Apartments and Housing Affordability

Below is a schematic of current apartment development in a small area of Melbourne just north of the City Centre, next to the Victorian Markets. These are pretty tall; one already under construction is 88 stories.

North Melbourne development

And here is a blog post from our Melbourne friends OhYesMelbourne on another City Centre adjacent development site; Docklands. And I thought Auckland is experiencing a building boom. Well it is, and this growth is impressive, but of course Auckland is a small city by global standards, and the current boom is well in proportion. Across the world it looks like we are in a phase that is concentrating development pressure in primary cities.  So while urbanisation is widespread it seems to be especially concentrated in the cities that dominate their regions, like the Australian State capitals and Auckland in the South Pacific. It’s not just in the new world either; that classic primary city; London, is building up at a new rate too.

Aside from issues of about the balance of this growth from a nationwide perspective or architectural style [blingy is the term that springs to my mind], what is the likely impact of this kind of additional dwelling supply coming onto the market in these cities? Currently Melbourne is getting about 1500 new residents a week [1838 per week last calendar year, in fact]; which at current household sizes means there is fresh demand for about 500-1000 new residences each and every week; pretty hard work to satisfy that demand you’d think?

Well think again; the boffins at the Reserve Bank of Australia are worried about oversupply according to this report from Business Insider. Here’s the recent apartment supply growth:


So while the RBA couches this situation as a warning to financial stability, or at least risk to property developers loosing their shirts in a saturated market, isn’t this exactly the sort of quantity of new supply that overheating urban property markets need, like Auckland?

Price growth is already slowing for inner city apartments in Melbourne and Brisbane, and there are signs that activity in the Sydney property market is beginning to slow after two years of breakneck activity. Supply and demand in all three regions appears to be nearing equilibrium, with significant more supply scheduled to come. It’s clear that downside risks to prices are building.


It seems there is a lesson from the cities across the Tasman that supply/demand equilibrium in cities can be achieved most effectively by building up, although at the risk of supply overshoot. But then isn’t that always the case in any attempt to rebalance a market? So what are the barriers to this sort of solution occurring in Auckland? Is it even possible? One problem is inner city land supply, is there that much available space? Melbourne certainly has a lot of city proximate available land. Auckland is likely to need this sort of growth to also occur in metropolitan centres as well as the Central City simply from a space perspective; given how tightly bound our City centre is. But in that case we will also need to complete the Rapid Transit Network in a timely fashion to make that model function properly. But then we have to do this however we grow; or we are just planning traffic gridlock.

Then there are our planning regulations, especially height restrictions and view shafts, limiting spatial efficiency, and Minimum Parking Regulations adding unnecessary cost to construction [as well as feeding traffic congestion]. I’m sure some will argue that Aucklanders won’t live in apartments, but recent growth in inner city living shows that we have yet to find the limit of those happy to make that choice. It seems likely that out of 1.5+ million there still more willing to live this way, especially as the quality of city amenities and distractions improve [especially public transport, the cycling and pedestrian realm, street quality and waterfront spaces]:

City Centre Population - 1996-2015 2

And this is even more likely to be the case if new supply is sufficiently scaled to affect property price growth; then these dwellings will become even more attractive; more affordable as well as proximate. Perhaps, if the RBA’s handwringing is prescient, at the cost of one or two over-ambitious property developers’ businesses…?

Auckland Dwelling Consents

Is it happening already? Certainly all the growth in dwelling supply in the last couple of years has been in attached structures: Stand alone houses used to completely dominate Auckland’s housing supply; at three-quarters of the market four years ago to around half now.

The evidence from these nearby cities suggests that ‘up’ may well be a more immediately effective solution to rampant dwelling inflation in Auckland than distant, hard to service, and slow to deliver detached houses out on the periphery. Certainly in as much as it is a supply-side issue.

Queen St Light Rail

On the day that the Sydney Morning Herald runs an intelligent editorial showing a grown-up attitude to the disruption that comes with important infrastructure builds…

The Herald remains a strong supporter of the light rail project to run through the inner city and eastern suburbs, and urges the Baird government to prosecute the case forcefully for the line.

Construction of the project, due to start on George Street in October, will be painful and frustrating. Mistakes will be made, and they must not be excused.

But any conception of the transport needs of central Sydney must begin on the basis the status quo is unsustainable.

That status quo represents an over-reliance on bus transport through crowded city streets.

The streets are so crowded that the buses are unreliable. They consistently fall behind timetable well before they have left the city and entered the suburbs.

…AT has released more LRT images:

Town Hall LRT_800

Note in both images all cars are gone, and there is a sort-of cycle lane, that in practice will really be part of the big shared space, yet indicated. Personally I think this is a good arrangement for this pedestrian dominated place and means that it is a slow speed and take care place for riders. The parallel routes of Nelson and Grafton Gully are for getting places at pace; good crosstown cycling connections will be needed to link these all together.

Queen St LRT_800

This would be a spectacular upgrade to the Queen St valley in terms of access but even more so in place quality. And just at the right time, or at least the proposal certainly isn’t ahead of the need; downtown is booming and development is spreading up the hill. We will be able to taste the sea air again in the city! I just can’t wait to get the fume-belchers out of our main spine.

Also from a purely transport capacity angle this will add a whole new access point for people into our uniquely motorway severed City Centre, as currently buses have been restricted on Queen St to the local access only City Link, and the AirBus, because of the unattractiveness of too many diesel buses in core pedestrian places. Adding Queen St to those other two north-south streets of Albert and Symonds as a route to move high volumes of people, while reducing the total bus numbers.

As the SHM goes on:

The Herald does not support any one mode of transport over another. In a metropolis like Sydney, trains, buses, the private car, light rail, cycling and walking all obviously have their role to play.

But the government should invest money in the mode of transport that fits the particular need of a particular space and of a particular travelling public.

And in central Sydney, the use of a growing number of buses to get people to and from work is no longer fit for purpose.

Without major changes to the city – without replacing some of those buses by new rail links – it will be impossible to increase the frequency of bus services to those areas not served by rail.

This argument represents much of the benefits inherent in the CBD light rail project down George Street, as well as the North West Rail Link and its eventual connection to the inner city.

This is exactly the situation Auckland finds itself in; the City Rail Link for connection to and through the core and the further out West, East, and South, and buses upgrading to LRT when capacity limits are hit on surface routes elsewhere. Including, in my view, across the harbour from Wynyard in tunnels to a balancing North Shore network, instead of the bloated and destructive third road crossing. Or a bridge, either way it would be direct, fast, and way way cheaper than NZTA’s current, yet last century, plans:

Light Rail Bridge

Light Rail Bridge


All up it renders Queen St just like Bourke St in that other Australian city:

Bourke St Transit Mall, Melbourne 2014

Bourke St Transit Mall, Melbourne 2014

I have requested an image of Dominion Rd LRT too, so will follow up with that and other info in the days ahead.

Sunday reading 18 January 2015

Every week we read more than we can write about on the blog. To avoid letting good commentary and research fall by the wayside, we’re going to publish weekly excerpts from what we’ve been reading.

Urban kchoze, “Prince Charles’ 10 Principles of of urbanism: typical example of what’s wrong with urbanists/architects“:

In a way, the true descendants of traditional cities aren’t the mummified European cities of Paris and London where all is done to maintain buildings and neighborhoods as they were in the early 20th century, but Japanese cities. Yes, Japanese cities are resolutely modern in terms of buildings, but the traditional process of city-building is still alive in Japan, while it has been replaced by planner fiat in Europe and North America. The people who built the cities people love would have likely been more than happy to have our modern technology to allow for taller buildings with more varied materials. Likewise, though the Japanese use modern materials and technologies, they still use them in a way that is more in line with the traditional process of incremental city-building.

Alan Davies, “What would it take to build a tram network the size of Melbourne’s?“, Crikey:

The US has over 45 operating streetcar and light rail systems but none of them are anywhere near as large as Melbourne’s tram system. Melbourne has the largest extant urban streetcar network in the world with 249 kilometres of double track and 487 trams.


If Melbourne’s tram network had been removed in the 1950s and 60s like similar systems in Sydney, Brisbane, Adelaide, Perth and many regional centres were, it would be astronomically expensive to build something like it today from scratch. The cost of rolling stock alone would be in the region of $3 Billion (1).

Based on the actual $1.6 Billion it cost to build the newly opened 13 km Gold Coast G:link line, a network the size of Melbourne’s could have an all-up cost in the region of $30 Billion.

Or if we extrapolate from the estimated $2.2 Billion it’s taking to build Sydney’s new 12 km CBD and South Eastern Light Rail system, the all-up cost could be in the region of $45 Billion.

James Dann, “They paved paradise etc etc“, Rebuilding Christchurch:

Yesterday, Georgina Stylianou revealed that the earthquake recovery minister Gerry Brownlee had used his “special powers” to fast-track a car parking building for Phillip Carter, the brother of the Speaker of the House, National MP David Carter. This was followed by a chorus of down-on-their-luck property developers piping in that they too needed more car parks, and that could the government please build some for them.

The sad, bizarre situation in Christchurch right now is that there are more people lobbying for the rights of cars to sit motionless than there are trying to house human beings.

Lindsay Cohen, “Seattle dog’s rush hour ride: on the bus, by herself, weekly“, Komo News:

SEATTLE — Public transit in Seattle has gone to the dogs.

Commuters in Belltown report seeing a Black Labrador riding the bus alone in recent weeks. The 2-year old has been spotted roaming the aisles, hopping onto seats next to strangers, and even doing her part to clean the bus — by licking her surroundings.

“All the bus drivers know her. She sits here just like a person does,” said commuter Tiona Rainwater, as she rode the bus through downtown Monday. “She makes everybody happy. How could you not love this thing?”

Anna Maria Barry-Jester, Why The Rules Of The Road Aren’t Enough To Prevent People From Dying, FiveThirtyEight:

On how speed limits in the US were set

Here’s how speed limits are established in most states, according to Federal Highway Administration research: Traffic engineers conduct a study to measure the average speed motor vehicles move along a road. The speed limit is then set at the 85th percentile. From then on, 85 percent of drivers would be traveling under the speed limit and 15 percent would be breaking the law. Sometimes other factors2 are taken into consideration, but in most places, speed limits are largely determined by the speed most people feel safe traveling. Some states, including Louisiana and Michigan, go so far as to call limits determined by this method “rational speed limits,” stating that achieving compliance is possible only if the speed limits are reasonable.

Todd Niall,  Knowledge gap in Auckland rail saga, Radio NZ:

The gap, in this case, is a knowledge gap. The gap between what we see being played out in public, and what is going on behind closed doors, between the Auckland Council, and the Government and its agencies.

The reminder of the significance of knowledge gaps was the Government’s announcement in June 2013 that it would commit to sharing the cost from 2020 of a project it had publicly poo-poohed.

This was widely regarded as a sudden and unexpected change of tack by the Government. It wasn’t.

Paul Little, Trees, not cars, make a liveable city, NZ Herald

Although no one has actually been seen embracing them, the stand of six 80-year-old pohutukawa on Great North Rd near the SH16 interchange works could use a hug right now. Auckland Transport has approved their removal to widen a road we don’t need.

Hugs would also be welcomed by a lot of Aucklanders who have recently begun to see all too plainly what a hellish plan is being put in place between here and the Waterview connection (cost $1.4 billion). The pillars and overpasses can now be seen to be on a scale so colossal they appear not to be made with humans in mind at all.

One of a few images from a 1937 plan for London by Sir Charles Bressey on how to accommodate more vehicles in London

Sir Charles Bressey 1937 London Plan

Chris Barton, The Best Urban Design of 2014, Metro:

It was a year of winning forms and some massive fails. Chris Barton picks his favourite urban design developments — and hands out the wooden spoons.

And finally, Councillor George Wood sent us a fun game to play via twitter. Fortunately, I passed the test:

Quiz: Can you name these cities just by looking at their subway maps? [Wonkblog]

Reflections on Melbourne and Sydney

2014 was an auspicious year. Whether by cosmic alignment or fickle chance, Easter Monday and Anzac Day fell in the same week, and I was able to shoot off to Melbourne and Sydney for ten days with only three days off from work. We talk about these larger cities a fair bit on the blog – they’re both almost three times the population – but I think there’s still some interesting points left to make.

Getting by with fewer cars

In Melbourne, I stayed with a friend in the outskirts of the city, 35 km away from the CBD. Despite living this far out, he and his partner get by with a single car. They commute to the CBD by bus and train, and only really use the car in the weekends. With car licensing at $700 a year, and the other costs of car ownership that go with it, they don’t see the need for a second vehicle.

I also caught up with a couple of friends who live more centrally in Melbourne, and who work centrally as well, and neither of them own a car. Likewise, the friends I saw in Sydney were a couple with just one car between them. The people I’m talking about are all professionals, but they manage to get by with fewer cars then they would in Auckland. There’s a real cost saving there.

This observation also comes through in the census data. The average Auckland household has 1.7 cars, compared with 1.6 in Melbourne and 1.5 in Sydney (actually, the figures will be slightly higher than that… I’ve assumed that all households with “three or more” motor vehicles only have three).

Better transport options – public, active modes and so on – make all the difference. Auckland is very well placed to make some big changes on that front, a point Peter made very well here. We just need to take advantage of those opportunities.

P1000031 small

Don’t forget to publicise the shiny new things. Not that this tram was particularly shiny, but you get the idea.

Metro Rail Networks/ City Rail Link equivalents

Of course, and as we’ve discussed previously on the blog, Melbourne and Sydney both have much more extensive train networks than Auckland. They’re also adding new lines as we speak – the Sydney routes map below shows two new lines currently under construction. The Melbourne map doesn’t show what’s currently being built, but the Regional Rail Link is underway and due for completion in 2016.

Also visible from these two maps, of course, is that both Melbourne and Sydney have their own version of the City Rail Link – looped track through the city centre. Brisbane and Perth do as well, for that matter… more on those in another post.

Smart card bundling

Melbourne has recently stopped accepting cash or paper tickets on all public transport services. You’ve got to have a smart card, called “myki”.

A myki costs AUD $6, and you can also buy a “myki Visitor Value Pack” for $14 – it’s preloaded with a day’s worth of unlimited Zone 1 travel (covering the CBD and most of the inner suburbs where tourists would want to go). However, the thing I really like about this pack is that it bundles the myki card with discounts for 15 of Melbourne’s major attractions, including the aquarium and Eureka Skydeck. The discounts are pretty good in some cases, up to around 20% off admission.

This is a great way of getting myki cards into the hands of tourists who might otherwise be put off by the fact that they can’t pay with cash when they’re only in town for a short visit. It shows a pretty good understanding of consumer behaviour, and it’d be good to see something similar here – how about it, Auckland Transport/ council? For starters, there are the council-run attractions such as the zoo and museum… Or for that matter, why don’t the private sector guys – Kelly Tarlton’s, Skytower, and so on – get the ball rolling on this?

*Update – as Matt wrote this morning, it turns out that AT are already working on this: “concept development for 1/3/7 day and customized HOP cards for visitor / tourist PT and tourist attraction discounted access is nearing completion”, and AT are hoping to release something for January 2015 to tie in with the next Auckland Nines. Good stuff!

Variable quality cycling infrastructure

Melbourne has some pretty good quality infrastructure, with a number of separated cycle paths and trails, and a large network of bike lanes. However, the city is let down by the Australian laws which require cyclists to wear helmets – as for New Zealand. According to, which has a wide range of resources on the topic:

In Melbourne, surveys at the same 64 observation sites (PDF 535kb) in May 1990 and May 1991 [before and after the introduction of compulsory helmet legislation] found there were 29% fewer adults and 42% fewer child cyclists (36% overall). Each site was observed for two 5 hour periods chosen from the four time blocks of weekday morning, weekend morning, weekday afternoon and weekend afternoon, representing a total of 640 hours of observation. The weather was broadly similar for both surveys. Victoria introduced compulsory bike helmet legislation in late 1990.

In the first year of compulsory helmet legislation in Victoria, child cycling went down by 36% and child head injuries went down by 32%. Surveys taken in May/June 1990, 1991 and 1992, reported by Cameron et al. (1992), indicated that total children’s bicycling activity in Victoria had reduced by 36% in the first year of the helmet law, and by a total of 45% in the second year.

There’s some more on this topic here – written, funnily enough, by a libertarian think tank. It was good to see the ACT party picking up on this earlier this year, and saying their policy would be to scrap the helmet law.

P1000030 small

A bike hire scheme run by a hotel called The Olsen – not sure if it’s available to the general public

Stuff happening

There seemed to be cranes everywhere in the Melbourne and Sydney CBDs – reflecting a country which didn’t have the same slowdown we had here in New Zealand. Of course, and as reported by the Herald, we’re starting to get things going again in Auckland as well. Construction activity is picking up in many parts of the city and in most sectors.


White elephants

As many will know, the Sydney monorail was decommissioned last year, after just 25 years of operation. I’m no expert on monorails, but according to a newspaper article from the time, light rail would have cost 33% less, and could have carried 60% more passengers per hour. And now the monorail’s been torn down, so the government can put in light rail after all. Go figure.

P1000269 small

There’s probably a couple of lessons that can be taken out of this. Firstly, monorails tend to be a waste of money. Secondly, and more importantly, it’s important for public (or private, for that matter) transport infrastructure to be well thought out, and provide value. This is why our Congestion Free Network delays investment in some public transport projects which we don’t think give good value for money, and brings forward others which do. It’s also why we advocate different solutions for different corridors – heavy rail for some, light rail (potentially) for others, busways for others.

Learning from Melbourne about selling PT changes

We all know that public transport in Auckland leaves a lot be be desired. The majority of existing and forecast trips happen on the bus and train network. Yet we have a bus network whose routes resemble spaghetti that has been thrown against a map and a train system being run using clapped out, 50 year old, noisy and smelly diesel trains. To top it all off we have a mix of ticketing systems that don’t work with each other making it difficult for casual users to make spontaneous trips.

The positive side however is that we are actually doing something to address it. The proposed new bus network seems to have received a lot of support from the general public, even through the submission stage and is set to roll out over the next few years. Electrification of the rail network is well under way and the first of our new electric trains are under construction and should start arriving from August onwards. Lastly while it appears to be going extremely slowly, integrated ticketing has started rolling out and integrated fares are a key part in making the new PT network work.

Assuming everything sticks to plan, within three years the PT system we have won’t resemble anything that we have today. There is probably not a city in the world that is undergoing so much transformational change to so much of its PT systems all at once. This has led Patrick to call the process we going through, “The Great Upgrade”.

But as with any major change, it invariably causes disruptions to everyday users. The rail network is a prime example where increasingly levels of disruptions, from both electrification and our outdated rolling stock are putting passengers off using services. This is perhaps the biggest challenge that Auckland Transport faces right now, not just addressing falling public transport patronage, but working out how to bring customers “along for the ride” while so much change happens.

I suspect that one of the keys areas that they will need to address is how to clearly articulate the changes. Explaining not just that change is happening but why it is happening, how it will happen and most importantly what it will mean for users.

A great example of the kind of level of detail that AT really need to be putting out comes from Melbourne with their rail development plan. The video that accompanies the plan is clear, even giving what the future routing options will be something AT won’t even talk about with the CRL and a much smaller rail network.

While the video is talking primarily about Melbourne’s rail network, something similar for Auckland, to cover all of the changes planned across all modes is desperately needed. I suspect that only by really bringing the general public “along for the ride”, showing that the changes will lead to a much better PT system, will AT manage to retain patronage through this difficult period.

Have your say on where and how Auckland sprawls

As I blogged about a few weeks ago, the Council is considering different options for Auckland’s future “Rural Urban Boundary” in the south – as this area was highlighted in the Auckland Plan as being suitable for significant urban development. Digging through the Council’s website, I have found that they’re now seeking public feedback on the different options. Here’s an explanation:

Auckland’s population is growing rapidly. Over the next 30 years an additional million people are likely to live in Auckland. In southern areas of Auckland, about 7,000 babies are born each year. As we grow, our children will need places to live and work.

The Rural Urban Boundary (RUB) will identify greenfield land for urban development and the 30 years of growth projected in the Auckland Plan. It is part of an intention that the Unitary Plan provide for up to 40 per cent of new dwellings to be located in rural towns and villages, greenfield areas and other rural areas, as well as opportunities for the remaining growth to locate in existing urban areas.

The need is to provide adequate room for growth while protecting the things that Aucklanders hold special, such as the natural environment, heritage, productive rural land, valued coastal areas and sense of community.

For the south, it means investigating which greenfield areas could best be used to provide up to 55,000 dwellings of the total 400,000 needed across Auckland, along with business land for up to 35,000 jobs. Five options for where houses and businesses may go are available for public feedback.

The RUB will be included in the Unitary Plan, the rulebook determining where development will occur. We want to hear your views on a range of preliminary options for this long-term development.

All the different options involve massive change for the area – urbanisation of large tracts of what is in my understanding pretty top quality rural land for farming. Here are the options:

Locating most of the growth around the railway line is obviously a no brainer (though it will require additional stations compared to what’s proposed in the extension of electrification to Pukekohe project), so the Karaka North options probably scores lowest in terms of closeness to the railway line. The “rail focus” option would have the interesting result of making Pukekohe no longer a separate satellite down, but the southern edge of a continuous sprawl of urban development – it would be interesting to see how that would go down with the locals!

Stepping back from comparing the different options though, I think there’s a more compelling question to ask in terms of why we are proposing so much sprawl, when there are so many untapped opportunities to intensify throughout the existing urban area. In relatively recent times Melbourne went down the path of opening up massive tracts of land for urban sprawl – with some interesting results:

MELBOURNE’S urban fringe has been swamped with 35,000 unsold homes, prompting warnings the glut could trigger a further slump in property values, and fuelling criticism of the Baillieu government’s ”crazy” decision to expand the city’s boundary.

The stockpile of unwanted housing in many of Melbourne’s newest suburbs has led to warnings by some planning experts that ”suburban ghettos” could emerge on the city’s fringe, creating a social divide.

Of the record 55,290 unsold homes in Melbourne in June – the highest number of any capital city in Australia – most were concentrated in about 50 suburbs on Melbourne’s periphery, where more than 60 per cent of all unsold homes in Victoria are located, according to data from SQM Research.

Opening up all this land on Melbourne’s periphery has clearly been ignorant of the fact that most of the demand is to live in their inner suburbs – just like Auckland. This mismatch has prompted fears of effectively creating two different Melbournes – a highly functional, wealthy and popular inner city and an increasingly isolated, ghettoised outer city.

Returning to Auckland, planning for 150,000+ people living south of Papakura seems something of a recipe for disaster – contributing to the increasing polarisation of Auckland between the haves in the inner areas and the have-nots further out. My alternative of focusing on the provision of significant additional dwellings in Auckland’s “middle suburbs” – providing opportunities for those who would typically have to live further out to enjoy the benefits of relatively inner-city living, if they’re prepared to cope with living in terraced houses or other semi-detached typologies could instead ‘stitch’ back together the inner and outer and reverse the process of polarisation that more sprawl is only likely to accentuate.

While many of these questions may be somewhat outside the scope of providing feedback on the Rural Urban Boundary options, perhaps it might stimulate some discussion around at least minimising the amount of land opened up for sprawl and then pushing back well into the future the actual ‘release’ of that land for urbanisation. Feedback closes this coming Friday and can be made online.

Dumb Ways to Die

This has been going around the net for a few days now but still worth posting here in case anyone hasn’t seen it. It is a campaign launched by Melbourne Metro to warn of the dangers of trains.

This follows another interesting advertising campaign from Australia where Queensland Rail were promoting rail etiquette.

How to improve housing affordability?

The Q & A show on TVNZ yesterday morning looked at the vexed issue of housing affordability. Guests Bernard Hickey and Murray Sherwin agreed wholeheartedly that something needs to be done. That’s no surprise really – you have to be living under a rock to not know that housing affordability is a significant problem for Auckland. In recent months we’ve seen the affordability problem spread from home-buying into rentals – with rental prices of inner areas going particularly ballistic.

Of course, when it comes down to the question of “what can we do to improve housing affordability?” things start to get muddied a bit. There are so many questions:

  • Do we allow more land to be developed as greenfields – or does that just mean sprawl and excessively high transport costs for both the people living there and infrastructure costs for Council and the government?
  • Do we make intensification easier – but how can we do that in a way that works better than what has been done in the past (leaky buildings and chicken coop apartments)?
  • What about where people actually want to live – do they want apartments or the “quarter acre dream”?
  • If house prices are so high, then how come the market isn’t building more houses?
  • How much of the debate is about land cost compared to construction costs?
  • Why is it that most new housing built is at the high end of the market, and will building more McMansions in Flat Bush really make a difference to affordability in places where prices are increasing the fastest – like the inner suburbs?

The commentators on this morning’s show suggested a few options:

Speaking on TV ONE’s Q A this morning, business commentator Bernard Hickey and Productivity Commission chair Murray Sherwin said councils and central Government need to take urgent action to bring costs down, whether that be introducing land taxes or opening up more land for development…

…Hickey said the Government needs to consider the “political hot potato” of taxes to reduce the value of land.

“If you really want to come from left field and actually make a difference to land prices, that’s one of the things you could do,” he said.

“Something needs to be done from a central and local government point of view to improve affordability, particularly in Auckland. Otherwise it’s going to continue to be a structural weakness in our economy and the cause of, frankly, social strife.”

Sherwin said councils need to work with developers to make more land available and build low cost houses.

“That can come about by more greenfields development, so more urban expansion, if you like, or intensification within existing limits. I’m perfectly relaxed about which way it goes, but whatever we do, we need to be able to provide affordable houses, so that means lower-cost houses than we’re doing now,” he said.

And then some ideas from Labour’s Annette King:

Labour’s housing spokesperson Annette King has said the Government should be thinking about big building schemes with public-private partnerships.

Sherwin said that is an idea worth considering, with research showing there are few New Zealand companies that build houses on a large scale.

“The analysis we had showed, I think, five companies in New Zealand that build more than 100 houses a year, and about 4600 building companies that do more than 1 house a year mostly. It’s in that sort of order. So we just don’t get the economies of scale,” he said.

“We don’t do large developments, and there are very few entities, very few companies that have the balance sheet that will withstand the costs involved in putting up a large subdivision of the sort that you see in Australia, the US, UK, Europe and elsewhere.”

I’m more interested in the land cost part of the debate (rather than construction costs), because it generally relates quite strongly to questions of whether Auckland should grow through intensification or sprawl – discussion which has a huge transport impact. As I noted in this previous post, within the land-cost side of the debate there are two lines of argument – both of which have some merit:

  1.  Increase the supply of housing across the board, because increasing supply should bring prices down. As most new housing tends to be at the top end of the market this is likely to mean building more high-value housing (unless a compelling effort is made to change this) in the hope that the increase in supply will lower prices across the board.
  2. Specifically focus on increasing the supply of affordable housing. As most new housing constructed is not “affordable” a concerted effort is likely to be needed to ensure the market provides this particular type of housing.

I tend to think that if we are wanting to make a difference to affordability in the short term, then the focus needs to be on the second option as outlined above. More housing in a particular price range needs to be provided. Of course the inevitable next question is “where?” And this is where things get interesting and we inevitably find ourselves in the sprawl versus intensification debate. Greenfield development is arguably quicker and easier than intensification, banks seem to be more willing to lend money to the construction of single detached housing than for brownfield redevelopment and the development industry is more comfortable building this typology because it’s what they’ve always done. Furthermore, in terms of construction cost it’s actually much cheaper than building apartments – on a per square metre basis you can build a luxury home cheaper than a fairly basic apartment building. Unless the developer can sell the apartment they’re building for a price that probably pushes it beyond being “affordable” then they’re going to make a loss on the project – so it won’t happen.

On the flip side, greenfield development inevitably means higher transport costs for those living in these peripheral areas – as well as significantly higher costs in providing infrastructure to service them. My previous post noted the massive additional infrastructure cost of serving peripheral areas – where should that cost lie?

If the developer has to wear this cost, then they’ll pass it on in the sale price and likely push it beyond being “affordable”. If the Council needs to wear the cost, then basically it’s just a giant subsidy for sprawl. Furthermore, there’s always the question of whether people really want to live out in the back of beyond. Melbourne’s new peripheral housing developments don’t seem particularly popular:

MELBOURNE’S urban fringe has been swamped with 35,000 unsold homes, prompting warnings the glut could trigger a further slump in property values, and fuelling criticism of the Baillieu government’s ”crazy” decision to expand the city’s boundary.

The stockpile of unwanted housing in many of Melbourne’s newest suburbs has led to warnings by some planning experts that ”suburban ghettos” could emerge on the city’s fringe, creating a social divide.

Of the record 55,290 unsold homes in Melbourne in June – the highest number of any capital city in Australia – most were concentrated in about 50 suburbs on Melbourne’s periphery, where more than 60 per cent of all unsold homes in Victoria are located, according to data from SQM Research.

As demand has fallen over the past year, the number of outer suburban homes with ”For Sale” signs has jumped by almost 40 per cent.

Factors thought to be driving the surge in home listings include mortgage stress, poor infrastructure and transport services in outer-lying areas and limited local job opportunities.

I don’t think it’s particularly difficult to imagine Flat Bush, Karaka, Silverdale North and other recent peripheral areas ending up in a similar position if a heap of land is opened up for greenfield development.

Perhaps what this all actually means is that there is no silver bullet for improving housing affordability. We obviously need to make intensification a bit easier, but maybe more at a low-scale (which is why it’s so heartening to hear that the Council is thinking about getting rid of density limits in residential areas to enable the splitting of existing houses) than just thinking we’re going to end up with a whole pile of apartment buildings to save the day. Also, it seems like the problem isn’t going to solve itself without some sort of public-body intervention – either in the form of subsidising infrastructure to service peripheral areas of sprawl, or to make up the difference so that apartment/terraced house building in the inner areas can make financial sense for developers. Or for the government and/or council to get more directly involved in development, with the financial risk that brings.

And that will really be the crunch issue. How much are we really concerned about housing affordability? Enough to spend some serious public money on making a difference – or not?

New cycle superhighways for Auckland?

A short while ago I asked for an update on the Auckland Harbour Bridge shared cycleway and walkway from the good folks running the Getacross campaign, Kirsten Shouler sent me the following summary of the project and it’s current status:

Since May 2011, NZTA and the AHB Pathway Trust have committed significant resources to identify and finalise the optimal design for a walking and cycling Pathway on the Auckland Harbour Bridge. NZTA has now signed off on the structural feasibility of the Pathway concept design. NZTA has advised they won’t allocate funding through the NLTP to construct walking and cycling access across the AHB, but they will permit the construction and operation of the Pathway as a community facility.

What happens to the Pathway now is in Auckland Council’s hands. On May 15, Auckland Council’s Transport Committee will decide the future of the Pathway project. A potential funder has been identified, and a naming rights sponsor lined up. There is virtually no cost to Auckland Council but we need Council on board as a project backer to finalise the contracts.

The AHB Pathway Trust is asking for Council to consider  the Pathway proposal as a transformational project and as a Public Private Partnership (PPP) which is funded by revenue from a toll on users and the sale of naming rights to the Pathway.

The Pathway is an example of a private initiative which has a very strong foundation, including agreement with NZTA and a robust business case….It will:

resolve the most critical gap in Auckland’s walking & cycling network

  1. provide a flagship project for uptake of walking and cycling in Auckland (similar to the way Britomart Station provided a catalyst for rail patronage)
  2. deliver a significant tourism attraction that will encourage longer stays by visitors to Auckland
  3. use an innovative funding proposal in line with goals of with Getting Auckland Moving & the Auckland Plan
  4. provide projected net surpluses  – which are estimated to be substantial
  5. enable Auckland Council to take ownership of the Pathway once the construction loan is paid off.

As you can see it all sounds like very promising stuff. They have NZTA on board allowing the structure to be added to the bridge and private funder ready to pay for construction. All it needs now is the OK from Auckland Council and the pathway becomes a reality. Fingers crossed for May 15th, great job Getacross!

Now it would have been good if the various agencies responsible for transport in Auckland could have somehow funded this out of their not insignificant budgets, but there’s no point splitting hairs if this PPP model is the one that actually gets it built. At the end of the day a small charge for a great ride and a wonderful view isn’t such a bad thing… although I must wonder if we’ll have the dubious honour of the only bridge in the world where it is free to drive across but a tolled for those on foot!

Anyway, this pathway will make an excellent addition to the transport and tourist infrastructure of our city, and as Kristen says it will end up in the hands of the people once the construction loan is paid and the investors have made their money back. Looking at that list of benefits, I really think numbers 1 and 2 are the killer outcomes of this project. As a shoreboy I can say I would love the opportunity to walk or ride into the city and home again, and there is obviously a huge problem where a full quarter of your city cannot access the other three-quarters without using motorised transport (or a lengthy swim!). But the flagship-project effect is perhaps even more important, it’s one thing to simply meet the current demand for walking and cycling, it’s another altogether to open that option up to a lot more people, to advertise it, promote it and to make it a real part of the way people get around our city.

Like most other Aucklanders I cycled around my neighbourhood a little as a child, but gave it up in my early teens in favour of being driven – and later driving myself – everywhere instead. For a good ten or twelve years I didn’t give cycling another thought, not until I moved to Melbourne. There I chose to live car free and could do so relatively easily with a transit pass and some comfortable walking shoes, but in some cases I found it quite time consuming to make trips across town that were a few kilometres in length. They would take thirty or forty minutes on foot, and often just as long on the tram once you factor in a little wait time and a connection or two. The solution I discovered, along with thousands of other Melburnians, is cycling. Cycling has gone from strength to strength there, not only in sheer numbers but also in image. Hipster kids aren’t concerned with cool cars, but you should see the flash fixies and cruisers lined up at the pubs and cafés all over inner Melbourne every afternoon. In Melbourne riding bikes is not only effective, its fashionable too.

They may be latte sucking hipster douchebags, but they're latte sucking hipster douchebags who ride bicycles.

One thing I noticed in Melbourne is that they have well used shared cycleways along every motorway, rail and river corridor in the city, and quite frankly there’s no reason we can’t do the same. We already have our own prototype along the Northwestern Motorway, and a few other short sections, so why can’t we do the same on the motorways and rail lines to the north, south and east too?

The great thing about shared cycleways is that they are very cheap to build: all you need is about two metres or so of spare width out of a corridor, the design geometry is pretty lax and if you get stuck in a tricky pinch point there’s no real problem diverting the route onto a nearby street or using a pedestrian crossing. As a general guide a price of $1 million a kilometre would be generous for a cycleway, yet there is so much potential for benefits. The Northwestern Cycleway currently carries over six hundred people a day, one wonders if you could add anything like that to the motorway for a mere million per kilometre? The BCRs of cycle projects must be huge!

At this point I should probably make a little observation. In Melbourne I used just regular streets and roads to travel about on my business, and only occasionally used the flash cycleways for a bit of sport on a sunny day. So is this the right path to take? Instead of corralling cyclists into off road paths so they can get out of the way of good honest car drivers, should we aim to normalise cycling on road so that people can just ride anywhere they so chose? Well yes and no. The ability to safely and easily cycle on any street to any destination should be the end goal, but we can’t get there without off road cycleways. The simple fact of the matter is that cycling is currently a niche mode in Auckland and it’s really only done by enthusiasts. To broaden the appeal and normalise cycling we need to get normal people on to bikes, and the best way to do that is to provide a safe and easy network of cycleways. Perhaps people start riding on them for a bit of fun, or they buy a commuter cycle to fly past the motorway traffic, but at the end of the day they get a bike and start riding it. Once we have that off road network stretching out to the four corners of the city, then it’s time to get serious about on street riding.

There’s certainly room along the Northern Motorway once the bridge crossing is complete, there are a few sections of board walk along the eastern rail line that could be extended into a route all the way from Panmure to Quay St, there is space along the Southern Motorway for something similar down to Otahuhu and beyond. In fact our city is covered with transport corridors that could have a smooth concrete path added to one side, it should be a requirement of any new or upgraded motorway to build one in. Another interesting idea I had heard is about the potential to leverage off the electrification works on the railways. Apparently they have had to establish a series of small access roads and work sites all along the railways to install the new equipment, so why not link up a few of these access ways and pave them into long corridors for cyclists and walkers? It can’t cost a lot and the pathway would still provide excellent access for maintenance crews in the future.

So what’s holding us back on these cycle superhighways, why aren’t we spending the relative pittance to cover our city in a network of cycling and walking paths? It might only take a few tens of millions to get a thousand commuters off the road at peak times, so why the hell not? Let the commuters of Auckland burn fat instead of oil, and perhaps even have some fun while doing it!

Auckland’s PT: expensive and poorly used

An Auckland Council report on various aspects of our transport system makes a number of comparisons of Auckland’s public transport system with various cities in Australia, Canada and the USA – as well as Wellington. The cities used to compare Auckland against, including their population and what different technologies their PT system includes, is shown in the table below: These are a good range of cities to compare Auckland’s performance against, in my opinion. We have a number of cities with fairly similar population densities to Auckland (Sydney, Vancouver) cities with a similar population (Portland, Calgary, Adelaide) and cities with a variety of PT systems. On the key statistic of boardings per capita, it’s clear to see that Auckland is the very bottom city on this list. The per capita boardings of the Canadian cities are pretty amazingly high.

If we just compare with the Australian cities (and with Wellington) we can also see that while Auckland’s patronage has grown over the past decade, it hasn’t increased as much as many other Australian cities, particularly Melbourne and Perth: It’s interesting to remind ourselves that Melbourne has a railway link tunnel fairly similar to what’s being proposed in Auckland, and the ability to get heaps of people into Melbourne’s CBD by train has played a major role in the revitalisation of downtown Melbourne over the past decade, obviously contributing significantly to its rising patronage.

If we look at modeshare comparisons, once again Auckland lags behind the other cities – although it must be remembered that this is 2006 data and undoubtedly things will have changed in Auckland since then. It’s a shame that the Canadian data wasn’t able to be broken down by PT type, but for many Australian cities it’s notable that generally rail has a similar, or greater, modeshare than buses for peak time travel. Auckland is very much the exception to that rule, which probably highlights a PT system that is a bit too dependent on buses (due to our historic neglect of the rail network).

So why are things so bad for Auckland? Setting aside the obvious historical reasons, it’s clear by comparing Auckland with these various overseas cities that we provide a lower quality and quantity of services than elsewhere, but we charge the highest price on a per kilometre basis. Firstly, the quality & quantity: In short, we’re providing a pretty rubbish service compared to all the other cities used in the comparison. But what are we charging compared to all these other cities: So despite having the lowest quality PT service out of all these comparative cities, we then go and charge passengers the highest fares out of any of the cities. Not content with that, we are also then one of the few cities not to have a properly integrated ticketing/fares system. The reasons for our low patronage levels are starting to become pretty obvious I think.

Another element to consider is the cost-effectiveness of our service delivery. Obviously the cost of providing our rail system is pretty high, because we’re running incredibly old trains and use an incredibly outdated, overly labour-intensive, ticketing system. Our bus service seems relatively normal to provide on a per kilometre basis: While our services don’t seem particularly expensive to provide on a per kilometre basis, because we have the lowest average loadings of our PT vehicles, Auckland then stands out as close to the most expensive city to provide public transport on a per-person basis: Looking at the graph above it seems fairly obvious that the key way for Auckland to improve the cost-effectiveness of its public transport network is by increasing passenger loads and thereby reducing working expenses per passenger kilometre. Nevertheless, because our fares are so incredibly high on a comparative basis, Auckland’s farebox recovery level actually isn’t bad when compared to many of the other cities: There are quite a few pages of pretty good analysis and suggestions about how we can improve Auckland’s situation towards the end of the document, but for me the information above is extremely helpful in outlining quite a few things:

  • Despite an improvement to Auckland’s PT system over the past decade, we’re still doing very poorly compared to comparative cities in Australia, Canada and the USA. Furthermore, most of those cities have been increasing their patronage at even faster rates to Auckland.
  • Compared to other cities, Auckland’s PT service quality is considered to be extremely low, while quantity of service provided is also fairly low (although somewhat understandably given our low use). Improving service quality (better reliability, faster speeds, value for money etc.) is likely to be the most effective way of increasing use.
  • Compared to the other cities, Auckland’s fares are incredibly high – particularly as we don’t have integrated ticketing. Making fares for unlimited daily, weekly or monthly travel quite a bit cheaper is likely to be quite effective at boosting patronage and making PT seen as better value for money. Peak/off-peak pricing splits are also likely to be a good idea.
  • Compared to Wellington in particular, we are paying too much for the provision of services on a per kilometre basis. Compared to all cities we’re paying too much on a per passenger basis. This suggests that we’re running too many empty/underloaded buses or trains around, particularly during peak times when it’s most expensive to get a vehicle on the road. I also wonder whether this makes a good case for a publicly owned bus company to do what Kiwibank has done to the banking industry and keep prices a bit sharper.
  • Our farebox recovery levels are actually quite high compared to many overseas cities, suggesting that efforts to improve cost-effectiveness should come from boosting patronage through service quality improvements, rather than by hiking fares.

This pretty much matches up with what I’ve thought for a long time (although I am surprised how comparatively high Auckland’s fares are). One hopes that now Auckland Transport and Auckland Council have all this information, it will become more obvious what interventions will be most useful. Things like better bus priority measures, a more efficient bus network, a more intensively used rail network and and improved ticketing system.

I hope that eventually we can get off the bottom of all these public transport statistics.