Categories

Archives

Unitary Plan Fantasies

Introduction

In this post I discuss two related questions that concern common “fantasies” about the Unitary Plan, specifically:

  • Question #1: To what degree has Auckland’s density changed during the last few decades?
  • Question #2: To what degree does the balance of brownfields/greenfields development in the Unitary Plan differ from the past?

We might be able to agree on answers to these two questions. Why? Well, they are positive questions, insofar as they refer to attributes, i.e. density and brownfields/greenfields development, which are able to be subject to empirical measurement and testing.

Ideally people would agree on answers to important positive questions before moving onto normative questions, because the latter are not empirically testable. An example of a normative question would be: “How much weight should we place on the preferences of existing homeowners versus potential homeowners? I hope the difference is obvious; normative questions tend to be gnarlier.

It’s often helpful to separate positive from normative statements. People can often vehemently disagree on the answers to normative questions, while still agreeing on the answers to positive questions. Hence, in this post I will try to provide clear answers to two important positive questions that seem to be frequently misunderstood by those who oppose the Unitary Plan. Rest assured that I hope to tease out some of the important normative questions in more detail in a subsequent post.

Question #1: To what degree has Auckland’s density changed during the last few decades?

The answer to this question is simple: In the last 10-15 years the population density of Auckland has increased. In this working paper, Peter quantifies the density for various New Zealand cities, which are summarised in the following table. We see that Auckland’s population-weighted density (i.e. the density at which the average resident lives) has increased by around one-third (33%) in just over a decade.

As Peter discusses in this post, increased density is consistent with other empirical data. When we look at population growth in Auckland, we find that the population of central areas, especially the city centre, is growing faster than other places in the region. Waitemata (which covers most of what we refer to as the “Isthmus”) stands head and shoulders above the rest in terms of population growth, both in total and relative (%) terms, as shown below.

The increase in density observed in central areas doesn’t seem to be caused by regulations on urban expansion. Instead, Auckland seems to have grown denser primarily because there is increasing demand from people to live and work centrally, i.e. as a result of people’s preferences. Research by Arthur Grimes, for example, has found that Auckland’s central areas have become much more valuable relative to less central areas, as illustrated in the figure below.

This change is significant, and is mirrored in cities elsewhere, such as Amsterdam (NB: Amsterdam has always controlled urban expansion, providing further evidence to suggest that controls on urban expansion are not behind changes in the relative values attached to centrality). Increasing density in Auckland are also consistent with the experience in Sydney and Melbourne, as illustrated in the figure below (NB This figure is taken, incidentally, from the excellent ChartingTransport website). Here we see that density in both Sydney and Melbourne increased by a similar % to that observed in Auckland. 

So from where I’m sitting the answer to the first question is fairly clear: Over the last 10-15 years or so Auckland has become a much denser place, and it’s become denser because more people and firms want to locate in central areas. As far as I know the sky hasn’t fallen on our heads. Indeed, from what I can tell Auckland has been doing relatively well of late. 

In this context, the imposition of regulations preventing intensification would seem to have the following impacts:

  1. Reduced development and higher property prices;
  2. Fewer people and jobs being located in central areas;
  3. Increased urban expansion, with associated infrastructure, congestion, and energy costs; and
  4. Transfer of wealth from those who have less to those who have more (further reading).

The likes of Richard Burton, Dushko Bogunovich, and David Seymour may argue that the costs of regulations preventing intensification are outweighed by the benefits, e.g. maintaining the “character” of inner-city suburbs.

I know of no quantitative evidence to show this is the case. On this basis I think it’ fair to say that their claims are unsubstantiated, at least in quantitative sense. I note that recent changes to the RMA (passed, incidentally, with the support of the ACT Party) places a higher bar on the economic evidence needed to support restrictions on development. In the absence of such evidence, and given the large body of quantitative evidence that demonstrates the costs of regulations that prevent intensification, arguments against intensification would seem to be rather flimsy. I can only hope that the IHP agrees.

Question #2: To what degree does the balance of brownfields/greenfields development in the Unitary Plan differ from the past?

The answer to this question is hinted to in the previous discussion: In the last two decades most development has happened within the existing urban area, i.e. brownfields. More specifically, development has been split 71% and 29% between brownfields/greenfields respectively. Data supporting this analysis is summarised in the table below, which is extracted from the Development Strategy published by the Auckland Council (available here).

The historical percentage of brownfields/greenfields development is similar to that enabled by the Unitary Plan (60-70% and 30-40% for brownfields and greenfields respectively). At this point I think it’s worth highlighting a rather extraordinary exchange from Peter’s recent post on the linear city (source).

Capture2

To explain:

  • “Brian” asks Duskho Bogunovich (who works for Unitec and has publicly criticized many aspects of the Unitary Plan) what proportion of Auckland’s historical growth has been accommodated within the urban area (“brownfields”) and what proportion has been outside (“greenfields”); and
  • Duskho replies with “I don’t know” but then suggests a ratio of 1 part brownfields to 5-10 parts greenfields. Converting this into percentages would imply that Dushko believes 9-17% of historical development has been brownfields, with the balance in greenfields.

Dushko’s numbers are at odds with the data presented above. Indeed the data flips his percentages around completely. Now, in Dushko’s defense this particular question asked about the last *30* years whereas the data presented above goes back only *20* years. On the other hand I can’t see this ratio changing too dramatically though even if we went back one more decade.

The key takeaway message from this exchange is that 1) Dushko doesn’t know the actual brownfields/greenfields ratio and 2) the data which is available suggests a brownfields/greenfields ratio that is at odds with his intuition. I personally would expect that those who oppose the Unitary Plan, such as Dushko, would spend some time familiarizing themselves with the empirical evidence, especially when such evidence is crucial to the argument they are themselves advancing.

Keep this issue in mind when you consider another one of Dushko’s comments (source):

But forcing massive intensification inside Auckland cannot fix the housing crisis anyway … The city must grow both ways – up and out – to allow the land and housing market work properly. And getting the ‘up/out’ ratio right is crucial … this ratio for Auckland is probably 1:2. That is, 1/3 should be growth by intensification, and 2/3 by growing out (new suburbs; satellite towns; redistribution to the outer region – Waikato and Northland). Sadly, the council, in its ‘compact city’ ideological zeal, managed to get this ratio exactly the opposite – 2:1. The ‘70% fantasy’. This is PAUP’s fatal flaw. That’s why the Plan is a dud. And will never be implementable. Unless we use the North Korean approach.

In Dushko’s world, Council via the Unitary Plan is “forcing massive intensification” that is at odds with the “right ratio” for intensification. Dushko’s sees evidence of “ideological zeal” and “fantasy”, ultimately concluding that the PAUP is “fatally flawed” and a “dud”, which will not be able to be implemented unless we resort to North Korean style policies. Hyperbole much?

Especially when one considers the empirical data. Put simply, the Unitary Plan simply is proposing to continue long-established trends in Auckland’s urban development, which have resulted in steadily increasing density with a 70%/30% brownfields/greenfields split.

People like Dushko might argue that we would be better off if changing these trends. I’d disagree but, hey, let’s have that debate. It’s fair game.

What doesn’t seem fair game is for people like Dushko to criticize Council’s Unitary Plan and suggest it represents a “radical” change from the past, when in most respects it’s business-as-usual. Perhaps the only way the Unitary Plan can be described as “radical” is that it provides for only 80,000 new homes to be developed over coming decades, when official population projections suggest we will need approximately 400,000.

Conclusions

I started this post by posing two “positive” questions, to which I have since suggested the following answers:

  • Question #1: To what degree has Auckland’s density changed during the last few decades? Auckland has become 33% denser since 2001. This change appears to be driven more by the growing desire of people and firms to locate centrally, rather than regulatory controls on urban expansion. The increase in density observed in Auckland, and the increasing value placed on central locations, is consistent with trends observed in cities overseas, such as Sydney, Melbourne, and Amsterdam; and
  • Question #2: To what degree does the balance of brownfields/greenfields development in the Unitary Plan differ from the past? The last two decades of Auckland’s developent has seen a 71% to 29% split between brownfields/greenfields development respectively. This data seems to be at odds with the views of many people that oppose the Unitary Plan, who argue that Council is forcing “intensification” and a “compact city” on Aucklanders.

What do you think is fact or fantasy when it comes to the Unitary Plan? And on that note, what is your fantasy for Auckland. In 20 years time would you prefer to be 1) more dense; 2) less dense; or 3) about the same as now? Vote below.

77 comments to Unitary Plan Fantasies

  • Brian

    Nice post and thanks for picking up on my comment. I think it’s a really interesting question to ask because one’s assumption about how they think Auckland has grown in the past will subconsciously sit behind the level of fear they have about the future and how different it might be.

    I can understand Dushko’s perspective better now. He thinks a future so different to Auckland’s past is an unreasonable and unlikely outcome. Problem is he’s muddled up what’s happened in the past and is therefore now actually proposing the very same radical shift that he thinks is unreasonable.

    The first sentence of the Auckland Plan should read: “Over the next 30 years Auckland is expected to grow in a similar way to how it’s grown in the past 30 years: roughly two-thirds inside the existing urban area and one-third outside.”

    • stu donovan

      Well said. And thanks for asking a good, simple question. Often these kinds of questions help shed light on how people can hold divergent views on what should happen in the future, because they misunderstand what has happened in the past.

  • PeterP

    Much denser than now. By a lot. It’s just a matter of time before people realise that commuting for 1.5h each way from those greenfield developments is actually far less fun than initially anticipated. Also because the demographics are changing – smaller households (1 or 2 persons only) very often don’t want the hassle of maintaining a stand-alone house. And once everyone puts these things together there’ll be run on inner-city living. But wait, isn’t this actually happening already?

    • stu donovan

      Yup. And the value of my apartment in city centre has doubled in 8 years. Dont buy an apartment they said, you won’t get capital gains they said.

      Nek minnit I’ve made a tax-free mint.

      Although a large part of this “gain” has to be a regulatory tax on others caused by planning rules preventing new supply from coming onstream.

    • On standalone houses, also wait until the tidal wave of Boomers hitting retirement peaks. A significant proportion of them will be in good health, financially stable, and looking to downsize to an apt or townhouse (less maintenance).
      Where are a) the buyers for their now expensive family home, and b) the type of housing stock they want to buy?

      • Mike

        Ah, the same Chicken Little line that Bernard Hickey has been trotting out for years…… It simplistically ignores immigration, multi-generational families and their development potential (whatever plan eventually emerges from the PAUP mess)

  • Early Commuter

    *** This comment has been edited for violating our user guidelines *** http://transportblog.co.nz/about/user-guidelines/

    It’s extraordinarily gauche to cherry-pick someone’s comments and then criticise them in a post like this, without a true right of reply.

    The correct approach would be to have taken these quotes, email Dr Bogunovich, and then ask him for his replies, rather than take a few knee-jerk comments on this blog as his absolute truth.

    PS the pre-existing urban area is a very fuzzy concept. RUB != MUL and so forth,

    • stu donovan

      Disagree. Nothing wrong with “cherry-picking” substantive factual errors. Im not interested in the rest of his arguments (e.g. the merits or otherwise of the Linear City), so adding context would contribute diddly-squat to the issue at hand, i.e. the historical brownfields/greenfields split observed in Auckland.

      Dushko has many rights of reply. He’s welcome to reply here, and/or via a guest post.

    • Adam W

      If you put your view out into the public media as Dr Bogunovich has done, then they need to expect criticism – and using facts and evidence is the best form of criticism.
      A very interesting post and I enjoyed reading it.

      • Stu Donovan

        Thank you.

        And yes I agree: Dushko put his views out there, and now we are subjecting them to critical evaluation. Nothing more, nothing less – and certainly something that academics should be used to.

      • Yes. If you present yourself as an expert and get caught not grasping the basics of the field, expect some reaction.

    • Rich

      Disagree, I believe the quotations shown were used in context.

  • Matthew W

    Good post. I have noticed that arguments are often focused on positive questions instead of normative ones. I think in part this is because people want to build up a set of “factual” reasons as to why their normative views are correct. E.g. climate change – the argument isn’t generally about whether or not it is a good idea to spend money/ alter the economy to mitigate climate change or not. It is all about whether the scientists are right, or that the actual truth is what this scientist says or look at this data etc etc. Basically the reason we see arguments focused on positive questions is because everyone is arguing in bad faith!

  • Question #1: To what degree has Auckland’s density changed during the last few decades: Auckland has intensified but been real hodge podge about it (given legacy rules and legacy Councils). That said we have had some large Greenfield growth too like Botany without the follow up like bus ways or Sky Train (Te Irirangi was designed to take rail).

    Question #2: To what degree does the balance of brownfields/greenfields development in the Unitary Plan differ from the past?
    Technically the Auckland Plan allows for more sprawl if we do go the full 60:40 split as it allows and with most of that sprawl heading to the South you can imagine trying to get those people through Otahuhu on the Southern Line and Mt Wellington on the Southern Motorway….

    What do you think is fact or fantasy when it comes to the Unitary Plan? And on that note, what is your fantasy for Auckland. In 20 years time would you prefer to be 1) more dense; 2) less dense; or 3) about the same as now? Vote below.
    Well Stu given you said Auckland is around the 65-70 Brownfield 35-30 Greenfield split now I am happy for the Unitary and Auckland Plans to continue.

    But one thing Stu I wouldnt mind picking your brains over is the role of the Centres especially the Metropolitan Centres.
    The current Rezoning Hearings before the IHP are not looking flash for Council with Housing NZ and the Panel effectively holed Council’s economic modelling. One of the problems was 9 of the 10 Metros were deemed uneconomical to develop and if we are going via Panuku to tip money into these Metros we might want the economic argument to stack up prior.

    Any way if we are going to intensify towards the 70:30 levels then we might want to get our larger Centres in order first and for some of them to take more of the brunt than Council would allow under the PAUP.

    • Stu Donovan

      Good question Ben. I really don’t know much about the financial viability (or otherwise) of development in the metropolitan centres. I suspect many of them struggle because they are outside of the Isthmus, and so don’t benefit from the centrality premium that is driving much of the appreciation in land values that has been observed in the isthmus.

      Manukau will benefit from the tertiary campuses opening up along with the new bus station and other investments. Medium term it’ll also gain from residential growth down south, for which Manukau is the obvious retail centre unless people want to traipse into Sylvia Park or Botany. Takapuna seems ok due to amenity and proximity to city centre. Albany may do alright because of University. Don’t know much more than that …

      In general there may be some merit to arguments criticising an over-reliance on metro centres for accommodating growth. Zoning them for high-density does not necessarily mean that density will eventuate. And if it does not then the slack needs to be picked up elsewhere, probably where market potential is highest, i.e. the isthmus.

      In general I would opt for a strategy that 1) aimed for the metro centres to succeed and zoned them for high density accordingly (along with complementary investments) while 2) enabling considerably more development in areas with high market potential. Reality is that Auckland needs approximately 400k homes in the next few decades and the current Unitary Plan only provides for 80k. So we’re far short, and the shortfall will not be met by up-zoning the metro centres on their own.

      • Matthew W

        Agree with Stu here.

        The thing about very large scale projects is that they are high risk. There are sites in Takapuna (and the city centre) that could have been developed years ago but arent because ( I am educatedly assuming) of the risks (long time frame) and the need to attracted a large amount of capital all at once. Three storey walk ups on the other hand are much lower risk. A reasonably ambituous “mum and dad” builder/developer could quite conceivably move up from building houses to three storey character flats.

        This isn’t to say that we shouldn’t be looking at how we can unlock and enable more development in these centres, but we shouldn’t put too many eggs into that basket.

        But as a general questoin back to you Ben, how would we get our metro areas in order?

  • General advisory: Fact checking public statements on transport, urban form, and Auckland in particular is a core purpose of this blog.

    By all means find fault with our data or methodology, but criticising this very activity is not only pointless [we’re not going to stop] but also highly suspect. It suggests a lack of any actual argument but an emotional objection with the conclusion the evidence supports.

  • mfwic

    Maybe you could explain your arguments to a bear of little brain like me. You have argued:
    1/ Land values have gone up in the centre and so that proves people just prefer to be there as it can’t be caused by restrictions at the edge. As proof you note Amsterdam has shown the same pattern and they have always had growth management. Well maybe its the fact you remove the substitute of land at the edge that is the cause. Why is an increase in land value at the centre only due to the a preference to be there? Surely people look at what options they have and choose. If you are right then we can get rid of the RUB entirely.
    2/ Most of Auckland’s development in the last 20 years has been within the developed area. Well given that the MUL morphed into a growth restriction around that time what did you expect to see? Prior to the mid 1990’s the MUL was used to focus growth in a few new areas at a time and then relaxed in a few more as those filled up. I think it was the Long Bay case where the ARC dug in and claimed it was necessary to use the MUL to encourage growth in the middle. I think that is called begging the question when the answer is in the actual question. ie since the ARC applied the MUL as a means to force more growth in the centre where has most growth been?

    • mfwic

      https://en.wikipedia.org/wiki/North_Shore_City_Council_v_Auckland_Regional_Council This was perhaps the turning point when the ARC started using the MUL to limit growth rather than to stage it. They put forward a huge heap of evidence on growth management.

    • Stu Donovan

      1. The relevant question here is whether demand that is not fulfilled due to limits on urban expansion relocates disproportionately from the fringe to central areas. I’d argue this doesn’t seem very likely, mainly because centrally located properties are not a close substitute to properties on the fringe. Research by Grimes finds high prices just within the MUL, which may reflect that demand re-located to *just* within the MUL, i.e. as close to the fringe as it could get. This would seem to make most sense because this is the closest substitute to the properties that aren’t being supplied. Yes some demand may re-locate to more central areas, but I can’t see the imbalance being sufficiently large to drive the (masssive) change in relative prices for central areas that we’ve seen.
      2. I think you’re missing the point here: The relevant question is not what I expected to see, but what Dushko expected to see – and others who claim the Unitary Plan’s targeted split between brownfields and greenfields land is unachievable and/or unprecedented. It’s not, is the answer.

      • Matthew W

        Here is my theory as to why fringe development could in fact disproportionately relocate to the city centre: Green fields and brown fields development are rather different things. The advantage of greenfields development is you can develop an entire area with nice brand new housing and get economies of scale. However when you stop having sufficient green fields development, the only other option is intensification or brownfields development of one form or another. So when the market starts satisfying growth from intensification, it is going to look at the urban area and decide where best to do that. Well the best place for intensification, all else being equal, will be near the city centre because of its proximity value.

        It doesnt make sense to say that because the market cant develop a green fields site north of Albany its next best option is going to be intensifying Northcross. Those are two completely different things.

        • mfwic

          I think you are right Matthew, part of the issue is we shouldnt just think about an average house as we lose sight of differences. Houses come in all sizes and prices but if you think of a two house market of expensive houses and cheap houses, it is easier to understand. In the old days the MUL was relaxed as needed and we got new expensive suburbs and new cheap ones. Once the MUL was used as an absolute constraint the available land was used exclusively for expensive houses. The substitute for cheap houses was flats in the CBD. Where once we got areas like Unsworth or the top end of Torbay with 3 bedroom 1 toilet rectangles now all we get in the suburbs are Long Bay and Hingaia type mini mansions.

    • Seems you are conflating ‘inside the limit’ with ‘in the centre’. Applying a blanket tool like an MUL can’t force a subset of suburbs to be more attractive than others.

      • mfwic

        No but it can make second choice areas with potential for housing more likely to grow. In this case that was the CBD which was struggling to find investors willing to build office towers. Owners found a ready market for their sites as residential towers instead. The substitution doesn’t require that individuals who would have located on the outskirts buy in the centre. The increase in price affects every alternative creating a general change.

  • As usual Stu provides useful data. All he has proven, though, is that if you have a policy of urban containment you can contain urban development. What of prices during this period? As predicted by any such model they have gone through the roof. Then people who have legitimate concerns about their particular neighbourhood are solely blamed in this post.

    • Sailor Boy

      “if you have a policy of urban containment you can contain urban development” indeed, Stu has proven that the market will build all types of housing when left to its own devices, and that if we decide that we aren’t actually libertarian free market politicians and support a policy of urban containment in the vertical dimension then we can and will contain vertical urban development.

    • Peter Nunns

      As Stu observed in the post, the changes to the RMA that your party supported strengthen requirements for quantitative cost benefit analysis to justify planning decisions. This is to be welcomed – as I’m sure you will agree, it is a bad idea to implement regulations that have high costs and few benefits. Increased CBA requirements seem to have had implications for Auckland’s MUL – it seems to be moving back to a tool for *staging* horizontal growth, rather than constraining it.

      But they *also* has major implications for the extensive suite of regulations that limit the supply of housing in the inner suburbs. In particular, given what we now know about the costs of constraints on building up, is it plausible to expect the benefits of these regulations to be sufficient to justify regulation?

      This is, ultimately, an empirical question. And it’s one that proponents of red tape will be asked more frequently in the future. So rather than banging on about “legitimate concerns”, it would behove you to go away and gather some data to prove that the costs of development restrictions are justified by the benefits.

    • Angus Robertson

      And as land prices go up, the costs of building increases. Are we really going to get urban development by making it more and more expensive?

    • harrymc

      ” Then people who have legitimate concerns about their particular neighbourhood are solely blamed in this post.”
      Totally disingenuous statement.
      “Legitimate”? Who decided that their concerns were legitimate. Oh yeah: Seymour et all.
      “Solely blamed”?? This is just wrong.
      Seymour tying himself in knots again.

    • Yes David supply constraints cause price increases. The supply constraint here is on city proximate dwellings, imposed by various layers of regulation. Land and even dwelling supply a long long way from where there is demand may help moderate the extremity of those price increases to some degree, but not by much, because they are not in the same market. And anyway will cause other unwanted distortions and costs such as much higher travel costs [in time and money].

      Location is the biggest determinant of dwelling value, more supply elsewhere is insufficient to move prices meaningfully in a supply constrained market in another. If this was not the case then the fact that there are many freely available and very cheap dwellings in say Te Kuiti or Kawakawa would be sufficient to correct the property market in inner auckland; it is not and they are not.

      The market over the last 20 years has shown where the majority of demand in Auckland has been [east Coastal and City proximate], and it currently is showing little sign of substantial change away from this pattern. If your concern is to help moderate prices in these areas, then reducing the barriers to adding supply in those very markets is the only rational course. Of course if the opposite is the case, ie if you represent people who want to continue to enforce reduced supply and maintain an exclusionary policy in order to support and continue to grow property prices in desirable areas then the reverse will be the case.

      Which do you support David? A more open and equitable market, with less red-tape, or an artificially enforced supply-constrained one for the benefit of particular existing property owners alone?

  • Bryan

    It would be interesting to see a breakdown of “inside pre-existing area”, to see whether that was spread evenly over the whole isthmus or city (i.e. infill everywhere), or whether it was concentrated in “pockets” (CBD apartments, greenfield sites within the MUL like Henderson Valley, brownfield sites like Cermaco at New Lynn). Also interesting that two of the four highest growth Local Board areas are some of the furthest from the centre.

  • Angus Robertson

    Q1 – The increase in density observed in Auckland, and the increasing value placed on central locations, is consistent with trends observed in cities overseas, such as Sydney, Melbourne, and Amsterdam. If only it were so, because this is the natural pattern of growth that leads to intensification and a superior urban environment.

    Unfortunately Auckland has a much higher “new land cost to apartment price ratio” than Sydney or Melbourne (or Brisbane or Vancouver or Toronto – all places that are exhibiting high apartment growth). Auckland overprices/overvalues its proximate greenfield development, jumping up overall land cost and slowing all urban development.

    • Angus Robertson

      Under current market the median price for a section clear Auckland land is between $600,000 to $700,000 and the median price of an apartment is $500,000 to $600,000. Giving Auckland a new land cost to apartment price ratio of between 1.0 – 1.4. For comparison sake: Brisbane – 0.65; Melbourne – 0.6; Sydney – 0.55.

      If we maintain our high land costs the median price of an Auckland apartment will need to be in the $900,000 to $1,000,000 range for us to value central locations “consistent with trends observed in cities overseas, such as Sydney, Melbourne, and” Brisbane.

      • Peter Nunns

        Can you provide citations for those figures? I’m currently looking at a bunch of property sale microdata that suggests that the median price for apartments sold in Auckland in 2015 was a bit under $400,000. Some other data I’ve gathered on a couple new builds suggests that they’re selling for higher prices – $600-$1m, but that’s mainly because they’re larger and higher quality. (New stuff is generally more expensive than old stuff.)

        • Angus Robertson

          Auckland:
          For apartment prices: http://www.trademe.co.nz/property/price-index/for-sale/
          For land prices used realestate.co.nz and approximated using asking price function of search engine.

          • Peter Nunns

            Trademe’s figures seem to be skewed upwards due to their use of mean price rather than median price. Mean price is pushed up by some apartments with really high listing prices – $1.5m and above – but that’s not really reflective of the bulk of the market. In the dataset I’m looking at, mean apartment sale price is roughly $100k higher than the median price. So you’re probably overstating the unaffordability of Auckland’s apartments.

            In addition, I’m not sure that asking price is a great measure given that such a large share of dwellings are sold at auction and hence don’t have an asking price. It’s hard to be sure what impact that has on the data.

          • Angus Robertson

            Yeah, you are correct. I was being overly hopeful. The methodology you are using is more akin to that used to generate the Australian figures.

            We are not building a lot of apartments. To build more we need higher sale prices or lower costs to create profitability. With Auckland’s interesting policy of pricing land so high, the prices of apartments need to be much much higher. While Auckland apartments remain so affordable, we aren’t going to build many.

            With land expensive and apartments remaining so affordable – who will ever build apartments here? Anybody can buy the land in Melbourne for less and sell the apartments they build for more – who will ever build apartments here?

            http://www.reiv.com.au/property-data/median-prices

  • Robert

    My question would be : If major generators of density like universities relocated would people still want to live in the central city. Desire to live in the city is not that simple as often it is due to choosing that option due to convenience. Many people who are not tied by jobs or education to the central city choose to live elsewhere and rarely visit the central city. Intensification does bring productivity and cultural benefits as this blog has well proved and I agree with. However I do wonder if the arguments advanced above are necessarily correct in their assumptions.
    On the UP I wonder if the debate on intensification is a bit misdirected. I am working on a high density development in a leafy suburb and got nothing but resistance from Town planners who basically do not seem to understand good design. The proposed UP rules are in some cases worse and I predict a real issue with quality once the UP is operative. The whole process is flawed as the fundamental issue of change management has not been well handled. A few more houses in leafy suburbs is not going to solve the housing shortfall but massive upscaling of brownfields along major transport routes would and much of the property along those routes is of a poor standard. The UP should be a rolling document that gives powers to Local government to have a fast tracked area /structure plan with some serious teeth given to community consultation and engagement to create a rationalization of land amalgamation,roading and services. If it is done well the community will see the benefits and take ownership. It has worked before ( anzac quarter Takapuna )but it needs a different model to work within ( which is where the UP fails )

    • Robert moving universities to greenfield sites was the big idea in the 1960s, thankfully it has now been largely abandoned. Though not before it gutted cities such as Christchurch and Hamilton. Why on earth would you want to move a source of economic activity to some inaccessible place with poor transport access and no or only a small proximate population? This can only be supported as an idea if you hold some dated notions about cities as fallen or immoral places that need dispersing, and if you fail to understand the economic value of agglomeration which is to say the entire purpose of cities throughout history.

      Concentration is efficiency.

      Additionally ‘if universities and other major generators of density are moved from the centre city…’ well then we will just have another ‘centre city’ somewhere else. That just changes the location, at no doubt vast coast, but not the quality and value of ‘major generators of density’. So such a move is of little to no value, city centres are in places for very real and enduring geographical and economic reasons. Anyway this is famously hard to do outside of command economies. Unless, of course, the intention is to disperse activity, as was the [failed] aim of the sprawl era relocations, and then of course we lose the efficiencies of concentration. See first point above.

      • mfwic

        In the 1970’s the University of Auckland struck a deal with Auckland City Council to stay in the centre. They promised their roll would not exceed 10,000 students!

        • A stupidity of the sprawl era… which can be summed up as a wilful determination to deny the entire raison d’être of cities. Because of a equally wilful determination to re-shape the city from end to end to suit the new fad: the car.

          We are in recovery from this massive mistake, sadly the idea of course lives on, ideas always do; especially collective delusions.

          So it goes; happily there are bigger forces at work now.

          • mfwic

            Actually it was rates they were after. The University paid very little but cost them a lot so the Council would have loved it if they went to Albany as intended. They saw the site as being somewhere for more offices.

      • Robert

        Hi Patrick, Totally agree with your response re the benefits of city centre and I noted this in my original post.However I was musing on the fact that Stu was saying that people Want to come to the central city and I was reflecting on the fact that people Have to come to the city. My point was to Stu that is it wise to make that causative link. My personal observations are that many people do not visit the central city and that the city is increasingly multinodal, a trend that has been ongoing for my 58 years on this planet. Most of the nodes have their own universities,cafe culture,apartments,theatres/cinemas and shopping precincts. So not sure what you mean by failed 60s as it has already happened and secondary city centres are building around them.Anyway it is a minor digression from the post.

    • Sailor Boy

      “If major generators of density like universities relocated ” Yes, if we didn’t live in a world where businesses acted rationally that would change our urban form.

  • Angus Robertson

    Q2: To what degree does the balance of brownfields/greenfields development in the Unitary Plan differ from the past?

    The Unitary Plan is adding 100%+ greenfield to Warkworth, 80% to Silverdale, 100%+ to Kumeu and 100%+ to Pukekohe. The Unitary Plan is adding less than 10% greenfield to Auckland.

    With urban Auckland constricting greenfield growth to less than a third of historic norms, growth across urban Auckland has slowed dramatically and land prices have risen. Apartments are being built at much lower proportion to houses than seen in previous building booms.

    My vision is for much more density, primarily in the CBD and direct environs. For that to happen we need to free up land.

    • Angus: ‘My vision is for much more density, primarily in the CBD and direct environs. For that to happen we need to free up land.’

      This really doesn’t follow, or at least isn’t a clear way of expressing what you must mean, because the constraint in the ‘CBD and direct environs’ is not land supply, but land use. Outside of massive reclamation we cannot add land to this area but we can use the existing land more efficiently. So it is a regulatory failure that restricts development not one that restricts land supply, except in the sense of the supply of proximate land that can be developed to meet a willing market. But that is a fairly complicated way of expressing it.

      • Angus Robertson

        Patrick: “because the constraint in the ‘CBD and direct environs’ is” land use and land cost.

        If we open up the borders of Auckland to low value development, those (20 – 30% historical record) wishing to have a low value suburban existence can move away from central isthmus suburbia and free up their land for development. As we do not allow Auckland to grow outwards these people camp in place and withhold their land from development.

        • Angus your comments get more and more confused as you go on. Before it was ‘CBD and environs’ now its the fringe. These are two different places. Repeating a muddle doesn’t make it any clearer.

          • Angus Robertson

            Well it is a city Patrick, a city is an interconnected thing that is viewed holistically.

  • Grant

    Do we have readily available data on the 10 years prior to 1996? If we are trying to look at facts and figures could make a big difference to the arguments. Also the fact the Unitary Plan only allows for 80,000 new homes but we may need 400,000 is pretty fundamental do the intensification more than a % proportion breakdown of green/brown field areas? Just my 10c worth.

  • Stu and Matthew W I will answer both your points in reply to my own here:
    Thank you Stu for your comments there. Mind I take notes from it as it forms salient points as I prepare for my Rezoning Hearing later next month (with the focus around the Metropolitan Centres).

    Matthew W
    How would I get the Metropolitan Centres “back” into order.

    I will be the first to admit as an urban Geographer that there is no single silver bullet solutions and do think so would be irresponsible of me.
    Bearing in mind yours and Stu’s comments, the Transform work Panuku is about to start with Manukau and Auckland Transport stating they want to see no more than 80% of Southern Auckland commuters go above Manukau and the Airport (not debating the merits or demerits of that one Patrick unless you write a post on it) a few things do come to mind

    1) Zoning and controls
    1a) Manukau and Albany are elevated into the Super Metropolitan Centre proposed zone I have put forward. This new category sits between the City Centre and standard Metropolitan Centre zones already in the Auckland Plan. The purpose of the SMC took the height limits out of both centres while adopting more of the language used in the City Centre Zone rather than the Metropolitan Centre Zone objectives and policies. This way I theorised it would send a signal to the market that the catchments these two areas serve would undertake significant growth (120,000 new Greenfield homes in South Auckland and some 30,000 jobs to boot according to AT) and Council (whether through itself or Panuku) is both pointing out and willing for these two Centres to undertake even more intensified growth than any other Metro Centre. Now remember what I said above with AT not wanting 80% going no further north than Manukau? A standard Metro cant deal with that so here comes the Super Metro.

    1b) I would also take the 18 storey height limits off New Lynn and Takapuna as well

    2) Panuku. We know Panuku are to released a Plan for Manukau next month to the Auckland Development Committee. Once I see it I can comment more on how Council can help a larger Metro Centre through some public works.

  • George D

    It’s interesting to note that Melbourne, for example, has become considerably more dense even as it allowed massive expansion over its productive agricultural land. People simply don’t want to live 50km from major employment centres. The great majority of new construction is now near to the city centre (within 1-10km) because that’s where the demand is.

    • Even more startling when you realise that there are regulatory incentives in Aus to build at the fringes too, like not having to pay Stamp Duty [yes they still have that] on new houses. This incentives ‘leap-frog sprawl’ where a brand new home can in practice be slightly cheaper than a 1 or 2 year old one due too the tax difference. Of course it will usually be further out, and further from Melbourne’s existing transport systems, especially the rail network which radiates out from the centre so each new suburb increases the distance to a station as the ‘pizza slice’ of the city expands at its widest wedge end… Melbourne is a true ‘Mullet City’; one head, two haircuts; dense, walkable, Transit-rich in the centre, dispersed, auto-dependant, and underserved in the boondocks.

      • Angus Robertson

        It’s hardly startling, Melbourne is a normal type city. They’re building upwards 5-6 times faster than Auckland and outwards 2-3 times faster. A natural relationship between upwards and outwards that is quite pervasive in cities.

        What would be startling is a city that just went up, those are very rare and expensive.

  • “Transfer of wealth from those who have less to those who have more”

    A stunning claim considering that the price of everything goes up with intensification, which is a by-product of induced demand.

    Paying $700k for 50sqm in the city, instead of $350k for 500sqm in suburbia because your employer has set up in the same small space as many other employers reducing your lifestyle options, is in fact a transfer of wealth from people, to developers. It’s a massive externality that benefits your employer at your expense. The so-called “agglomeration benefits”.

    Great for business. Terrible for people, who get locked into development dependency.

  • Angus Robertson

    Figure 4 shows the progression of critical mass that occurs in a city, as the city grows the value of living in the central area increases.

    The Unitary Plan is horrible, because it takes the real value of land curve (fig. 4) and distorts it. The unitary plan creates a price curve that is shallower and therefore less conducive to intensification than Auckland had 30 years ago.

    • stu donovan

      I wouldn’t say the Unitary Plannis horrible in all respects. For example it merges 7 separate district plans into one and does some good stuff like removing and/or reducing minimum parking requirements. But lots to improve! Especially around zoning!

  • Angus Robertson

    The historical natural market has intensification 70% to greenfield (largely single dwelling) 30%. The regulations entrench (for Auckland City, not including exurbs) a 91% supply of intensification and a 9% supply of greenfield. The result is obvious – there is anticipated over supply of intensification and a shortage of low intensity greenfield.

    This has two easily observable effects:
    – Prices of single dwelling increases. As single dwelling is highly land inefficient, but highly valued – land prices will rise.
    – Prices of apartments gets suppressed on expectations of over demand. As the cost of land increases, but price remains suppressed, the rate of apartment construction becomes very slow.

    • Sailor Boy

      Funny that the evidence submitted in the unitary plan hearing is almost unanimous in saying that the portion of brownfields enabled by the UP is less than 60%

      • Angus Robertson

        The amazing thing about apartments is that they can be built upwards in, which means they don’t require much up zoning. They only need to be profitable. This intensification has been permissible prior to, during transition phase and after UP implementation. In the decade prior to 2008 we constructed 20,000 or so apartments in the CBD. In the decade from 2008 to 2018 with the MUL distortions entrenched we are due to construct only 6000.

        • Sailor Boy

          And despite this all evidence points to us being able to build too few apartments because the zoning for apartments isn’t widespread enough in market desirable areas.

          • Frank McRae

            Part of the problem is that the area of land on which apartments may be built is so constrained that there is an incentive to land bank and collect capital gains rather than develop. Takapuna is a case in point.

          • Angus Robertson

            You have “evidence” that suggests making a project really expensive to build whilst suppressing its sale price creates a market desirable project? I would like to see that evidence.

            Market desirability indicators (or lack there of):
            – Land price Auckland $600,000 – $700,000; apartment price Auckland $400,000. Auckland apartment builds per 10,000 people in current boom – 40.
            – Land Price Brisbane $300,000; apartment price Brisbane $400,000. Brisbane apartment builds per 10,000 people in current boom – 240.
            – Land Price Melbourne $350,000; apartment price Melbourne $600.000. Melbourne apartment builds per 10,000 people in current boom – 270.
            – Land Price Sydney $500,000; apartment price Sydney $700,000. Sydney apartment builds per 10,000 people in current boom – 175

          • Bro, where are you buying a new build apartment for $400k?! Please let me know immediately!

  • Angus Robertson

    Nick R,

    Exactly, it’s quite impossible to get a new apartment built for $400,000.

    Auckland has a land cost structure that suggests a profitable median sale price should be 20% higher than Sydney – about $850,000. Yet we have an existing apartment market trading at a median of $400,000. The intersection between the cost of supply and the existing market is tiny, the distortion of market is so freaking awesomely awfully large.

    This is why we get nothing being built.

  • Matt P

    Can someone please assist. Is Council looking to keep the requirement in the PAUP as notified for extra density to only be achievable on sites of at least 1200 sq m with widths of at least 20m?
    I can see why they did this, but it would be a significant barrier to redevelopment, due to the need to amalgamate sites.
    Interested in knowing whether they proposed to pull this requirement in their late 2015 amendments?
    Cheers

  • Angus Robertson

    (NB: Amsterdam has always controlled urban expansion, providing further evidence to suggest that controls on urban expansion are not behind changes in the relative values attached to centrality)

    Amsterdam is one city of several that make up the Randstad, collectively home to 7.1 million people. The cities interact and feed value into each other by their proximity. The value of land at the periphery of Amsterdam is high value.

Leave a Reply