Prime Minister Jacinda Ardern is dismissing National’s suggestion for the Government to pass an emergency law to free up more land for housing.
Speaking at a post-Cabinet press conference on Tuesday, Ardern said the Government was already addressing the issue through the National Policy Statement on Urban Development.
The Statement, which took effect in August 2020, sets out the objectives and policies for planning that local councils need to use under the Resource Management Act (RMA).
While all the Statement’s objectives applied almost immediately, the timeframes for councils to implement various parts of the Statement extend to 2024.
National’s proposal implies more immediacy and is a stop-gap measure for until the RMA is repealed and replaced.
National Leader Judith Collins wrote to Ardern suggesting a special select committee be established to provide recommendations on temporary legislation by the end of March.
National said the powers, akin to the ones used in Christchurch after the earthquakes, would make room for the building of more houses both through intensification and greenfield development.
National suggested the appeals process be suspended so district plans could be completed as quickly as possible.
It also recommended suspending requirements for infrastructure to be built prior to zoning.
It is at this point that National and Labour clash.
Removing Auckland’s Rural Urban Boundary an 'outdated' fix
Asked by interest.co.nz last week why Labour walked away from its 2017 election promise to remove Auckland’s Rural Urban Boundary (RUB), Housing Minister Megan Woods said: “There is already significant land in Auckland zoned for future urban growth within the RUB over the next 30 years, but the biggest barrier to increasing housing supply in these areas, and beyond, is the cost and provision of infrastructure (eg three waters, transport, and community infrastructure)...
"The idea that changing Auckland’s RUB will fix the city’s housing woes is outdated and has been superseded by other progress we have made in our first term.
“The National Policy Statement - Urban Development… requires councils to consider plan changes that would provide significant development capacity regardless of whether this is within current plans or not.
“This means there will be more flexibility and opportunity for urban development beyond the current RUB.”
Infrastructure levies avoided
Coming back to problems around infrastructure, legislation passed in August 2020, enabling the users of new infrastructure to be levied to help the cover the costs, is yet to be used.
Asked by National’s housing spokesperson Nicola Willis (in a written question) whether any Special Purpose Vehicles had been established under the Infrastructure Funding and Financing Act, Woods said the Ministry of Housing and Urban Development was working closely with Crown Infrastructure Partners and the Treasury to implement the legislation.
“The current focus of this work is on operationalising the statutory processes set out in the Act, and having initial conversations with councils and others to build their understanding of how they can use the Act to fund infrastructure projects,” Woods said.
“Officials expect these conversations will support councils and others to identify and apply for potential projects to use the legislation.
“Given this current phase, it is too early to expect levy proposals.”
The powers under the legislation are modelled on a set-up led by Crown Infrastructure Partners and used at the Milldale Development in northern Auckland. Owners of properties in the new development are being levied for 30 years to help cover the cost of new infrastructure.
There has been talk for over a year of duplicating that arrangement in other high-growth areas. But both interest.co.nz and Treasury have warned of the costs and complexities involved.
Same story with the Urban Development Act
Willis also asked Woods whether any projects had been considered as candidates to be progressed under the Urban Development Act.
As per her previous answer, Woods said it was too early to expect applications, given the legislation had also only been passed in August.
The Act outlines a new streamlined process that approved large-scale public or private developments can go through to get their projects off the ground, as detailed in this story.
The Act empowers Kāinga Ora and its partners to acquire land - either through agreement or compulsorily - and override provisions in RMA plans or policy statements, among other things.
“The current focus of this work is on operationalising the statutory processes set out in the Act, and having initial conversations with councils, developers, iwi and Māori, and others about how they can use the Act for complex urban development,” Woods said.
“These conversations will support councils, developers, iwi and Māori, and others to identify and apply for potential Specified Development Projects to progress under the Act.”
Woods didn’t indicate the Government would pave the way for other developers by being the first to go through the new process.
Why weren’t projects being lined up?
The Urban Development Act, Infrastructure Funding and Financing Act and National Policy Statement were spearheaded by former Urban Development Minister Phil Twyford. Ardern disestablished that portfolio after the 2020 election.
National is supportive of the infrastructure legislation and removing Auckland’s RUB.
Willis told interest.co.nz she thought the Government should’ve been able to “talk and chew gum at the same time” when it came to getting projects ready to go through the infrastructure and urban development processes while writing the legislation.
She said it was disappointing there wasn’t more work going on behind the scenes as we can’t afford to spend years waiting for something to be done.
As for KiwiBuild, the number of houses sold under the scheme hit 1,126 in November.
The Government is expected to make an announcement around housing supply at the May Budget and unveil policy changes around housing demand in late February. See this story for more on what's being considered.
72 Comments
"The National Policy Statement - Urban Development… requires councils to consider plan changes that would provide significant development capacity regardless of whether this is within current plans or not."
...and by the time this actually has a flow on effect and things get built, we'll be another two years down the line. This is not a good enough brush-away to avoid discussing doing something on a more urgent basis to create more housing in the short-term. Remember, the Govt is -35,000 or so down on Kiwibuild houses they promised to the market already.
Plus, given the government's track record with light rail and Kiwirail sending the Auckland rail network into months-long periods of repairs with no service, the government has basically no credibility when it comes to 'oh we need to build infrastructure instead!'. Can't design it, won't fund it, can't maintain it.
This Government, along with National have no intention or political will to control the housing market. They could fix it tomorrow if there was political will to do so. When 70% of NZers own houses and vote, it would be political suicide for bringing in any policies that would allow house prices to drop or stop rising.
Despite all the BS from the Government, political power is put ahead of what is good for New Zealand's social fabric.
by Ocelot | 8th Dec 20, 12:19pm
I think using the household stat is very deceptive. I live in an owner occupied house as a boarder, so I'm included in the owner occupier stat. I think this article from 2014 shines a light on the true situation.
https://www.macrobusiness.com.au/2020/12/runaway-nz-house-prices-expose…
Home ownership by adults fell below 50% in 2013, and for under 40's fell to 22%.
Yeah, itsme's comment just doesn't make sense to me. There were many reports and news about housing crisis and home ownership rate drop. If we have 70% NZers owning houses, I don't think there is housing crisis at all. The comment is completely contradicting with what we've seen and heard for the past few years.
Jacinda's Labour Government, want people to aspire to:
- Live in a statehouse for life AND/OR
- Eventually be able to RENT on the private market
Labour really are a bunch of communists. Labour affiliates call each other 'comrad' and espouse communist rhetoric. It's really scary TBH, I've actually been shocked at Labour's (and their affiliates) descent. Surely news media whom rub shoulders with Labour on the daily SHOULD BE AT LEAST acknowledging Labour's extreme views.
The main reason for issuing a Climate Emergency, other than the sound bite of, 'Our Nuclear Free Moment' is it is allowing them to say,
'This is a new problem ie one that does not have any past political campaign baggage of all the broken promises they have made on the likes of housing over the years.'
We would do so much more to solve climate change and many other social problems if we just focussed on making sure our houses were warm, dry, healthy, and affordable.
But to actually make the same commitment to housing as they are doing for Climate Change, then it would also focus on what they haven't done because of what they are now saying they will do, ie there is no historical yard stick to measure them on Climate Change, so anything they say at the moment is beyond reproach until we can see the alternative in hindsight. Housing on the other hand is just one broken promise after another.
It's like buying some brand new to market hi-tech gizmo with your only reference point as to why you need it is the salespersons spruiking.
Covid has been like this, but note as time has progressed and we can compare what they told us they would do, and why, to what has actually happened, then we can see we were sold a lot of unlived up to political BS.
It's all a political game, and if we actually solve anything out of this will be more good luck than good management.
They should be treating this issue with as much urgency as they have covid and climate change. Waiting 2 years until it’s election time is unacceptable. Bring tradies in, create more miq places at army camps if need be, at the same time bring those students in as well. The management skills and big picture thinking lacks big time.
Auckland's updated RUB opened up massive areas for new suburbs around Pukekohe, Kumeu and Silverdale. And blocked the building of new suburbs on most of the land closer than Pukekohe, Kumeu and Silverdale. The infrastructure costs to connect massively sprawled out exurbs are typically higher than a less sprawled apart city.
Also after declaring a climate change emergency it is odd for a government to be so adamant that these RUB restrictions against building closer to Auckland must remain in place, increasing the median commuting distance of all. Building housing closer to places of work and existing infrastructure is "outmoded"?
Commuting is a question of time not distance. My occasional trip to Ardmore from North Shore was about 25 minutes on the 40km of motorway but the 3km from my house to the motorway could take variably from 10min to an hour with an average of about 25min. If Kumeu was connected to a high speed rail (as it would be in any other big city) then that long journey would be a pleasant read of the newspaper.
There are railway tracks to Kumeu and many houses in walking distance of a station.
The question is, are they lowering the floor of the tunnel in the Waitakeres so that electric trains could get through? If not, they are not committed to sustainability but only to more roading and burning of fossil fuels by individual drivers.
Must be pretty recent if there's been a change of direction? As of August 2019 they hadn't investigated the work required to enlarge the tunnel to run electric through to Waitakere and Kumeu. https://fyi.org.nz/request/10667-wiatakere-tunnel-upgrade-for-transport…
Yet the council is now growing the population out that was by (estimated order of) 40,000 over the next years.
Thanks. Looks like this is it: https://www.kiwirail.co.nz/assets/Northland-rail-94.8M-investment-summa…
They do highlight that tunnel. No mention of commuter trains BUT if they enlarge enough for containers you'd hope that they'd enlarge enough for electrification.
Ok, got that, the Kiwirail engineers seem to be good at their job but they live hand to mouth from the government grants.
Rail has been grace and favours from the start.
Trucks have torn the Northland roads apart, particularly since the slip near Kaitia on SH1, the quicker they transfer containers to rail the better.
Meanwhile on the rental front, if you are on the median income in Lower Hutt ($34,700 from 2018 census) and you want to rent a single bedroom in a house with other flatmates;
https://www.realestate.co.nz/3930960/residential/rental/24-ludlam-cresc…
At the asking rent of $415/week - you'll need to find someone else on that median income to share that single bedroom with in order for that rent to be affordable according to the 30% of gross income rule;
https://www.calculate.co.nz/rent-affordability-calculator.php
Or, there is always the Accommodation Supplement, of course.
Rental prices are the issue - introduce rent price controls - and house price problem solved.
#retcontrolnow.
At the asking rent of $415/week - you'll need to find someone else on that median income to share that single bedroom with in order for that rent to be affordable according to the 30% of gross income rule;
So, like a couple who want to live together, who both have jobs earning the median income? Which is below the full time minimum wage?
Not that shocking of a proposition, really.
Rent control is never going to fly. Rents are directly linked to house prices, which are linked to the mortgage repayments. The real problem is that the whole system has got out of balance, however this is not a unique problem here in NZ, its happening around the world. The fundamental problem now is that there are just to many people on the planet but nobody even wants to talk about that.
Rents aren't linked to house prices, they're linked to incomes. See for example https://www.corelogic.co.nz/sites/default/files/2020-09/FINAL_Q2_2020_N… page 11
When rental supply is too low, landlords can extract more rent because there is low competition, but there's a max they can extract at any one time and it's not related to the price of houses.
Just imagine if we had a sovereign currency issuing government with its own central bank, what we could achieve. Many economists say that is exactly what we have but that it doesn't suit our neo-liberal masters for us to be told this as we might start making demands that don't suit the purposes rich.
For them it's always better for the banks to be providing our money rather than the government.
"The idea that changing Auckland’s RUB will fix the city’s housing woes is outdated and has been superseded by other progress we have made in our first term.
Really, They went backwards as far as I can see.
Dithering around like possums in the headlights. "look two moons" This lot will have lost the next election before they wake up. I would suggest that they are well on their way to loosing already.
When people make ridiculous statements, then they open themselves up to ridicule.
'When asked.....why Labour walked away from its 2017 election promise to remove Auckland’s Rural Urban Boundary (RUB),...Megan Woods said: “There is already significant land in Auckland zoned for future urban growth within the RUB over the next 30 years, but the biggest barrier to increasing housing supply in these areas, and beyond, is the cost and provision of infrastructure (eg three waters, transport, and community infrastructure)...'
She needs to change her surname to 'two short planks'.
That is the problem, they 'zoned' the land. Now it will be land banked, or happily farmed, and/or held up in Govt. bureaucracy to allow the supply of services as the market wants, not what Govt. decree.
There is no 'today supply to equal demand,' or the next day, week, month, year, let alone enough for the next 30 years.
Other jurisdictions have no trouble supplying affordable housing and do it with minimum Govt. intervention.
How about we do what they do.
Re National offer.
At work we used to have a saying that said in effect "It does not matter where the idea comes from. If it is good we will use it."
I get the impression with labour that they are hunkered down in their own small Wellington bubble and are only interested in their own ideas. The range, perspective and quality of their ideas must therefore be very limited. 60 odd people in a population of 5 million, there has to be a lot of better ideas beyond their ranks. A really good leader is outward looking and listening to everybody who they are leading. Apart from having a far greater range of ideas with which to manage, people feel respected and part of the team. The "team of 5 million" yeah right. Their idea of teamwork seems to be that you the 5 million listen to what we the 60 (or more realistically 1 or 2) say and do what you are told.
I think it’s a valid criticism that the NPS-UD will take too long and it’s also not clear it will deliver: Council’s might find ways to avoid upzoning or the development community may not respond to the zoning changes in the way that is hoped. It could be seven or eight years before we find out that it is not really working.
I think it would be a good move for the government to take on powers to effect changes in zoning – whether greenfields or through intensification to kick changes along sooner. Having the powers will be a check against Councils not working in the spirit of the NPS-UD, and exercising the powers to do some immediate upzoning will confirm sooner whether developers will respond to the NPS_UD in the way it is hoped.
I also think they need to establish an infrastructure fund or do something like that to ensure that infrastructure roadblocks don’t stop the provision of housing.
And in the meantime freeing up more greenfields land where possible seems like a reasonable idea in the interim. I know the argument that it won’t help with the changes to the RUB in Auckland, but I think the more supply the better in the meantime until intensification really starts working.
It does seem like the government are sitting on their hands when they claim they have already done all they can.
The wording of the NPS-UD has allowed the council to do exactly the same restrictive zoning policies as they open up 'new land.'
It allows land bankers to land bank, and councils to drip-feed infrastructure to suit, whatever the excuse, rather than let private developers get on with it.
The only thing that will be supplied is more expensive land and therefore houses.
They have to be stupid, or complicit to allow this to happen.
Are you saying that land-bankers will bank land upzoned through the NPS-UD? Can you explain how you think that will happen?
Either way I think the solution, whether it is with greenfields or through intensification, is to flood the market with land / development opportunities. That way land owners have less incentive to hold and developers won’t bid up the cost of developable land against each other too much.
Councils haven’t had to respond to the NPS-UD yet – they’ve got a couple of years to do so.
Central government having the power to force zoning changes in a way similar to that envisaged by Collins would be a way to ensure that the market is flooded with development opportunities sooner, and it would also provide a safeguard against Council’s bringing in lots of extra rules.
The land bankers are way ahead of the council. They know that council will only extend infrastructure from their last connection point, so you don't need to zone it to identify which land is likely to be up next.
And if you are next up, and it makes economic sense, then you can just sit there and frustrate everyone wanting sections past you, although if someone offers you enough you will sell, that is the idea, after all, ie to bid up the price.
The short answer is, the council does not need to be the sole or even a provider of the infrastructure. Private companies can do is quicker, cheaper, and more environmentally friendlier.
All land should be opened up, except for land designated for environment reason, future roading designations etc. This would still leave available at any one-time hundreds/thousand of POTENTIAL development land available, that developers would be able to buy at closer to the rural land price, and yet when they went to look at developing it would have to be more based on affordability and amenity (parks etc). So while in theory, they would all build at once, the competition will make them fall into a natural free market hierarchy tp favour certain ones today, but if they try to 'get too smart' with higher prices or reducing amenities, it will automatically open up a competitive opportunity for another developer.
This is how it works in jurisdictions where housing is truly affordable.
The present system allows both council and land bankers to get too smart with the price, without any competitive push back. And as long as the price is high on the fringe (the fringe sets the price for all land going back in), then you cannot have truly affordable housing.
I think you are describing the Texan approach to land development. While that is one way to get affordable housing I am not convinced that is the only way. There are a number of countries with low price increases on the graph of house price change vs housing stock change here: https://brendon-harre.medium.com/one-becomes-four-is-the-magic-number-f…. Likewise there are a number of countries with low price to income ratios – many lower than the US: https://www.imf.org/external/research/housing/
I don’t know the details of places like Italy and Finland but I don’t think their cities are expanding like the Texan ones.
So I’m not convinced so far that the NPS-UD changes won’t work. So long as there is way more land zoned for intensification and served with infrastructure than developers can immediately develop you should get the competitive pressures that will hold sale prices down. But the government may need to step in to control the Councils’ zoning response though and help the rollout of supporting infrastructure.
It's great to see your participation in what is really land economics.
Yes it is the Texas approach, which is truly a free-market approach, which does not mean no Govt. involvement, but the Govt. sees its role to facilitate what the market wants, part of which is affordable housing. The regulation guides rather than tries to control.
Brendon likes the more interventionist model of Europe, has he has lived in Finland, and I like the more free-market model of Texas where I have worked and developed.
The Texas model produces more affordable housing without subsidy. This is for two reasons, Govts. are not as efficient as a private enterprise in doing things, plus much of what Govt. calls affordability is taking other taxpayers' money and subsidizing the affordability. This is just playing with words.
The Texas system is also extremely robust, in spite of high immigration, and low-interest rates, or in times of share market crashes, the price never boomed or bust but remained stable.
We have neither model in NZ but are caught in some 'worst of all models.'
I've already seen how local Govts. are interpreting the NPS, but it was pretty obvious to me that this would happen due to the wording, just it is pretty obvious to many that most of what the Govt. do will fail to lower prices, except in the event they overbuild and the market crashes. There is much that is happening with sales numbers and sales methodology ( eg off the plan) that reminds me of 2007.
If you really want to understand housing, you must first understand the land it sits on, Books by Evans https://www.amazon.com/Economics-Land-Planning-Alan-Evans/dp/140511861X or Alain Bertuad https://www.amazon.com/Order-without-Design-Markets-Cities/dp/0262038765 are a must, but a great first resource step is http://www.performanceurbanplanning.org/
Brendon will be able to answer about Finland. The only real thing I know about housing in Italy is they have the second-highest % per country of elderly (Japan first) and are expected to have halved their population by the end of the century. And make high-quality building materials and with style.
You're not suggesting we are on the verge of a crash?
I'm not advocating subsidies, but rather that the NPS-UD, as the main horse currently in the race be given the best chance to deliver. I agree the wording leaves the Councils with a lot of wriggle room and so I do think central government needs some mechanism to ensure that alot of the intended development opportunities are delivered. Stepping in to upzone some land now in a way similar to that proposed by the National party would also provide an earlier test of whether the whole approach could work.
I've got a concern with the capacity assessment process that it might encourage Council's to think that it is enough to zone just enough capacity, whereas I think to get something like a free market you need to zone and be in a position to provide infrastructure for many, many times more development opportunities than you currently need.
I've got Evans' book on my reading list and will get round to it sometime.
I'll keep repeating for clarity, a free market cannot work if you zone in advance as it allows the market to be monopolized. Texas does not zone the land in advance, they leave it up to the market to decide what land is up next and it is only once consent has been granted that the land is semantically rezoned.
If it is done right then no land banking is possible, land is purchased close to its next best use cost, ie rural. AND then if any money is needed to pay for council services, then the developer has the capacity to do it. At the moment the land banker walks away with the biggest free capital gains gift without adding any value due to council policies, and then the council turns around and asks the developer to pay for all the services. the cost of which is all passed onto the end purchaser. Councils policy gave the money they need to the land bankers.
You only need to develop the infrastructure to meet the demand, no more no less. It's not hard with modern systems, but councils are wed to older systems, and there is no competition.
If the legislative system allows supply to equal demand, which in development terms is approx. 6 to 12 months leeway, then the supply curve will lie almost on or is parallel with the demand curve, whereas when supply is restricted, the demand and supply cycles are counter-cyclical (like speed wobbles).
Central Govt. wrote the wording to councils to use, so they knew what they were doing, or if not will not change it anyway. councils are after revenue so will revenueize the wording to death.
The NPS, might/will deliver sections, but they won't be affordable sections. Having high supply and being affordable is not necessarily the same thing unless the plan is overbuilt and cause the market to crash, but that is not the plan.
I agree you cannot have a slow dripfeed of land or development opportunities released through the zoning process. As you say, if you do then you just create a quasi-monopolistic situation where the current landowners at the time of rezoning benefit.
But I don’t think the use of zones is necessarily the problem. Rather it is tightly controlling the amount of land or development opportunities within zones at each time, closely dictating where and when development will happen.
I think the essential feature of the Texan system is that developers have freedom on where and when to develop – there are no artificial constraints distorting the market.
And I think we may be able to create a similar freedom if we zone large swathes of the city for redevelopment, so that there is a flood of redevelopment opportunities rather than a dripfeed and developers have a lot of freedom to choose which sites they want to redevelop. We may be able to get this effect with the NPS-UD if the wording was improved or the Councils were otherwise forced to do all or most of the upzoning along the corridors specified in the original document with very few or no exceptions.
You are almost there. BUT.
All land has zoning, even no zoning by default is a type of zoning.
So there is no need to further zone the land.
It's a contradiction in terms where you say as in Texas there are no artificial constraints distorting the market, and then say we can zone enough land so no artificial constraints exist.
The research has looked at this and it is estimated that land with the potential ability to buy for development 30,000 sections NOW would have to be zoned to give the same equivalent unconstrained freedom you talk about. We already have that and more without having to designate it as a zone change prior.
The thing with zoning an area of land is not all the land within that area is available to be developed in spite of what the zoning says. What about the farmers who are quite happy to farm for the next thirty years, or the land bankers who park their money long term in the land, knowing that the longer they sit, the greater the value? As soon as you allow the freedom to develop, then it will always find plenty of land for sale NOW, without having to bid up the price to 'force' a reluctant landowner to sell.
30,000 you reckon? From the maps I’ve seen of the area potentially affected by the NPS-UD 6 storey plus upzoning there may be way more possible apartments than that.
I’d be interested in the research about the required supply if you’ve got a reference for it. All the same whatever model they’ve used has probably got some contestable assumptions built into it.
But we’d find out if it was effective if the envisaged upzoning under the NPS-UD happened. I just wish it was happening sooner and with more certainty. And going back to my original point if there are going to be delays it would be good to have other measures in the interim.
The NPS is a nationwide statement, and the 30,000 would be from the point of any one potential section.
The point being it can only realistically be achieved by lower restrictions not creating more. You do understand the NPS is a restriction, just like the Special Housing Areas were.
The maps don't and can't tell you how many in that area are actually available right now. which is not near as many as the number show and is not near enough to provide the freedom needed to allow a competitive market.
That's the whole point, the very act plus the wording of the NPS means it has no show of supplying affordable housing.
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