as road congestion and agglomeration economies;
  • Imperfect information, such as future road congestion levels;
  • Search/transaction costs, such as moving house and changing jobs; and
  • Path dependencies and irreversibilities, such as development of agricultural land.

Well-designed policy interventions should seek to understand the reasons why market participants are not making wise decisions, and influence behaviour accordingly. The externalities associated with developing greenfields land is particularly relevant, I think. After all, while new residents “win” from moving out the MUL, existing residents (including those just on the fringe) may “lose”. This was, I believe, one of the main objections to an expansion in the MUL at Long Bay, illustrated below (photo source).

Long Bay

The third and final question considers the benefits and costs of a specific policy intervention. Costs are unavoidable and arise in the form of 1) welfare losses to market participants, who – as a result of the policy intervention – are now unable to act exactly as they please; 2) compliance costs, such monitoring/enforcement; and 3) unintended consequences from regulatory intervention. The supposed economic benefits of a policy intervention need to be compared to these costs.

The third question is where the NZIER working paper has focused most of its attention, in terms of quantifying the effect of the MUL on housing and transport costs. But because the NZIER paper does not grapple with the first two questions, its conclusions (“expanding the MUL is always positive”) comes across as premature at best.

My scepticism in this particular instance stems from two key issues with the working paper as it currently stands.

The first issue is that proponents of the MUL (and I am not one) point to a range of areas in which managed urban development can help to realise efficiencies in infrastructure investment and environmental management. Such benefits need to be included in the benefit cost equation before any firm conclusions can be drawn.

I note that NZIER’s analysis is limited to households, and households may not be directly responsible for some of the relevant costs – e.g. local and central government may shoulder the costs of providing infrastructure. However, households will ultimately (and indirectly) pay for these costs through their rates, and this does not seem to be taken into account. Evidence from Australian studies such as the Perth cost of growth study (Trubka, R, Newman, P and Bilsborough, D. 2008. “Assessing the Costs of Alternative Development Paths in Australian Cities.” Curtin University Sustainable Policy Institute.) and a similar study conducted in Sydney (CIE and Arup (2012) “Costs and benefits of alternative growth scenarios for Sydney – existing urban areas.” Prepared for NSW Department of Planning and Infrastructure.) suggests that development in greenfield areas imposes significant additional infrastructure costs. A similar study is forthcoming from Auckland Council.

The second issue with the NZIER working paper is more subtle but possibly more significant. It relates to the justification for policy intervention. Specifically, the pervasive and long-standing presence of inaccurate transport/land use price signals that have stimulated urban expansions rather than urban intensification. This includes:

  • Regulatory barriers to urban intensification, such as building height limits, minimum parking requirements, floor area ratios, minimum apartment sizes, and building set-backs. In a recent talk at the University of Auckland, for example, the urban economist Ed Glaeser indicated that – in his opinion – regulatory barriers to urban intensification were more binding than regulatory barriers to urban expansion, and more critical for Auckland’s situation. Indeed, barriers to intensification may one reason why house prices in Auckland’s central suburbs have increased so much more than peripheral areas, as noted in the working paper. The NZIER working paper mentions such barriers only in passing, as “an area for further research”, in spite of the fact that Glaeser and Gyourko (2002) [link: http://www.nber.org/papers/w8835] developed a methodology for quantifying their impact over a decade ago. I think that is an understatement: economists have ignored regulatory barriers to intensification for too long, preferring instead to focus on the easier to observe, but less important, barriers to urban expansion.
  • Inaccurate transport price signals, causedby:
    • Vast over-supply of under-priced parking caused by the application of minimum parking requirements; and
    • Absence of time-of use-road pricing, which tends to benefit long distance commuting by people with a low value of time.
  • Inaccurate land use price signals. Ideally Councils would charge the marginal cost of developing in different parts of the city. In practise, however, it is incredibly difficult to develop robust estimates of how the marginal costs of development varies across the city. Hence Councils tend to set development contributions in a rough and approximate way and instead rely on regulatory tools to stage/manage development in those areas where existing infrastructure is better able to accommodate growth.

While I support and advocate for addressing the above issues, I am under no illusion this will occur anytime soon. For this reason it is important that criticisms of the MUL (or its more recent incarnation the “RUB”) consider that it may have a role as a second-best (interim) policy solution. I say *may* because I’m wary of advocating for a nightmarish “babushka policy doll” scenarios, whereby “second-best” policy interventions, such as the MUL/RUB, are justified primarily on the grounds of other flawed policy interventions, such as building height limits, minimum parking requirements, floor area ratios, minimum apartment sizes, and building set-backs. Naturally, it would be more efficient to address the underlying causes of unfettered urban expansion.

So where does this leave us?

Well, on one hand the working paper makes a useful contribution to the policy debate by quantifying some of the benefits from urban expansion, specifically lower housing costs. On the other hand, it does not discuss – let alone quantify – many of the supposed “benefits” of the MUL. For this reason I believe its conclusions with respect to the effects of expanding the MUL are, at best, premature and therefore unlikely to convince those people who support the MUL.

More generally, however, I believe the working paper is – like much of the economic literature on this topic – rather superficial. It does not consider regulatory barriers to urban intensification, for example, when evidence and professional intuition suggests these barriers are more binding than the MUL. At a recent talk at the University of Auckland, the urban economist Ed Glaeser suggested that regulatory barriers to urban intensification were likely to be more of a binding constraint on urban development than regulatory barriers to urban expansion. This recent study into the effects of removing minimum parking requirements in London, for example, found that developments provided almost 50% less parking after the regulation was removed.

It’d be great if all the good people at the NZIER, the Reserve Bank,  and Treasury etc invested a little more effort into “binning the mins”, rather than the (apparently) myopic focus that seems to be placed in fighting the MUL.

Minimum-parking-requirements

And when I say “regulatory barriers to urban intensification”, I am actually referring to the combined effects of building height limits, floor-area ratios, minimum parking requirements, building set-backs, and minimum apartment requirements. In this context, the debate over whether to expand/remove the MUL seems *relatively* unimportant.

Thankfully it’s a working paper, so I’m already looking forward to the next version.

51 comments to Big city life? Challenges and trade-offs for Auckland

  • dennis

    Its very simple increase the supply of land and reduce the cost of houses. Intensification does not appeal to all. Is there any information indicating that the majority of Aucklanders want intensification.

    • Anthony

      It’s called the CBD. Actually have a look around there.

    • Chris Werry (@chriswerry)

      Any information? How about the 2013 census? Auckland is the fastest-growing region in New Zealand and the Waitemata board is Auckland’s fastest growing area by a large margin.

    • It appeals to some. Not everybody wants to 3 bedroom house on a 1/4 acre and hour’s drive from town and 10 minutes drive to the mall that will still cost $500,000.

      The majority of “Real Aucklanders” *want* a 4 bedroom mansion with nice sea views, 10 minutes drive to town in light traffic, in a nice area with good schools, 5 minutes walk to the shops, 1/4 acre, costs them $250k but will instantly increase in value to $900,000 , just down the road from the park, etc, etc.

    • ‘Its very simple increase the supply of land and reduce the cost of houses.’

      dennis, perhaps ought to try reading the post again; if you do you’ll see that in your quest for simplicity you’ve arrived at an oversimplification that fails to grasp the whole picture.

      ‘Intensification does not appeal to all.’

      indeed, and no one says it does, or must, but it would be good if it was possible as an option for those who do.

      ‘Is there any information indicating that the majority of Aucklanders want intensification.’

      Well in the last census the fastest growing area in the country was the AKL CBD at 46.5 %, so there are clearly those who do. Again, no one is saying every has to, but by the same token nor should everyone have to live half way to Hamilton or Whangarei in a little insipid cul-de-sac, with a dreary pocket of lawn, and 100km+ soul-sapping daily commute, and there’s already thousands of those to choose from.

      • Trevor

        If the CBD growth rate is 46.5% then the value of CBD land is truly affordable and no intervention is required to remove parking mins or change building regs.

        • Steve D

          Indeed, not least because the CBD doesn’t have parking mins or seriously binding height/density/coverage limits.

          That doesn’t suit people who want to live in Auckland but don’t want to live in the CBD, though.

        • Precisely, the CBD is the one place where Auckland doesn’t have mandatory parking minimums, and where there are the least regulations controlling what you can build on your land, which means there are the least constraints on delivering what people want… no surprise it was the most popular place in New Zealand for people to move to between the last censuses.

          It would be nice if more place in Auckland could have that same freedom do deliver what people want, no reason that should be the case for just 3 square kilometres in the centre, while the other 1,000km have bans on building the sorts of housing people are moving to the most.

    • I would also add to that that many Aucklanders are now not from Auckland or New Zealand originally. They may have different aspirations and requirements for where and how they want to live in a city.
      There’s room for all views, it’s just that the developments we’re largely getting and the laws that drive them, only cater for one view.

    • If you are sure noone wants density then let’s just abandon the MUL and all the anti-density rules. Then developers will only build what they can sell and they can build whatever they think they can sell.

      If noone wants density, then the only stuff that will sell will be large houses on the periphary. Developers who build desnity will go bust and the market will correct itself. Free choice for all.

      You must agree with that surely? Or do you not believe that everyone in Auckland wants a big house far from the centre – meaning long commutes and little time with family?

  • John Polkinghorne

    I’ve mainly just looked at the assumptions they use for their model, as laid out in Table 1… notes below:

    1) I was surprised that they assumed an average travel speed of 44.1 km/h. The Household Travel Survey has consistently found that Auckland drivers average about 30-32 km/h. It’s around 37 km/h for passengers, reflecting that passengers are less likely to be bogged down in peak traffic. I’d imagine that peak commuting speeds would be 30-32 km/hr or even lower. (see http://www.transport.govt.nz/research/travelsurvey/data-and-spreadsheets-household-travel-survey/)

    The info they use comes from http://www.nzta.govt.nz/resources/research/reports/489/docs/489.pdf, Table ES1 from the looks of things.It comes from Auckland Transport modelling
    so I would have expected it to be sound – but maybe the AT model is calibrated wrongly? I struggle to believe that peak hour commuting speeds in Auckland could be 44 km/hr.

    2) Their operating costs of travel are possibly a little understated; they’re based on AA figures which assume fuel consumption of around 6.4 L/ 100 km for small cars, 7.4 for medium cars and 9.9 for large cars. However, the average on road fuel consumption in NZ is 10 L/ 100 km, and likely to be a bit higher in urban/ congested conditions. So they’re underestimating the cost of fuel, but this is partly cancelled out by the AA basing their figures on quite new cars (newer than the NZ average) and thus using higher charges for depreciation and insurance.

    3) The authors only consider commuting costs, but research I will be presenting in the near future shows that these are only a small proportion of total travel costs, and that city fringe households are likely to spend more on other travel as well (e.g. for shopping, education and other purposes). These additional costs should also be taken into account.

  • Fred

    Oh what a surprise. Another rubbish paper from the sprawl advocates.

    I’m shocked. Truly shocked.

    • tuktuk

      +1. You have to remember that this NZIER paper appears to draw upon the influence of very similar documents published by similar groups based in the United States that they use to reinforce their own prejudices. These sprawl advocates consistently misinterpret the discussion in extreme black and white sound bites.

      The debate has only ever been about offering choices to people to live in a range of environments, and the positive financial, social and environmental outcomes that arise from offering people choices.

      Great post Stu, a concise yet intelligent discussion of the issues.

      • mfwic

        -1 As opposed to the very reasonable and rational advocates of limiting land supply to push up housing costs in order to achieve their vision of a compact city full of rich white people pretending they are urban. I love how the MUL which is a limit gets sold as offering choices.

        • I guess they didn’t teach reading comprehension at traffic engineering school in the 60s. :(

          • mfwic

            Didnt start school till the 70′s dude. But which bit about “offering choices to people to live in a range of environments” is advanced by preventing people from affording a house because the Council has a MUL? Explain what I didn’t comprehend about the left wing double speak and I will change my mind if I am wrong.

          • Tuktuk was talking about removing constraints to development (i.e removing restrictions on intensification and outward growth) so that people can have a choice of living in a range of environments. The point is you can’t gripe about an MUL staging outward growth when we have even more restrictive controls on inward growth. Those are the sprawl advocates that Fred and Tuktuk are referring to, the likes of Demographia who will wax lyrical about the evils of having a rural-urban boundary limiting outward consumption of land, yet paradoxically defend to the death all the rules and regulations that are designed to massively restrict the efficient utilisation of land within the boundary. I don’t think there is a person here that is particularly fond of either, I see the MUL as a necessarily evil to manage the worst effects until we can fix the rest of our even worse planning controls.

            I’m not sure quite how you interpreted that as him suggesting that an MUL is a tool to increase the offering of choices. He is talking about removing controls and constraints to increase choice. But from the way you immediately leapt in with “limiting land supply to push up housing costs” and “left wing double speak” it appears you are simply prejudiced in this argument already, you’ve already decided what everyone else thinks.

          • mfwic

            OK so you are right I did jump on Tuktuk and that probably wasn’t fair of me. I read it as an attack on those who support sprawl (I think it is a necessary component of growth and if we cant have increased density it becomes essential). Perhaps his criticism was of US sprawl advocates and their rabid approach. The double speak wasn’t his as much as the nonsense about choice pushed by the ARC and documents like the Auckland Plan which claimed to offer choice but imposed a limit (which by definition removes choice). I cant buy into the argument that sprawl is good but intensification isn’t as that seems inconsistent. But I have worked on large projects for both and I can tell you we have had a lot more wins with sprawl as the incumbent people who don’t like it leave.

          • tuktuk

            Alright, I’d better step back in here. My comments were about ‘US sprawl advocates’ and some of their followers in NZ. It would be fair to say that certain councillors and politicians are somewhat bi-polar in their outbursts over advocacy for sprawl on one hand, and their actions to restrain intensification on the other.

            I think that as a starting point, we are agreed that controls should be consistent for sprawl and intensification – to achieve a level playing field. Furthermore, I think we can also agree that people want to live in Auckland, and there are a whole heap of economic arguments that have been discussed many times as to why this is actually a good thing for the country. Therefore, planning controls should be set at a limit that does not discourage growth, while at the same time ensures that those who are going to benefit do pay their fair share.

            Of course, the tricky bit is making this all work in the world of realpolitik.

          • mfwic

            Your last sentence nails it. I have worked on liveable community projects where people mount strong opposition to any intensification. They live in the area and love it how it currently is and basically have no interest in sharing what they have. You can’t make them want to. I have also worked on greenfields structure plans where we consulted at length with local people who also didnt like higher densities but rather than fight they sold up for a profit and went to another rural area. The result was the old RPS greenfields got developed, the brownfields didn’t to the same extent. I don’t know how you change that or if you even can change that. But we need more housing so I say go for the low hanging fruit.

          • tuktuk

            But I say we need a better city that includes more housing so I say go for the better quality fruit ;)

        • Steve D

          > I love how the MUL which is a limit gets sold as offering choices.

          That’s how it seems to work out in practice, and that’s why I think the MUL does more harm than good in practice.

          But the actual supposed point of the MUL wasn’t to limit choices or even stop sprawl. It was to make sure land was released in a controlled way so that new greenfields developments could be done in a planned way, and with infrastructure built in a way that was affordable. The ideal would be charging development fees that reflect the true costs of providing for growth, but that’s both politically and logistically impossible, as Stu says.

          Having existing ratepayers effectively subsidise new development (whether greenfield or infill) actually does seem like the next-best solution, though. It’s all those existing ratepayers who’ve caused the problem through endless NIMBYism and BANANAism and exploiting the RMA to prevent any new development inside the city, so they should at least pay the costs of that decision.

          I genuinely think that given a real level playing field, and a transport system not totally based around cars, most growth in a city like Auckland would come from intensification rather than sprawl. Given that we’re not getting that, badly-designed and poorly-located sprawl at least seems like a better deal than having a whole family crammed into a garage.

          • mfwic

            You are dead right Steve, that was my understanding of the intention of the MUL. As for not paying the full cost of development, the existing home owners don’t pay the full cost either. Old combined sewers are rebuilt at the cost to ratepayers rather than the owners of villas using them. Old footpaths in existing shopping areas are repaved and titivated from rates paid be people everywhere. We share costs because figuring out who benefits and by how much isn’t possible. And as you say it is the inner city residents who seem to want to limit development in their own neighbourhood, so why shouldn’t they carry some of the cost of developing elsewhere.

          • conan

            “Old combined sewers are rebuilt at the cost to ratepayers rather than the owners of villas using them”

            So do the owners of villas not pay rates? Where do I sign up for this?

          • mfwic

            No I didn’t say that. I pointed out that the villa owners are not charged directly for the cost of their sewers the way new sewers for subdivisions are charged. My point is that you do pay rates and those rates are used, not a direct charge.

  • Stevenz

    First of all, a study that concludes “expanding the MUL is always positive” is immediately suspect, at best. No qualification or nuance? If so, it’s a first in the history of public policy.

    When the subject of “affordable” housing comes up, I want to know: affordable for whom? Affordability isn’t determined by capital cost alone but includes location costs, energy use, build and finish quality, etc. It is axiomatic that those who want to live on the fringe are not looking for low-cost housing, and suburbs and exurbs can be the most expensive housing in a region. So let’s understand the issue of affordability a little better. I believe that land costs are not determined by simple market mechanisms of supply and demand since land is (still) a finite commodity. I have nothing to prove this, but it seems clear to me, at least, that marginal costs of land do not necessarily reduce costs per unit, and they certainly do not reduce costs of existing land, particularly that at some remove from the fringe, since they are not directly competitive with the new units. I.e., there is very little economy of scale effect. And there is a considerable politcal impact on development patterns that affect cost. (Example, Honda definitely achieves meaningful economies of scale when it builds 1,000,000 cars as per-unit costs go down. That price reduction is passed on to the buyer. Direct competition also keeps down the price, mainly through cost control. The real estate market doesn’t work that way, nor does politics distort the price of a car.)

    So after 20% more land is released and a parcel sells for, say, $350,000 instead of $375,000 (the difference won’t be as much as people think), and you might put a $350,000 house on the less costly one, whereas you may have put a $325,000 house on the more expensive on because you can afford and are willing to spend $700,000.

    The new 20% increase in available land will come onto the market over time, so short term pricing effects will be minimal. There will also be a lot of speculation and that does nothing for reduction of prices.

    Low density comes with costs that higher density does not. That’s been established many times over so no further comment here.

    Some of the most attractive urban places to live are land-constrained, AKL included, and that necessarily comes with a cost. Does AKL want to be one of those places? Is the MUL (I hate “RUB”!) the goose laying the golden eggs?

    Much of the opposition to an urban limit comes from an ideological point of view – libertarian, “property rights” people who don’t believe in regulations in general. That’s not good analysis.

    It is right and proper for policy makers to consider the overall effects of its policies, not just the effects on those directly affected, e.g., homeowners, developers, banks. It’s not only right and proper, that’s what they’re paid for, to make the tough decisions.

    Lower density development, especially residential, does not always pay its way in terms of overall costs to the public to serve it. Multi-family is better (an argument for density), and commercial/industrial the best. Lots of studies there, too.

    You get what you pay for. Maybe it’s good that housing is expensive because that means that people want to live here. Cf San Francisco, Vancouver, Portland, etc.

    To get *really* affordable housing, there must be some kind of market intervention. How far are we willing to go?

    OK, enough. I am perfectly willing to see good – and I emphasise *good* – analysis of urban limits or other restrictive LU policies. However, it’s a complex thing, this urban development process, and a lot of benefits are hard to quantify. What I don’t want is to just throw it – the MUL – out or a perversion of it that amounts to throwing it out. But – and this is a big but – if increasing land supply outside the limit by 20%, or whatever the right number is, can be accomplished without even moderate environmental or public service impacts, it may be OK if – and this is a big if – it is managed well. But right now, I remain skeptical.

    By the way, very good and helpful analysis. Thanks.

  • mfwic

    For most of its existence the MUL was used as a means to manage the order in which land was urbanised. The point of it was to make sure each part was developed properly with infrastructure spending focussed where it was needed. Around about the time of the Long Bay appeal the ARC decided to use it to try to stop further development which in political speak was called growth management. The idea was to limit growth at the periphery because they thought there was not enough intensification within the older areas. In their view the market (yes with height and density rules) wasn’t going to give the city they wanted. Rather than killing off the MUL we need to go back to the pre 1996 situation and allow growth but bit by bit. Planning can address the coordination failures of the free market. Surely that is the purpose of it.

  • mfwic

    Do generation zero buy really long cars? or are their apartments only 4.5m wide?

    • Steve D

      Well, they also get their drinks served by waiters who’d have to stoop under the ceiling, and catch 1.5-storey high single-decker buses. On the other hand, it could just be a stylised graphic.

    • mfwic

      I thought about a new Generation Four Zero campaign called “Axe the Max” but decided I could probably make a heap of money helping people get dispensations from maximum parking rules over the next 15 years. Just as the minimums have been lucrative. My high score was a dispensation of 128 required parking spaces.

    • bbc

      Well ignoring the fact that it’s a graphic to display a point, there are apartments that are perhaps 1 car wide but then much long, so no whilst it’s illustrative, there are a lot of apartment buildings in Auckland (which thankfully don’t have MPRs else they wouldn’t have been built) are similar to the illustration.

      • Nick R

        If you wanted to park two cars sideways like that you would need a minimum of about 18m width, for two parks and manouvering between them.

  • If you are sure noone wants density then let’s just abandon the MUL and all the anti-density rules. Then developers will only build what they can sell and they can build whatever they think they can sell.

    If noone wants density, then the only stuff that will sell will be large houses on the periphary. Developers who build desnity will go bust and the market will correct itself. Free choice for all.

    You must agree with that surely? Or do you not believe that everyone in Auckland wants a big house far from the centre – meaning long commutes and little time with family?

    • mfwic

      I agree with the assessment from Simon above that most people want a big house near the centre with sea views. The problem is some people will only be able to afford a small house a long way out. I think that should be an option. Short of a coup d’etat I dont know how you will get rid of density rules. I understand your argument of why you want them gone but if you can’t get it through then it won’t help ease house supply and is not going to be of any use to people who can’t afford a home. I hope you made a submission on the Unitary Plan. ( I have for my area and I expect to be hated by my neighbours for it, but we really are squandering land here)

      • Yes the realpolitik makes changing anti-density rules tougher. But does that mean we just give up? Do we cave in to illogical and prejudiced thinking that is 40 years out of date that easily?

        If we dont, then the word “choice” (or any derivation thereof) should be banned from any discussion on the topic of housing. It should be universally acknowledged in writing that the opponents of eliminating all restrictions on development (whether up or out) have decided to force all Aucklanders to live a low density lifestyle. Regardless of what that means in terms of economic and ecological consequences.

        Then when my kids ask “who were the f&%king idiots who f&%ked up this city” (and they will), I can point and say “those guys over there, not me”. Sounds fair to me.

  • ‘most people want a big house near the centre with sea views’

    Absolutely right. And almost all of us have to compromise on at least one of those three wishes Herne Bay real estate being what it is, and more generally two. But we all differ on which one we cling to last. For some it’s the scale of the property so will decide to be further out in a vast pile, some it’s proximity to the centre, so may not have sea views and but be in a small Victorian cottage or an apartment, and some may be in a little shack on a beach in the countryside…. All choices are valid and the city regs should strive to enable each typology as the market sees fit.

    It is also clear that we are moving [or have moved] from a period where city proximity was relatively undervalued by the market to one where that has a new higher value. The evidence for this is can be seen in property prices, and in particular the spread between inner properties and outer ones. There are plenty of distant and ‘affordable’ houses that aren’t being bid up in the current overheated market. They tend of course to not have sea views, are way down the end of the motorway, and are not great structures.

    The costs of transport; in money, time, and frustration, are certain to have played a role in this change. But it is also just the Zeitgeist, as was the previous fashion for spread away from the centre, especially as it is observable all over the OECD.

    • I’m not sure I agree entirely, because there are two kinds of want.

      One is the “blank cheque sky is the limit” want, the want of simple desire. That is where you get the want for a really big house near the centre with sea views and all the trimmings, but that is more often than not the housing equivalent of wanting a Ferrari. Nominally in reach of just about anyone who puts their mind to it but realistically a bad idea for just about everyone.

      The other is the more realistic want. Where people want something that meets their needs, but is affordable to buy and run, yet also comfortable and enjoyable. This is more than simply meeting needs, but tempered by reality. This is people wanting a Toyota with the sports trim package.

      The question is do people actually want the big house in the centre with sea views, or do the want the right sized home they can afford, in the right neighbourhood, close to amenities with a short commute and with a nice outlook, if not sea views.

      I wouldn’t want the Ferrari myself because it’s just too much bother and hassle even if I could justify the price. If I was a multi millionaire I still wouldn’t buy one. I feel a little the same about housing. I’ve recently house sat a six bedroom large house on a full section with sea views. I loved the views, I loved the nice house, but I didn’t love the amount of vacuuming and cleaning to be done, the lawns, the garden maintenance, or the logistical exercise required to make sure all the doors and windows were closed, locked and alarmed every time I wanted to pop down the road. I also didn’t really like the length of walk it took to get to the local shops, or the inevitable need to drive and park most of the time instead. I realise the last bit isn’t directly the result of the house type, but it does tend to come part and parcel with big sections and spread out housing.

      Personally I think this idea that everyone wants a big house in the best suburbs with views etc, but should settle for a terraced house or an apartment in the city for the greater good, is as passée as the concept of trying to accommodate everyone on cul de sac suburbs at the end of the motorway. There are some people who simply don’t want a big house, or don’t want a lawn, or indeed don’t want a car. Not only because of the financial implications, but often simply because they don’t want those things for their lifestyle.

      I think you’ll find a lot of the Z generation think that way, the idea of mowing lawns and washing cars on the weekend is abhorrent.

      • Neil

        You are quite correct that people want many types of houses, but most of all they want a secure investment. Old villas may not be particularly practical for many home owners, but they have lasted 80-100 years without rotting. I believe many homebuyers are acutely aware of rotting houses, leaking apartments, and body corporate problems. When Generation Z can afford to buy a home, I suspect they will still look for a “no problems” purchase in a good school zone.

        • I am fully conversant with the condition of villas after 80-100 years and they have only not rotted in that time because of serious intervention and a great deal of money. There is absolutely nothing ‘no problem’ about a villa.

          • Neil

            I agree that old villas need maintaining . . . constantly . . and would never own one myself, but they do attract buyers far more easily than 1990s houses and terrace houses, and few have needed the complete demolish and rebuild of modern houses.

        • Nick R

          If Ged Zedders want a no problems purchase, an old villa is the last thing they should buy!They only last 80-100 years with constant maintenance. The ones on the market are either massively renovated and ridiculously expensive, or need massive renovation and are still ridiculously expensive.

          We’re don’t really build no problems houses, some well designed terraces made out of concrete would be a good start.

      • mfwic

        Wants come into more focus as they become needs. As for the Ferrari- give that a miss. Even if you could buy one you will just end up looking like a douche.

  • John Mackay

    Thanks for your brilliant post, Stu. Perhaps mfwic could explain why the 300 households without cars that have chosen to live around the Orewa town centre, should nevertheless have to pay for two unnecessary garages ? Or why developers on the edges are building McMansions when the majority of households are now only one or two-person ? The idea that development is reflecting what the market wants is laughable.

    • Bryce P

      Walked up the hill to a new Kensington Park showhome a few weeks back. 2 brm. 1 car park. I can see the merit.

    • mfwic

      Hi John. (for those who don’t know him John was doing urban design in Auckland before the term was invented.) The answer John is they shouldn’t have to. People should be able to buy the number of garages they want just as the choose how many bedrooms, toilets and living rooms they want. The problem is that rules originally intended to deal with in-fill housing in suburbs in the 1980′s have been applied to medium density areas without any thought or analysis.

  • It’s a bit of an over-simplification but I like this quote from Alain Bertaud (http://www.demographia.com/dhi.pdf)

    “Even the Communist Party of China recently declared that resource allocation is best achieved through
    markets; why can’t urban planners in so-called market economies reach the same conclusions and let markets decide how much land and floor space households and firms will consume in different locations?”

    • Yes, except that Demographia would be unlikely to follow that advice themselves.

      They are unashamedly pro-sprawl and would be unlikely to support scrapping anti-density restrictions. Or they would just say (as the ACT guy did recently) that if the people in an area dont want that then the market should be distorted by leaving those restrictions in place.

      Yay the “free” (i.e. free to sprawl) market.

      They also oppose public transport and support exclusively building motorways.

      Ironic that he also says this: “Mobility takes two forms: first, the ability to travel in less than an hour from one part of a city to another” – yet Houston and Atlanta are their poster children. How likely is it you could travel from one side of Houston or Atlanta to another in an hour?

  • Torbayite

    regard Long Bay development
    1) Photo is a bit old. There are now 3 or four houses with people living them in Long Bay
    2) The price of the houses. I do not think any will be less than 1 million and about $850,000 for a town house. I do not see this reducing prices in Auckland. Maybe you could argue it will reduce the price for houses at the 1.5 million dollar mark by undercutting them.

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