By Gareth Vaughan
Six years after Auckland Council passed the Unitary Plan, with scope for increased housing densification to boost supply and improve affordability, what impact has it had?
Quite a bit according to University of Auckland Associate Professor of Economics Ryan Greenaway-McGrevy.
Speaking in the latest episode of interest.co.nz's Of Interest Podcast, Greenaway-McGrevy talks about a recent paper he co-authored on the impact of upzoning on Auckland housing construction, plus a range of other housing related issues.
Greenaway-McGrevy explains why he believes Auckland leads the world when it comes to upzoning, the impact of the Unitary Plan on residential building consents, and where Auckland's at with housing affordability and rents.
He also discusses land prices versus land costs and explains why he supports the concept of a land tax.
We also talk about the Medium Density Residential Standards following 2021's Resource Management (Enabling Housing Supply and Other Matters) Amendment Act, and what these could mean for cities and towns around New Zealand, including Christchurch where the Christchurch City Council voted against the new housing intensification standards.
63 Comments
if you ask the wrong question, you get the wrong answer.
The question that needs to be asked is 'why do other jurisdictions, without the upzoning and arguably because of having no upzoning, have far more affordable housing?'
The jurisdictions with the most affordable housing have less restrictive zoning, which is not the same as upzoning.
Upzoning is a subset of less restrictive zoning. Just need to get on with it, and it's absurd that it has been prevented for so long.
Especially absurd when you consider that sprawl has been demonstrated (North American experience) to be circa 2.5 times as expensive to maintain as more intense housing. (Suburban vs. urban, city costs)
Incorrect on all facts.
Upzoning has nothing to do with less restrictive zoning.
Less restrictive zoning results in housing at approx. 4 to 5x median income, so unless upzoning is going to achieve that then there is no comparison.
Less restrictive zoning is market-driven, and upzoning is bureaucratically driven.
Sprawl is not more expensive, that is just a compact city's ideological ringfencing of benefits and then ignoring where the resource costs are pulled from.
Incorrect and fact free, to claim that sprawl hasn't been found to be more expensive for city maintenance costs.
You're trying to claim that upzoning isn't a subset of less restrictive zoning by saying if it doesn't solely get us to 4-5x income it's not worth doing. A non sequitur. Doesn't flow at all. That's just yelling "it's not as good so it doesn't count".
Again, harking to motivations is just a further comment on what different people want. Not at all a contradiction of the fact upzoning is simply a form of less restrictive zoning.
It is patently obvious that upzoning is less restrictive zoning than zoning that prevents more development. Basic understanding of set theory and English.
Well, I didn't see you providing any links when you made your claims, but having been involved in both inner city and greenfield developments, both in jurisdictions with fewer zoning restrictions and up zoning, I can factually state that your claims are not correct. It's far easier to build infrastructure, both in CAPEX and OPEX in a greenfields subdivision plus house than in brownfields.
You're confusing what the definition of 'less restrictive' zoning really means as is used internationally by the likes of the Demographia report, The World Bank, and The NZ Productivity Commission Report into Housing, and to describe the type of zoning say Texas works under and has been used on the site for many years.
It means less restrictions across all land types and is defined in particular where the market indicates the use before and even without the requirement for any change in zoning to be made.
To zone the land first just allows for monopolistic land bankers and speculators to game the system and cause a shortage of land to always cause a supply imbalance to demand and make unearnt super profits.
Without these restrictions, then there is always a potential superabundance of land available NOW, to satisfy whatever the demand is.
The problem using Texas as your example is that's a region that's actively trying to encourage development for it's post-petroleum existence, using subsidies, lower taxes and less restrictive legislation. So super hard to use as a model, because it's inherently subsidized and growth orientated.
Don’t worry Brock, it’s getting even dumber, given central government has mandated higher density housing almost everywhere in NZ’s bigger cities. Through all the far flung reaches of suburbia, well away from employment, services and good public transport.
world leading stuff!!!
Surely the MDRS addresses the issue of far-flung developments. In spirit it enables capacity everywhere which means that only the most prime sites are targeted for redevelopment.
Developers much prefer to develop in areas where housing is demanded. MDRS allows that.
It does not enable capacity everywhere, it only allows it to happen in certain cities.
There is no city in the world where density has ever been a proxy for affordability. If that were true then Hong Kong would be the most affordable city in the world, not the least affordable.
If it was only about developers' preference, then they would be building far more affordable mid-density to single-dwelling housing, because that is what is most demanded, but not supplied.
Their best intention 'spirit' is a poor substitute for what the evidence is showing from such decisions. Housing has progressively gotten less affordable.
Oh god.
I meant it enables capacity everywhere within cities (mainly tier 1, and excluding QMs).
The 'spirit' means it doesn't allow for BS qualifying matters.
Developers act as intermediaries/agents for owners and they respond to localised differences in demand. That is, they don't build rubbish dwellings in far flung areas when demand is for high density dwellings at the core and zoning is permissive of that outcome. i.e. the MDRS
And that is why it doesn't work because what you define as 'everywhere,' is not everywhere and therefore the resource is still constrained within the true definition of how land pricing is set.
The demand is not for housing at 10x median income, these exact policies either force people to the exurbia and beyond looking to make it more affordable for what they really want, or otherwise heavily compromise on what they want and buy a shoebox closer in.
In jurisdictions with real affordability at circa 4 to 5x median income, they have both lower and higher densities than Auckland, with the dwelling being of a better quality both in materials and size.
All most people are getting are 'rubbish' dwellings everywhere.
MDRS is not about land supply, bud. There may be some cases where it changes the elasticity of supply at a regional level, but it is primarily about dwelling supply which is separable from land supply.
It is about changing demand for land. It never had the goal to overall the aggregate value of land in a region, only adjust the bid-rent curve. It has the effect of increasing demand for under-developed properties in high demand areas to stimulate intensive dwelling development.
Now I agree, it is not a panacea for affordability. But you are misunderstanding the actual objective and mechanisms of the policy.
Every point on the demand curve is linked to how the price of land is set on the fringe. This curve is almost exactly the same shape in any city in the world, but the relative starting points on the fringe determine the value the prices will increase along the curve all the way into the center.
dafaq you talking about man.
Every point on the demand curve is set by the distance from the core (or inversely, distance from the fringe). It isn't linked to the price of land at the fringe - its linked to the residual of income and costs of distance.
This demand curve sets the price of (urban) land at the fringe.
You don't even need to know the theory to see in practice how it is set by land price at the fringe. Urban boundary restrictions cause land on the fringe that would otherwise be $50,000 ha to be over $2,000,000 ha, and all land going back in is a ratio of this fringe price. And of course, the initial input price helps determine the income residual.
You can see this on the Auckland land curve, or any other restrictive zoning, compared to less restrictive zoning like, say., Houston.
That's why the likes of Houston has a total purchase cost of owner anywhere on the curve that is lower than in NZ, plus it has both higher density and lower density areas, so if you want high density then you can purchase it more where you want, and it is more spacious a dwelling yet less than 1/2 the price of something similar(if you can get it at all) in NZ.
And all this is explained from Adam Smith, to especially the likes of Alan Evans and Alain Bertuad.
100% I do. And that's why I support MDRS and reducing constraints on land supply.
You conflate my issues with your consistently bad takes / poor understanding on land markets and urban economics with not wanting good housing outcomes.
It's also a stupid assumption you make that I work within the bureaucracy.
If you don't work in the bureaucracy, then you have no excuse. For constraints on land supply to be reduced, then zoning both up and especially out needs to be reduced, and allow people within those markets to set their own density covenants, which will naturally increase over time as the market dictates, not the planning czars.
If the MDRS reduced constraints it would see prices fall on a like-for-like basis. It doesn't.
I have worked in land markets that have provided good housing outcomes, in terms of what people want in both quality, size, location, and price. All the things that the NZ system has progressively moved away from with their ideologically driven policies.
Your good intent is causing the very perverse outcomes you say you are against.
If the MDRS reduced constraints it would see prices fall on a like-for-like basis. It doesn't.
What makes you think MDRS won't make a difference to dwelling prices?
This is another one of your issues in your understanding - you conflate land and dwellings, assuming they are inseperable. MDRS will 100% make dwellings cheaper as it fundamentally changes the elasticity of supply. What it doesn't do is lower overall land prices - for that you need land supply policy, which, as I have said and you seem to ignore, I am not against.
It's a false equivalency to cut the section in half, build two houses and then say because they are slightly cheaper the housing is now more affordable in comparison to what stood there previously.
We know on a $m2 basis they are paying more, so it would be just as valid to say they are paying more. It is easy to make such a claim if you don't have a baseline against to reference them.
I'm actually in favour of the MDRS when it is market-driven like it is in jurisdictions where housing is perpetually affordable, and have been promoting such policies for over 20 years. The NZ version of an MDRS by its very definition is not a proactive market-driven policy but is the reaction to bad policy.
But there is no jurisdiction in the world where they have calmy unwound bad policy. The best the MDRS will do is accelerate the crash and get all the pain over more quickly, from which a better policy will be enacted so we don't get a repeat.
No that’s not quite correct.
Developers of course won’t build where there’s not demand, but there’s demand throughout all urban areas of Auckland - not just areas close to amenities. Of course there is some truth in what you say - demand will *typically* be higher in areas close to amenities.
The biggest thing for developers is delivering to price points for which there is a market, or ‘realisable demand’, and from which they can secure profit margins of at least 20-25%. Another big thing is securing the right sites. The right sites must be a certain size, dimension, slope and with minimal barriers in terms of infrastructure servicing. Many of the better sites closer to amenities have already been redeveloped in Auckland.
This means that much of the redevelopment that occurs under the MDRS will be on sites that are in the middle of suburbia, often quite remote from amenities. AkA ‘sprawling density’.
It’s not totally a bad thing as it certainly enables more housing supply. However, housing in these locations is likely to be quite car dependent, unlike high density housing near centres and train stations.
Yup. The building will happen where the land is cheapest. Unfortunately we don't know what is planned for Central Auckland because it's been railroaded with some sort of 'future Light Rail' development area designation. Not really clear on what that means, or what can be built, or when, but those areas in the far-flung burbs like North West and South West Auckland are fair game.
Unsure how this qualifies as world leading. Seems like that bar must be pretty low.
More rubbish.
Development occurs where there is the most demand (currently mid priced housing in low-mid value locations) and where developers can make the most profit.
You have a flawed and very very strange notion of ‘demand’. Of course, in theory (you love your theory) many people would love to Live in Ponsonby or Remuera. So at an abstract level there is high demand for central, high amenity locations.
But such abstract notions of demand are vastly different from ‘realisable demand’ or demand that can be realised within the constraints of financial means.
Dude. You can't get past the idea that development is a function of zoning. The reason we see shitty medium density housing in shitty locations is not because of inherent demand for that typology. It is because it is a next best solution in a market where supply is constrained in the best locations. Take away that constraint and you will see much less of this shitty housing being built.
It is not abstract at all to say that demand is highest in areas such as Ponsonby and Remuera. Simply mapping land prices will show you that the willingness to pay for these areas is very high = high demand.
Developers of course won’t build where there’s not demand, but there’s demand throughout all urban areas of Auckland - not just areas close to amenities. Of course there is some truth in what you say - demand will *typically* be higher in areas close to amenities.
One quick perusal of the distribution of land values and the attractiveness for development across Auckland (along with some basic theory on developer incentives) will highlight to you that almost certainly the development will pursue projects at the core where density is demanded.
This means that much of the redevelopment that occurs under the MDRS will be on sites that are in the middle of suburbia, often quite remote from amenities. AkA ‘sprawling density’.
With that statement, it is pretty obvious that you don't have any idea what you are talking about.
Total garbage.
Check out some of the data on Knowledge Auckland’s website sometime if you don’t believe me. While you will see that most development has been occurring in Auckland’s urban area over the last few years, much of that redevelopment has been occurring in the middle of suburban areas NOT close to centres and train stations.
for crying out loud..
Come back and discuss once you have educated yourself.
Let me guess, you are a planner or urban designer?
Ok then, have a look at the map on page 10 of the report link below. Medium density occurring all over the place in Auckland.
Totally refutes your comments.
over to you…
https://www.aucklandcouncil.govt.nz/plans-projects-policies-reports-byl…
No.
There is a lot of existing higher density zoning near centres and train stations as well. And redevelopment there has been patchy.
As you can see on the map - medium density is scattered all across Auckland.
Because developers go where they can do development, and make money.
MDRS will open up much more of those far flung areas for redevelopment, so much more if it will occur.
What don’t you get?
Lol. PhD in urban geography here buddy.
please tell me more.
A major thing you are oblivious to is affordability. I assume you think a whole lot of development will now occur in central Auckland. Totally ignores the inability of a large proportion of potential buyers to afford central Auckland prices.
That’s why so much two storey terraced housing is occurring in lower value suburban locations:
- the land values are lower
- two storey terrace housing is much cheaper to build than apartments
It’s all very well in the abstract to say people want to live centrally and close to amenity, but that’s totally ignoring the economic basics of ‘ability to pay’.
but hey, I am wasting my time here and getting not only snide, but totally misinformed, comments.
Anyone studying economics in recent decades - perhaps 20 of those - is likely to be wrong, on first principles.
Because their teaching (bit of an oxymoron, that, teaching and economics on the one sentence) fails to address the physical world.
Which they then feel entitled to address.
Alle same priests defending a heaven.
Economics is a social, not physical science.
But presumably also the physical sciences have it wrong also.
Only by subscribing to amateur hobbyist sites with a penchant for repeating Russian derived propaganda will we find the truth. The more it looks like a 1998 Geocities page, the more likely it holds the key to the matrix.
So, you think there’s a whole lot of demand for 2 bed townhouses in central Auckland at a price point of circa $1.1 million (minimum), as compared to 2 bedroom townhouses in middle or outer suburbia at circa 750-800k?
Look forward to you educating me on how that basic concept is ‘misguided’.
I just watched this short video from E. Glaeser, below, on it.
And I fail to see anything more than secondary relevance.
It confirms that land values and house prices will be higher in high amenity locations. Of course, so what?
If you enable widespread medium density almost everywhere, then yes a certain amount of development will gravitate to those locations.
However, that again ignores the fact that only a minority of the population will be able to afford to rent or buy in those locations.
The MDRS, if enabled in central Auckland, will certainly result in more medium density development occurring in central locations. However, the majority will still occur in those mid to outer suburban locations, because of ability to pay.
Ergo, the MDRS is being applied to much wider urban areas, so we will continue to see ‘sprawling density’. But with a bit more occurring centrally, no doubt.
Nymad seems to be suggesting that the majority of medium density development will suddenly, magically, occur in central locations, if it is enabled to.
I totally disagree. But noting a greater proportion of development will certainly be centrally located.
https://m.youtube.com/watch?v=Qx394peRdK8
But then again , I am apparently ‘not smart’, despite having a PhD and an IQ in the mid to late 130s.
So, all you can throw around is ad hominems. That says an awful lot about you and the ‘strength’ of your argument.
Attack the man, not the argument. Great work!
You also seem very precious about this topic matter, and seem to appear only when this topic matter is published. Which makes me very heavily suspect you are a government policy wonk or bureaucrat who has been heavily involved in the MDRS.
The ball is in your court as to whether you actually want to engage in a debate or just throw ad hominem around.
More sad ad hominems. Frankly, pathetic. Hilarious, Mr or Mrs Government Bureaucrat involved with the flawed MDRS.
We all know that ad hominems are used when someone does not have the capacity to engage in a coherent debate. I gave you the chance. Too bad.
I will let you have enjoy your wet dreams about the MDRS and flawed, abstract urban theory. Which you don’t understand (but mention to try to sound impressive)
good bye
Why, Gareth, did you ask an economist a question about physics?
Bit like asking a priest whether there's a heaven; his job depends on him not acknowledging the truth.
Ex fossil energy, no city of over 1 million existed.
Beyond fossil energy, nobody - and particularly no economist - has proved that we can maintain those over 1 million. Of which Auckland is one.
Can we balance this article, with someone from the real sciences please?
At 'peak horse' the upzoned tenements had densities far higher than today's modern cities.
The key to the charade of higher density is to ring-fence out the labour of others and the cost of resources they take from the surrounding exurbia and countryside, and only include within the fence the counting of the benefits received from using those resources.
https://micromobility.substack.com/p/peak-horse-but-for-cars-
The rise of automobiles saw the demise of horses, which saw the rise of canned pet food. And maybe even the demise of rhubarb.
The butterfly effect AKA by politicians and other ignorants an unintended consequences.
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