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Location affordability in New Zealand cities – is greenfield growth really affordable?

Several weeks ago I attended the annual New Zealand Association of Economists conference in Auckland. Geoff Cooper, Auckland Council’s Chief Economist, had organised several sessions on urban issues, and as a result there was a lot of excellent discussion of urban issues and Auckland’s housing market. You can see the full conference programme and some papers here.

At the conference, I presented some new research on housing and transport costs in New Zealand’s main urban areas. My working paper, enticingly entitled Location Affordability in New Zealand Cities: An Intra-Urban and Comparative Perspective, can be read in full here (pdf). Before I discuss the results, I’d like to thank my employer, MRCagney, for giving me the time and the data to write the paper, along with several of my colleagues for help with the analysis, and Geoff Cooper for suggesting the topic and providing helpful feedback along the way.

The aim of the paper was to provide broader and more meaningful estimates of location affordability that take into account all costs faced by households. In my view, widely-reported sources such as Massey University’s Home Affordability Report have too narrow a focus, looking only at house prices. However, a range of research has found that transport costs vary between different locations depending upon a range of factors such as urban form, availability of transport, and accessibility to jobs and services. And transport costs are pretty large for many households!

I used two methods to provide a more comprehensive estimate of location affordability in Auckland, Wellington, and Canterbury. First, I used Census 2013 data to estimate household housing, car ownership, and commute spending at a detailed area level within each of the three regions. This allowed me to estimate variations in affordability between areas within individual regions. Second, I used household budget survey data to get a sense of how New Zealand cities stack up against other New World cities.

My main findings were as follows:

  • First, rents (a proxy measure for housing costs) tended to fall with distance from the city centre. However, commute costs tended to rise with distance – meaning that outlying areas were less affordable for residents once all costs are included. This was consistent with previous work on location affordability in New Zealand and the United States.
  • Second, international comparisons suggest that Auckland and Wellington have relatively high housing costs and that this may be driving some of the affordability findings. While this finding lines up with previous research that’s focused on house prices alone, it’s important to note that the location affordability estimates suggest that a focus on greenfields growth alone may not save households money.
  • Third, while I didn’t identify any specific policy recommendations, I’d recommend that (a) policymakers should consider all location-related costs when attempting to address affordability for households and that (b) further research should focus on removing barriers to increasing the supply of dwellings in relatively accessible areas.

And now for some pictures.

These maps show two measures of location affordability within Auckland. The left-hand map shows estimated housing costs (i.e. rents) as a share of median household incomes at a detailed area level. Broadly speaking, this map shows that expected housing costs fall between 20% and 30% of household income in most of the city, although some areas are relatively less affordable.

The right-hand map, on the other hand, incorporates expected car ownership and commute costs. Overall location affordability is lower throughout the city. Expected housing and transport costs rise to 40-50% in areas of west and south Auckland, as well as the entire Whangaparoa Peninsula. The most affordable areas for their residents tend to be in Auckland’s inner isthmus suburbs.

Auckland map 1 Rent share Auckland map 2 HT share

(Click to enlarge)

I’ve also combined this data into a graph that presents location affordability by distance from Auckland’s city centre. The bottom (blue) line shows housing costs as a share of median household income, weighted across all area units within each 2-kilometre concentric circle radiating outwards from the city centre. It shows that, on average, households spend a similar share of their overall income on housing costs in both close-in and outlying suburbs.

The top (red) line shows that combined housing, car ownership, and commute costs increase as a share of household incomes with increasing distance from the city centre. On average, households that live further out of Auckland spend more on location-related costs, as lower lower rents are offset by added commute costs.

Auckland H_T distance chart

The results for Wellington and Christchurch were broadly similar – although with a few interesting differences related to their urban form and transport choices. However, as this is the Auckland Transport Blog, I’m going to suggest that you read the paper to see those results. It’s long, but it also presents a lot of new data on housing and transport costs in New Zealand.

Robert Ellis’s apocalyptic vision of Auckland

This blog has often written about Auckland’s 1950s-era motorway development plan, which transformed the city in fundamental ways. New Zealand painter Robert Ellis was one of the first to grasp the significance and character of that transformation. His Motorway/City series, painted in the 1960s and 1970s, shows roads invading and dividing urban space. (As they proceeded to do in real life.)

The Auckland City Gallery is about to host an exhibition of Ellis’s paintings that will run from 9 August 2014 to 15 March 2015. From the press release:

Opening on Saturday 9 August at Auckland Art Gallery Toi o Tāmaki, Robert Ellis: Turangawaewae | A Place to Stand is the first solo exhibition in a public museum by senior Auckland artist, Robert Ellis in his ‘hometown’. Including many of his most important paintings, the exhibition will present Turangawaewae Maehe 1983, painted in 1983, a gift from the Friends of the Auckland Art Gallery to mark their 60th anniversary this year.

‘Together with Auckland artists Colin McCahon, Milan Mrkusich, Pat Hanly and Gretchen Albrecht, Ellis is nationally regarded for producing ambitious paintings on a large scale,’ says Auckland Art Gallery Senior Curator New Zealand and Pacific Art, Ron Brownson. ‘As a major figure, Ellis’ art addresses many cultural issues. His subjects range over tensions between transport and urbanism, contrast ecology with spirituality and look at the on-going nature of Māori-Pākehā relations.’

Here’s one of the more well-known works from Ellis’s Motorway/City series, which can usually be seen in the City Gallery:

Now, I’m an economist rather than an art historian, but Ellis’s vision of the city seemed to be something new in New Zealand art. New Zealand artists had not tended to focus on cities – think of all the attention Colin McCahon lavished on New Zealand landscapes – and when they did, it was to present vague, idealised scenes. Ellis was different. He showed the city in the process of expanding and mutating, and in the process creating a different New Zealand.

Here’s number 15 from the Motorway/City series. It contrasts New Zealand’s stereotypically bucolic rural space (below) with the encroaching city (above). The latter is dynamic, disordered, vaguely sinister. (What was it that Allan Ginsberg wrote about “Moloch whose love is endless oil and stone”…) And it is ceaselessly growing into the countryside.

In other paintings, Ellis depicts the city not as the invader of a rural landscape but as an invaded space. Motorway/City number 22, for example, appears to show an existing urban fabric, complete with a more or less rectilinear street grid, that has been overwritten by the smooth curves of the motorway. The pre-existing city has rendered incomprehensible in the process – notice how the lines of the motorway draw in your attention instead.

I’m often struck by how quickly artists and writers grasp emerging truths, especially when compared with technical experts of various stripes. Robert Ellis’s art was an especially prescient view of New Zealand cities – painted at a time when New Zealand had barely begun to think of itself as an urban country and when the promise of the motorway was still novel enough to be seductive. I highly recommend going to see the upcoming exhibition.

SHA’s and Transport Investment

A few days ago I looked in depth into the locations of the Special Housing Areas that have been released so far, allowing for over 33,000 new houses. The locations of these are not spread evenly around the city, or evenly amongst the greenfield areas. Therefore this should cause the council and Auckland Transport to rethink some of their priorities for transport investment. Firstly this should give further impetus to the need for some important Congestion Free network projects, which will benefit existing areas and new developing areas.

There are nearly 9,000 dwellings to be built to the North-West of the city, in areas like Kumeu. This area is currently hopelessly served by public transport. For example it takes nearly 1.5 hours to get the bus into town at peak times, and on weekends it is not much better as bus operates a hopelessly windy route, diverting through Henderson on the way from Westgate to the City! The extra development planned adds extra emphasis to the case for the North-Western Busway, which would provide a very quick link from the North-West into the city. While some would call for a diesel rail shuttle to be provided, this has been investigated by Auckland Transport but found to be poor value for money. The busway would result in a much higher frequency and much faster services than the rail shuttle, which would take over an hour. The proposed frequent bus network only shows 15 minute frequency to Westgate, however the scale of development should mean the frequent service should soon be extended to Kumeu and Huapai. The developments in this area are likely to be low density, so sites for several park and ride stations need to be investigated. These types fringe areas are the right type of areas to expand park and ride, not valuable urban sites. The busway would not just benefit new developments, but also existing suburbs along the North-Western like Massey and Te Atatu.

NW and UH busways

This 9000 houses also covers areas like Hobsonville and Whenuapai. Again the only route between the North-West and the North-Shore is an infrequent and wandering service that takes well over an hour for a 20 minute car journey. The new network offers some improvement, with a slightly more direct service, however still designed for local traffic rather than trips between West Auckland and the North Shore. This is where the Upper Harbour busway we proposed in our Congestion Free Network comes in. This will also be useful for people living in the Kumeu and Westgate areas as not all these people will be working or want to travel to the CBD, so quality links to centres in the North Shore are important too. Again the form of development is likely to mean that several busway stations with park and ride will also be required at the major motorway interchanges.

Through the southern corridor over 4800 dwellings will be built. 2200 of these are in the Addison area, which hugely strengthens the case for the Addison station that has long been proposed to serve that growing area. Another 1800 of these are in the Franklin area, which further builds the case to ensure the electrification extension to Pukekohe proceeds soon. 1000 of these are at a totally new greenfield site as Wesley, north of Paerata. As this is 5km north of Pukekohe a new station at Paerata/Wesley should proceed here with some urgency.

The 5000 dwellings to be built in the Flat Bush area will further add to congestion is the already car dependent south-eastern suburbs. While Flat Bush is in an awkward location in relation to potential rapid transit routes, the Te Irirangi Drive busway would help connect residents to the closest centre of Manukau with its brand new station and tertiary institute, and also to the mall at Botany.


Eastern busways

 

The need to invest in transport projects which benefit these areas, should also show the need to rethink lower value projects across the city. First of all there are less than 900 dwellings north of the existing urban area at Albany, and these are at Silverdale. Note that means there are none on Whangaparoa Peninsular, Warkworth or Wellsford. First on the deferral list should be Penlink, which has a very high cost, high environmental impacts and low economic and transport benefits. It is difficult to see why this project should proceed when there is little growth in the area. A few extra ferries to the city seem like a much better idea to improve transport for people of this area. Deferring Penlink would free up $200 million to spend on much more high value projects. The lack of new development north of Orewa is yet further ammunition against the need for the Puhoi – Warkworth Highway to proceed. The $760 million required for the project should be reallocated by the government to serve areas of Auckland that are actually growing, rather than further delaying or canceling important infrastructure like busways. Across the city there are various other low value roading projects than should be deferred or downsized to free up money for more transformational public transport investment.

Where are the Special Housing Areas?

We now have had 3 tranches of the government Special Housing Areas announced over the past year. The first tranche in October 2013, second in December 2013 and the third in May 2014In brief these are defined areas that allow developments to be fast tracked through special consenting procedures, and the zones and rules from the Proposed Unitary Plan are applied. So far there are 63 individual SHA’s, collectively allowing 33,486 houses. The latest monitoring report shows that 18 of these developments have received a Resource Consent, 4 more applying for a Resource Consent, and another 36 at various pre-application stages.

Consented SHA's However the location and typology of these houses really matters for a variety of reasons. While fringe housing may appear cheaper, once transport costs are taken into account this is not always the case. Housing in existing areas also utilise existing infrastructure and public transport, while this must be added from scratch in fringe areas. Then of course there is market demand and changing trends, over the last few years prices have appreciated most rapidly in the inner suburbs, though this is now starting to spill out all over the isthmus.

Therefore I have looked at the SHA’s using several different measures. Firstly a classification that looks at the type of development land. ‘Brownfield’ means inside the existing built up area. “Greenfield - within the MUL” are developments that are within the Auckland Regional Council’s urban limits. They are new developments from bare land, however will adjoin the existing urban area. Importantly these areas have undergone substantial planning, such as for infrastructure, as there has been an expectation that these sites will be developed within the near future. “Greenfield – outside the MUL” is land that is within the Rural Urban boundary in the Unitary Plan, however outside the MUL. The only planning that has gone on in these areas would be broad brush work during drafting of the Unitary Plan.

Brownfield 13,261 39.6%
Greenfield- within MUL 10,411 31.1%
Greenfield – outside MUL 9,814 29.3%
TOTAL 33,486

The Auckland Plan set a goal of up to 70% of development to be infill, and up to 40% greenfield. However crucially the plan set the current MUL as the boundary from which to measure from, so these greenfield developments are counted as infill! Therefore this is spot on with the Auckland Plan target, though not really the long term intent of where growth should be.

Within the Brownfield developments, these can be further classified into Strategic, Housing NZ led, and private or community led. Strategic areas were identified only in the 3rd tranche. These were wider scale areas that did not have any specific developer interest, however were identified by the council as being well suited for future development and having good existing infrastructure. A large amount of the SHA’s identified in the 2nd and 3rd tranches were led by Housing NZ, which were redevelopments of areas of state housing into higher intensity. However this only leave 3037 developments led by the private sector inside the existing urban area, which is only 9% of the total.

Strategic 3,037 22.9%
Housing NZ 6,418 48.4%
Private/Community 3,806 28.7%
13,261

It is useful to look at the general geographic area of each of the SHA’s, so to do this I have looked at which former council area they would have fallen in.

Auckland City 5,235 15.6%
Franklin District 1,834 5.5%
Manukau City 7,523 22.5%
North Shore 1,535 4.6%
Papakura 4,770 14.2%
Rodney 3,183 9.5%
Waitakere 9,406 28.1%
TOTAL 33,486

This shows up some interesting aspects about the locations of the SHA’s. Very few are in North Shore City, while over a quarter of them are in Waitakere. Also only 16% are in the former Auckland City area which seems to be have the highest housing demand. This area also has the best access to jobs and tertiary education so increasing housing here needs to be a high priority.

Within the Greenfield developments I have looked further into the locations, and classified into general geographic areas.

North-West (ie Kumeu, Westgate, Hobsonville) 8,950 44.3%
North (north of Albany) 876 4.3%
Southern Corridor (Takanini, Papakura, Pukekohe) 4,834 23.9%
South-East (Flat-Bush) 5,045 24.9%
South-West (Mangere) 520 2.6%
20,225

Once again the large number of developments in the North-West really stands out, while there is only a small number to the north of the city. While this does not cover all the development underway, is does give a good idea where major development will occur over the next 5 years and more.

Another tranche of SHA’s are currently under consideration by the Council’s Housing Project Office, with the timeline as follows.

SHA processWhile their is no opportunity for direct public input, both local board members and councillors have substantial say over which areas get approved. Local board members are able to scrutinize local projects, and all SHA’s have to pass votes in the Auckland Development Committee and the Governing Body.

Looking at the numbers above there seem to be enough sections approved outside the MUL for the time being, but not nearly enough in areas of high demand. Therefore it would be great to see the 4th tranche being focussed on existing urban areas, with nothing outside the MUL.

The locations of these developments should help shape where infrastructure and transport investment is focussed coming into the next Long Term Plan. Areas of little growth should see projects move down the priority list, and sometimes disappear from the 10 year plan altogether. The speed of development in land outside the MUL is likely to cause the council and other infrastructure providers some issues. The effects of these SHA’s will be the subject of my next post.

NZ Initiative’s ideology short-changes compact city debate

The New Zealand Initiative last night released a think piece on the trade-offs of urban form – entitled “Up or Out“. Given the extensive recent debates in Auckland over the Auckland Plan and the Unitary Plan, plus the ongoing issue of housing affordability, it’s helpful to have further analysis and research in this area. Unfortunately, it seems as though some ideological assumptions behind what the NZ Initiative has come up with mask many of their conclusions – somewhat ironic given that one of the key thrusts of the piece is (valid argument) that we need to step back from assumptions and look at the data.

The general approach of the paper is reasonably logical – it analyses some of the benefits of a compact city approach, questions whether they hold true and then compares those benefits to some of the costs. Firstly, looking at agglomeration:

Part of this debate has centred on the agglomeration benefits that come from urban proximity. This is an important discussion point because agglomeration is often cited by planners as the clincher in their argument for compact cities. We do not reject the economic advantages to situating businesses and consumers closer to one other. After all, people and firms in urban areas tend to be more productive than their counterparts in less well-populated areas.

However, these advantages are only detectable as agglomeration benefits when the positives of proximity outweigh the costs of density. This is a balance that any city, regardless of urban form, has to strike if it is to survive. And yet this report shows that the restrictive planning regulations required to deliver the utopian vision of a compact city often tips the balance towards the cost side of the urban ledger.

You can tell from the use of the phrase “utopian vision of a compact city” that they have started out from an ideological position that density is bad.

It does make some sense that agglomeration benefits would have a limit. Yet if we look internationally there are much much larger cities and much much larger urban cores than Auckland – and we find that often it’s the larger cities and larger urban cores which are growing the fastest. The paper even references the significant agglomeration benefits from the CRL’s business case before going on to counter-intuitively suggest that agglomeration benefits in central Auckland appear to be on the wane.

However, the main argument is that the two main negatives of congestion and higher land prices need to be balanced against agglomeration to work work out whether building “up” or “out” is the right approach. Let’s work through the arguments made by the paper on each individually:

Congestion is one of these costs. Traffic congestion data from the United States shows that the most congested metropolitan areas are often the ones that have chosen to pursue compact development. Additionally, quantitative research into transit investments over a 26- year period using data from 74 US metros shows public transport had no long-term impact on road congestion. This stands at odds with the perception that high transit penetration is the solution, not an aggravator of gridlock.

Digging a bit deeper into how they arrived at this conclusion, it seems as though the same methodological mistakes around the measurement of congestion are being made as occurs with the Tom Tom surveys – focusing solely on congestion severity and ignoring issues like congestion exposure. The key point here is that low density car dependent cities may have less intensity/severity of congestion (because they’re so spread out) but whatever congestion there is has to be experienced by everyone because there are no alternatives. In a place like New York, the roads may be congested but to the vast bulk of people this doesn’t matter because they’re walking, cycling or using the subway.

The other gigantic flaw in the paper placing so much emphasis on the issue of congestion is the inconvenient analysis undertaken a couple of years ago which shows the most congested US cities are actually the most economically productive. While it’s more likely economic success causes congestion than the opposite, the congestion doesn’t seem to be holding these places back.

congestion-gdp

The key takeaway from this is that while congestion is annoying and perhaps theoretically should hold back economic performance, if we look at different cities across the USA it doesn’t seem to be doing this. It’s also interesting to compare how we view congestion on the transport network to other areas of society. For example people will choose to go to a restaurant that is busy, even if it involves waiting rather than go to an empty one next door. The crowded and congested restaurant is successful while the empty one is not. If we expand that to a city scale, many people would prefer being in a busy and interesting place with lots of other people than an empty city.

Moving on to land prices, this is seen as the other main negative resulting from a compact city approach that should be balanced against the agglomeration benefits:

Another cost is land. From the perspective of local government in New Zealand, compact cities are desirable because they limit the amount of roading, water and social infrastructure that will need to be provided. Yet by limiting the supply of land, city officials are inadvertently putting a scarcity value on housing in this country, which ranks among some of the least affordable in the world. Equally, the onerous regulations and zoning restrictions required to steer development along the compact model add to the scarcity value of housing. This scarcity value is not limited to housing, and businesses facing higher property costs will pass these on to customers in the form of higher prices, and where they cannot, firms will look to relocate to cheaper areas – a process that is already happening in Hamilton, a beneficiary of fleeing Auckland firms.

We’ve covered off this debate many times before in the past few years as the Auckland Plan and then the Unitary Plan were hashed through in great detail. While limiting the supply of land will theoretically drive up its price, when it comes to housing affordability the issue is the cost of housing more than the cost of land. Furthermore, it’s the cost of housing in particular areas that’s the issue – there’s plenty of affordable housing in Papakura, Clendon, Pukekohe, Waiuku and other far flung parts of Auckland. The huge price escalation is happening in the inner areas – and I can’t quite see how it’s possible to create more land in Grey Lynn or Mt Eden (although of course it’s possible to get more housing out of that land through intensification).

Going back to the paragraph quoted above, what’s particularly odd is the sentence “…the onerous regulations and zoning restrictions required to steer development along the compact model”. Given that enabling intensification is about the removal of zoning restrictions so people have more flexibility to do as they choose with their land, I wonder whether the NZ Initiative has completely misunderstood what planning does and does not do. One is not forced to build terraced houses in the Mixed Housing Urban zone – contrary to popular belief!

The other crazy thing that the paper completely ignores is the gigantic amount of sprawl that has been enabled in Auckland through the Auckland Plan and the Unitary Plan. In one big bang the restrictions on land supply in Auckland have been pushed outwards – even though the result of this is likely to be extremely expensive and not actually what people want anymore. Have the authors been completely ignorant of the Unitary Plan by accident or deliberately?

The paper then briefly touches on health issues – it seems to be cherry picking data and making assumptions based on how cities were in the 19th century to come up with conclusions that seem strangely at odds with what books like “Happy City” suggest. I’ll leave those details to a future post though.

Overall, the paper thinks that it’s come to some grand conclusions:

We have shown through academic research and the historic record that compact cities are not a panacea for the social, financial and infrastructural problems gripping modern cities today. There is no ‘one size fits all’ solution to urban costs, and the sooner we abandon ideology, the sooner we can start developing nuanced solutions to issues like congestion and skyrocketing property prices.

The aim of this report was not to generate specific policy recommendations but to unpack the highly technical argument surrounding urban form changes for the average citizen to participate in the discussion. Still, it is evident at a high level that overly centralised planning and decision making structures are one of the major contributing factors driving urban costs in New Zealand and further afield.

The conclusions are not completely wrong – in highlighting that cities are complex and any ‘one size fits all’ approach is likely to fail. However, in both key areas of critique (congestion and land prices) the paper has made some fundamental oversights – like ignoring the complexities of congestion and its seemingly minimal impact on economic performance, like ignoring the huge amount of additional land supply provided by the Unitary Plan and like ignoring that a key part of the compact city approach is liberalising planning rules within existing urban areas.

Perhaps unsurprisingly, but certainly disappointingly, the paper promises much but inevitably fails to deliver beyond repeating a simplistic ideological perspective on forms of urban growth – falling into the very trap it so merrily accuses others of doing.

What if we really were doing “social engineering”?

An article on Planetizen a few months back highlights an issue often missed in the debates over roads versus public transport or sprawl versus intensification – the fact that for the last century most government spending and policy has supported car use and lower density development. Yet this is seemingly often ignored by those moaning about how planners are supposedly  ‘forcing’ people into dense living environments while transport planners are supposedly ‘forcing’ people onto public transport.

Michael Lewyn, the post’s author, asks an interesting hypothetical question to set up his argument that really public investment and policy (essentially public sector intervention) has for an incredibly long time been tilted towards urban form and transport outcomes epitomised by car dependent urban sprawl:

After reading yet more blather about the “war on cars” or “density-pushing planners” I recently had a thought: what if government really did favor transit and compact development as aggressively as they had favored sprawl in the 20th century?  How different would planning and transportation rules be?…

For example, in the first half of the 20th century, government at all levels spent public money on roads for automobiles, while giving limited or no support to streetcars (which at first were private).  As transit providers began to lose money, government took them over, and the federal government started to support public transit in the 1960s.  Today, the federal government spends about four times as much on highways as on public transit.   As a result of these policies, many cities have weak public transit systems, while many people and jobs have moved to suburbs served by highways.

This cartoon from Andy Singer springs to mind (he has a heap of other great cartoons on many of the issues we talk about on the blog)

Public Investment - Wasteful Subsidy

Some examples are then outlined to give us a bit of an idea about how extremely pro public transport and urban intensification policies would need to go in order to truly counter-balance what has existed for around a century in the USA (and in New Zealand). For transport funding:

So if government completely reversed course in the 21st century, it would reverse funding ratios: that is, spend half a century spending several times as much on public transit as on highways, and then spent another half century completely defunding highways (much as it ignored transit in the early and mid-20th century). 

For how mortgages for greenfield development were subsidised:

In the 1950s, government heavily subsidized suburbia, through Federal Housing Administration (FHA) lending criteria that favored suburbs.  For example, FHA refused to subsidize mortgages in racially diverse urban neighborhoods, and favored new single-family homes (which tended to be in suburbs) over renovating existing homes- a policy that encouraged middle-class homeowners to move to suburbs.  So to completely reverse course, the FHA would have to spend a couple of decades refusing to insure mortgages in any neighborhood built after the New Deal, while subsidizing mortgages in older neighborhoods. 

For density controls:

Since the 1920s, most American zoning codes have mandated that huge swaths of land be limited to low-density residential use, ensuring that many Americans do not live within walking distance of public transit.  To truly reverse this policy, government would have to spend the 21st century mandating that new development be at densities sufficient to support transit, and would require a mix of residential and commercial uses to the extent possible.

And how about parking?

Since the 1950s, most zoning codes have also required that commercial landowners and multifamily dwellings provide visitors with parking lots and garages, thus effectively subsidizing driving by making parking more abundant.  And because zoning codes also required buildings to be set back from the street, these parking lots were usually in front of buildings, thus ensuring that pedestrians must waste time walking through ugly parking lots in order to reach their destinations.  To reverse this policy over the next 60 years, government would have to establish maximum parking requirements (as a few cities have in fact done) and require buildings to be in front of sidewalks so pedestrians could reach them more easily.

Of course this is just a series of hypothetical questions, which highlight that many of the changes to land-use and transport planning that we promote on this blog: things like removing parking minimums, removing/lessening controls that limit development density and promoting a better balance between public transport and road spending are really pretty mild and attempt to shift planning policy and transport spending back much more towards a ‘neutral’ situation. If we really were promoting bias towards intensification instead of sprawl, public transport instead of road spending, that was to the same extent (but opposite direction of course) as what has happened in the past century – we’d have to be WAY more extreme.

Transport costs & housing affordability: part 2

Last week’s post about how considering transport costs is an important consideration when really understanding housing affordability has led to a fairly epic comments thread. This is perhaps because many sprawl advocates are so used to hammering the “sprawl is the only way to improve housing affordability” line that they feel quite threatened by a more comprehensive analysis of the situation.

To summarise many of the points made by blog authors within the comments thread:

  • The research validly highlights that transport costs rise as you get further from the centre of Auckland and this counter-balances – to some extent – the higher housing prices experienced in some inner areas.
  • We think it’s highly hypocritical for people to bang on about the need to remove urban limits while maintaining strong support for the majority of planning rules that limit development potential in already urbanised areas. Councillors such as Dick Quax and Cameron Brewer are particularly bad when it comes to this hypocrisy – surely height limits, building setback requirements, parking minimums, density controls and the like are just as much “social engineering” as urban limits.
  • In places where sprawl has resulted in affordable housing (Texan cities are often given as the example) there has been huge (billions upon billions) spending on highways and other infrastructure to support that growth. Hardly the ‘market outcome’ that the proponents suggest.

We have supported urban limits in documents such as the Auckland Plan and the Unitary Plan. In fact we support stronger control over the release of greenfield land in the Unitary Plan compared to what’s currently proposed. The reasons for this are obviously multi-faceted but basically come down to the significant public cost of providing new areas with sufficient transport, water, wastewater, stormwater, schools, parks, medical facilities etc. With so much public investment required to make new development areas liveable, quality communities it’s critical for there to be a carefully staged plan of what areas will be developed when. Not having an urban limit makes this process extremely difficult and potentially undermines the efficiency of public investment because you often see “leap frog” development or a mismatch between where development happens and where public investment has occurred.

Putting that never-ending debate aside though and returning to the issue of how transport costs change our understanding of housing affordability, there are some additional maps in both the journal article referenced in our original post and in the thesis the article is based upon, which provide interesting further information. Please note that we have been asked by the thesis author Kerry Mattingly to not publish the thesis online.

The first interesting map looks at the proportion of household income that is spent on rent across different parts of Auckland. The author provides a number of reasons for using rent rather than mortgage repayments, which appear sound and supported by previous academic studies.

rent-proportion-incomePerhaps what’s most interesting about this map is the lack of a clear pattern, with proportions being high in some areas (North Shore, southeast and parts of the isthmus) but low in other ‘patches’ – generally areas that appear to correspond to concentrations of Housing New Zealand property.

One map that does show a clear pattern is the mean annual commuter variable cost – which broadly tracks the amount of money each household annually spends on commuting.

annual-commuting-costEven though the methodology for preparing this map obviously didn’t assume everyone worked in the city centre, we still get a clear pattern that indicates the further you live from the city centre the more you spend on transport. Relatively employment-rich South Auckland sees lower commuting costs than employment poor west Auckland, but still generally not as low as the commuting costs for the inner isthmus.

The upshot of comparing these two maps is simply that when you add transport into the mix, the true ‘affordability’ of different areas changes quite significantly. That’s perhaps best illustrated in this third map – which shows how much (as a percentage of housing cost) transport adds onto the cost of living in a certain area.

transport-increases-costsThis map is a little bit challenging to interpret initially, but basically it shows what proportion of housing cost would need to be added on to reflect the additional cost of commuting in that area. For most of the inner isthmus it’s less than a quarter of the housing cost that’s added on – so the housing costs make up most of the “combined housing and transport cost” that would be faced by someone living here. For areas further out – particularly it seems in the south (despite its relatively large number of jobs) – the proportion is much higher, often meaning that someone may need to add half again to the cost of housing to truly recognise the combined housing and transport cost of that area.

As a final point, I’ve overlaid (just roughly) the approximate location of land zoned future urban in the proposed Unitary Plan on top of the map above (excluding Warkworth as it was too far north to fit for me).

transport-increases-costs-addFUZThe concerning conclusion from the map above is that most of the land we’re proposing to urbanise over the coming years lies in areas where transport costs will be a huge added burden. In essence, even if the additional greenfield land does provide cheaper housing costs (and the high costs of Flat Bush give reasonable reason to be skeptical of that outcome), that ‘gain’ will probably be significantly undone by the high transport costs experienced by those living in these new parts of Auckland.

 

 

From the Ground Up: Rebuilding Christchurch as a Sustainable City

Dr. Susan Krumdieck is an energy researcher and a Professor of Mechanical Engineering at the University of Canterbury. I met her earlier this year at the 2013 NERI Energy Conference, where she gave a spoken presentation and was listed as an author for five different posters being presented!

Susan argues that the current recovery and growth strategies for Christchurch, put in place since the earthquakes, are taking the city down the wrong path. For example, the  Land Use Recovery Plan (LURP) “is a short sighted and dangerous plan for the city in several ways: it puts the cohesion of the city at risk, pulling the people from the city center, it will be very expensive to build, and people will lose a lot of money in property that will not give a return on their investment”.

The LURP seems likely to be ratified today, although things seem to be complicated

Working with other researchers, Susan has proposed an alternate growth plan for Christchurch: “to redevelop within the city in a way that would re-energize the city, boost the economy and provide affordable housing”. In particular, the team suggested more intensive redevelopment of the Riccarton area as a way of beginning this process.

Susan has put together a couple of videos explaining her team’s proposals. The first one, below, is four minutes long and a pretty good introduction to her take on the situation.

The second one, below, is a 48 minute public seminar, and goes through the Christchurch situation and the researchers’ proposals in more detail.

Note that both videos, if you open them in Youtube rather than here on the site (click the “Youtube” button in the lower right of the video screen), have notes and comments which explain a bit more. In brief:

The ‘From the Ground Up’ project had the simple objectives of developing a plan to house 15,000 people within the urban boundary in a way that provides a rate of return on investment over 10% for developers, provides warm, low-energy sustainable housing for 20,000 people across the spectrum of income levels, which can adapt to zero oil-based transport and which can drive development of urban infrastructure like electric trams and the central city. The project used a methodology based on science, engineering, and research of best practice. The project resulted in a plan for “New Riccarton” a re-build of an old suburb into a new urban area with all the amenities.

We’ll hopefully be hearing more from Susan in the future – perhaps including some guest posts.

Reaching Peak Sprawl?

An interesting recent article in Atlantic Cities asked the question of whether we’ve reached “Peak Sprawl”?

Metropolitan Atlanta, long a symbol of car-dependent American sprawl, has recently passed a threshold where a majority of its new construction spending is now focused in high-density, “walkable” parts of town.

Since 2009, 60 percent of new office, retail and rental properties in Atlanta have been built in what Christopher Leinberger calls “walkable urban places” – those neighborhoods already blessed by high Walk Scores or on their way there. That new construction has taken place on less than 1 percent of the metropolitan Atlanta region’s land mass, suggesting a shift in real estate patterns from expansion at the city’s edges to denser development within its existing borders.

“This is indicative that we’re seeing the end of sprawl,” says Leinberger, a research professor with the George Washington University School of Business, who led the study in conjunction with Georgia Tech and the Atlanta Regional Commission. “It does not say that everything turns off. There will still be new drivable suburban development. It’s just that the majority will be walkable urban, and it will be not just in the redevelopment of our downtowns, but in the urbanization of the suburbs.”

Sure Atlanta is just one place, but in recent decades it has taken over from Los Angeles as the real poster child of urban sprawl – which really makes one think that if sprawl seems to be on its way out in Atlanta then it’s really time to sit up and take notice.

There’s also a really interesting connection between the different shape of our built environment going forward and the road to economic recovery:

“People might be saying, ‘Oh, get real Leinberger.’ But we invest 35 percent of our wealth in the built environment,” he says. That refers to both infrastructure and real estate. “So, it’s a pretty significant sea change in how we build the country. The country’s going to look fundamentally different over the next generation than it has over the past two generations.”

Plenty of other people will inevitably argue that it’s too soon to declare sea changes of any kind while the recovery is still ongoing (we have, after all, been having the exact same conversationabout trends in the decline of driving). Won’t we go back to building how we’ve been building for decades once the economy picks back up? Perhaps it’s the economy, and not changing consumer tastes, that’s holding sprawl at bay?

Leinberger looks at his data, and then looks at this question differently.

“I think there’s a cause-and-effect issue here,” he says. “I think that when the economy picks up steam, it’s going to be because we learn how to build walkable urban places. Real estate caused this debacle, and real estate has always acted as a catalyst for economic recoveries.”

He figures we’re sputtering along at 2 percent growth precisely because we’re not building enough of the walkable urban product that the market wants. “And it’s signaling with pretty flashing lights,” he says, “to build more of this stuff.”

The connection made with driving trends is a particularly interesting one because I think that fundamentally they both relate to two particularly important demographic changes going on in both the USA and New Zealand (and obviously other developed world countries):

  • The baby boomers are shifting into retirement age and therefore both not driving as much as well as wanting different housing options from the large standalone houses they’ve lived in for decades.
  • Younger people (Gen Y, Millennials or whatever you want to call them) aren’t following the same housing and travel trends as their parents – instead driving less and often preferring more urban and walkable environments. Technological change may be playing an important role in this shift.

I think that this cuts to the heart of why we find the gutting of the Unitary Plan’s provision for intensification in inner areas so frustrating. It’s not (just) that providing for intensification will lead to better transport and other outcomes, it’s that all signs suggest the type of housing Auckland will most need in the future – to respond to these changes demographics and in step with international trends – will be smaller apartments and terraced housing in walkable, inner suburban areas with good access to public transport.

Will the Councillors be as worried about Sprawl?

The past few days has seen a pretty sad process of watering down the Unitary Plan to provide much less affordable housing and intensification within the existing urban limits. The push to limit intensification has come from a somewhat strange mix of councillors who I don’t think would often find themselves on the same side of the debate. Those most commonly opposing provisions that allow for intensification were: Calum Penrose, Cameron Brewer, Dick Quax, Sandra Coney, Sharon Stewart, Mike Lee and Wayne Walker.

I’ve only watched bits and pieces of the debates and deliberations over the past week, but it seems as though one of the key concerns from many of the councillors opposing what they see as widespread intensification relates to whether Auckland needs to plan for quite this much growth all in one go. To some extent there’s a bit of validity in the argument – the Auckland Plan is a 30 year strategic document while the Unitary Plan is a ten year statutory document: they aren’t the same thing and there’s nothing which says that the Unitary Plan needs to enable all 30 years worth of growth outlined in the Auckland Plan all at once. Particularly when significant infrastructure spending on transport, water, wastewater, stormwater, parks and schools to support the growth will take decades to come to fruition.

The main problem with that approach, aside from neglecting the massive housing shortage which exists and the moment and providing for significant pent up demand in inner suburban areas, is consistency with the approach being taken outside the current urban area. As we’ve noted many times, the more development is constrained inside the current urban area the more there will be pressure for further sprawl to take place.

And the Unitary Plan contains a lot of areas where sprawl could take place. The latest documentation online shows in yellow the areas proposed to be zoned “future urban”, indicating that they will be urbanised at some point in the future. Here’s the map for the southern area:

southern-rub-sprawl

At least on the bright side it seems that the horrific Karaka-Weymouth Bridge idea has been killed off with the development seeming to largely following the rail line.

Looking out to the northwest, there’s a heap of growth planned around Whenuapai, Westgate and even Kumeu/Huapai and Riverhead:

northwest-rub

The positive story here is that with this scale of growth in the northwest, the Northwest Busway is assured to be an essential project and the real question simply relates to when it will be built. I wonder if Kumeu/Huapai will grow large enough to justify an extension of electrification and therefore passenger services from Swanson.

Shifting up north, perhaps the biggest surprise is the massive amount of land set aside for future urbanisation around Dairy Flat, which hadn’t really been signalled in the Draft Unitary Plan maps. If it were to happen soon then an extension of the Northern Busway to Silverdale would almost certainly be needed. It is also interesting as I have heard a few rumours about people with good connections buying some large blocks of land in the area recently on the expectation zoning would be changed in the Unitary Plan.

silverdale-sprawlAnd finally there’s even pretty massive growth proposed around Warkworth, which by the look of it would eventually see Warkworth to grow to many times its current size:

warkworth-sprawl

It’s a bit difficult to figure out exactly how the Unitary Plan enables land to go from this gigantic future urban zone into actual development, but critically what the Unitary Plan is doing is putting a huge heap of land into the same bucket of “future urban”. Presumably this will mean massive value appreciation for people who end up inside the RUB, which will put pressure on for redevelopment (due to increased rates). Stopping little bits of future urban zoned land from being developed ‘willy nilly’ all over the place could actually be really difficult – as the Resource Management Act is fairly generous in allowing private plan changes.

What would be a better approach, in my opinion, is effectively splitting the future urban zone into two zones: a short term future urban zone and a longer term “urban reserve land”. This approach would signal that the longer term land isn’t intended to be urbanised for 15-20 years and therefore would allow infrastructure providers to focus their efforts on serving the areas that actually will be urbanised in the near future. After all there is little point in building something expensive like a busway if the development it is to serve doesn’t happen for 20+ years. We also don’t want the situation where development occurs and key infrastructure like a busway is built 20 years too late.

So our challenge to all those Councillors who have stymied intensification every step of the way in the Unitary Plan so far, particularly those who aren’t that fond of sprawl either, is to have a think about the other side of the coin and look at ways to ensure that we aren’t cutting out intensification while enabling widespread urban sprawl. Perhaps if we have eased back on the boldness of the push for intensification, we also need to ease back on the extent to which the Unitary Plan enables sprawl.

After all, the Unitary Plan’s meant to be a 10 year regulatory document, not a 30 year strategic one.