By Bernard Hickey
It's now one of the most famous phrases in the English language: "Houston, the Eagle has landed." It signified the moment when humans landed on the moon and it followed years of hopes and dreams and planning and construction. There was immense satisfaction, and then anxiety about whether the whole enterprise could be brought safely back to earth.
On Friday, Auckland's 'Eagle' landed in the offices of the Council and it's a moment that will prove pivotal in the future of both Auckland and the rest of the economy. The Independent Hearings Panel on the Auckland Unitary Plan handed 1,000 of documents, plans and recommendations over to officials after five years of work, including 249 public meetings and 21,210 pieces of written feedback.
There were 13,394 submissions from members of the public and all sorts of interested parties covering 1.494 million separate submission points over 249 days of hearings on 70 separate topics. Submitters made 4,000 appearances and submitted over 10,000 pieces of evidence.
Controversy has raged over its contents since a draft was published shortly before the 2013 Council elections. Countless angry discussions around the Council table and endless letters to the editor have debated whether the Plan should allow Auckland to grow out and/or up, and how. It is the most anticipated town plan in the history of New Zealand.
Everyone who cares about how Auckland handles its explosive population growth and what that means for the rest of New Zealand is interested in its contents. The Government has wrapped its entire supply-led strategy for dealing with Auckland's housing crisis/challenge into the Auckland Unitary Plan. The troika of housing ministers, Bill English, Nick Smith and Paula Bennett, are not-so-slightly desperate that the Plan includes enough room for hundreds of thousands of new houses, and that the Council agrees to it if it does.
No one knows what is in it and won't until it is revealed in all its glorious mass of zoning rules and maps on Wednesday afternoon. When it is revealed to the public, it is likely to set off a firestorm of debate about the future of Auckland, and unfortunately it will happen in the full glare of an election campaign for Council seats.
Under the rules to decide the Unitary Plan, the Council has 20 working days to make its decision or decisions on the Plan's recommendations. That means it will all have to be done and dusted by August 19. The Council is preparing for an intense set of public meetings to debate the recommendations from August 10 to 18.
The Government and some on the Council are quietly confident will it fit the bill and be approved, although there is a tiny bead of sweat on their brows when they say it and their fingers are suspiciously crossed. Anyone at the now-infamous February 24 meeting where the Council voted 13 to 8 in favour of those who wanted to withdraw proposals for more intensification of housing developments knows this is no sure thing.
The stakes are incredibly high, as pointed out repeatedly by Reserve Bank Governor Graeme Wheeler in comments to politicians, and as recently as July 7 by his Deputy Grant Spencer.
"The Panel’s recommendations and the Auckland Council’s response to those recommendations will be crucial in setting the future path towards reducing the housing market imbalance," Spencer said.
Auckland and New Zealand desperately needs Auckland to change its plans so developers can build the sort of 3-4 storey walk-up apartments like the one pictured in Ellerslie. The Wamaka Buildings were built in 2013 by Mark Todd's Ockham Residential on a traditional section that would normally have just one stand-alone house on it, with possibly a small in-fill house at the back. The usual redevelopment would put three NZ$1 million-plus townhouses on it. But Wamaka includes 10 two and three bedroom apartments that would now be sold for a more affordable price of around NZ$550,000. They can be built at an affordable price because they don't need expensive basements or lifts or sprinkler systems.
Auckland needs a flowering of these sorts of developments all across the Isthmus if it is to become more affordable. Used car yards all along Great North and Great South Rds should be turned into these sorts of affordable and attractive housing developments. This was the sort of housing that the Council voted to stop on February 24.
The Government, the Reserve Bank, Generation Rent and the rest of New Zealand are preying the Eagle has landed and it can be brought home safe and sound. Fingers crossed. The last thing we need is for all of us to be gazing skyward on August 18 and see the hopes of future generations flame out in a mess of Council debate and legal challenges.
A version of this article was published in the Herald on Sunday. It is here with permission.
95 Comments
Hard for supply to match demand and if it does will not be before few years and by that time the ever growing house price - god knows what they will be and space x you are correct that all this madness can be stopped but puting restriction on foreign buyer and for that solution it has to be #JKEXIT.
This plan will also help the house owner with little bit of land also to go up in multiple.
Boom time for house owners with land and Builders.
Agree any solution to take off has to start from #jkexit.
National government supporting only rich though not just but is known and tolerable but their love and all out support for asian buyer is going beyond as in no time, they with their money power will operat NZ by remote as their colony, if not already.
Govt should start by taking action instead dividing the society.
Neighbour in Hamilton just gone into a rest home.Family are selling the house that has a current GV of 340k.
Agents say that 450k to 500k is achievable in this market.This has nothing to do with foreign buyers,this is all to do with Fhb attitude of must have home.It's a kiwi tradition.
My feeling is that the home, that 2 years ago was valued by the same agent at 320k is actually worth about 350k.Pay any more and you may suffer further down the track.
Just an opinion,no expert.
Why don't we set up an oligopoly in food production, where "supply" is restricted, and it doesn't matter if food prices inflate threefold over a decade and some people make fat profits out of it, there are no "rights" to basic necessities, and if any food item sells for "x dollars", well that is just "what it is worth", ennit? No point in looking into the economics of "supply" and "rackets" and "gouging".
So what exactly are all these people going to do in a more dense Auckland? Is Auckland going to become an industrial powerhouse to supply the jobs? If so then I hope the more dense housing is near the factories. Are we going to become the high tech hub of the world? Where is any evidence of that happening, or being supported? Certainly support for my own high tech intellectual property has been a hunt inside a vacuum. Are we going to become a financial hub for Asia Pacific, yeah right, more like a tax evasion and fraud centre from the look of the work Gareth Vaughan is doing. Is the future of Auckland children to sell each other coffees (and houses)?
I would have thought it evident that dense cities are becoming hots spots for civil unrest. But then we have always been slow learners in New Zealand, importing trends that are already failing elsewhere.
But I am not totally opposed to higher density, but it has to be associated with a couple of key conditions. That is mixed use, and getting rid of the motor car from every day life.
I seems to me this increased population mantra seems a great way of simply consuming resources for the sake of it, little thought is being given to the creation of a better civilised way of life. Remember, we import 100% of our transport energy, think about that really carefully.
We're going to become fabulously rich as the world-leading powerhouse Switzerland of $2 shops and fast food franchises.
Or it's a cargo cult that hasn't quite been thought through.
Edit, rather than make new comment: Have been wondering - how many of the current businesses are genuine going concerns, with products, employees, customers, turnover, and all the rest, and how many are fakes, set up purely for money laundering, and/or as an immigration pathway, to serve that purpose for a few years, profit and turnover irrelevant, then sold on to the next aspiring business immigrant? In my area have been noticing an inordinate number of those manicure/pedicure places that never have any customers. Lack of customers doesn't appear to be any kind of hindrance to operations. How much of our apparent Main Street/services/SME economy is an illusion, made up of decoy businesses?
The usual rationale given for our high immigration rate is that we need a base of young taxpayers to support all the ever-increasing cohort of fogies on superannuation. If that's genuinely the case then a) why the hell are we then allowing immigrants to then import their own fogies, negating the desired demographic rebalancing, in an age of skype and cheap flights, where emigrating doesn't mean waving goodbye to family forever; and b) is this even a valid plan any more, when there aren't the jobs available for these younger people, in an age of offshoring and automation; and c) where there are jobs, a significant number aren't paying much tax because of WFF and suchlike subsidies?
If there is any underlying evidential basis for this policy, and frankly I doubt it, the reasoning doesn't hold up to scrutiny, and the execution certainly doesn't.
Kakapo: "cargo cult" is the perfect term for contemporary fads in urban planning. I have used it often. The primitive Papua New Guinean tribesmen who were the famous "cargo cult" thought that civilisations were rich because they built airfields and then the Gods sent magical flying monsters down full of "stuff".
Modern urban planners think that by building tall buildings and subway systems, everyone will become as rich as Manhattanites.
What is the intellectual difference between the two, apart from modern urban planners having less excuse for their stupidity?
Scarfie above made an excellent argument along the right lines - can we just assume that all the "industries" that suit dense "housing" and public transport are going to spring into existence after the Plan is enacted?
'I seems to me this increased population mantra seems a great way of simply consuming resources for the sake of it'
That is the system. Consumption of resources -even non-renewable ones- is rewarded, and frugality and conservation are strongly discouraged.
Increasing the population is one of the easiest ways of increasing the rate of consumption of resources, though persuading people to use military-style vehicles to travel to work and go shopping and other similarly insane policies also contribute substantially to the 'consumption machine'.
The 'consumption machine' will keep consuming ever-greater quantities of resources until it can't. Clearly, the point of catastrophic failure is approaching fast, both from the perspective of availability of resources, (especially liquid fuels) and the accumulation of pollutants (CO2, plastics, organomercury compounds hormone mimics etc. ) in the biosphere. All the scientific evidence indicates 'we' will hit the wall by 2020, though a major jolt will undoubtedly come before then.
Dense cities and urban unrest? On the contrary, cities around the world have undergone a renaissance with crime dropping through the floor- new urbanism is on the rise as tech workers and high skilled workers much prefer to live in cities than dull suburbs or too-quiet small towns. Look at New York which 30 years ago was synonymous with urban decay; and London with it's massive growth in the financial sector. The people and dynamism seems to feed on itself producing a whole startup ecosystem; once it hits critical mass large numbers of jobs get created.
For a local example urban Wellington is now full to bursting with thousands of techos and creatives working for the likes of Weta Digital, Trademe, Xero; none of them existed 20 years ago. Auckland is still a bit behind the curve but the number of people living and working in or near the CBD is growing exponentially, with the rail links improving and number of decent offices and apartments developing it will be a fantastic place to live and work if well managed.
The analogy of the Moon landing may well be more appropriate than intended because there is a mountain of evidence it never actually took place and was a staged event designed primarily as a propaganda exercise to maintain confidence. The fact that no further attempts were made in the 40 years following the initial 'voyages' supports that contention.
And so it is with the Auckland fiasco: a lot of fundamentally flawed concepts have been promoted; there has been a lot of vacuous commentary; nothing of substance has emerged when it comes to dealing with the reality of the local and global predicaments, which are made worse by the day.
The writing has been on the wall since Auckland City and the Auckland Regional Council firmly rejected the concept of limits to growth in 2005, in favour of unsustainable growth and the future consequences of unsustainable growth.
And at this late stage in the game the National government dare not close the floodgate of immigration because to do so would put the NZ economy into a fairly immediate tailspin. Therefore, we should expect the level of political, environmental,, economic, social and financial failure to increase over the coming months and years. Indeed, the IMF is now suggesting that governments borrow and spend even more money to prop up flagging global growth as highly depressed interest rates fail to deliver the required results. Desperation is emerging..
https://www.theguardian.com/business/2016/jul/23/imf-calls-for-more-gov…
Those who scoff need to provide actual evidence humans went to the Moon and returned alive. None of the so-called evidence stands up to scientific scrutiny, I'm afraid. And just as with official narrative of 9/11, there are more questions than answers. It's rather a lot like religion: believe in spite of the evidence.
However, none of that is relevant to our present predicament, other than the propaganda aspect, that people in power can say almost anything, and will be believed by the gullible and the uninformed.
What's your take on the different religions? I say this there's much more evidence we put man on th moon than there is that Jesus, Mohamad or Buddha graced us with their presence - and yet the vast majority of the citizens of the globe swear faith to one of these prophets being real...
A lot of evidence that Christ existed and inspired...this isn't a theology site but we could start with the letters of St Paul written within 20 years of Christ's death plus several extra- biblical historical references from non-sympathizers. And of course the gospels. Almost no credible scholars consider that Christ did not exist.
Fritz you might want to take that up with Richard Dawkins. The God delusion, https://www.youtube.com/watch?v=uQ7GvwUsJ7w
You don't believe in the moon landings but still expect to be treated with scientific credibility? Good luck with that. For starters, how about the fact that were still using kit left by the first moon landing? Or are all these scientists in on the conspiracy too? https://en.m.wikipedia.org/wiki/Lunar_Laser_Ranging_experiment
I suggest you start with:
https://en.wikipedia.org/wiki/Moon_landing_conspiracy_theories
The fact that their are reflectors that have been left on the moon that can be seen from earth seems pretty compelling evidence to me.
Chaston is beyond help on this, I have been pointing out to him for years that the value of his site is constantly dragged down by ecopalypse doomsayers and the like. Trouble is Chaston is actually sympathetic to them, he actually believes some of this stuff himself.
The moon landing conspiracy if true, does not have parasites on the take to the tune of billions of dollars per year, which depends on the survival of the theory. I include in the "parasites" on global warming and enviro-doomsaying generally, the rentier classes in property and finance who make a killing from the policy approaches that are chosen in response. IF policies such as simple taxes were adopted instead of carbon trading schemes and urban growth boundaries that enrich the 1 percent, the whole thing would not stink so much.
I highly recommend the long article "The Great American Bubble Machine" by Matt Taibbi. It is an indictment on economic-political media generally, that "Rolling Stone" magazine carries some of the highest quality analysis!
Most of the people who make the most noise about Thomas Piketty's findings, haven't got a clue about the big elephants in the room that are the actual causes of the rising inequality in our time. Including Piketty himself, some of the stuff he hays himself in his famous book, gives him away. Several other analysts have pointed out that most of the inequality identified in Piketty's data is in fact to be found in urban land value inflation. But there is a clamour on the Left, for more wealth redistribution rather than the mass sacking of urban planning departments, which is the true solution.
It is indeed a pivotal moment.
The 'majority' view of pundits in the planning / development sectors seems to be that the Council will rubber stamp much if not all of the plan, especially the residential chapters.
It's a view I tend to favour, but nowhere near as confidently as some. I agree with Bernard that it is far from a done deal given how the Council voted in February.
If they don't rubber stamp the residential chapters, it's going to get very messy indeed.
Apart from the Banks being a big problem in this housing crisis, in my view it will not matter how many houses you build in Auckland, and probably in all the main cities, the demand is there when there is no control over foreign buyers. It is demand, demand demand not supply.
At last someone on this comments thread with a brain!
There are numerous cities in the USA growing at TWICE the rate Auckland is, and they happen to be the cities with no affordability problems, because like with cars, TV's and I-Pads, if there is more demand, you just supply a bit more. If anything, the prices becomes more competitive because of economies of scale.
https://www.buildzoom.com/blog/cities-expansion-slowing
I don't know how long it is going to take, but the mainstream punditry and economics profession will have to wake up one day and ask "how did these US cities get such an economic lead on the rest of the world"? Joel Kotkin is probably the best chronicler of the trends. His "America's Red-State Growth Corridors" is out of date now but still an informative read.
It really is as simple as you say. Money spent on actually building freakin' houses and even putting in the infrastructure for them, actually adds to REAL wealth - the stuff in existence and being consumed: versus the alternative of just paying more and more for the same, unchanged second-hand items - not to mention the social justice implications of the direction of the zero-sum wealth transfers.
At last someone on this comments thread with a brain!
There are numerous cities in the USA growing at TWICE the rate Auckland is, and they happen to be the cities with no affordability problems, because like with cars, TV's and I-Pads, if there is more demand, you just supply a bit more. If anything, the prices becomes more competitive because of economies of scale.
https://www.buildzoom.com/blog/cities-expansion-slowing
I don't know how long it is going to take, but the mainstream punditry and economics profession will have to wake up one day and ask "how did these US cities get such an economic lead on the rest of the world"? Joel Kotkin is probably the best chronicler of the trends. His "America's Red-State Growth Corridors" is out of date now but still an informative read.
It really is as simple as you say. Money spent on actually building freakin' houses and even putting in the infrastructure for them, actually adds to REAL wealth - the stuff in existence and being consumed: versus the alternative of just paying more and more for the same, unchanged second-hand items - not to mention the social justice implications of the direction of the zero-sum wealth transfers.
NZ needs property investors and anyone's right to own 20 homes if they wish.
Property investors have nothing to do with forcing prices up as they want to buy right so the numbers work.
People buying for their own occupation are the ones that buy on emotion.
Auckland buyers are ruining it for many others around the country and the Reserve Bank should have made the new rules solely for Auckland.
There will be many unintended consequences around the provinces with the new rules.
True property investors with plenty of equity will be the winners as they will retain tenants far longer due to people who don't own being able to buy because they have insufficient deposits!
The LINZ stats that were released a month or so ago. Media played up the 3% or whatever it was that were non tax residents, but the figures showed that 36% of buyers were on student and temporary visas. Add those together, and count temporary and student visa holders as foreign, as most people would, you get 39%. From memory there were 36% not having to fill out the questionnaire, so presumably citizens and permanent residents, and more acting through trusts and companies, where nationality wasn't checked, so the percentages of foreign vs NZ in that segment is unknown.
It's probably a reasonable assumption that genuine students aren't splashing out on all the real estate they can get their hands on. In the case of the under-25s especially, is a reasonable assumption that they're unlikley to be using their own money, and that they're acting as proxies for somebody else.
To be counted as a student, all you need to do is enrol at one of the fake language or computer schools that are proliferating.
It is sickening, and a national disgrace, that our stupidity on urban planning policy has led to this xenophobia. Growth accompanied by elastic supply of housing is an unmitigated good. No-one needs lose anything; economies of scale are gained, knowledge is gained, international connections are gained, diversity is increased, etc etc. There are numerous cities in the USA growing twice as fast as Auckland, and they all happen to be popular destinations for opportunity-seekers because of their excellent, systemically affordable housing. In contrast, NZ is a popular destination for get-rich-quick specufestors (and it is not alone in that, some other US cities, and Australian ones, and more, have the same problem).
We should be trying to be the North Carolina of the South Pacific, not the Hong Kong of the South Pacific. Boeing just expanded its operations into North Carolina, just in case you wanted to have a good sneer. And have a look at the example of Raleigh in this article from yesterday:
http://www.stuff.co.nz/business/82089717/five-successful-cities-with-ch…
In the context of this discussion, aiming for Switzerland is cargo-cultist nonsense. For a start, we haven't had the world's most famous bankers located here for centuries, and we never are going to. We don't have their system of democracy. We don't have a policy of (well) armed neutrality, national conscription and a domestic armaments industry. We don't even THINK about transport tunnels and viaducts as large-scale solutions, let alone work on becoming world-leading in them.
We need less woolly, out-of-touch dreaming about the impossible, and more pragmatic confrontation of the "needed".
The best remedial education on this whole subject, is this highly simplified (so even politicians can understand it) policy guide:
Switzerland of the Pacific is more a joke than anything real. When Key proposed making New Zealand the Switzerland of the Pacific, he overlooked, or more probably hoped the dumb public would overlook, that you don't become Switzerland by providing dodgy financial services to low-rent crooks for minimal return, but by having lucrative industries manufacturing pharmaceuticals and specialist chemicals and high-quality precision scientific instruments.
NZ just lurches from one cargo cult silver-bullet get-rich-quick mania to the next. Is a bit of rational thinking and diversification really so beyond us?
'Houston, the eagle has landed, ' where housing is 3x medium income.
'Auckland, the turkey has landed,' where housing is 9x medium income.
The PAUP will be a turkey, and will be no better in increasing affordable housing supply than the SHA's were, unless of course you mean affordable defined as subsidized housing, or smaller and smaller apartments.
Auckland subsidises sprawl, not small apartments. Apartments don't get built in Auckland.
A normal city expands with a 70% up / 30% outwards expansion; Auckland does 60% : 40% and all that additional sprawl is paid for by rate payers.
Take a trip to Kumeu, Warkworth, Pukekohe, Orewa, Ckarks Beach - have look at the countryside there. This is your last chance to see it, everything wilk be sprawled over as the towns triple in size over the next 20 years.
Will be vey interesting to see what happens. I have an 'only one house allowed' $1.2M house 5km's from town that could become 3 x $680K houses - or will start as it is. This is best chance Council will have to allow more, cheaper houses Assuming they care about housing more than the risk of losing the NIMBY vote in local body elections.
It never works that way. Unfortunately none of the bright minds considering this problem on our behalf, are noticing the evidence from all over the world, that as long as a growth boundary is in place, you can cram houses in as much more as you like, they will remain just as expensive as ever per unit, or more so.
I challenge anyone, however expert or not, to provide evidence of one single city anywhere in the world that is “affordable because it is denser”. And I mean “affordable” in terms of real price of the average housing unit, which in the Demographia Reports, is a median multiple of 3. It stands out like a sore toe, that all the median-multiple-3 cities have an average/median home of substantial size and even more substantial section. Obviously the way “urban land markets” work, the price of land can be turned into a highly elastic variable when you have urban planners running a racket in actual land for growth. You can end up paying so much higher prices for land, you get less and less of it per unit, for a higher and higher per-unit real cost. Hong Kong; 66,000 people per sq km, median multiple 16: Atlanta, 700 people per sq km, median multiple 2.9. And these are not outliers, they are the end points of very obvious trend lines in data correlations.
Actually this is Economics 101, “Quota schemes and rackets”. Got a racket in food, people will be paying MORE of their incomes for it even as the overall quantity needing to be divvied up between the population, is ratcheted down by the racketeers, and people who can’t out-bid their fellow citizens have to make do with less and less. Just like the people at the bottom of the socio-economic stack unable to get housing at all, a callous enough food racket will likely result in death by starvation for the most vulnerable.
Or out it another way - Melbourne v. Auckland.
Would you rather buy a property for $900,000 and convert to 3x $680,000 units in Melbourne; or purchase a property for $1.2m and convert to 3x $680,000 units in Auckland?
A realistic development decision tree, faced by developers of today. Land costs are much lower in Melbourne and demand is very similar.
If you have owned the land for awhile, go for it. New entrants tend to be put off by the additional several $100,000 it costs to get equivalent land in Auckland to that available elsewhere, so you should make a good profit and be protected from too much competition.
Economics 101 teaches that they won't stay $680K. As soon as the land use allows 3 dwellings, if total land is still constrained by the UGB, prices will shoot up and soon they'll be over $1mil each. Just look at Vancouver. They allow "basement suites" and now you basically have to rent out your basement to afford a house. House prices with restricted supply simply go up to whatever people will pay. Infill isn't the answer (especially given our roading system), apartments near transport hubs and smashing the UGB is much better solution.
That is the concern. If everyone starts doing it the street will go from 50 x $1.2M houses to having 150 x $680K houses so I'd drop prices to sell the quickest. Oh well, I should be able to get consent reasonably quick and as in this situation I'll be acting as a speculator not investor I'll be paying tax, as any other business does, on any profit made.
finally someone gets it: that desirable cities become more expensive and the supply (when increased) usually reflects the increased demand (and the high prices). What Auckland needs to do is to increase the supply of intensified housing (including high rise apartments) to bring down the prices to more affordable levels (i.e. 680K rather than 1.5 million). But there's no changing the fact that desirable cities ARE expensive. Does New Zealanders want to avoid having such a city?
More houses, more profits for the builders/developers/agents along with more price rises, because demand is limitless for a place in NZ, in this screwed up world. Wait till the Aussies and PR holders in Aussie start looking across the ditch to buy their first homes (they can come in without any restrictions and live like citizens here with all benefits, unlike the poor Kiwis who cross the ditch, right ?).
No one knows what is in it and won't until it is revealed in all its glorious mass of zoning rules and maps on Wednesday afternoon.
It has been possible to view the PAUP for some time now and it changes in stages with no dramatic change of mode. Every change the council makes, they cut a little more land off Auckland and add a massive amount of sprawl in the middle of nowhere.
This trend will almost certainly continue, because the council loves sprawl.
Look. The National Party Government have just paid $1b of tax payers money to fund another 12 months foe all organisations involved to write up more "Plans". Thats Mbie, Council, Ateed, Consultants for Africa, to spend a billion dollars to come up with a "To Do List" before next years election. Meaning. Nothing will be done for at least another 2 to 3 years.
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