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Reeves Rd back down?

Auckland Transport appears to be backing down on one of their best and boldest decisions – to defer the Reeves Rd flyover and use the money to bring forward the construction of the AMETI busway. This is after what I’m aware has been intense lobbying directly to the government and minister from politicians like Dick Quax and the local MPs. I understand they’ve even been pushing to try and have it declared a State Highway so the NZTA can pay for it.


Here’s AT’s press release:

Chairman, Dr Lester Levy, wishes to clarify the Auckland Transport Board’s position on the Reeves Road flyover, part of the Auckland Manukau Eastern Transport Initiative (AMETI).

An AT media release dated 12 February 2015 implied that a Board decision had been made to accept a new delivery strategy, which included deferring the flyover and opening the full South Eastern Busway (to Botany) earlier. Dr Levy says the board of Auckland Transport has not made any decision to accept the proposed new delivery strategy including the deferral of the flyover. Rather the board simply noted a report presented to its December meeting which suggested a delay in the timing of the flyover, subject to further technical and funding feasibility work.

“That work to assess the feasibility of busway route options through Pakuranga town centre and how funding can be secured for Reeves Road flyover to be delivered earlier continues,” he says.

“The Board has not agreed to the proposed new delivery strategy at this point in time, as it still awaits the technical and funding feasibility. When that work has been completed the Board will be able to give this matter further consideration.

“It is regrettable that this AT media release resulted in stakeholders and the community receiving a mixed message, but I want to be very clear that no firm decisions have been made at this time” Dr Levy says.

As a comparison here is the press release they now say was wrong which clearly talks about using the money to bring forward the busway, the challenges of consenting the project and the extra cost to fix more bottlenecks created by the flyover. I’ve added some emphasis of these points but perhaps I too have read it wrong. What do you think?

Major new public transport improvements will arrive earlier for people in Auckland’s south east.

Auckland Transport is aiming to open the full Southeastern Busway to Botany sooner than the 2028 completion date earlier proposed, and AT is investigating extending bus lanes to Highland Park.

Recent work on the Auckland Manukau Transport Initiative (AMETI) has identified that the busway can operate through Pakuranga town centre without the need to build Reeves Road flyover first.

This allows funding to be used to deliver more public transport improvements sooner by deferring the $170 million flyover until next decade. Targeted traffic improvements will also be made to relieve congestion at the intersections of Ti Rakau Drive/Pakuranga Road and Ti Rakau Drive/Pakuranga Highway.

Auckland Transport AMETI Programme Director Peter King says the change means better transport choices for people in the area sooner and supports the roll out of the new public transport network in 2016.

“The recent decision on the Basin Reserve flyover in Wellington shows the challenges of consenting a flyover that has impacts on an urban area and the potential for long delays. This decision allows us to extend the AMETI transport improvements made in Panmure to Pakuranga and Botany as soon as possible while continuing to build the case for the flyover.

“Large numbers of passengers are expected to be attracted by quicker, frequent and more reliable bus journeys on lanes separate to traffic. About 7.4 million trips a year are expected on the busway.

“There are time savings from opening the busway between Panmure and Pakuranga, however they are much greater when the full busway to Botany is open. For example catching the bus and train between Botany and Britomart will take 38 minutes, 17 minutes quicker.

“The change to timing reflects Auckland Transport’s prioritisation of rapid, high frequency public transport and will not require extra funding.”

Work to develop the flyover showed its congestion benefits would be limited until further significant investment along the South Eastern Highway. It also indicated a likely increase in costs with the need to create a quality urban environment beneath it.

Auckland Transport will update the community in early March on the new delivery plan for AMETI and a potential change to the busway route through Pakuranga town centre. Following further feasibility work there will be consultation on any change to the busway route.

Consultation will be carried out on the latest design for the next construction stage between Panmure and Pakuranga, before a Notice of Requirement is lodged in April.

The Panmure to Pakuranga projects include:

  • Replacing Panmure roundabout with an intersection with traffic lights and more direct pedestrian crossings.
  • Panmure to Pakuranga busway on lanes separate to traffic congestion.
  • Panmure to Pakuranga shared cycle/foot path separate to traffic.
  • Second Panmure Bridge for busway and shared path.

Mill Road economic evaluation

In this earlier post Matt discussed the proposed Mill Rd project in South Auckland.

I actually grew up in Franklin (Waiuku) and know the wider sub-region quite well. Mill Rd is, in my experience, an unsafe stretch of road within a somewhat disconnected/fragmented network. So there’s definitely some transport/land use issues in the area that deserve our attention.

Tick to AT on that front.

As a transport economist, however, one must always ask whether the benefits of a proposal are commensurate with the costs. In terms of Mill Rd, the economic benefits of the proposed project are shown below (NB: This is extracted from the scheme assessment report pg 79).

Project benefits

The benefit cost ratio of the project is stated to be 2.2. This means that the project receives a “medium” rating for economic efficiency under NZTA’s project evaluation policies. It’s worth nothing that in Peter’s post on the MoT’s analysis of capital spending on roads, local road projects were found to typically have BCRs in the range of 3-4. Mill Rd’s economic efficiency is, in comparison, somewhat underwhelming.

Digging a little deeper we can see that the largest 3 benefits attributed to the project are 1) travel time savings ($271m); 2) agglomeration benefits ($69m); and 3) vehicle operating costs ($27m). I thought the benefits ascribed to agglomeration were the most interesting (NB: For those who haven’t heard of “agglomeration” before, you might want to read some of our previous posts on the topic here and here).

In a nutshell the literature suggests the primary agglomeration economies typically arise from:

  • Regional economies of scale, i.e. larger markets for goods and services (especially more efficient labour markets). This can be achieved by either bringing more people/firms into the city and/or bringing existing people/firms closer together by reducing transport costs;
  • Local knowledge spillovers in dense urban environments that increase productivity; and
  • Efficiencies in the public provision of infrastructure/services.

When discussing agglomeration benefits the Mill Rd SAR notes (emphasis added):

“Agglomeration economies describe the productivity advantages that arise from the close spatial concentration of economic activity. There is a strong link between transport provision and the benefits that arise from the spatial concentration of economic activity. 

The contribution of the improved Redoubt Road-Mill Road corridor to the upgrading of the Auckland transport system qualifies for the agglomeration benefits to be taken into consideration. Economic Evaluation Manual, Vol.1, Section A10 provides the methodology for estimation of these benefits. 

The corridor provides an access route to Auckland CBD and Manukau City Centre. Both are major employment and commercial centres, which justify an adoption of the agglomeration benefits for the project. The value of these benefits was assumed at 20% of the total benefits, which is conservative as similar projects in the Auckland region use values in excess of 25% to 30%.

Having observed that agglomeration economies arise from the close spatial concentration of economic activity, the SAR then proposes to estimate agglomeration economies by applying a blanket 20% factor to total benefits.

At this point I emitted audible “hmmm”, a bit like Homer Simpson day-dreaming about warm pie (NB: Source).



The SAR is correct that agglomeration benefits can arise from spatial concentration of economic activity. Where the SAR seems to make a fairly large leap of faith, however, is by assuming that the Mill Rd project (and specifically the land use patterns it enables) will logically lead to sizable positive agglomeration benefits. It’s worth noting at this point that from a quick read the above extract is the only discussion of agglomeration economies in the entire (200 plus page) report, despite them supposedly representing the second largest source of benefits for the project.

Before discussing agglomeration economies in more detail let’s introduce an important concept” The “counter-factual”. This describes would happen without the Mill Rd project. In the case of agglomeration economies, we’re primarily interested in land use effects, i.e. what would those 10,000 households do in the absence of the Mill Rd project?

It seems plausible to suggest that some households would simply choose to locate in the area anyway, while enduring slightly longer travel-times. For these households the agglomeration effects are almost identical to the base case. Other households might instead choose to locate somewhere else, most likely in a more central location. This  would actually tend to generate larger agglomeration benefits than would have arisen had they located in the Mill Rd area, i.e. for these households the Mill Rd project can be considered to have a negative effect on agglomeration economies.

This discussion highlights two important points about agglomeration economies: 1) You can’t have a very informed discussion about them without first carefully defining the counter-factual (land use) scenario and 2) depending on this counter-factual scenario, it is possible that transport investment gives rise to negative benefits, because it encourages/enables development to spread out more (and create more congestion) than would have eventuated otherwise.

In this context, simply assuming a 20% agglomeration premium on total benefits strikes me as a tad presumptuous. Let’s now go back to the three micro-economic channels that contribute to agglomeration economies that we listed above and consider how they relate to the Mill Rd project.

First, it seems unlikely the Mill Rd corridor will, on its own, impact on regional economies of scale. It’s simply not a sufficiently large step change in accessibility that it would encourage more people/firm to migrate to Auckland than would have done otherwise. Indeed, with Auckland’s annual population growth running at approximately 50,000 people per annum, the total growth expected in this area over the next 30 odd years (25,000 people) is a veritable drop in the growth bucket. It’s primary effects seem to be bringing Papakura closer to Flat Bush and Botany Downs, and both of these centres slightly closer to Manukau. Unlike the SAR, I’m not sure how it provides a new access route to the city centre, at least to a degree that would have implications for regional productivity.

Second, it seems unlikely that the Mill Rd will contribute much to knowledge spillovers. In a geographic sense, the area is right on the periphery of the metropolitan area, and relatively remote from employment areas to the north. It is especially remote from the city centre, which is the source of most of the knowledge spillovers in Auckland. While secondary centres like Manukau do experience some agglomeration economies, these seem more likely to arise due to the two types of agglomeration discussed above and below.

Third, Mill Rd doesn’t seem to give rise to major efficiencies in the provision of public infrastructures and services. Indeed, the Mill Road transport project represents approximately $20,000 in CAPEX costs for every household that is expected to locate in the immediate vicinity. It seems plausible to suggest that these households could be accommodated for similar (if not lower costs) somewhere else in the region. To make the case for these agglomeration economies, we would expect to see evidence of surplus capacity existing in nearby health and education facilities.

So what’s the take-away message from all this econo-mumbo-jumbo-fiddle-faddle?

First, even taking the economic evaluation of Mill Rd project at face value, we find that it’s a fairly mediocre local road project. While there are transport issues in this area, addressing them in this way seems expensive compared to most local road schemes around the country.

Second, I’m not confident it is reasonable to assume the agglomeration benefits of the Mill Rd project equate to 20% of the total benefits. By extension, I question whether there is sufficient evidence to include them in the base economic evaluation. Instead, it seems more reasonable to treat them as a possible sensitivity, and even then 20% seems to be a very high premium given the location of the project. Removing these benefits from the evaluation causes the BCR for the project to drop from 2.2 to approximately 1.8. It’s important to note this is not necessarily a terminal issue for the project; the proposed scheme obviously still manages to address some importany problems in the wider area. It’s just probably not as urgent as it appears from the evaluation.

Finally, it highlights what I think is the most important and interesting policy issue: That is, the need for land use policies to be informed by transport outcomes, and possibly linked to financial incentives. In this case, it seems like the Mill Rd project will cost quite a lot. Perhaps, then, there is a need for AC to revisit the merits of enabling growth in this area. Indeed, AT can rightly say that they are to some degree simply responding to land use plans developed by AC. And the latter may want to consider whether development would even occur out this way in a hypothetical situation where the actual infrastructure costs were internalised into the costs of development and ultimately passed onto consumers?

What do you think is the best way to balance public/private interests when it comes to transport and land use outcomes?





Mill Rd Horror Show

Auckland Transport are about to publicly notify the Northern section of the massive Redoubt Rd-Mill Rd Corridor project. This section of the corridor was estimated two years ago to cost up to $374 million and the recent draft 2015-18 Long Term Plan documents suggest the entire project all the way to Drury will cost around $800 million over the next 30 years. That’s a lot of money but seems unsurprising once you realise that AT are basically planning a mini motorway along the route. The road is said to be needed to cater for all of the greenfield growth that is expected to occur in the area.

Future housing in the Redoubt Rd Mill Rd Area

AT are holding public open days tomorrow and Saturday about the project.

  • 17 April 2015 – Westfield Manukau (centre court), 11am to 2pm.
  • 8 April 2015 – Westfield Manukau (centre curt), 10am to 1pm.

They have however already published online the information they will be presenting to the public. Overall the main reason given for the project is to cater for up to 24,000 new dwellings and 6,000 jobs in and around the corridor as well as address the safety issues with the existing road that roads. They say that in the four years to 2013 there 293 crashes, four of which have sadly been fatal.

Mill Rd - Crashes

These are what AT say the features of the project are:

Project features

  • Redoubt Road widened to two lanes in each direction between State Highway One and Murphys Road
  • Westbound bus lane along Hollyford Drive and Redoubt Road towards Manukau
  • On road cycle lanes on both sides and an off road cycle and foot path for the length of the upgrade
  • Replacement of the existing Mill Road with a new arterial with two lanes in each direction between Murphys Road and Popes Road
  • Murphys Road widened to two lanes in each direction between Flat Bush School Road and Redoubt Road
  • Murphys/Redoubt Road intersection realigned and traffic lights added to improve safety
  • 17m and 23m high viaducts at Puhinui Creek gully and South Mill Road gully above native bush
  • Widened footpaths on both sides of Redoubt, Mill and Murphys roads with pedestrian crossings at key intersections
  • Replacement planting and stream restoration
  • Improved stormwater facilities, including new wetlands areas
  • Landscaping of the new road corridor.

I haven’t had a chance to go through the documents yet however I have had a look at the images provided and what I see scares me. It scares me because while the road may already exist, this project is more like starting from scratch as involves significant property purchase and widening. Yet despite that widening AT still appears to be short changing some modes along the route – in particular cycling. The examples below show the cross sections of parts along the route and you can see in places cycle lanes as narrow as 1.5m and with what appears to be only a narrow painted median to separate them from the traffic.

Cross Sections

In my view, if we’re going to the trouble of buying houses to widen the road then we should be building worlds best practice right from the get go. And here are some impressions of what the completed roads will look like.

So what happens to the buses, they have to force their way back into traffic?

Mill Rd - Totara Park

Motorway to Totara Park


Murphys Road

Totara Park (Hilltop Road)


How many people are going to be brave enough to use that cycle lane sandwiched between lanes of traffic. Would you let your kids cycle on that?

Mill Rd - Murphys Rd Bush

Murphys Road


Mill Rd - Totara Park - Ranfurly Rd

Murphys Road/Murphys Bush


Without protection those cycle lanes will see vehicles veer into the lane to save precious fractions of seconds by not having to slow down a little bit – much like a truck did to me a few days ago almost knocking me off my bike.

Totara park to North of Ranfurly road

Totara Park to north of Ranfurly Road


That roundabout looks horrific for anyone not in a car. How is a child or someone who can’t run fast meant to cross the two lanes of traffic on either side of the road.

Mill Rd - Totara Park - Alfriston School Roundabout

North of Ranfurly Road to Alfriston School

Overall there are some improvements from what we traditionally see in at least there are some cycle lanes but in the end they seem so poor it’s more like they are to tick a box rather than being a serious part of the design. It’s clear even the designers don’t think their creation is safe as the length of the road they’ve also created a shared path on one side “for less confident cyclists”. If they were creating cycle lanes like have on Beach Rd (but on both sides of the road) then cyclists of all abilities would feel safe in them.

To make things worse it’s not just the road design that’s causing concern as locals are also worried about the proposed massive viaduct over bush

Mill Rd - Viaduct

I’ll try to have a look into the NoR documents in the next few days but so far this project is expensive and seems to repeat many of the mistakes of the past. Come on AT, you can do better and if you wouldn’t let your kids ride on it alone then you’re not doing your job properly

Massive March Patronage

We were expecting public transport in March to be mad and throughout the month we certainly saw it living up to that expectation with daily reports of full services. Some people watched up to 12 full buses go past their stop before one with enough space arrived for them to squeeze on. On the parts of the rail network not yet served by electric trains services were also overflowing – and that was when they weren’t being cancelled or severely delayed.

Auckland Transport have today released the patronage results showing just how busy the month was and the results are astonishing. Across all modes there were an extra 1.1 million trip taken compared to March last year which at 15% is a huge increase. The annual result increased by 10% in comparison to the year to March 14. The results were helped by there being one extra business day plus events such as the Cricket World Cup, Volvo Ocean race and the Auckland Arts Festival.

2015-03 - AKL - Total Patronage

Once again the star performer was the rail network which increased by a massive 33%. At 1.56 million trips in the month we finally surpassed the one month record of October 2011 which was from during the Rugby World Cup (although we got very close in February). Patronage for the last year is now at 13.4 million (up 21%) and at this rate we could see it top 14 million by the end of the financial year in June.

2015-03 - AKL - Rail Patronage

Of course with rail patronage growth accelerating it continues to reinforce our view that we’ll likely hit the CRL patronage targets well in advance of the 2020 date set by the government. At this stage it’s still looking like it could be in 2017 that we cross the 20 million mark. I wonder what the Ministry of Transport will say about it in their next report due August which will use those June numbers.

2015-03 - AKL - Rail Patronage vs Govt Target-1

The other modes aren’t standing still either, bus patronage is also growing strongly. Patronage on the Northern Express is up over 14% and on other buses it is up over 11% compared to March last year. The 12 month figures are up 16.8% and 8.4% respectively. On ferries there was strong growth however the 12 month figure is still below its peak of mid-2012.

2015-03 - AKL - Bus Patronage

Lastly Auckland has now passed the milestone of 50 trips per capita per year (this accounts for population growth each month). That’s a good improvement from where we were a decade ago but well short of other cities. As a comparison Wellington has around 74 trips per capita while Perth has 80-90 per capita and Sydney about 130 per capita. Where do you think we’ll be in 10 years’ time? If the current growth can be continued – and with all the improvements planned then it should be possible – then around 80 trips per capita is not beyond the realms of possibility.

2015-03 - AKL - PT per capita

Here’s AT’s press release.

There’s been another big jump in the numbers using public transport in Auckland.

Annual patronage now exceeds 78 million boardings, an increase of 10%. In March there were 8.4 million boardings, a jump of more than 1 million on March 2014.

Auckland Transport chairman, Dr Lester Levy says it’s been a big year with increased services across rail and bus and the gradual replacement of the diesel trains with new electric models.

The big performer was rail which reached 13.4 million passenger trips for the year, an annual increase of 21%. March saw a monthly record high of 1.56 million train trips, an increase of 29% on March last year.

The growth is put down to the enhanced travel experience and additional capacity provided by the new electric trains and greater service frequency introduced over recent years.

Dr Levy says, “We’re moving to speed up the roll-out of the electric trains because we know Aucklanders want the extra capacity and the improved service that they provide.”

Auckland Transport is aiming to have a full electric network by the end of July except for the link between Papakura and Pukekohe which will continue to use diesel trains. These will be refurbished over time to provide an enhanced experience. The electric trains will provide improved travel experience and more capacity on the Southern and Western Lines.

Auckland Mayor Len Brown says the figures are good news for the City Rail Link.

“At this rate, Auckland will meet the Government’s threshold for financial support for the CRL three years early in 2017, three years earlier than predicted. Growth has been accelerating since late 2013.”

March was also a record breaking month on the Northern Express with patronage up almost 17% on the same month last year, the 12 month total reached 2.8 million.

It was also a record for other bus services as patronage rose 8% to 56.6 million. Ferry numbers for the year totalled 5.4 million trips, up 5% on an annual basis.

General Manager AT Metro, Mark Lambert, says growth on bus services is attributed to increased services and frequency, improving travel times from new bus priority lanes and a significant improvement in service punctuality being achieved by bus operators through new timetables. Further service level increases and punctuality improvements are planned for later this year along with the introduction of double decker buses on a number of routes. New network designs will also be introduced from later this year.

Meanwhile, Auckland Transport apologises for recent disruptions on the rail network including track and signal failures (operated by KiwiRail), mechanical breakdowns with the old diesel trains and staffing issues.

Mr Lambert says, “The new timetable from December 2014 introduced a 20% plus increase in services across the constrained Auckland rail network making it difficult to recover when there is an issue. We are working with the rail operator Transdev to speed-up the recovery time when unfortunately inevitable failures occur.”

Guest Post: FlyKly Review

This is a guest post from our friend Lennart Nout on his FlyKly. If you don’t know what that is then read on.

Why would a (relatively) fit young man like me invest in an electric bike?

Because I am lazy. I am not a cyclist, I don’t necessarily enjoy sweating and, my genetic make-up (I’m Dutch) does not make me appreciate hills, especially when I’m on my way to work. I dress for the destination, not for the trip, so anything that helps me up the hills is very welcome.

In May 2013, I “invested” in FlyKly, a new start-up company from the United States. Their Kickstarter campaign promised a wheel that would turn any bike into an electric bike in 5 minutes: a wheel with a built-in motor, battery pack and control system. As any gadget-appreciating young urbanist with a credit card would do, I immediately pre-ordered one. And so did 2,357 other people, pledging a total of over $700,000.

FkyKly Kickstarter

As is common with Kickstarter-type projects, the delivery was pretty slow. After about 8 months, the initial company announced they had merged with an Italian company and had completely redesigned the product from scratch, which resulted in an additional 6 month delay… followed by more delays. Eventually, in December last year, the wheel arrived.

Of course I was very excited– but the fun was short-lived, as that first wheel turned out to be a lemon. Long story short, and with many thanks to the efforts of the customer service department, a new wheel was shipped to me relatively quickly. And here it is:

FkyKly Wheel

After about a month with the FlyKly, I can finally give you a fair and unbiased review of the machine. I will judge it by five measures:

  1. Installation
  2. Operation
  3. Look
  4. Feel
  5. Will it change the world?

Installation (10 out of 10)

The FlyKly is delivered as an entire wheel, with all the electronic components well hidden in the aluminium hub. This makes for extremely quick and easy installation: I am literally talking 5 minutes. You take off your old wheel, you plonk in the new wheel. Done. As the Dutch would say: “A child can do the laundry”.

After the physical installation, the only thing left to do is input some settings like circumference of the wheel and the size of your cogs. The entire process, from unpacking the wheel to riding the  bike, takes less than 15 minutes. I am not kidding. Ten out of ten.

Operation (9 out of 10)

The wheel settings are controlled on an app via bluetooth. That means you have to connect your phone to change the speed, power and regenerative braking power (yes! Braking recharges the motor). This can be a bit tricky, as the bluetooth range is about 5 cm. But once the settings are done, there’s nothing more to do and the wheel will run itself.

FkyKly App

The wheel kicks in after about 10 seconds of riding; you know it’s working when you hear a gentle hum from the hub. Back-pedaling will start the regenerative braking, which makes the wheel charge itself a little while going downhill. I found this particularly useful when riding slowly approaching intersections or when there are pedestrians around. NB Don’t expect this to replace your normal brakes! Not fantastic, but a nice feature.

You charge the battery pack by removing a cap from the side of the axle and plugging in the provided charger. Again, very inconspicuous and very easy.

And the wheel shuts itself down automatically after 4 minutes (or so) of inactivity, so no need to remember to turn it off. All up, super easy! Nine out of ten.

Look (9 out of 10)

Because everything is contained within the hub, your bike won’t look like an electric bike. I particularly like this feature, as I find most electric bikes particularly big and bulky.

FkyKly installed

The wheel only adds about 3.5 kg to the weight of your bike, as well. This means that you can still quite easily lift your bike up a set of stairs or into a bike rack.

The only thing that reveals what’s inside the hub is a little blue LED that shows the wheel is “on”. This is nice, especially if you like LEDs (I do),

Feel (7 out of 10)

So how does it perform? I tested it on some of Auckland’s hills, and it easily gets you to the top of Queen Street and Franklin Road with very little sweat. The FlyKly does not transform your bike into a high-powered super speedy race bike – the top speed is 25 km/h – but what this wheel does is take the edge off cycling. It’s like somebody giving you a push all the time. It may not be powerful enough for some, but it’s perfect for me.

The range of the battery pack is approximately 35 km, compared with the 50km that many other electric bikes boast. This may be a limitation for some, but for me it’s plenty, as I usually cycle around the city with an occasional trip to Henderson or to Mission Bay (BIKE RAVE!).

World changing capabilities (7 out of 10)

The key question for all new gadgets: will it change the world?

Short answer: Yes.

Long answer: A device like this – especially one so easy to use — takes away another barrier to cycling. It gives people more confidence when riding, as it feels like you’ve always got a little bit of help. At the same time, you don’t really have to think as hard about your route, as it will help you get up the hills a lot quicker and without effort. It allows you to dress for the destination, even on longer, hillier routes. Buying a wheel is also a lot cheaper than a whole electric bike. I got this wheel for US$600. It retails now for about $1,000, but this price is likely to drop with competition coming in. You can keep your cool, old, heavy, grandmother’s bike on the road! In combination with the infrastructure that’s on the way (hello city centre cycle network), innovations like this will make cycling a lot more viable for a lot more people.

Final verdict: Very likely to become pretty popular in the near future.

Getting the maths wrong on the cost of housing

The New Zealand Herald’s cover story last Friday was quite sensational: “Homeowners in Auckland’s fringe saving up to $50,000 a year“. But while the eye-grabbing headline was worthy of clickbait merchants like Buzzfeed, the underlying analysis was not so good.

Here’s the key point of the article:

Bayleys calculated the first-year mortgage repayment costs for different suburbs based on median house prices from the Real Estate Institute of New Zealand (REINZ) and the ANZ variable rate of 6.74 per cent.

It found the annual cost of servicing a mortgage for a median priced Orakei or Remuera home ($1.35 million) was $84,060 in the first year.

In Pukekohe, where the median price of a home is $500,000, the annual mortgage repayment in the first year would be $31,128.

Even factoring in the $4032 annual cost of commuting from Pukekohe to the CBD by train on the At Hop card system – as well as the $768 public transport cost from Orakei to the city – living in the southern suburb was about $50,000 cheaper.

This is not entirely wrong. Housing costs do tend to decline as you get further out from the centre, while average transport costs tend to increase. That’s exactly what I found in a research paper I wrote on the topic last year. But it’s not entirely correct, either. Bayleys and the Herald have made two elementary errors in their analysis.

First, they’ve chosen a misleading measure of housing costs. House prices aren’t a realistic measure of the true cost of living at a point in time, as they are influenced by a range of short-term and long-term factors. In particular, when you buy a home, you are actually buying three very different things:

In other words, looking only at house prices is like arbitrarily including the cost of Kiwisaver into your housing costs.

My intuition is that rental costs are a better indicator of housing costs. They’re certainly less volatile, as I found in a recent paper that I co-authored on the relationship between rents and prices in Auckland. One of the key findings in that paper was that rents were quite low relative to prices in inner-city and coastal suburbs. As the following maps shows, median rents are only around 1/3 to 1/2 of median mortgage repayments in Remuera:

Nunns, Hitchins and Owen indicative rental yields 2013

It’s not as though data on rents isn’t available. The Ministry of Business, Innovation and Employment publishes quarterly data on average rents for new tenancies, broken down by suburb, dwelling type, and number of bedrooms. So let’s take a look at that data instead. According to MBIE’s data, the average weekly rent for a three-bedroom house was:

  • $754 in Remuera (or $39,000 per annum)
  • $406 in Pukekohe (or $21,000 per annum)

However, there were a number of cheaper options available in Remuera, and the inner suburbs in general. Going down to two bedrooms would reduce your rent by $9,000 per annum – a viable and attractive option for many households – and looking for flats or apartments would save even more money.

But basically, looking at the rental data shows that most of the cost of buying in Remuera is not related to housing costs per se – you’re actually buying the expectation of capital gains. The rent data shows that it’s still possible to save money on housing costs by living further out, but the magnitude of savings is far lower.

Which brings me to a second major flaw in the Herald’s analysis: They have only accounted for the monetary costs of commuting further into the city centre and completely excluded the value of people’s time. A quick look at AT’s journey planner shows that the train trip from Pukekohe to Britomart takes about 70 minutes, while a public transport trip from Remuera to Britomart takes 20-30 minutes depending upon whether you’re closer to the train station or a bus route.

In other words, the Herald has assumed that people don’t mind spending an extra 80-100 minutes commuting every day. They haven’t even tried to account for the cost of wasted time. Most researchers and transport economists disagree with this approach. Here, for example, is a discussion of the subject from Charles Montgomery’s great book The Happy City:

[University of Zurich economists] Stutzer and Frey found that a person with a one-hour commute has to earn 40 percent more money to be satisfied with life as someone who walks to the office. On the other hand, for a single person, exchanging a long commute for a short walk to work has the same effect on happiness as finding a new love…

Daniel Gilbert, Harvard psychologist and author of Stumbling on Happiness, explained the commuting paradox to me this way:

“Most good things and bad things become less good and bad over time as we adapt to them. However, it is much easier to adapt to things that stay constant than things that change. So we adapt quickly to the joy of a larger house because the house is exactly the same size every time we come in the front door. But we find it difficult to adapt to commuting by car, because every day is a slightly new form of misery, with different people honking at us, different intersections jammed with accidents, different problems with weather, and so on.”

In short, the Herald’s analysis has:

  • Overstated the real magnitude of financial savings from living in Pukekohe vs Remuera by a factor of three – a comparison of rental data suggest that the financial savings are actually $16,000 per annum or less
  • Ignored the non-monetary costs of commuting extremely long distances, which makes people miserable. All else being equal, people should be willing to pay more to live in the areas which have the best job accessibility.

Bertaud urban structure graph

My advice, if you are choosing where to live in Auckland, is to disregard the advice of real estate spruikers such as Bayleys and the Herald, and take a more objective and comprehensive look at the topic using the app developed by my co-worker Alex Raichev. The app provides information on a much broader range of factors, including the rents, the monetary and time cost of commuting, and the costs of car ownership. Here’s a sample:

affordability-org-nz screenshot

And, as always, my advice to the Herald is to check the facts more comprehensively before committing this sort of thing to print.

Open Streets 2015 review

On Sunday the Open Streets event along the Waterfront was held and this is a mini review of the day as I saw it. In particular I think there were a couple of really good aspects about the day and a couple of failings that absolutely have to be addressed when the event happens next year.

The Good

Overwhelmingly the day was good and I think a lot of fun was had by the many thousands of people who came along. I haven’t heard any official figures for the number that attended but it was definitely significant. This would also have been helped by the fact that Japan Day was being held on Queen Wharf which added a wonderful additional cultural element to the mix.

I enjoyed bumping in to many readers and friends as well as checking out some of the events that were on.

Transportblog Bike Gang

The Transportblog bike gang stopped for a drink at Imperial lane before heading to Open Streets


In addition to the thousands of people strolling around, many of people also brought their bikes of all shapes and sizes along. It was clear both from observations and conversations that there is a large amount of latent demand for more cycling in Auckland if we can make our streets safe to do so. This was also highlighted along Beach Rd (and Grafton Gully) where the new separated cycleway has clearly made safe enough that parents are happy to let their kid’s cycle on the road with them, something you don’t see on cycle lanes made of just green paint.

There was a considerable improvement from the previous event in that this year the trains were running – last year’s event coincided with an electrification shutdown. That meant it was much easier for people and families to get their bikes to the city centre. Just imagine how many more would ride to the station to go to events like this if there were safe cycleways to stations (and family passes).

There are a lot of photos on the #OpenStreetsAKL

Even the Police joined in on the action with a couple of friendly officers on police bikes.

Police Bikes

The Bad

There were a couple of areas that definitely could have done with some improvement and/or our public agencies being a bit bolder. The most glaringly obvious of these was that Auckland Transport only closed the eastbound lanes on Quay St, leaving the two lanes on the southern side open to traffic. This had a few immediate impacts, it meant:

  • there simply wasn’t enough space. At times it was a struggle to even move on foot let alone on a bike
  • that the stalls and events that had been organised felt a little crammed.
  • more active traffic management including staff standing at key intersections. It also meant fences were needed the length of the closure of Quay St to stop people walking into the westbound lanes accidentally which I imagine would also have mean it took more time to set up/return to normal.

Open Streets Crowds

Open Streets Crowds 2

I can kind of understand why the section from Queen St (Albert St post CRL) to Hobson St needs to be open so the North Shore buses don’t grind to a halt however the section from Queen St to Tinley St/Tangihua St should have been closed. Next year AT absolutely must close the full width of the street (except for what’s needed for bus operation). It probably also needs to ensure that there is a dedicated space for people to cycle else they will just create the typical shared space scenario of a few pedestrians ambling across the entire road width.

I think we also still have a way to go with when we open up our streets. It still seems like it can only be done if there are lots of events going on to keep people interested. It would be good if we could get into the idea of just blocking off a few roads on a regular basis without all of the other activities that have been added (maybe just allow the street food vendors.


It was also interesting to see the impact that the event had on pedestrian numbers are some of the automatic counters scattered around the city centre by Heart of the City. As you’d expect the pedestrian volumes closer to the waterfront are significantly higher than they usually are while the further south you get the more normal they are. Here are a couple of examples.

Ped Counts

Overall I think that despite the issues, once again a day like this has proven that Aucklanders are keen to embrace our city and it’s ever improving urbanism. Give them people friendly spaces and they’ll jump the chance to enjoy the city in new ways. I expect those from AT and the council to be bolder the next time this event is held. More space is needed to be opened to people and not just on Quay St either.

Did you go to the event? If so what did you think and if you have any pictures please add them to the comments.

open street 2015_2

Update: Auckland Transport estimate about 30,000 people attended the event

Development update: April 2015

New projects are starting to pop up around Auckland, Christchurch and (to a lesser extent) the rest of the country at an amazing rate. There are plenty of new additions to the RCG Development Tracker this month – in residential alone, that includes Botanica Mt Eden, Anzac Lofts, Hemisphere Apartments, and Beach & Cavalli.

Apartments, and Albany

I’ve finally been able to shift Willis Bond’s apartment developments in Wynyard Quarter from “proposed” to “pre-sales” – they’ve now started selling units in two buildings, in an area that will eventually have 550-odd residences.

Construction has started at Albany’s Rose Garden Apartments, with a first stage of 200 apartments and eventually 800 or so. There are several other projects selling off the plans in the area, as well as cranes up and building underway on Library Lane, a short way from the Albany town centre.

It’s worth noting that there hasn’t been a single home completed in Albany’s town centre so far – there’s just a motel which was built around 15 years ago. Until now, Albany has been almost entirely retail focused, with more than 120,000 square metres of retail space. After our loss in the cricket, I’ll avoid any #mcgsobig comparisons and even the traditional rugby field comparison, but suffice to say that that’s a lot of shops. Albany is finally starting to get a residential element, and there could be several thousand people living there in a few years’ time.

I think us bloggers agree that Albany needs a rethink in terms of its pedestrian environment, especially now that it will have a sizeable residential population. We’ll write more about this soon.

As shown on the main Development Tracker page, there’s a lot of apartment construction underway. In Auckland, we’re giving building consents to around 2,000 new units a year, with many more being marketed and potentially kicking off during 2015.

Apt consents

Retirement villages

I’ve also been making an effort to bring the Development Tracker up to date for the retirement village sector. This is still a work in progress, as there has been a lot happening. As Matt has written previously, these villages are often great examples of density done well. With an aging population, expect to see a lot more of them in the years to come.


Things are also heating up in the office market. At Wynyard Quarter, Fonterra’s new headquarters are well underway, as is the other VXV Three building, and a new building for Datacom has just been announced. Mansons are plugging away at 151 Victoria St West, and are moving NZME (who publish the Herald, among other things) in there, freeing up their current four-hectare site for future development. The 1980s-era BNZ building is likely to be refurbished this year too.

There are a few things I find interesting about the recent office trends. Firstly, the lion’s share of new office space in Auckland is going in the city centre. There is a smattering in the inner suburbs – Parnell, Ponsonby, Newmarket – and a little further out, but generally most of that new employment is going to be in the middle of the city.

Offices AKL

Office projects across Auckland. We’re only showing developments of at least 5,000 sqm, so it’s not an entirely fair comparison, but there’s a definite city centre focus.

Secondly, the government’s employment-based target for the CRL looks as unrealistic as ever. It’s just not possible to create space for that many workers in a short time, given the long lead times in developing offices. At any rate, this target is a very poor way of measuring the need for the CRL, so good on the council for getting on with it in the face of intransigence from Wellington.



Auckland Transport have launched their newest safety video and it’s aimed at the stupidly high number of people that still use a phone when driving – something you notice even more when walking or on a bike. The ad has fairly typical ending for a road safety video but what stands out to me in this video is the reaction of the people using the phones when strangers call them out. How realistic is it that after yelling Oi that the person will be all cheerful and just put their phone down. Seems far more likely that you’ll get back at the least a hand gesture and possibly some verbal abuse.

Here’s the press release

The friendly message is “Oi! Mind on the road, not the phone” – the reason drivers on phones cause accidents.

Auckland Transport has launched a new campaign highlighting the high numbers driving while using their phones. In Auckland between 2009 and 2013, there were 5 fatalities as a result of drivers being distracted.

Karen Hay, Manager Community and Road Safety says, “The numbers are probably under-reported, this could be a much bigger problem.”

She says 60% of the crashes are rear-end collisions, “This is obviously drivers taking their eyes off the road.”

The “Oi! Mind on the road, not the phone” campaign targets 16 to 39 year olds and includes a cinema ad plus radio and digital advertising.

Rob Pitney, Auckland Transport’s Manager Campaigns and Customer Insights, says people of all ages are using their phones behind the wheel and a third of all distraction-related crashes involve drivers in their twenties.

“We’ve discovered two-thirds of people in this group are texting, using apps and social media, doing emails and making calls while driving. They’re the target of the ‘Oi!’ campaign; we want to raise awareness of the very real dangers of using mobile phones while driving and to introduce a gentle ‘nudge’ that will enable passengers to encourage drivers to leave their phone alone.”

Research by Auckland Transport shows 30% of those who make calls have their phone up to their ear and 70% of those who make calls do it when the car is actually moving. It was also found that 70% use apps for travel information while driving.

Mr Pitney says, “Our focus is on driving smartly, sensibly – focussing on the driving and not the smart phone.”

Senior Sergeant Mark Chivers of Counties Manukau Road Policing Unit says it’s an offence to use a mobile phone while driving. The penalty is $80 and 20 demerit points.

“Driver distractions come under high risk driving in our “Fatal Five” – the five things that contribute to crashes and trauma on our roads. We have a continued focus on these things in our on-going effort to reduce road trauma.”

He says the campaign with Auckland Transport is an opportunity for Police to demonstrate that any dangerous activity on our roads will not be tolerated.

What’s happening to Takapu Valley?

As Peter found when covering the Ministry of Transport’s review of capital spending on roads (parts 1, 2, 3, and 4) our multibillion dollar national transport budget is being spent in some bizarre ways. Money’s being allocated to major roading projects that don’t offer many economic benefits in return.

MoT state highway BCRs 2005-2012

While the high-level picture is clear, it’s not always obvious what’s going on in project selection. Why does the New Zealand Transport Agency (NZTA) choose one project over another? What are their processes for assessing “strategic fit” and other considerations?

Some smart people have been taking a critical look at a major Wellington road project that’s been flying under the radar: the Petone-to-Grenada motorway. Like the Transmission Gully motorway, it’s being touted less for its benefit-cost ratio than for its impacts on the “resilience” of the Wellington region.

Tamara Duran, who writes on the Takapu Valley website, provides a useful summary of the project… and the issues with the project. In addition to her extensive analysis of the the impacts of the project on resilience (parts 1, 2, and 3), she’s put together a primer on the project, complete with maps for the out-of-towners:

Since the Christchurch and Tōhoku earthquakes, “resilience” has been the mantra of… pretty much anyone building anything, be it a building, a corporate structure, or a communications network. We all want to be resilient, to survive whatever has just happened and get back up and about our normal business as quickly as possible.

The New Zealand Transport Agency has picked up on how keen everyone is on resilience, and so is now including it in all of their sales material. Perhaps unsurprisingly, NZTA has defined “resilience” from a transport perspective as “more roads”. Not “more transport options”, and not even really “better roads”, just more. Got congestion problems? Build another road to get around it. Got a road falling apart? Build another road to take traffic off it.

Case in point: The Petone to Grenada link road, in Wellington. This road has been in the investigation and planning stages for a good 20 years now, the reason being Wellington’s notoriously challenging geography. To get from the CBD to the rest of the Region (and ultimately the rest of the North Island), there are essentially two routes out – SH1 up Ngauranga Gorge, and SH2 along the harbour.   Both of those are through narrow corridors with few or no alternatives.

P2G map 1

Source: Google Maps

The logical thing to do, then, as proposed in various studies since about 1991, is something like this:

P2G map 2

Source: Google Maps

Traffic wanting to get between the SH1 corridor in the west and the SH2 corridor in the east can “cut the corner” of Ngauranga, taking pressure off those two chokepoints.

If there’s a truck flipped in Ngauranga Gorge, traffic can go up SH2 and across P2G. Likewise if there’s a crash along SH2 traffic can go up SH1 and across P2G back to Petone. All good, and everyone’s back about their business with minimal fuss.

But 7km of road is Not Enough Road. More Road = More Resilient, remember. So what NZTA is proposing is this:

P2G map 3

Source: NZTA Presentation to Chief Executives Group, November 2014, released under OIA

We’ll turn the whole thing north-south (because clearly a north-south road is how you solve an east-west problem); then we have room to double the length. Here are some other “resilient” features:

  • Motorway to motorway interchanges through chains of roundabouts!
Source: NZTA/Opus

Source: NZTA/Opus

  • Motorway to motorway interchanges via two-lane local streets! (and roundabouts!)
Source: NZTA Petone to Grenada Project website

Source: NZTA Petone to Grenada Project website

  • “Bypasses” with one-way ramps that force you 12km out of your way!
P2G map 6

Source: Petone to Grenada Scoping Report, February 2014

  • Motorways next to other motorways! (More Roads = More Resilient!)
Source: NZTA Petone to Grenada Project website

Source: NZTA Petone to Grenada Project website

  • Roads on unstudied active fault lines!
Source: GNS Active Faults database

Source: GNS Active Faults database

  • 80 meter deep canyons through the Wellington Fault Scarp!
Source: HC8/9, Grenada-Petone Link and SH58 Upgrade Economics, Sinclair Knight Merz, April 2010, released under OIA

Source: HC8/9, Grenada-Petone Link and SH58 Upgrade Economics, Sinclair Knight Merz, April 2010, released under OIA

  • In Petone!
Source: Petone to Grenada Link Road Preliminary Geotechnical Appraisal, September 2013, released under OIA

Source: Petone to Grenada Link Road Preliminary Geotechnical Appraisal, September 2013, released under OIA

NZTA has taken a reasonable solution to Wellington network resilience woes and “made it better”, in the process negating the very function the road was originally supposed to serve. In the meantime, genuine improvements to the earthquake and natural hazard resilience of the roading network are left to languish.

Source: (ex. labels) Wellington Region Road Network Earthquake Resilience Study, Opus, August 2012

Source: (ex. labels) Wellington Region Road Network Earthquake Resilience Study, Opus, August 2012

I’d really recommend reading her entire series on the motorway. It seems like NZTA is pursuing a more expensive option that delivers much worse outcomes. In particular, Tamara argues that better results could be achieved through upgrades to a few problematic bits of the existing State Highway 58.

Meanwhile, University of Auckland statistician Thomas Lumley (who writes the excellent StatsChat blog) has been digging into NZTA’s options assessments on the project. He’s found that the agency has made some basic statistical errors in its weighting of evaluation criteria. The effect seems to have been that NZTA’s chosen the wrong project, for the wrong reasons:

If you have to make a decision with several options, each with different types of positive and negative effects, it’s going to be hard. Techniques for breaking down complex decisions into sets of simpler questions are very valuable, but it’s important that the way you break down the problem and recombine the answers fits with how you answer the simpler questions.

I’ve been pointed to what looks like an unfortunate example from the NZTA, in assessing options for the Petone–Grenada link road to be constructed near Wellington. The road comes in two sections: from Petone to the eastern section of Lincolnshire Farm, and from there to Grenada. According to the scoping report (PDF), these can be decided independently of each other, so there’s an ideal opportunity to simplify the decision making.  NZTA describes four options P1 to P4 for the first section, and four options A to D for the second section.

I would have expected them to just make independent recommendations for the two sections, but what they actually did was more complicated. First, they looked at the P options and decided based on four criteria that P4 was best.  They then looked at A+P4, B+P4, C+P4, and D+P4 for the same four criteria, and said in a footnote (p172) “Upon combining one of Option P1, P2, P3 or P4 with one Option A, B, C or D the effect more towards the negative takes precedence.

This can only make sense if the harms or benefits weren’t independent.  Sometimes that’s possible. In particular, one of the criteria was “resilience”, and you might argue that it doesn’t matter how robust the second part of the road is when the first part is under several meters of rock and mud, or filled with bumper-to-bumper traffic jams. It could make sense to take the worst value of the two sections when assessing resilience: but people who know more about Wellington-area transport than I do still seem dubious.

The same argument certainly doesn’t apply for the other criteria: archaeological,  ecological,  landscape/visual impact, and transport benefit/cost. If one section of the road is an environmental nightmare, that doesn’t make the environmental impact of the other section unimportant. If one section of the road is unavoidably ugly, that doesn’t excuse making the other section ugly. If one section destroys an important heritage site, it doesn’t mean the other section doesn’t have to care about preservation of the past. If one section is ridiculously expensive it doesn’t mean the costs are unimportant for the other section.

The impact of decomposing and recombining the evaluation as they did, is that any criterion where P4 was bad becomes much less important in choosing among options A to D. P4 was very bad on the landscape/visual criterion, and moderately bad on ecology.

By now you should be expecting the punch line: evaluated independently, options A and B look good because they score well on ecology and landscape/visual criteria. Evaluated in combination with P4, they look terrible, because the ecology and landscape benefits are masked by the “more negative” combining rule. That’s a problem with the combining rule, not with the road. Here’s a colour-coded version of the information in Table 23-19, p182 (from T. Duran)

P2G separate and combined option assessment

Not only is the combining rule obviously missing some information, it’s not even internally consistent. If the evaluation had been done in the opposite order they might well have chosen A first, and then looked at A+P1 to A+P4. Even D was what they’d chosen first, P3+D would then look slightly better than P4+D.

It’s very tempting to look for ways of combining preferences that don’t rely on numbers, just on orderings, but in most cases they aren’t available, and attempts to do it leave you worse off than before.

This evaluation wasn’t set up to focus only on resilience — even assuming that the resilience assessment is valid, which I hear is also being questioned — it was set up to value the four criteria equally. It really looks as though a minor detail of the approach to simplifying the evaluation has had a large, accidental effect on the result.

Thomas’s words are gentle but suggest serious methodological errors in NZTA’s project selection. Taken together with Tamara’s critique of the agency’s evaluation of the resilience impacts of the Petone-to-Grenada road, it really makes you wonder what’s wrong with NZTA’s decision-making.