Think tank the New Zealand Initiative is welcoming new Housing and Transport Minister, Phil Twyford's suggestions of simplifying planning rules and abolishing Auckland's rural urban boundary.
The Initiative’s executive director Dr Oliver Hartwich said the appointment of Twyford as Housing and Transport Minister in the Labour-led government was "a breath of fresh air".
"It is great that these two portfolios are held by the same person because we cannot solve the housing crisis without addressing transport – and we cannot solve our transport problems without fixing the housing market."
Twyford was "absolutely right" that planning rules need to change.
"National talked about it for years and did little. We look forward to seeing more action from the new Minister”
“Auckland needs to embrace its growth potential or it will choke under its own success. Minister Twyford has correctly understood these alternatives and is gearing all his policies towards making growth happen. At the Initiative, we have long argued that Auckland needs to grow both up and out and that we need more intelligent ways of financing infrastructure. We wish Minister Twyford well for delivering both.”
Twyford told TV3's The Nation programme during the weekend that given the shortfall of housing in Auckland and the population growth projections, the city was "going to have to grow up and out".
"So I said the other day I was very interested in work that had been done by Infrastructure New Zealand on a large new development in the south of Auckland there, Pukekohe.
'It's got to be up and out'
"But there are massive opportunities for us– ... So we want to build most of the development we can in the city, around the transport network. We want to do density well and build great urban communities for people to live, work and play.
"As far as I’m concerned, it’s got to be up and out.
"On the question of the Metropolitan Urban Limit, we’re going to build affordable houses. We’re going to tax speculators. We’re going to do all of those things, right?
"But if we want a lasting solution to this problem, we have to make reforms that will allow the market to deliver better outcomes on its own, and the two really big things that we have to fix there are the broken system for financing infrastructure that stops the city from growing, and the highly restrictive planning rules like the urban growth boundary.
"But you can’t get rid of the urban growth boundary without fixing the infrastructure financing issue. So this is going to be a major priority," Twyford said.
Twyford has suggested abolishing the rural urban boundary before, while previous Housing Minister Nick Smith made similar suggestions earlier before signing up with the Auckland Council to the Auckland Housing Accord. Previous Auckland deputy Mayor Penny Hulse spoke against the sprawl of the 1970s.
Infrastructure shortage
Current Auckland Mayor Phil Goff said on RNZ's Morning Report on Monday that he didn't believe there was a huge problem with a shortage of land in Auckland - more that there was a shortage of infrastructure.
"With the Auckland Unitary Plan we have zoned, for the next 30 years, 422,000 sites for dwellings.
"So we don't believe that there is a huge problem with shortage of land. What there is a big problem with is a shortage of infrastructure."
RNZ reported that Goff didn't agree with Twyford's "separate view" that if you took away the rural-urban boundary price differences for land would disappear.
"We don't want the city to sprawl out forever," he said.
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Phil Goff states: "With the Auckland Unitary Plan we have zoned, for the next 30 years, 422,000 sites for dwellings." So, why do we need to re-zone more land exactly? A very simple question.
Given the rate at which property developers are likely to go bust over the next few years and the drop in immigration levels, it is hard to see how the existing residential zones will be filled, let alone the need for more.
Almost correct.
How is works is that you need enough land available at anyone time ie no monopoly, that at any demand level it can be bought (and then developed) without it increasing in value because of any bureaucratic restrictions.
Goff in theory has enough land 'zoned' but because it will be drip feed to the market off the back of the last connection then it is easy for land bankers to hold out for the highest price.
Even their thinking on infrastructure is CBD centric. STEP systems allow for easy wastewater systems separate from any last connection service.
And there is a point at any fringe development, depending on how it is planned, where the traffic is travelling just as much away from the main center as it is towards it.
Twyfords fatal mistake will be to think he can manage the spontaneity that is need with a true non retstrictive boundary that allows for land to be NOT monopolized , and thereby allows for land to be truly affordable.
Their effort to control the effortless reminds me of how sincere they seem in their beliefs.
After all - once you learn to fake sincerity - you have it made. Or do they just don't get it.
There is no drip feed, there is in fact a misdirected large flood of land supply. Goff is providing proportionally more land in total today than any other council in the last 50 years. Every time we have one of these discussions someone tries to say Auckland Council is putting in an undersupply of land, when that is untrue.
The problem is very little of that land is near Auckland City. Out the back of Pukekohe, out the back of Warkworth or Huapai or Orewa or Wellsford or Beachlands - a massive over supply of land is being released.
Auckland Council are not CBD centric, Auckland Council do not practice any variant of smart growth or intensity friendliness. Auckland Council do sprawl bigger than Texas.
There is really stuff all land banking in the traditional sense, the price of Auckland land is being driven up solely by people who want to shave 4 - 5 hours off their commute each week.
Goff is not creating real land, it is just him and a few others drawing lines on a map, and as soon as this is done it allows land bankers to game the system.
In Texas it is up to the developers to decide which land gets developed next (working to rules about which land is already excluded eg environmental reasons) therefore no one rural land owner can game the system as landowners here can do. If the land owner at the next connection holds out too much, then the developer will purchase cheaper land further out and install STEP type systems etc.
At first glance this would mean the same type of splatter development you are saying Auckland has, but of course houses are only 3x income rather than 10x income as Auckland is.
What of course this then allows is for those that truly want to move closer into the CBD can do so because it is less than 1/3 the price of do it (not doing it) in Auckland.
I get so grumpy with the 422,000 number - it is just such a fraud. They upzoned all the houses around where I live mostly so they could add more to their fake number. In reality, given the hills, the size of houses, and how most houses sit in the middle of their sections, probably 1 in 10 properties (at most) are suitable for infill - yet they will assume that all sections are "available" land. Go Twyford go!
Agree. They did take some account of barriers to development, but not enough.
I think there is a case to say that you keep all land low density. Then allow parties to come in with consents for major redevelopment over a certain threshold (say 200 homes), where it meets certain criteria (proximity to centres, parks etc). Then if you secure consent, it's 'use it or lose it' - like the SHAs in Queenstown (but not Auckland where SHA landowners also got an upzoning at the same time through the Unitary Plan - hence little if any incentive to develop!) Development in SHAs in Queenstown is happening for the very reason it is 'use it or lose it'.
the same could apply in greenfield settings - you get a consent, rather than a rezoning, and it's use it or lose it. Reduced potential for speculation / land banking.
you could allow low impact granny flats, small backyard tiny houses etc to pick up the slack
Now, this different approach to planning would probably never fly now, because of the Unitary Plan. Impossible to see most of Auckland downzoned, with resultant decline in land value. So it's only theory, really :)
Would be interesting to know if this alternative approach was even considered by council, though. Doubt it!
Unplanned cities sprawl out and then create new sub-urban centres of industry and commerce, and houses remain cheap (eg 3-4x salary in rapidily growing Texan cities) due to price being set by cost of new build at urban edges. This is only a problem in planner's heads, but in the real world it is the only proven and rational approach to managing the growing travel time and transport infrastructure burden that accompanies attempts to centralise everything within a single hugely built up CBD surrounded by high density urban housing that places ever more impossible demands on existing transport corridors.
Planners may love these dense metropolises, having been fed a line by ideologically driven academics, but the people forced to sacrifice their time and lifestyle to planner's dream find it to be an increasingly unaffordable nightmare in practice.
Auckland is doing sprawl bigger than Texan's - our planners are totally opposed to both free sprawl and a compact city. Worst of both worlds, sprawling much further than economically feasible, is the Auckland Plan. Why else are the council siting huge sprawls at far off Warkworth, Huapai, Riverhead, Orewa, Beachlands, Pukekohe?
I'd be a bit cautious as to referencing Texas in regards to property prices. One of the large challenges in Texas is the rather large property tax rate. The typical NZ homeowner would be rather shocked to understand the rates in some states in the US. Texas is just under 2% on average, and this rate is rather influenced by rural property. Urban property (the typical property that has houses on it) has rather higher rates. So that $500k house would then have annual rates more than $10k.... this has a bit of an effect on property values. In effect, when thinking that one is owning a property, one is instead renting it from the government where the rent paid is the annual rates/tax.
That is one way of looking at it, and not incorrect, but:
For starters a $500K house is the equivalent of a $1.5m house in Auckland, so the equivalent medium price in Texas for the $1m house in Auckland would be $333,333 and the Texas rate equivalent would be $6,666.
So they question is, what is better?
Pay $1m in over inflated house price (and mortgage that goes with it) and $2,600 in subsidized rates per year, or real value of $333,000 and real rates cost of $6,666?
Previous Auckland deputy Mayor Penny Hulse spoke against the sprawl of the 1970s.
Now there is a consummate politician at work.
The RUB is certainly not the sprawl of the 70s, the RUB creates much bigger sprawl. The current AUP is to decentralise to spread out Auckland far and wide over the region.
The growth is mainly immigrants. Kiwi born are leaving auckland. Immigrants from western countries will live in apartments if the price is right but immigrants from poor asian countries have a strong preference for a stand alone house as soon as they can afford it. That is the old kiwi dream. So we cannot solve our problem just by building apartments. There must be some planned build out too.
1) Reduce the immigration rate to something sustainable over time. The government is committed to dropping the rate but is it enough. Give it to the RBNZ as a macroprudential tool to manage demand in the economy & get the politics out of it. Government to still set the mix of immigrants and upper & lower bounds. Lower immigration rate will drop the forward infrastructure demands and spread tem out over time
2) Introduce congestion tolls in Auckland reviewed every 6 months like Singapore. We design transport systems for the peak hour with spare capacity otherwise. The tolls will defer the need for future infrastructure. At the same time add high frequency PT across the cordons
3) NZ has 60+ councils with local & regional government levels for 4.5m people & planning documents which would reach the height of the skytower - insane. Establish larger unitary authorities & at the same time set up NZ effects based standards for development, water, air etc (the RMA was meant to be effects based not zoning based like the town & country planning act). We need a flexible land system which can respond, not one dictated by urban planners rules.
4) Introduce rates & govt tax on a land tax basis. Remove the ability to rate on a capital basis. This will drive efficient use of land.
5) Review whether road users are yet paying the full cost of transport - not likely given historic studies. Realign the costs so that they are. This will reduce demand on rates for transport projects and allow that money to go to the other infrastructure backlogs.
6) Review/rewrite LTMA, LG Act & RMA so they work coherently. Require Unitary Authorities to all have covered funding for all the basics first (base rating level - maintain or decrease service levels) and then the add ons (additional rates - increased service levels) Ratepayers then have a better idea of the cost split and whether they want the add-ons.
7) Get rid of developer contributions and replace with targeted rates & infrastructure bonds. Developer contributions simply push up the up front cost of housing rather than those actually using the service paying for them on a cashflow basis
8) Again separate Transfund from NZTA & set up the Government transport policy statement so the public can provide feedback (at the simplest & highest level) on funding going into each pot (roads, PT, cycling, walking, maintenance, safety etc). Transfund must report on the subsidy/overtaxation for each pot
Some major points of differentiation. Singapore is smaller than Auckland and much higher population density so it has economies of scale. Natural terrain of Singapore is much flatter and they have no natural disasters to engineer for. Much less red tape to get infrastructure projects underway. If the Singapore government needed land you own for new roads or rail, they can acquire it through their public works act for a token amount, no lengthy negotiations needed. I reckon they could have completed a similar project to the waterview tunnel in 3-5 years rather than the 10-15 years it took us.
The main regulator of Auckland's house shortage will continue to be the market - and, more specifically, the price mechanism.
Our blowhard Labour-led Govt is talking of building 50,000-plus new homes in Auckland. It won't! That's simply not possible, due to severe, chronic supply constraints.
Instead housing prices will continue to rise in Auckland for the foreseeable future.
TTP
Perth experienced a housing crisis during the mining boom with caravans, portacoms and tents everywhere whereas I’m not seeing that in Auckland.
So does Auckland instead have a “home ownership crisis” due to the 5 year investor feeding frenzy?
And if that’s the case perhaps a market correction will magically fix the housing crisis.
There is a massive difference in Perth v Auckland.
1. The mining boom paid well, very well.
2. Bank's were a lot freer with money.
3. They created whole new towns outside of Perth.
4. A lot of the mining work was FIFO. That meant people didn't need permanent residences, they just needed a place to crash at the end of each swing.
5. The weather there is a lot more conducive to temporary accommodation.
Look at Perth now, prices dropping, people leaving, whole commuter towns (the ones they built are now sitting empty), and the whole city is now suffering, and the real pain is probably another year or two away from hitting (At least according to my Father in Law)
Good luck in dealing with and convincing ACC. Goff is already showing resistance and his bureaucrats wont be happy central Gov pulling them in by their nose ... has always been about power not logic and planning ...!!
BTW, solving these problems around the world is done by building new cities instead of just inflating existing ones..
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