Productivity Commission report on Land for Housing

The Productivity Commission has released a draft report called Using Land for Housing which looks at options for how more land can be made available for development. At first blush that may sound like code for “open up lots of greenfield land for development” however the report appears to actually look at many of the issues in a holistic way giving a fairly balanced outcome. On a first skim through I agree with most of the changes the commission has suggested.

Before I go into the recommendations I think it’s useful to highlight that the commission start off by showing a good understanding of why cities are important. This is from a short summary document however there is a more detailed discussion in the draft paper. I think this is important as far too often if feels like many see and treat cities – particularly Auckland – like some kind of unnatural aberration sucking the value out of the rural areas.

Cities are national assets. They provide a wide range of jobs, higher incomes, generate higher productivity and raise the prosperity of surrounding regions. Cities also offer access to amenities not available elsewhere, such as specialised health and education services. Allowing cities to grow and accommodate new residents can help improve the wellbeing not just of the people who live there, but also those elsewhere in the country.

The main recommendations revolve around a few key categories, namely: planning/regulation, infrastructure and overcoming existing barriers/behaviour.

The recommendation that’s probably gained probably the most attention so far falls into that last category and is the suggestion of setting up Urban Development Authorities (UDA) – much like Auckland Council is already doing by merging Waterfront Auckland and their property CCO. They say a UDA could assemble, rezone and prepare for development large parcels of greenfield or brownfield and then partnering with private developers to build at scale. This seems pretty much identical to what’s being going on at Wynyard Quarter.

What’s gaining attention though is a suggestion that these UDAs could have powers of compulsory acquisition which would help in assembling suitable land and address issues such as land banking. It’s worth noting that compulsory acquisition was possible in the past and I believe is partly how the former Waitakere City Council was able to buy up large amounts of the town centre – although the government has currently removed the ability to do so in future.

UDA - venn diagram

They also suggest these UDA’s could help capture some of the increased value that occurs from the development. Overall I think the idea of a UDA is a good one although I can certainly understand the concerns about giving so much power to them.

Planning/Regulation

Looking at the other parts of the report, they say that one of the current issues is that existing homeowners have a disproportionate influence on local political processes as they are the ones who benefit the most from restricting supply in their area – thereby inflating the value of their own property/s. This then gives those homeowners greater incentive to be more politically active and push for regulations that restrict development opportunities. This is of course exactly what we saw happen in the Unitary Plan discussions.

To counter this the commission suggest that councils engage in more sophisticated consultation processes and giving the government more say in planning processes. I do agree with the first point but the second I’m not so sure about given the past comments from the likes of Nick Smith.

The commission specifically call out a number of planning regulations that have been imposed – often by the processes above – that have made it much more difficult and costly to develop urban land thereby reducing density. They make the following recommendations in this regard saying we should:

  • remove District Plan balcony / private open space requirements for apartments;
  • review minimum apartment size rules in their District Plans, with a view to removing them (once the MBIE has completed planned work on updating Building Code rules and guidance related to air quality, lighting, acoustics and access in multi-unit dwellings);
  • remove District Plan minimum parking requirements and make more use of techniques for managing traffic demand;
  • lift current building height limits where it cannot be demonstrated that the benefits outweigh the costs; and
  • undertake robust cost-benefit analyses before considering the introduction of building height limits.

We have addressed all of these points in the past, especially the minimum parking requirement issue so it’s great to see the commission pick up on these points.

Infrastructure

There is quite an extensive amount of discussion on the issue of the provision of infrastructure and how it is funded. In short they suggest funding constraints – often from the political processes mentioned earlier – makes it difficult for core infrastructure such as water and roads to be built in advance so it is done piecemeal which adds extra costs to the process.

They suggest that councils need additional tools to both help manage demand on existing infrastructure and to help fund new infrastructure that supports growth. They particularly point out that the government need to allow for road pricing on existing roads where it can be justified.

They also want to see more variable pricing in things like water connections. The example of Watercare is used which charges a flat fee for any new connection however they say that distorts costs and reduces transparency. Instead they think the charge should be influenced by local conditions i.e. if connecting a new dwelling an area has excess capacity in the network then that could be cheaper to connect to the network than a house on the edge of town in a new subdivision that needs new pipes installed.

Interestingly the specifically call out as not practical a few finance methods often suggested by those pushing greenfield growth such as Tax increment financing (TIF) and Municipal utility districts (MUDs). They do call for greater use of targeted rates to pay for local infrastructure though, for example the costs of the core infrastructure to new developments mentioned above could perhaps be paid off by a targeted rate levied against that area so it doesn’t impact on the rates of the rest of the city.

A few other recommendations around rates are made. This includes that council rates should be based on land values not capital values as it would encourage “land to flow to its highest value use”. It also suggests that the government should pay rates on core crown land including hospitals and schools. This is for the same reason as having rates based on land values, to encourage the best use of it. It’s one recommendation that I’m sure won’t be implemented. I would like to see rates paid by other organisations too such as churches. An example I highlighted the other day on twitter was this one up around Oteha with huge amounts of land dedicated to parking that pays almost nothing in rates due to being a church.  Note: this is not a debate about or an attack on religion.

City Impact Church NS

There are a number of other recommendations and in the interests of space and time I won’t cover them all. All up it seems like a fairly well balanced report that importantly recognises that cities and density are important. If you want to make a submission, you need to do so by 4 August.

PINZ in the Auckland housing balloon?

I was a bit surprised to hear the Property Institute of New Zealand warn of an “apartment bubble” in Auckland earlier this week. I was even more surprised when I read their press release. The CEO, Ashley Church, is predicting a bubble as a response to 1) banks being likely to decrease their deposit thresholds on apartments from 20% to 15%, and 2) the Reserve Bank potentially bringing in “loan-to-income restrictions”, where mortgagees would then only be able to borrow X times their income.

The press release then gives a hypothetical chain of events:

 1. The Reserve Bank restricts mortgage loans to a percentage of household income – effectively making the purchase of freestanding residential homes almost impossible to all but the very wealthy.

2. With median household incomes of just $76,500 – home buyers flock to the apartment market to find properties which comply with the new rules.

3. The relaxed deposit rules, by the major banks, allow buyers to borrow a little more if the apartment is new – (on average, a little over $400,000 if we adopt the Brit formula) – and this combination fuels a new wave of apartment building and streamlined marketing programs designed to entice buyers.

4. Property Investors – many of whom have also been caught by the new rules – also start buying apartments in large numbers.

5. The combined effect of this new wave of buyers quickly pushes up the price of apartments – fuelling an ‘apartment bubble’.

6. Perversely – the quality of new apartments suffers as developers focus on the ‘low-end’ of the market so as to appeal to as wide a range of potential buyers, within the Reserve Bank rules, as possible.

7. Meanwhile, the cost of renting free-standing homes in Auckland also increases as demand outstrips supply due to the absence of traditional property investors buying these types of properties.

8. Within 7 to 10 years Auckland becomes a highly ‘intensified’ city with large numbers of low quality apartments dotting the landscape and free-standing residential homes becoming the preserve of the well-off and wealthy renters.

However, this chain of events misses out half of what defines a bubble. He’s postulated a rise in prices, sure. But where does the subsequent decrease happen? To me, this sounds like a recipe for a one-off, permanent increase in apartment prices. A permanent shift in the demand curve, as it were. I’m not making any predictions on apartment prices, I’m just pointing out that the chain of events here doesn’t actually include a drop in prices, and therefore isn’t a bubble.

Moving on from that (rather important) point, there are a lot of other strange things in this press release. Firstly, it seems a bit far-fetched that the Reserve Bank would impose harsh restrictions to the extent that only “the very wealthy” could afford freestanding homes, and the press release also ignores the price response (i.e. prices would drop, and many people would still end up in those homes – there aren’t enough “very wealthy” people to fill them all up).

Secondly, if the Reserve Bank is going to clamp down on Auckland home loans, it’ll be because they’re worried about a city-wide bubble. I’d say this is a much bigger concern than an apartment bubble – it’d affect a lot more people.

Point 7 is one I’ve been reading a few variations of recently, which doesn’t follow from economic intuition. If landlords drop out of the market, do rents to rise? Given that each landlord dropping out of the market means there’s an owner-occupier there instead – and therefore a smaller rental market on both sides – the effect on rents might go either way.

Points 6 and 8 in the chain of events are odd too, essentially scaremongering about large numbers of low-quality apartments. The press release continues in a similar vein:

Mr Church says that he is aware that a focus on ‘intensification’ through building more apartments is consistent with the Auckland Unitary Plan and that some might see this outcome as a good thing – but he notes that this provision is also strongly rejected by a large number of Aucklanders and shouldn’t be forced on the city by the Reserve Bank.

“The drive for Intensification is based on a political ideology and is rejected by a large number of Aucklanders. It should only happen if Aucklanders want it”.

It’s a strangely political statement itself, coming from an organisation which began as the professional body for valuers. The PINZ’s statement in March that “the Reserve Bank Governor needs to “stop chasing shadows and stick to his knitting” seems a bit ironic.

As an aside, I think it’s great that the banks reviewing their lending policies on apartments; after all, it’s a more established market now than it was ten years ago, and there’s (hopefully) a lot less speculation going in that market than there was in the mid-2000s boom-bust. The banks will still be cautious about lending for leaky or leasehold buildings, and perhaps shoeboxes, and once those are taken out of the equation the apartments that are left should have a manageable level of risk.

Why is the government aiming so low?

On the whole the government’s new policy of opening up excess land in Auckland for development is not a bad one. As I mentioned when it was announced, the devil was always going to be in the details and on that front the government hasn’t been doing so well. The two most prominent issues that have emerged have been:

  • The dispute with local iwi over whether they should have the first right to buy the land. Interestingly the iwi have noted that they support the policy and actually want to be involved in the development of housing. They are heading to court today over the issue.
  • That the vast majority of the first piece of land the government showed off turned out not be owned by the government but instead by the council. The site is shown in yellow below.

Govt Manukau Land Sale

Combined the issues suggest an element rushed policy making where the details simply haven’t been thought through. In my view, of the two the first is by far the most serious issue and one probably best left with others to talk about. The second one raises some additional questions – some of which have been highlighted well by Deputy Mayor Penny Hulse.

First and foremost, as part of the Unitary Plan the site is zoned as part of the metropolitan centre as shown below.

Unitary Plan - Manukau

The zoning means it’s possible to build mixed use and up to 18 storeys on the site although it feels like it has mixed potential. It’s sandwiched between the motorway and some large, not overly pedestrian friendly roads – Manukau Station Rd should have scaled down after the motorway was finished. It kind of has the feeling of being land in the middle of a motorway interchange.

The image below shows the intersection of Manukau Station Rd and Wiri Station Rd/Davies Cres. As you can see it looks like a traffic engineers dream with slip lanes on all corners and extra lanes for those turning right

Govt Manukau Land Sale - Intersection

On the plus side it is just across the road from the Manukau Train Station and new MIT campus while obviously a short walk to the rest of the Manukau city centre. That alone makes it odd that the government suggest only putting around 60 terraced houses on the site. This isn’t to say the site should have to be developed to 18 storeys but given its location and the demand for housing it seem insane to only think about putting 60 dwellings on it.

The situation raises two questions in my mind.

  1. First why is the government aiming so low. Is it just that they simply don’t get the urban reality and think that everyone only wants low rise? Some government ministers – such as Bill English – have at least acknowledged that intensification is needed and issues such as NIMBYism need to be addressed. This is one of the locations that such intensification can easily occur without any issues from surrounding neighbours. Bernard Hickey had a good piece in the Herald yesterday suggesting that the council and government need to do more to show that density isn’t bad, this is just one of many easy opportunities to do so.
  2. Secondly one of the reasons this hasn’t been a bigger issue is the council have said they’re keen to work with the government on developing the site (to a higher density). Given this is the case then what have the council and its CCO’s being doing just sitting on the land for so long. Surely if they were concerned about it they should be getting on with developing the land rather than just sitting on it, effectively land banking.

The Nation’s Generation Debate

On the Weekend TV3’s The Nation discussed what could end up being one of the defining issues of the next few decades, generational inequality. At its most basic it’s the idea that through various policy decisions older generations have effectively pulled up the ladder behind them on issues such as housing and infrastructure thereby making it much more difficult for younger generations. This is also something that’s not unique to New Zealand and the same issues are also being grappled with in many western countries.

First up on The Nation was Shamubeel Eaqub from the NZ Institute of Economic Research (NZIER) talking primarily about housing and how that it’s not just about home ownership but that it is likely to have other impacts throughout society such as pushing out poorer people further away from the city and the opportunities it can offer while saddling them with higher transport costs.

TV3 The Nation June 15 - Shamubeel Eaqub

Following this The Nation hosted a debate (two segments) between a Baby boomers represented by former National MP Tau Henare, Former National Party President Michelle Boag and Otago University Economist Simon Chapple and ‘Team Gen X and Y’ represented by Morgan Foundation Economist Geoff Simmons, Green MP Julie Anne Genter and former Salient Editor Asher Emanuel.

Part 1

TV3 The Nation June 15 - Generational Debate Part 1

Part 2

TV3 The Nation June 15 - Generational Debate Part 2

In my view the contrast between the two groups was stark. The younger were much more calm and composed, they seemed to have come prepared with facts and were able to (or at least attempted to) use them. By comparison the boomers (with perhaps the exception of Simon) where shouty and arrogant and best summed up by Michelle Boag’s closing comment of “Don’t give me evidence”. Another thing I noticed was that quite often when trying to say that they had it tough the boomers were actually referring to the experiences of their parents struggling to get by which in many ways is one of the core points of the generational debate. Older generations worked hard to give their boomer kids a better future but those boomers are increasingly putting in place polices that make it difficult for younger generations to do the same.

The debate primarily focused on housing. As expected there were of the typical old chestnuts that often get trotted out in this kind of debate. These include:

  • That parents help out their children to get in to homes. This was quite well addressed by Shamubeel in the first section who noted that it’s only good if you happen to be born to parents who own a house.
  • That “Back in the 70’s/80’s we paid higher interest rates” came up fairly quickly but the reality is a high interest rate on a cheap house is still probably better off than a low interest rate on a very expensive house. It would be interesting if anyone has worked out the differences however a quick google search did find this from Stats NZ showing that we’re now spending over 2.5 times more on housing than we did in the past and given this is at a national level it’s probably even higher in Auckland

Housing Costs 1974-2013

  • Our (our parents) generation used to move further out and buy a small bach and live in it for a couple years while saving up money to buy or build something larger. One of the issues with this is that we appear to be seeing a correction in land prices back to more historical trends where land prices closer to town are much higher, that means buying a house further out and saving money can still be a futile effort. Regardless, if anything this generations version of it is buying a small apartment or town house. The problem is if we want people to have starter homes we need to enable the construction of small and cheaper dwellings.

That also raises another issue that was highlighted in that there is an element of regulatory capture in urban planning. Existing home owners in desirable areas have used the planning process to prevent any new housing to be developed in their neighbourhoods, thus driving up the value of their houses. Any moves to change that are met with strong opposition come election time so politicians are too scared to do anything.

There were a few other related issues too such as education, employment and superannuation.

 

As mentioned these issues aren’t unique to NZ. This popped up in my twitter feed yesterday showing much of the same arguments are happening in Vancouver.

Did you watch the debate (or have you now)? What did you think of it?

Are vacant homes adding to Auckland’s housing shortage?

As Auckland housing hysteria gets more, well, hysterical, there seem to be a few people worried that investors are leaving homes vacant rather than bothering to rent them out – preferring to rely on capital gains as a source of income instead.

Leaving aside the obvious question of why you wouldn’t rent them out as well as getting capital gains (after all, this can be made pretty hassle-free with a property manager, and helps to cover the ongoing costs of the property), there is some concern that this is a widespread phenomenon and contributes to a housing shortage in Auckland.

I’m assuming from Peter’s post the other day that we’re now happy to broaden our readers’ musical education as well as providing commentary and encouraging intelligent debate about transport issues (although my “Transport-Related Song of the Week” post series never really panned out), so here’s a topical song:

North and South recently ran an article on the apparent phenomenon, called “Running on Empty” (which is also a catchy number by NZ band The D4). It does suggest that much of the issue is at the suburb level, which I’ll leave for another post. It also notes that some vacancies will be due to Kiwis now living overseas, or splitting their time between multiple homes:

Keith Rankin, who teaches economics at Unitec, has been noticing this “hollowing out” of the city with concern. He says housing patterns are changing radically on the Auckland isthmus, with young homebuyers pushed to the fringes – priced out of the market by speculators playing for capital gains.

“What is happening in places like Mt Albert and Mt Eden, Grey Lynn and Herne Bay?” he wrote in a blog post. “These are places where houses are being bought at very high prices, by people who themselves do not plan to occupy them” – and want to buy and sell as if tenants are incidental.

[Andrew King, executive officer of the New Zealand Property Investors Federation] reckons a lot of empty houses are owned by executives who’ve been seconded overseas and don’t want to lose their foothold in the market or have strangers living in their home

[Mike Atkinson, managing director of Aspire Property Management]’s take on Auckland’s “ghost” properties? Wealthy owners who split their time between multiple homes. The father of one of his friends lives on a boat but keeps a two-bedroom apartment in the Viaduct as a city crash pad. Another businessman he knows owns five houses, including property in Auckland, Wanaka and Mangawhai Heads.

The most easily accessible source of data on vacant homes comes from the census. The 2013 census shows that, on census night, there were 33,360 unoccupied homes across Auckland. That sounds like a lot. Out of the 500,000-odd homes in Auckland, it’s 6.6%, which might still sound like a lot.

However, it’s almost unchanged from 2006, when there were 33,330 unoccupied homes, 7.0% of the total. And not much up from the 29,586 recorded in 2001, also 7.0% of the total. When I first saw these stats, I thought of them more as something indicating the current shortage of homes – i.e. housing is tighter, so more homes are being occupied.

When you look at these stats on a regional level, you see that Auckland has a smaller percentage of vacancies than any other region except Nelson:

Unoccupied for regions

Again, this made me wonder if Auckland’s low vacancy rate suggested a persistently tight housing market. But then I looked at the stats for New Zealand’s cities, leaving aside the more rural districts:

Unoccupied for cities

This suggests that Auckland is actually in a similar range to most NZ cities – but no one is suggesting that there’s a spate of Invercargill investors leaving homes vacant just so they can enjoy the capital gain. It’d be interesting to look at this data more closely: I’d like to look at different Auckland suburbs in another post, and maybe there is some truth to the claim that it’s a problem in some areas – then again, maybe Herne Bay homeowners are simply more likely to be away on holiday, or overseas contracts and so on.

At a city-wide level, though, I don’t think there’s much we can take out of this. I think it’s a myth that there are large numbers of people leaving homes vacant for speculative reasons, and I think the data in this post goes a long way to busting it. I also don’t see support for my original hypothesis that low vacancies in Auckland suggest a housing shortage. That doesn’t mean we don’t have a shortage, but the vacancy data doesn’t really tell us. Of course, since the census we’ve had two years of strong population growth and not built enough homes for all the new Aucklanders…

The high cost of low rise

Last week the Government announced an interesting scheme to advance housing supply by redeveloping up to 500 hectares of State land. It’s still not clear how the land will be released, what the land tenure arrangement will be, or how affordable units could be delivered. Without knowing the full details of the initiative, this seems like a worthwhile initiative, one that has a lot of similarities with a plan recently proposed in New York City.

To get a feel for the extent of public land across the City, I took a look at ownership data from LINZ. Here’s a look at the public land in Takapuna (Blue = Crown, Yellow = Council). Takapuna is not unique in having boatloads of developable public land. In Takapuna the public is blessed with multiple lawn bowls, a golf course, and parking- heaps of council parking- reminding me of the Shoup-y quote, ‘we have a city where parking is cheap for cars and housing is expensive for people.’

takapuna

Government land in Takapuna. Source: LINZ

Taking a closer look at the Crown land reveals a crazily undeveloped piece of property at the corner of Anzac Street and The Terrace. The property (below, red) has two old buildings serving the police department and of course more car parking. Besides the disamenity of having sloppy, low density buildings in a town centre. there is a real opportunity cost with having such an unproductive piece of land regardless of property owner.

Because the property is so under-captilised it only contributes $24,306 to the Council’s base rates or $9.44 per m2.

zoomwithdetails

Council rates of Government land. Source: Auckland GIS viewer, LINZ property ownership data.

To put how poorly this property is performing in perspective, lets do the math. (See also: Want lower rates cut back on urban sprawl). Below is the new Turing project on Great North Road consisting of 27 apartment of a variety of sizes and bedroooms.

Turing - photo from Ockham (ockham.co.nz)

Turing – photo from Ockham (ockham.co.nz)

Using the rating data from the Council GIS viewer the property I compiled the CV data for each unit. The 27 dwelling units combined total over $15 million of rateable improvement value on top of  $8 million in land value. Applying a .73% tax rate across the site (the ratings data is not showing yet) yields a whopping $168,000 per year.

This site is less than half the size of the Takapuna site but yields more than seven times the ratings base. On a per m2 basis the Turing is 17 times more productive than the Takapuna site.

x

Turing: mid-rise residential development on Great North Road

The Takapuna site is uniquely re-developable since it is has such a low improvement value compared to its land value, but this is no different than the rest of the Council car parks around the town centre, and in fact all over the city. There is no shortage of urban land.

How is it fair that these two properties have such disparate rating values? This is where a land tax would help. Taxing land separately and at a higher rate than the buildings and other improvements that sit on top of that land would help to remove barriers to property being put into more productive uses (housing anyone?), and create a disincentive for what is essentially land banking.

Releasing public land across the city for residential uses is a good start. Ensuring that all property across the city  can be more productive by removing the barriers to redevelopment, including the tax regime, would be even better.

concept

Mid-rise development concept in Takapuna using Government land.

Metamorphosis: The Return of the City

The Auckland City Centre is entering a phase of profound change. The rest of this decade it’ll be undergoing a more extensive and disruptive renovation than your average Ponsonby villa. The designers and financiers are at work and the men and machines are are about to start. The caterpillar is entering that difficult and mysterious chrysalis phase; what kind of butterfly will emerge?

Some of the probable additions to AKL’s skyline [image: Luke Elliot]

If even half of what is proposed gets underway almost every aspect of the centre city will be different.

The Skyline

Precinct Property’s 500 million dollar total rebuild of the Downtown centre and a new 36 storey commercial tower is confrmed to start next year. The 39 storey St James apartment tower is also all go [with the re-opening of the ground floor to the public soon]. An apartment tower on Albert and Swanson has begun. There are a huge number of residential towers seriously close to launching some of which are 50+ floors. These are on Victoria St, Customs St, Commerce St, Greys Ave and more. The biggest of them all Elliot Towers is rumoured to underway next year. Mansons have bought the current herald site and said to looking at residential there. On the same block 125 Queen St is finally getting refurbished bringing much needed new commercial space in the city [+ about 1000 new inner city workers]. Of course the Convention Centre and its associated hotel will start too. Waterfront Auckland have announced new mid rise apartment developments and a new hotel beginning as well. This list is not by any means exhaustive. Auckland is now a builders’ boom town. And it will resemble nothing other than an enormous sand pit for the next few years.

The Street

Regardless of the forms of these buildings they are going to have profound impacts at street level; flooding the footpaths with people, stimulating more and more retail and especially hospitality services. Add to this the disruption of the works themselves, for example later this year the first stage of the CRL is going to start. Digging up everything from Britomart through Downtown, up Albert St to Wyndam St. If the proposed Light Rail system goes ahead that will mean the [no doubt staged] digging up of the whole length of Queen St and other places, Dominion Rd, Wynyard Quarter. Street space is becoming more and more contested. Driving in the city is going to get increasingly pointless, most will avoid it. But unlike last century that won’t mean people won’t come to the city. One, because it’s become so attractive with unique retail offers, unrivalled entertainment attractions, and a fat concentration of jobs. Two, because people are discovering how good the improving Transit options are becoming, so why bother driving. And three, because increasing numbers are already there; it’s where they live anyway.

And that Transit boom is going to continue, or even accelerate. Britomart throughput is now running at 35 000 people daily, when planned it wasn’t even expected to reach 20 000 until 2021 [see below; the blue line is still growing at that angle; it is now literally off the chart]:

Britomart Projection Numbers Graph

Why is this happening? A lot of people in wider Auckland still think the city is unappealing or unimportant. Aren’t we spreading new housing out at the edges? Aren’t new businesses building near the suburbs in those business parks? Well ironically one of the reasons so much growth and investment is happening in City Centre is because those same people, the ones that prefer their suburban neighbourhoods to the city, don’t want any change near them. The City Centre is one of the few places that it is possible to add new dwellings or offices at scale, and because it is a very constrained area with high land value this can only be done with tall buildings. The more suburban people refuse to have growth near them the more, in a growing city, investment has to concentrate where it can, and in Auckland that means downtown.

Auckland's first electric  tram 1902

Auckland’s first electric tram 1902

Auckland is still spreading outwards and businesses are growing in suburban centres, but these areas are not appealing or appropriate for all people and all businesses, and nor are they sufficient; the City Centre is growing by both these metrics too, and at a greater pace. The 2013 census showed that AKL city is the fastest accelerating place to live in the entire country, growing at over 48% between 2006-2013, and currently the city is experiencing a new shortage of office space and an interesting reshaping of the retail market. The education sector is also still strong there, with Auckland Uni consolidating to its now three Central City sites and building more inner city student accommodation. City growth is strong and broadly based: residential, commercial, retail, and institutional.

There are risks and opportunities in this but what is certain, outside of a sudden economic collapse, is that the City Centre will be a completely different place in a few years, in form, and in terms of how it will operate. And the signs are promising that what we are heading to is an almost unrecognisably better city at street level than it has been in living memory.

What is happening is simply that it is returning to being a city of people. Ten of thousands of new inner city residents, thousands of new visitors in thousands of additional hotel beds each night, hundreds of thousands of workers and learners arriving daily from all over the wider city each day too. All shopping, eating, drinking, and playing within the ring of the motorway collar. Auckland is moving from being one of the dullest and most lifeless conurbations in the world to offering a new level of intensity and activity. Well that is certainly the possibility in front of us now.

Auckland has had boom times before, and each of these leave a near permanent mark on the built fabric of the city [the Timespanner blog has examples in great detail].  So it matters profoundly what we add to the city this time. We are at the beginning of the opportunity to correct the mistakes of the postwar outward boom that came with such a high cost for the older parts of the city. By forcing the parts of the city built on an earlier infrastructure model to adapt to a car only system we rendered them unappealing and underperforming, and the old city very nearly did not survive this era. Only the persistence of some institutions, particularly the Universities, enabled it to hang on as well as it did. The car as an organising device is ideal for social patterns with a high degree of distance and dispersal. It is essentially anti-urban in its ability to eat distance but at the price of its inefficient use of space; it constantly fights against the logic of human concentration that cities rely on to thrive. It not only thrives on dispersal, it also enforces it.

Queen St 1960s

Queen St 1960s

But now the wheel has turned and cities everywhere are booming on the back a of model much more like the earlier one [see here for example: Seven cities going car-free]. This old-new model is built on the understanding that people in numbers both already present in the city and arriving on spatially efficient Transit systems providing the economic and social concentration necessary for urban vitality and success.

This seems likely to lead to a situation more or less observable in many cities world-wide where there is an intense and highly walkable and Transit served centre surrounded by largely auto-dependent suburbs. Melbourne, for example, is increasingly taking this form. And, interestingly the abrupt physical severance of Auckland’s motorway collar might just make ours one of the more starkly contrasting places to develop along these lines. A real mullet city: one made up of two distinct patterns.

Bourke St Transit Mall, Melbourne 2014

Bourke St Transit Mall, Melbourne 2014

Frankly I think this is fine, it could make for the best of both worlds. Those who want to live with the space and green of the suburbs can continue to do so but are also able to dip into a vibrant city for work, education, or especially entertainment, on efficient electric Transit, ferries, and buses when that suits. A vibrant core of vital commercial and cultural intensity sustained by those who choose to live in the middle of it 24/7. The intensity of this core plus any other growing Metro Centres [will Albany really become intense? Manukau City?] meaning the sprawl isn’t limitless and the countryside not pushed so far away that it is inaccessible. Auckland as Goldilocks; not all one thing or the other; neither all suburb nor all city. People will use or ignore which ever parts they want, and soon members of the same households will be able to indulge their different tastes without some having to leave the country.

What are the threats to this vision? Well we do actually have to build the Transit, this means completing the CRL soon as is possible, and ideally replacing a good chunk of the buses with higher capacity and more appealing Light Rail. To connect these two halves; the success of both the centre and the region it serves depend on it. But also we have deliver a much better public realm on the streets and especially at the water’s edge. We have to retain and enhance the smaller scale older street systems to contrast with the coming towers, like we have at Britomart and O’Connell St. All these moves require leadership and commitment and an acceptance that the process of getting there will be contested and difficult.

I have no fear that people in the wider city won’t be happy to choose to leave their cars at home for some journeys, especially into the city, then jump back into them for others across the wider city or out of town. After all it’s happening already. This is not then a bold prediction, merely the extrapolation of current trends. And it is the trend that tells us more about the future than the status quo. More of this:

CBD Transport Change

than this

CPO Lower Queen St 1960s

CPO Lower Queen St 1960s

or this

AKL m'ways 70s

AKL Grafton Gully 70s

Aussie apartment boom: the cities

As explained in my last post, Australia is currently in the middle of a major apartment boom. Of course, the picture changes depending on which city you look at. The following graph shows the share of attached dwellings for the “large Australian cities” – the ones which are bigger than Auckland, at 1.9 to 4.7 million people:

Big city dwelling approvals

Sydney has been building mainly attached dwellings for the last 12 years – 60% to 70% of all dwelling approvals. There’s a lot less of this activity in Perth, where the share of attached dwellings is around 25%, without much change in the trend in the last twelve years. However, Melbourne and Brisbane have seen a real lift over that time, from around 30% of approvals in 2002 to 55% now.

Here’s the share of attached dwellings for what I’ve called the “small Australian cities” – state capitals which are smaller than Auckland, at 132,000 to 1.3 million people (and note Australia has many other cities in this size range which I haven’t looked at):

Small city dwelling approvals

These percentages fluctuate quite widely, but note the high share of attached dwellings in Canberra (the size of Christchurch or Wellington) and Darwin (the size of Tauranga).

The figures above are for “Greater Capital City Statistical Areas”, which are defined very broadly, and include a large amount of rural land and smaller settlements as well as the main urban area. This tends to bring down the share of attached dwellings, since you’re more likely to get apartments in central Sydney than Campbelltown. In terms of land area, the GCCSAs range from 170,000 to 326,000 hectares for the “small cities” and 642,000 to 1.6 million hectares for the “large cities”.

It’s a little tricky to compare these areas to any New Zealand measurement – they’re probably in between the typical size of a territorial authority and a region – but the Auckland Region, stretching from Wellsford to Pukekohe, is 1.6 million hectares. The graph below compares the attached dwellings share for the Auckland region (in dark blue) to those for the large Australian cities:

Big cities plus Auckland

So, we’re building a smaller share of attached dwellings than Brisbane, Melbourne or Sydney (which, to be fair, are all larger cities than Auckland), although it’s interesting that we outpaced Brisbane and Melbourne for much of the 2000s. The share of attached dwellings is also tracking up strongly, and I’d expect it to keep heading upwards in the short term at least.

In “absolute” terms, we’re approaching 3,000 building consents a year for attached dwellings – less than we managed during the 2000s boom, but still significant, and continuing to grow strongly.

The upshot of all this is that John Key was absolutely right when he said “If you’re a young person buying your first place in Sydney or Melbourne or Brisbane, in most instances you’ll be going into an apartment.” If you’re wanting to buy in a big city – especially if you’re a first home buyer with less of a deposit or a lower income – an apartment, terrace or flat can be a great option, and they’re a big proportion of what is being built.

The Geography of Joblessness

Two articles on employment and its relationship to urban form and transport investment turned up, rather fittingly, on Labour Day. They offer interesting international perspectives, but before we get to them here is a fascinating chart derived from Ministry of Transport Household Travel Survey data that puts the focus on journeys to work into an valuable perspective. Remember the New Zealand census question that generates the gross mode share data much loved by government ministers only asks the very narrow question about travel for work. In Australia at least they ask about travel ‘for work or education’. So here is Auckland’s travel for all purposes:

AK trips by purpose and time 2013 census

In particular look at that am rush hour [and, quaintly, it is pretty much just an hour] 8-9am. Journeys to work only make up just 22% of the trips that cause that morning congestion.Trips to education is the big one then. The afternoon is very different with a full three hours of workers and learners all coming home. A great shame that trips for education are not counted in the gross mode share question as that would help the real role of PT and Active modes in keeping this city moving from being so easily downplayed by politicians and others. I have seen elsewhere that Auckland University, for example, has a private car modeshare for its students somewhere in the rounding: 1-3% [if anyone has a data source for this please add it in the comments]. *Correction 8% is the best info we have, thanks to Thomas S; source.

I can’t top the title used by The Economist so have repeated it above, here’s the link. The article simply asks the question what role might geography have in unemployment? As it is concerned with cities the geography in question is urban form. So has 60 years of subsidising the dispersal and segregation of living and working in cities in the west made it harder to provide, find, keep, or change jobs? It surveys the research and concludes that western cities suffer from ‘spatial mismatch’ and ‘poor accessibility’ and that these conditions do indeed inversely affect employment effectiveness of these places. Basically the more dispersed, the greater the degree of separation of zones, and the less effective its Transit system the less efficiency there is in its employment market.

What’s to be done? Here is the concluding paragraph:

All this has big policy implications. Some suggest that governments should encourage companies to set up shop in areas with high unemployment. That is a tall order: firms that hire unskilled workers often need to be near customers or suppliers. A better approach would be to help workers either to move to areas with lots of jobs, or at least to commute to them. That would involve scrapping zoning laws that discourage cheaper housing, and improving public transport. The typical American city dweller can reach just 30% of jobs in their city within 90 minutes on public transport. That is a recipe for unemployment.

The second article is from the Brookings Institution and is called: Cars Remain King and barrier to Economic Opportunity

This uses a study based on commute data from the US 2013 census to focus on ‘zero-vehicle workers':

The most recent 2013 Census numbers shed additional light on their commuting habits, showing how more than 6.3 million workers don’t have a private vehicle at their home. That’s equal to about 4.5 percent of all workers, compared to 4.2 percent in 2007.

Unsurprisingly decades of building and subsidising car amenity in the US has led to widespread structural auto-dependency for employment. This study also concludes that a shift in both urban form and transport infrastructure investment would deliver positive economic outcomes. And in particular that the focus by professionals, institutions, and policy makers needs to be on accessibility and not predominantly on vehicle speed:

To address this inequity, we need to shift how we plan transportation investments and urban development. Planners and engineers need to think less about mobility—how fast we move—and more about access—how many destinations we can reach. Grounded in the daily experience of commuters, this perspective can help meet the needs of workers and employers, better tying together regional economies.

One thing that would help is broadening the specialists in this field away from a focus on the LOS metric, as advocated by the Victoria Transport Policy Institute here.

Clearly a move away from monotonal places of only work [like how the City Centre used to be], or the pure dormitory suburbs of south east Auckland, are part of the solution here. The move to a greater spread of  Mixed-Use suburbs with working and dwelling within easy and pleasant reach, especially by the Active modes or short Transit trips, is desirable. This is after all, along with proximity, one of the features of the inner pre-autodependent sprawl era suburbs that make them so successful and desirable: They were formed pre zoning rules, and can be lived in with minimal travel for work and indeed other needs for most.

Of course committed sprawlists will immediately claim that if only we flatted the centre city and spread all employment out across the city then people would all live right next to their workplace and joy! travel times, congestion, and all human misery would end. Well I’m sorry but the following chart firmly puts paid to that:

Trip Length residential 2013

Above is that chart from 2013 census showing how those in newer further out suburbs have, on average, longer commutes, regardless of their place of work. It is important to underline that these commute lengths are not about just trips to the centre but to the actual real work trips taken by everyone as recorded in the 2013 census. There is just no way around it; the further out you live the longer, on average, your work journey will be. And if we keep extending the city out the worse this will get for these edge-city dwellers and everyone on aggregate. With the concomitant disbenefits that long commutes bring; higher cost, individually and collectively; plus all the negative health, pollution, and happiness outcomes.

And below the same data flipped to show it by destination. Look how inaccessible the employment around the airport is, despite all that road building. The $140m about to be spent on the Kirkbride Rd intersection will do nothing at all to improve this. Look too at Howick on the two charts, the small number of people that work there are mostly local, which is good, but most locals work much further away. Both charts also show the lack of local employment for people in West Auckland.

Trip Length workplace 2013

 

Which all goes to show that Auckland conforms to Bertaud’s ‘Composite’ urban form model below, which is of course the most common city type on the planet, and not the dispersalists’ largely imaginary centre-less model of the ‘Urban Village’ with everyone working adjacent to where they live and none working across town.

After all, even as Auckland gets longer [it can’t get wider!] the area most closely placed to everywhere is still the centre. This helps explain why the centre will only continue to grow and thrive despite increasing rents and other barriers, as it remains the most connected and accessible place to be, on average.

Bertaud urban structure graph

Trust you had a relaxing Labour Day.

 

4th batch of Special Housing Areas Announced

Yesterday the council and government announced the next batch of Special Housing Areas. These are the areas that are able to use a fast tracked consenting processes and for which the Unitary Plan rules (with a few conditions) come in to effect immediately. The intention is that by the faster consents will lead to developers building more dwellings and therefore helping address housing affordability however it also seems like some developers are just pushing for their land to be an SHA so they can sell it for an easier profit. All up there are 17 new SHAs bringing the total to 80 across the region. The Council say the new SHAs represent capacity for 8,000 new dwellings and that all SHAs combined have a potential of 41,500 dwellings. Below is a map of the new SHAs.

Tranche 4 Map

The first thing I noticed is that a decent proportion seem to be brownfield sites which is good however on closer inspection the greenfield sites while fewer in number still represent the majority of dwellings proposed. For example the massive Redhills SHA in the Northwest represents about 3500 dwellings which is almost half of all the new dwellings these SHAs cover. The council’s site has the details and maps of each of the specific SHAs but here’s a quick summary

  • Akoranga Drive, Northcote – 107 dwellings however it appears this is a retirement village.
  • Barrack Road, Mt Wellington – 40 dwellings – These are within walking distance of the Panmure Station which is good.
  • Bellfield Road, Papakura – 350 dwellings, this is the former Papakura Golf Course
  • Bunnythorpe Road, Papakura – 10 dwellings
  • Coates Avenue, Orakei – 14 dwellings
  • East Coast Road, Pine Hill – 39 apartments
  • Enfield Street, Mt Eden – 64 apartments over two buildings however interestingly these seem to fall outside the SHA rules by being 5 storeys.
  • Corner Great North Road and Walsall Street, Avondale – 36 dwellings
  • Harbourside Drive, Hingaia – 200 to 300 new dwellings
  • Mokoia Road, Birkenhead – 31 apartments
  • Morrin Street, Ellerslie – 138 units in a retirement village
  • Racecourse Parade, Avondale – 15 dwellings, this land is owned by the council under Auckland Council Properties Limited who will be looking for a developer to come up with ideas for the site.
  • Redhills (Fred Taylor Drive) – Stage 1, Whenuapai – 3,500 dwellings over 10 years.
  • St Lukes Road, Mt Albert – 107 apartments
  • Takapuna Strategic SHA – this is a Strategic SHA where the rules apply to a large area in the hope that it will encourage land owners to develop. It is thought it could deliver 350 dwellings.
  • Tamaki Regeneration Area – 1,200 to 1,500 dwellings
  • West Hoe Heights, Orewa – 400 to 800 dwellings

Of the SHAs above three in particular are very large greenfield developments that are likely to be the same type of sprawl we’ve seen so many times already. For the calculations below I’ve assumed about 20% of the land will be used for road access or public space.

Bellfield Road, Papakura – at almost 27ha the 350 dwellings would mean section sizes in excess of 600m². It’s currently zoned as Future Urban.

Bellfield Rd SHA

Redhills (Fred Taylor Drive) – Stage 1, Whenuapai – this is just the first 200ha of a 600ha development and the 3,500 dwellings equate to sections of approx 450m² each. It’s currently zoned Future Urban

Redhills Stage 1 SHA

West Hoe Heights, Orewa – even larger at over 37ha, the 400-800 new dwellings would be on sites somewhere between 375m² and 750m². It’s currently zoned single house which means sections of a minimum of 500m².

West Hoe Heights SHA

Lastly as here’s a map showing all of the announced SHAs

Special Housing Areas 1 2 3 4