Auckland Council’s Chief Economist Geoff Cooper was in the paper on Thursday with a few interesting arguments about urban planning. The article is refreshing because in it Cooper challenges a few of the many sacred cows in the debate over growth and housing affordability.
In particular, Cooper discusses the “up versus out” narrative that has been wrapped around Auckland’s urban growth. In recent months, for example, both the New Zealand Initiative and consultancy NZIER have published research papers arguing that Auckland should open up greenfield land to improve housing affordability.
Cooper argues that these analyses have failed to notice the fact that the proposed Unitary Plan already does this:
Despite this complexity, discussion on Auckland’s urban policy is often reduced to “up” (intensification) or “out” (sprawl).
This simplification overlooks three key issues — Auckland Council’s proposed urban limit policy, the policies underlying a compact city, and the political economy of urban policy.
The proposed plan vastly extends the urban limit, aiming for an average of seven years infrastructure-ready land supply available at all times. Once implemented, around 20 per cent more urban zoned land will be available.
This is enough for up to 76,000 new dwellings (roughly equivalent to all of Hamilton).
Calls for more land supply miss the solutions being implemented.
In my view, a policy of greenfields growth could result in not insubstantial economic costs. These risks are discussed in a range of new studies,evidence which present evidence suggesting outlying locations are not necessarily more affordable once transport costs are taken into account (often difficult to do in advance). So while house prices might be cheaper, the costs of getting around can offset those savings. Not to mention the external costs of congestion wider society must bear from more development in peripheral urban locations.
On the other hand, Cooper also critiques debates over residential intensification. He points out that removing *restrictions* on urban intensification development, so as to enable more compact and diverse forms of housing, doesn’t amount to “forcing intensification upon communities”, as some have claimed. Instead, the Unitary Plan tends to remove barriers that prevent people from living at higher densities in locations that provide the attributes they seek, such as amenity and accessibility. Cooper comments:
Proposed policies for a compact city are also misunderstood.
Compact living policies are about creating choices, by reducing existing regulations that stop people living in higher density areas, when they want to.
The inherited planning framework by Auckland Council is heavily biased towards the “quarter acre section” through rigid regulations. This creates a push for urban sprawl.
The city’s rules prevent the supply of housing people want in the areas they want to live in – close to the city, with good transport and other amenities.
These preferences are clearly shown in soaring house prices on Auckland’s isthmus.
The draft plan was designed to create greater housing choice. But this has been scaled back significantly during public consultation.
Residents want to preserve their lot, but it comes at a cost to future Aucklanders. New height limits have been introduced in many suburbs, while existing height limits have been tightened, as have density constraints which means it will be harder to gain access to attractive suburbs.
The important thing Cooper highlights here is how policies that restrict housing supply in desirable areas come with a significant cost. There’s a wide range of international evidence suggesting restrictive planning regulations, such as minimum parking regulations, density controls, and building height limits, tend to raise the cost of housing. A 2002 paper by Edward Glaeser and Joseph Gyourko, for example, found American cities with more restrictive zoning were less affordable:
The bulk of the evidence marshaled in this paper suggests that zoning, and other land use controls, are more responsible for high prices where we see them. There is a huge gap between the price of land implied by the gap between home prices and construction costs and the price of land implied by the price differences between homes on 10,000 square feet and homes on 15,000 square feet. Measures of zoning strictness are highly correlated with high prices… [I]f policy advocates are interested in reducing housing costs, they would do well to start with zoning reform.
New evidence from Auckland suggests that our planning regulations may have a similar effect, driving up housing costs above construction costs. While the proposed Unitary Plan loosens some regulations, it arguably doesn’t go far enough to truly improve housing choice and housing affordability. Indeed, in some locations it proposes much more onerous regulations than exist under existing district plans, such as on minimum size requirements for apartment. Such requirements have the potential to exacerbate housing costs for the households that can least afford it.
Finally, Cooper also highlights the sometimes perverse nature of the political economy of urban planning. As many people have pointed out, planning regulations have significant effects on intergenerational equity. While restrictive regulations might be good for existing homeowners, they’re extremely bad for new homeowners – and by extension future generations.
It seems fairly obvious to me that if a city is systematically unwilling to allow new housing supply to be built in desirable, accessible areas, then skilled young people will increasingly face a Hobson’s choice: Either pay too much for housing in an accessible place, or pay too much for transport in a cheaper fringe location. And in the long run, we can expect these people to choose another city to live in. Indeed, unaffordable cities place will tend to be disadvantaged in the increasingly global competition for skilled young labour. In this other recent article Cooper actually makes this very point: Auckland competes for people, business, and capital more with Brisbane. Sydney and Melbourne than with other places in New Zealand.
Unfortunately our political system seems especially bad at solving the intergenerational problems even though this is arguably one of its core functions.
This Government’s inability/unwillingness to make headway on carbon emissions being the prime example. As a young Aucklander with many Kiwi friends living overseas. I am fairly sure that the people who will benefit from better housing policy are, for the most part, not voting in elections or going along to consultation meetings. Many more may have not even been born yet. It is these voices that are so often not heard, nor even acknowledged, in the debates on the Unitary Plan.
Responsibility for this issue lies jointly with our political representatives and mainstream media outlets, who tend to lack the courage to push back on even the most blatant self-interested objections to urban development.
Ultimately I think it’s really useful to have Auckland Council’s Chief Economist speaking out on these issues and highlighting that Auckland needs to both grow “up and out”. Now it’d be nice if more people at a central government level started to champion the same issues.