Housing Affordability

December 17th, 2011 at 12:42 pm by David Farrar

The has released a draft report into housing affordability.

If you do not wish to read the full 259 pages, there is a 40 page summary and even a four page brochure.

The Productivity Commission is based on the Australian model which has strong support from Governments of both sides of politics. It has been the ongoing commitment to reforms such as those proposed by the Australian Productivity Commission, which has seen Australia move more and more ahead of New Zealand. If we do not act on recommendations for improved productivity, then there is a cost.

They observe:

… the distribution of house prices in Auckland is now markedly different to that in the rest of New Zealand, particularly at the lower end of the Auckland housing market. For example, between 1995 and 2011, the gap between lower quartile house prices in Auckland vis-à-vis the rest of the country increased by over 260% in real terms.

This means that for people in Auckland, even the less expensive homes are becoming unaffordable for many.

Section prices have grown more quickly than house prices over the last 20 years, indicating that appreciating land prices have been a key driver of house price inflation in New Zealand. This suggests a shortage of residential land in places where people want to live. Land price pressures have been particularly acute in Auckland, where section prices now account for around 60% of the cost of a new dwelling, compared with 40% in the rest of New Zealand.

They note:

The prevailing approach to urban planning in New Zealand has a negative influence on in our faster growing cities. The widespread planning preference for increasing residential density, and limiting greenfield development to achieve this, places upward pressure on house prices across the board. Constraints on the release of new residential land create scarcity, limit housing choice, and are increasing prices across the market.

It’s simple demand and supply. If politicians restrict the supply of land, of course demand will push the price up. Measures around the tax system can make an impact around the margins, but one has to also get the fundamentals right.

They recommend local authorities:

  • take a more active approach to the identification, consenting, release, and development of land for housing in the inner city, suburbs, and city edge, both with respect to volumes of consented land and the time taken to achieve consents;
  • adopt a strategy that allows for both intensification within existing urban boundaries and orderly expansion beyond them;

The Auckland Council especially has to release more land for development, otherwise a generation of middle to lower income Aucklanders will never have an opportunity of home ownership. Those poorer Aucklanders will be locked into being tenants for life, funding the retirements of the well off.

They also note the large sums of money now being spent on subsidising rental housing, and how this will increase significantly in future if fewer people can own their own home:

  • $564m on income related rents for 69,000 state houses
  • Accommodation Supplement of $1,200m paid to 320,000 people (around 50% of all renters)
  • $36m on community housing providers

Feedback is open on the draft report for a couple of months.


51 Responses to “Housing Affordability”

  1. flipper (5,299 comments) says:

    An excellent analysis DPF.
    “Disagree” on one point…. ACC [Aka Brownville] politicians must “release” more land…
    If it actually belonged to them, I would agree.
    But it does NOT. They have “taken” it by stealth thru their planning rubbish.

    Change that “plan” rubbish and we may have solutions…

    Enjoy Suid’africa …. DRSLB!


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  2. rg (215 comments) says:

    The productivity commission was an ACT Party initiative, as are the recommendations it makes around land supply ACT policy. It is good to see this blog supporting so many ACT initiatives, the charter schools, the spending cap, in fact the only reason this National Government might end up being a reformist govt is the ACT influence. Shame the voters weren’t told before the election about ACT’s policies, they were not widely published by the media.
    I think this National Government has been useless so far, I think with these ACT initiatives there is hope it will achieve something. I hope due credit is given by National supporters and they don’t take credit for things their Party did not have the ability or the fortitude to implement themselves.
    Thanks ACT

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  3. simonway (507 comments) says:

    The widespread planning preference for increasing residential density

    There’s a preference for increasing residential density? Could have fooled me. The vast majority of residential space in Auckland is a bunch of quarter-acre sections. There’s bugger-all high density housing outside of the apartment blocks in the CBD, and this is a problem exacerbated by pro-sprawl planning regulations.

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  4. Caleb (486 comments) says:

    even in the suburbs, every house has a token section, if its under 500sqm why bother.

    higher density, land efficient housing and less council red tape.

    pushing out into flat horticultural land is short sighted madness.

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  5. immigant (950 comments) says:

    If you could buy a decent town house in central Auckland I’d gladly live in it. I don’t like doing the lawns anyway.
    But instead all you can do is hope to buy a shit house on a section that is 1/2 the price of the property.

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  6. Simon Lyall (110 comments) says:

    Agree with simonway and Caleb above.

    If Auckland city council was serious about high density then you wouldn’t see major transport routes and train stations being surrounded by 1/4 and 1/8 acre sections (4-5 bedrooms, 2-3 bathrooms).

    Changes to the council rules about section coverage, height, setbacks and the like would enable people to actually build higher density housing without having to jump from 1/4 arce sections to 8 story apartments due to the planning costs. Under the current regulations the higher density housing seen in places like ponsonby are illegal to build.

    Sure there are plenty of people who will “never live in a shoebox” but I’d prefer a 1-2 bedroom apartment/unit close to town over having to be 45 minutes from town to pay less than $500k for a 3 bedroom place for my 2 person household. I actually like live close to shops and other things. With households getting smaller the angling of the market to bigger houses due to overheads is a real problem.

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  7. peterwn (4,286 comments) says:

    I do not think that councils are the correct groups to be making ‘governance’ decisions on land development matters. They are arguably are over-represented by people who have ‘made it’ in one way or another with excessive do-good / green tendencies thrown in. As with public transport there is too much of dictating how ‘other people’ should live and travel.

    It also strikes me as wrong that councils can require purchasers of new sections to meet infrastructure costs then collect rates which make provision for infrastructure renewal which would not be required for many years. In other words, ratepayers in new areas effectively subsidise ratepayers in old areas.

    Another probem is former power utilities extracted ‘capital contributions’ to install subdivision reticulation and when the utilities were ‘commercialised’, these assets were treated as company property whereas the property owners morally owned these assets.

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  8. JamesS (352 comments) says:

    If these people are seeking to solve the problem of housing affordability what suggestions do they have to reduce house prices?

    At the moment you have houses costing, say, $500,000 which are too expensive for many people; releasing land and then building another 50,000 (or whatever) houses which are on sale for $480,000 has hardly made things more affordable.

    House prices need to drop by at least 40% to be ‘affordable’; is that likely to happen? I think not.

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  9. Anthony (880 comments) says:

    How on earth did you come up with those calculations JamesS? I think you have no idea what you are talking about. Land is a huge component in house prices nowadays.

    Often the road reserve is huge too and the council won’t let you fence it in to use as part your section – although people do anyway and unless someone complains then nothing happens. I sold off the back of our first property for a song and the house that was built on it was right on the road reserve boundary. The builder cheekily fenced in what was otherwise waste land road reserve and it’s been like that for over 10 years now.

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  10. JamesS (352 comments) says:

    Okay Anthony, a developer builds 30 new houses in a subdivision – how much is he going to sell them for?

    Every builder/developer is in the habit of selling new houses for a certain price; he is hardly going to start discounting back to 1998 prices just because the sections are a bit cheaper, is he? the way he looks at it his profit margin has increased.

    There is a lot of naivity in this report.

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  11. nasska (16,759 comments) says:

    If we want to pare back the cost of new housing the only law change required is something that gets Local Authorities back to providing services rather than imposing costs. If you buy a car garage off Skyline et al the speccies have been approved on a national basis….why not the same for residential housing?

    If there was any sector crying out for deregulation this is it. Get shot of the most useless, bungling pack of over regulating parasites known to mankind, ie Local Authority planners & inspectors.

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  12. Anthony (880 comments) says:

    JamesS you sound like one of those people who think house prices never fall! If there is plenty of competition in the market then prices will come down – and developers need to offer lower prices to sell houses nowadays.

    The other side of the equation is evening the tax playing field further so that rental housing is not the way the middle class save for their retirement – rather than putting money in the bank. Negative gearing should be disallowed and interest should be taxed at no higher than the company tax rate.

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  13. Paul Rain (47 comments) says:

    JamesS: If there was such a serious problem with housing affordability that people were unable to find somewhere to live with house prices and rents at the present level (even assuming that it was impossible), then prices would drop as people who needed to sell their houses by hook or crook did so at the best price they could get.

    The ‘problem’ here, if one sees it as such, is that people today, living in a richer country than their grandparents, want to live in nicer houses. Yuppies with good jobs and no kids want, and can pay for, nice apartments in the city. The permanent welfare underclass wants enough rooms that they don’t have to hear their kids fight, and a living room big enough to fit the big screen.

    Obviously this leaves middle-class people who would like to have a few well-adjusted kids with a bit of a dilemma. Live in Auckland, and take on a heinous mortgage to ensure your kids are in a neighbourhood where they can go to a school with mostly other well-adjusted children, or recognize that there’s a whole country out there where it takes less than an hour to get to and from work.

    If government really wanted to spend a bunch of other people’s money to make people happier about housing affordability, maybe a “It’s Not OK” style campaign pointing out that it is, in fact, OK for two children to share a room could be the answer.

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  14. mavxp (504 comments) says:

    Increasing housing density makes sense from a sustainability and therefore economic viewpoint. Easier to service and maintain, keeps fertile land producing food and export $, and the distance to travel between work, home, and amenities is reduced – savings in time, fuel etc. which affect our productivity, balance of payments, and our standard of living. Yes more people are having smaller families or living alone or as couples only. We don’t need a 1950’s “1/4 acre paradise” and large American-deam suburban houses as lifestyles have changed for many of us. They keep building them because stupid baby boomers keep buying them as an investment property when they should be buying shares and investing in productive businesses (it’s all they know). Oh and there aren’t other alternatives in sufficient quantities occurring – which brings me to my next point:

    The question is how can we get quality city apartments and townhouses in enough quantity at locations close to transport hubs and amenities that they are desirable and affordable. Are the current planning restrictions achieving that goal? The city edge development needs to be planned also with infill housing close to commuter hubs with well serviced transport corridors. Endless sprawl is an awful waste of land and does not work well for infrastructure – especially transport – Auckland’s never ending hell of traffic jams will simply continue unabated and in fact get worse.

    We must change how we develop our cities going forward. But they must be realistic and achievable. Let’s not throw the baby out with the bathwater – planning rules and regulations are necessary. Organic is what we have had and it’s built Auckland as we know it – horrid transport and an overall dull and uninspiring city, with the only redeeming features being it’s natural beauty, however soiled by the ugly sprawling cheap housing and roads we have built and continue to build. Frankly I loathe the place.

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  15. Scott Chris (7,957 comments) says:

    How do you address the conflict of interest? That being:

    Most local authorities are made up of people who are land owners, and who are happy to see land prices inflate. Hardly surprising that they wish to restrict the supply of land. And they are voted in by other land owners who are also happy to see land values appreciate.

    So perhaps government could pass a law that would legally oblige a local authority to make available an adequate supply of land, so that average land value appreciation doesn’t exceed the rate of inflation.

    Oh, and introduce a land tax to disincentivize property investment.

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  16. nasska (16,759 comments) says:

    Scott Chris

    Your proposals would work against each other. On one hand you want yet more regulation re land supply to drive prices down then you want a land tax to drive them back up again.

    Less regulation is what we need & we’ll only see this when there are massive redundancies in the hordes of petty minded jobsworths employed by local bodies.

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  17. Nick K (2,061 comments) says:

    The anger evident in Comrade Mike Lee’s comments in this morning’s Herald says it all. He is angry because he knows he’s wrong, but cannot accept the alternative:

    Sherwin’s team were “rednecks in expensive suits, right wing provincially minded branch managers with no ideas for economic development”.

    “Freeing up productive rural land? You mean more urban sprawl for Auckland. Haven’t we already tried that? The costs are traffic congestion, roading, water and sewerage reticulation. Those have been externalised on to long-suffering ratepayers.

    “There is more than ample land already available for housing development in Auckland despite the obsessive lobbying of the land bankers. In terms of house prices, I wonder if the so-called Productivity Commission has anything to say about the exorbitant costs of construction materials in New Zealand? Let me guess, I bet they also recommend more privatisation of public assets?

    “If such tried and failed neo-conservative ideas are the recommendations of the highly paid members of the commission, one needs to question their productivity. Urban sprawl, blah, blah, blah!” said a frustrated Mr Lee.


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  18. Paul Rain (47 comments) says:

    mavxp: Admittedly, those baby boomers aren’t so stupid.. it’s made more attractive by the stupid politicians doing everything they can to encourage warm fuzzy property investment by giving out special considerations that damage our competitiveness. There’s an excellent Khan Academy video that explains how this collective mania allows boom and bust cycles in property to be so destructive.

    It’d be interesting to know how widespread the property-worship phenomenon really is. It certainly takes a heavy toll on us, as well as the Australians and the rest of the Anglo-American world. Is this sort of thing widespread in continental Europe?

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  19. pq (728 comments) says:

    come in here Hugh Pavletich, try to be kind to Farrar after all he knows everything and nothing

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  20. leftyliberal (655 comments) says:

    Both the supply and demand sides need addressing – targeting one without the other may have an impact but it won’t be as great. The demand side needs tempering by ensuring that property investment is kept at a minimum in favour of more productive investment. Strengthening of our existing capital gains tax, such as introducing a minimum rate of return across the board (eg equivalent to the 10 year bond return rate) on assets per annum (i.e. all housing is re-valued every year, and if it increases in value more than the minimum rate of return it’s taxed accordingly. This gets rid of unproductive investment in property.

    This obviously needs balancing with the supply side being addressed. If more high density is required in Auckland, then make it easier for suitable high-density to be built (eg semi-detached apartments and the like).

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  21. Scott Chris (7,957 comments) says:

    nasska says:- “Your proposals would work against each other.”

    No, they’re pulling in the same direction. Fine, get rid of the regulations *impeding* house and land supply, but at the same time legislate to ensure the council don’t restrict supply too. If you don’t make them accountable by setting them targets, then they won’t meet them. Or perhaps you’d have to appoint an independent body like the reserve bank to regulate the land supply. In fact, why not appoint the reserve bank itself?

    And the land tax is simply a re-weighting of the investment market to tax all investment income fairly. I’d imagine there would be exemptions for farmers, as they are not the target here and income tax could be reduced to compensate those affected.

    So as Mike, I mean, Leftyliberal says, address both the supply side and the demand side.

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  22. OECD rank 22 kiwi (2,947 comments) says:

    Kill off “Smart Growth”. Problem solved.

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  23. Anthony (880 comments) says:

    Another Act idea – limiting rate rises to rate of inflation (or less) might be a good way to incentivise local authorities to make it easier for new dwellings to be built as would be the only way increasing their income.

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  24. hj (8,596 comments) says:

    So we need to address supply (and the public pays for the tunnels under the harbour etc) but not the demand (ie unlimited inward migration), despite:

    immigration and tax breaks for investment in residential property are being cited as the underlying causes of steep increases in the cost of housing over the past decade.

    New Zealand now boasts one of the highest rates of home unaffordability in the world as a result of prices rising far faster than incomes, and the government’s Savings Working Group blames that squarely on the policies of successive governments.

    Although “the favourable tax treatment of property investment” accounted for about 50% of house price increases between 2001 and 2007, the working group said, there was also strong evidence that rapid swings in immigration brought about price-rise “shocks”.

    There was a sharp spike in immigration in 2001, 2002 and 2003 and, said working group committee member Dr Andrew Coleman, it appeared that property prices did not fall anywhere near as greatly when immigration fell again.

    The report added that there was little evidence that immigration boosted local incomes. In fact, the need to build roads and schools meant that net migration contributed to the national deficit.
    Perhaps we need all those Mainland Chinese Tour Bus drivers?

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  25. hj (8,596 comments) says:

    What is Nact’s overall plan apart from increase the population to make the realestate industry rich???
    Another 38,000 people could lose their jobs in the next couple of years as the economy slows, and people working in real estate, housing construction, retailing, manufacturing and business services are most at risk.

    ANZ National Bank chief economist Cameron Bagrie said these sectors had grown off the property-market boom and accounted for 60% of new jobs over the past five years.

    This suggests that immigration is encouraged as a means to (continually) stimulate the realestate industry.

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  26. hj (8,596 comments) says:

    “In recent years Auckland has ranked fifth and Wellington 12th in the annual global quality of city life rankings by Mercer, a US consultancy.
    But Auckland, more than Wellington, faces a challenge. Fast population growth over the past decade has strained infrastructure, boosted house prices and reduced the quality of life in the Auckland region. Addressing such issues goes right to the heart of the long-term strategies of the region’s councils for obvious economic and social reasons.
    Auckland’s ambition to become a truly international metropolis depends in part on maintaining the quality of life, which in turn requires bold vision, sound strategies, good regulatory processes and citizen commitment. Clearly, the RMA is a critical tool to help achieve those goals, which in turn will then help attract migrants, and help keep existing residents here. On present forecasts, the region could have a population of around 2m by 2050, a 65% rise from current levels, suggesting the challenges will be formidable.”

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  27. hj (8,596 comments) says:

    Lower Quality of life Plus:

    “New Zealand’s change in immigration policy dates back to the early 1990s when the gap in productivity with other nations became pronounced between the years 1970 and 1990. Higher immigration was intended to fix the problem.

    In its report, the SWG claims the move backfired.

    “The policy choice that increased immigration, given the number of employers increasingly unable to pay First-World wages to the existing population and all the capital requirements that increasing populations involve – looks likely to have worked almost directly against the adjustment New Zealand needed to make and it might have been better off with a lower rate of net immigration.”

    No Wonder:

    A great majority of Americans — in fact, the highest level in six years of Saint Index surveys — oppose new development in their own community. 79 percent said their hometown is fine the way it is or already over-developed. Some 86 percent of suburban Americans do not want new development in their community. Asked, “What type of new development would you most like to see in your community?” the most common answer was “none.”

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  28. hj (8,596 comments) says:

    Keith Locke.
    “We have no fear of migrants. The Green Party says ‘Welcome Home – this is your country now’. Our welcome extends to the families of new migrants. The Green Party policy is fundamentally humanitarian, not exclusionary like Mr Peters’.
    The Greens see no connection between population and environment.

    The Greens haven’t responded to the findings of the Savings Working Group. All the Greens have up their sleeve is: more public transport, clean up dairying, increase density, consult Maori first.

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  29. hj (8,596 comments) says:

    Over the last 30 years New Zealand has experienced: population growth well above the OECD
    mean; volatile immigration; an ageing population; cultural and ethnic diversification; and a radical
    transformation of family structure. All these changes have driven a large increase in underlying
    demand for housing.
     Since 1971, population growth has resulted in roughly 450,000 new households and the decrease
    in average household size has created an additional 350,000. Between 2001 and 2006, 22,000
    additional households were being formed on average each year.
     Demand pressures have differed markedly by region. This is driven by cross-regional differences in
    external and internal net migration and age, family and ethnic structures. Auckland has accounted
    for roughly 40% of New Zealand’s net household formation over the last 10 years.
     As well as influencing underlying demand for dwellings, population growth and demographic
    changes have also influenced tenure choice, with some groups in New Zealand more likely to rent
    than own their homes.
     Looking to the future, in nearly all parts of the country, the average household size is likely to
    continue falling, implying increased housing demand. New Zealand’s population is also likely to
    continue growing strongly. Much of this growth will be focused on the Auckland region, putting
    pressure on the regional housing market. For example, the Department of Building and Housing
    currently projects a shortfall of 90,500 dwellings in Auckland alone over the next 20 years
    (although a surplus is projected in other regions).
    Coleman said the working group was not anti-immigration, but called on the government to investigate limits in the future, something Immigration Minister Dr Jonathan Coleman does not seem inclined to consider.

    In a statement to the Sunday Star-Times, Coleman said: “Department of Labour research*shows there is no strong link between immigration and house prices and migrants provide a net gain to the New Zealand economy of around $1.9 billion a year. If migration stopped today, the economy would contract by 10% over 10 years.”
    “Garbage in Garbage Out”

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  30. Farmerpete (67 comments) says:

    My partner and I are land developers and we recently completed a large subdivision within the current city boundaries. The land was zoned medium density residential when we purchased (for a very substantial multi million dollar price). Before purchase we did due diligence with council to ensure we would get the relevant consents and permits etc. Once all these boxes had been ticked we proceeded.
    15 months into our consent applications council informed us that they could not provide connections for sewerage or water, inspite of confirming prior to purchase that they could. This was after going through all the usual hoops and being told the consents would issue. Council were not in the slightest concerned about their role in this. They were a totally inept, bungling and dishonest group. In 30 years of business I had not encountered people like these before.
    My point is that once land is zoned by council then consents should be automatic if the applicant complies with the relevant design criteria. Council cynically delayed our applications the the point where they shifted us from one fiscal period to another and the developer levies increased from $15k per lot to $33k per lot. I did a back of the envelope calc and worked out that $90k of a $250k section went in GST, council levies and consent costs. All before you factor in construction and land purchase. How can you get affordable housing under these conditions. So the issue is not just land cost, it is also compliance cost and time. When we complained to council that their inordinately slow response was going to make us lose the construction season and that this would add $500k to costs their response was, so…?
    Development is high risk, and the current RMA and council processes greatly increase the risk. Both these areas badly need reform. I am not advocating a return to a ‘wild west free for all’, but a system that requires council to act in a timely, responsible and predictable manner. Most ratepayers have no idea how their council behaves commercially. It is only when you have to deal with them day by day that you get to see the appalling lack of ethics, and commonsense.
    Unfortunately appealing to elected members is not very useful. Staff members regularly mislead and confuse the elected officials by artificially hiding behind regulations and red tape.
    In my view there will be no affordable housing until until there is fundamental reform. James S, the issue is not developers taking large profits (since 2007 there have been no profits for most developers). Right now if you were to try and build a 4 brm family home for under $500k in most areas of Auckland there would be no profit in it. Builders and developers have to be able to get to market much quicker, with much less compliance cost. This is the way that affordability will be impacted. And yes, zoning is also important.
    As for Mike Lee – it is people like him are are the largest part of the problem. He is stuck in a time warp.

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  31. Owen McShane (1,193 comments) says:

    Mike Lee is avidly ANTI-Sprawl. Where does he live? On Waiheke Island in a single family home.

    Gary Taylor of EDS is also avidly ANTI-Sprawl. Where does he live? At Bethel’s beach in a single family house.

    The Roman nobility did not want the Plebs moving out to be near their spacious villas so insisted they were locked up behind the city walls.

    So it has always been.

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  32. Brian Smaller (4,332 comments) says:

    @Farmerpete – Your anecdote is typical of what I have heard. Disgusting money grubbing and nothing more on the part of councils.

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  33. swan (778 comments) says:

    The support is quite simplistic and also biased in a number of ways. Owner occupied housing is seen as intrinsically a good idea, but reasons for and against this proposition are not dealt with in any meaningful way. Multi unit accomodation is also assumed to be undesirable, but this again is not dealt with in any meaningful way.

    The report goes into some detail about the lack of economies of scale in the NZ residential construction industry but does not even acknowledge the idea that large scale high density accomodation would enjoy economies of scale.

    Freeing up land supply at the fringe is certainly a way of increasing affordability, but my dog could have told you that. The nitty gritty of zoning and regulatory issues in the existing urban limits (for example look at Farmerpete’s experience above), has not really been dealt with in any detail at all.

    In a sense allowing increased density within the existing urban limits and allowing srawl are the same thing: they both require upzoning. But the report only focuses on one of these two avenues. In fact at times the report seems to imply that the policy of restricting sprawl is synonymous with allowing increased density, whereas this is of course not the case in Auckland. Despite the RGS being in place for over a decade, stuff all upzoning has actually taken place, and it remains as difficult and risky as ever to try to develop medium to high density in Auckland.

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  34. rg (215 comments) says:

    Farmer pete. There is only one Party that campaigned on RMA reform, and that was ACT. Anyone who didn’t vote for ACT should not be complaining about the repressive RMA. National voters voted for status quo, a continuation of our economic decline. Hopefully in three years time they will have suffered enough to make a more intelligent votre next time.

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  35. Paul Rain (47 comments) says:

    @hj “All the Greens have up their sleeve is: more public transport, clean up dairying, increase density, consult Maori first.”
    Haven’t you forgotten ‘different regulations for small business’, to necessitate the employment of more useless bureaucrats and discourage small businesses from growing?

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  36. hj (8,596 comments) says:

    I think the problem is that our whole country is in denial about population growth. We Act as though we can absorb masses of people without pain, yet the resources we need to absorb our foreign million(s) is more akin to building another McKenzie hydro scheme. It is easier to deny the problems of growth than go to the taxpayer on the basis that they will benefit via a trickle down effect as the development industry makes a bundle or some new type of economy yet unthought of emerges on our small isolated Isles..

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  37. Owen McShane (1,193 comments) says:

    We have no serious urban growth problems. New Zealand is highly “urbanised” like all modern economies but our urban areas cover only 1.5% of the land area which is one of the lowest in the world – Australia is even lower and yet their planners insist Australia is running out of land. Go figure.
    The reason construction costs are so high is that the drip feeding of sections means there are no longer any real group builders. They are all cottage builders now and we have lost the economies of scale.
    Claims that high density high rise apartments provide economies of scale are nonsense. They are only viable if the apartments are tiny. Any the planners measure gross areas rather than net areas. I am not against any housing type. Indeed I invented the word “town house” in the mid sixties and and encouraged the construction of the range of medium density housing types you can visit at the bottom of Freeman’s bay. I lived in the four story maisonette block and in one of the two story housing block to experience their performance at first hand. Fortunately I recommended deregulation of the zoning of the rest of the Bay and stopped the Government’s proposal to bulldoze the whole area flat. Immediately private investment flowed into the existing houses. When I returned from the US I bought a villa in 58 Hepburn Street for 9,000. And did it up. Everyone including my lawyer thought I was mad.

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  38. Owen McShane (1,193 comments) says:

    For a snapshot of where we are now go here:

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  39. Mark (1,614 comments) says:

    We have a ridiculous investment residential real estate industry that has pushed entry level housing prices through the roof.

    We have had successive governments with no regional development vision. So Auckland will simply get larger and larger as industries are forced north by the lack of transport infrastructure and businesses having to move north. Those pushing a single international port strategy are a very good example of this lack of vision.

    Entry level new housing ie the group house built by Universal etc is now 150 m2 when in the 1970’s 1980’s it was 90 – 100 m2

    The resource management act is cumbersome and expensive.

    Christ you could write all night on the reasons for this

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  40. hj (8,596 comments) says:

    We have no serious urban growth problems. New Zealand is highly “urbanised” like all modern economies but our urban areas cover only 1.5% of the land area which is one of the lowest in the world – Australia is even lower and yet their planners insist Australia is running out of land. Go figure.

    all that show is how meaningless those sort of statistics are. It is like saying you could get a room full of flies in a jar.
    The real issue isn’t space but space plus installed infrastructure.

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  41. swan (778 comments) says:

    Owen McShane:

    “Claims that high density high rise apartments provide economies of scale are nonsense”

    Do you understand economies of scale? Do you really believe that the marginal cost of the 50th apartment in a block costs the same as the average of the first 49? Do you think the marginal cost of the 5th apartment block on a site costs the same as the first four?

    Right across the Auckland urban area density restrictions (not to mention parking requirements) are binding on new development. But the report doesn’t touch on this. We do have med and high density development in Auckland. Do you really believe that the binding density restrictions just happen to match the optimal level of development in terms of average cost? If so you have a lot more faith in planners than I do.

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  42. BlairM (2,755 comments) says:

    Urban Sprawl is chardonnay socialist language for people living where they actually want to live, instead of stacked on top of each other in some shoebox.

    If you’re worried about transportation and infrastructure for people living 50km from the CBD, don’t. Nobody buys a house out that far and goes “oh shit, we forgot to buy a car and sort out the plumbing!” Except in the minds of the Chardonnay Socialists.

    And if you think that new developers don’t build and sell cheap houses… well duh! you’re right! They sell them a little bit cheaper to people who sold their houses for cheaper again. And those folk sold their houses for a little bit cheaper too. And eventually, newlyweds can buy a nice place in Glen Innes for something approaching civilised prices. Markets and capitalism are wonderful things.

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  43. Griff (13,845 comments) says:

    Them you have a propensity to Land bank
    cause you know that sooner or later it must be released the fuckers have already driven the price up to match the expected level of development driving a constricted supply even higher in price

    its mine and fuck off and let me do wot the market can take
    no spiritual bullshit no protection for your view no regulation of use no compulsory expensive regulation Let the market decide

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  44. comsumist (59 comments) says:

    I’m no fan of Mayor Brown, but whether or not the ‘property industry’ like it or not he has a point.

    Can we go on allowing urban sprawl of ever, and how will this be funded?

    The Auckland Council only has one method for raising cash to the growth in the infrastructure everyone demands – rates, and debt paid off by rates. Until the Government changes this to allow something fairer like a poll tax or income tax like an Auckland State Tax, the Council faces an impossible choice, unfair fuel tax that is political suicide, or higher rates – again political suicide!

    Everyone wants stuff from Council – public transport, sewage, water, library’s, rubbish collection, the list goes on and on and everyone wants it whether they live in rural Coatesville, Seaside Orewa, Parnell or Karaka. Everyone wants it, they want it ‘free’ and they want it yesterday AND they don’t want their rates to go up… going nowhere fast!

    The Auckland Council is in fact hamstrung by central Government, both Labour and National have not given it the ability to fund growth, National will only let it spend on Roads, Labour on Rail and not on roads (we need both).

    Mayor Brown, has in effect issued a challenge to central Government, he isn’t stating it outright, but he is slowly drawing Aucklanders to that point – the point where every citizen needs to contribute to Auckland growth and infrastructure, not just property owners or car drivers.

    He is also issuing a challenge over property ownership.

    No one will admit this, it’s like some holy grail in NZ that no one dares speak against, but it needs to be recognised…

    The 1960’s dream of owning a quarter acre section and a three bedroom house are over. Gone. Never to return. Get over it folks and stop complaining. It was nice while it lasted but if you are in your 30’s unless you are in the top income bracket – barely 10% – then your’e destined to live in semi-detached or terraced housing or an apartment, and if you are really hung up on it, you can mortgage yourself to the hilt to own it, but probably you’ll do what everyone else does in any other Western country as poor as ours and you will have a long term lease (something else the Government need to start doing something about) – as an interesting aside, IKEA is in existence because of home/apartment leasing that is quite normal over in Europe and Asia.

    The huge cost of sprawling Auckland almost sent some of the old Councils broke (Rodney being an example), the first world expectations of services coupled with static rates income of a 2nd world city means that allowing unfettered urban sprawl cannot continue, the future under the current funding mechanism is high rise apartments, more infill and two/three storey apartments in central Auckland (the shrieks of protest from the voters in those areas can be heard already, but they’ll fall on deaf ears from a mayor who does not need their votes).

    Higher density housing and flats in central Auckland obviously do not impress the vocal land bankers on the ‘Property Council’ who have had such a natural political influence on the Productivity Commission (I have nothing against them, I’m just saying they are natural National voters and if they didn’t have an influence there’d be something wrong!) but they make sense for a Council grappling with how to provide unlimited demand for services from a geographically spread out population from a limited funding base.

    Centralise the growth and the cost of the services goes down or at least is contained… it’s not rocket science.

    The alternative is to stick a huge pin in the property bubble and bring prices down but it’s not likely this will make it any more affordable. Really this will not happen, there are too many vested interests in the property industry, from the media (advertising) to politics both Labour and National, and no one is prepared to drive a stake in the heart of this weird and irrational obsession amongst the middle classes with property ownership, and those people really have no interest in what Mayor Brown is proposing… imagine if it did create affordable housing (rented or leased) with access to services like transport… what would happen to all those people who assumed they could sell their lifestyle blocks for housing developments to fund their retirement?

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  45. Griff (13,845 comments) says:

    comsumist cry for a change in how we live
    we are paying all ready one tree hill Epsom etc have way payed for the cost on infrastructure new suburbs pay for “development” cost then a stupid socialist idiot decides to blow the Bank On a public transport that only helps the small minority that lives in the central city

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  46. unaha-closp (1,603 comments) says:

    Easy solution – leave Auckland.

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  47. BlairM (2,755 comments) says:

    The 1960′s dream of owning a quarter acre section and a three bedroom house are over. Gone. Never to return. Get over it folks and stop complaining.

    I disagree. If we get rid of the planning laws and let people build where they want, you’d be surprised at how affordable a quarter acre three bedroom house could become. Planning laws are everything. It’s why you can get a perfectly decent three bedroom house in San Antonio, Texas for a mere $100k US. They don’t have ridiculous restrictions on “urban sprawl”, so houses cost what they cost.

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  48. Owen McShane (1,193 comments) says:

    Auckland is not a sprawling city. The Auckland urban area is one of the densest in the New World – denser that even New York Urban area. Not as dense as Los Angeles which is the densest in the US.

    This urban density is already too high for the road network and that is why central Auckland has day long congestion. You do not cure this congestion by further increasing density. The answer is to more widely distribute jobs and residence and stop making all land use decisions to bolster and inherently doomed rail system.
    The transport network should serve the city – not determine its future.
    There is no example of a retrofit rail system reducing urban congestion. IN fact the track record is negative because the rail spending diverts funds from road based flexible systems such buses, and shuttles. And even taxis which are soon regarded as unfair competition for rail.

    Broadband however will promote telecommuting which does reduce congestion and improves quality of life – especially for professional women who can raise children without having to leave their carreer for a few years.

    The natural development of Telecommuting is “Distributed Office Centres” which serve as a local focal point for telecommuters who then telecommute serve their jobs in more distant centres such as the CBD or wherever. They are excellent social centres – great place to find a spouse because the group of telecommuters all have a different boss – the power struggle is irrelevant.
    But notice the Plan does not even mention Telecommuting, let alone remote office centres – these are dangerous modes that compete with the Great Rail God to which we must all defer.

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  49. hj (8,596 comments) says:

    The Government has no mandate to fill the country u with foreigners Owen McShane . That is a policy imposed on us the the real estate industry, with the support of well off socialists. Party Vote NZ First

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  50. swan (778 comments) says:

    Owen McShane, the reason Auckland has day long congestion is because road use is a tragedy of the commons in NZ. Let’s bring in temporally and spatially variable road pricing, substantially lift development amd zoning restrictions within and without the urban area, and let people decide for themselves where they want to live and work. Oh and allow private investment in roading.

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  51. Owen McShane (1,193 comments) says:

    You are right of course – in your general solution.
    But the congestion levels on regular Auckland roads are remarkably high because our street network has little capacity being built on ridges and hills and valleys.
    Our studies in the sixties showed that if Auckland density went much over the medium density two storey average then we would run out of lane space, and kerbside parking etc. That is why trams cannot be retrofitted into roads like K Road – they are simply too narrow.
    Look at the avenues of Melbourne and see the room for their trams.
    Crowding more people into central Auckland fails on the basic numbers. And soon its not just the roads – its the drains and water and power infrastructure too.
    We should be planning to decentralise to multi nuclear mixed use towns and villages.

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