Housing Minister Chris Bishop’s new rules for how cities should plan for growth will limit the ability of councils to block new homes and transform the character of New Zealand’s cities.
An increasing number of townhouses will appear in residential suburbs—replacing detached homes and grass lawns—while cafes, dairies, and other small shops will be built around them.
Streets surrounding train lines and high frequency bus routes will grow taller, as they are rezoned for six-or-more story apartment buildings with shops, bars, and restaurants on the ground levels.
Rural farmland surrounding city fringes will be subdivided and cut into suburban villages, suitable for people happy to accept a longer commute to the office.
New Zealand cities will all grow taller, denser, and sprawl further into the countryside, although the exact mix will be left up to elected councils and the market to decide.
Whatever the outcome, Bishop’s sweeping deregulation of urban housing markets will completely reshape our cities and hopefully leave a dent in our housing crisis.
On Thursday, the Minister outlined six requirements city councils would have to accept if they wanted to opt out of the (controversial) Medium Density Residential Standards (MDRS).
They will have to: zone for 30-years of housing growth immediately, abolish city limits, upzone transport corridors, permit mixed-use zoning, and get rid of minimum apartment sizes.
Councils that choose this option may have to zone for up to ten times as much housing as was required under pre-MDRS policy settings. This is intended to create a flood of housing potential that washes away land scarcity and makes building, buying, or renting a home much more affordable.
Ghettos, farms, & shoeboxes
However, critics have said the policy will deliver less housing than the MDRS, cause urban sprawl to eat up productive farmland, and allow cities to zone just a few high density “ghettos”.
Housing experts mostly believe these risks, while valid, are limited by other regulations and economic incentives. For example, other rules already control how highly productive land should be managed and more new policies will require rural developments to pay for their own infrastructure.
The upzoning rules will force new housing in some desirable locations, such as along the best transport routes and close to the city centre, which should limit new homes being ghettoised.
Shoebox apartments, another possible outcome of these policies, will only be built if New Zealanders want to buy or rent them — and if banks become willing to lend on them.
Stuart Donovan, a senior fellow at Motu who has helped advise the Government on housing, said the jury was out on whether this policy was better or worse than the MDRS.
While it had the potential to deliver more housing than the status quo, it depended a lot on details such as how growth forecasts were set and which transit routes were up zoned.
Eight out the 15 councils covered by the MDRS have already implemented the policy and may choose to keep it rather than restart the entire zoning process, he said.
Spokespeople for the Labour and Green parties both welcomed further densification but warned getting rid of the urban boundary would cause too much urban sprawl.
Auckland Mayor Wayne Brown echoed this concern and also criticised the Government for dictating housing policy without stumping up any money for infrastructure.
Brown told Stuff there was “no sign of any money, just a whole lot of instructions” while also being pleased about the opportunity to opt out of the MDRS.
Leafy suburb madness
The medium-density standards were deeply unpopular with voters in some central suburbs who enjoyed living in a detached home with a lawn while also being close to the city centre.
Many residents of these “leafy suburbs” hated the idea of three story townhouses being built next door to their villa, and were not facing any of the costs from the housing shortage.
Bishop’s new policy is designed as a way to give councils the opportunity to protect these suburbs, but only if they can do so without limiting housing growth.
Act Party leader David Seymour, who is a senior Cabinet minister, took credit for killing the “mad Labour–National plan” to allow townhouses in almost all city suburbs.
“Sanity has returned to housing policy only after encouragement from ACT. This will be a huge relief for many,” he said in a press release.
Seymour said new homes could now be built out of sight of “existing residents who may not want a three-storey building a metre from their boundary”.
The new plan would free up undeveloped land for new housing instead, he claimed, although multiple housing experts said most new homes would need to be built in existing suburbs.
However, Bishop knows that putting all the new housing in far-flung fringe suburbs will not result in the productivity boost that he hopes will be the result of this reform.
He told reporters on Thursday the same people who complained about density in their neighbourhood were often the same ones complaining their children cannot afford housing.
The implication was that some would have to accept a tradeoff. Townhouses on their street may eventually translate into a safer and more prosperous community.
Multiple studies have shown that densely-populated cities are much more efficient economic engines than areas where people are more spread out.
However, big sprawling cities with low quality transport links and public services often have lower productivity as workers waste time commuting and getting over other barriers.
This is another reason to ensure cities don’t attempt to dump all of their new housing on outer suburbs where there are less jobs and opportunities.
There are some specific rules to try and make sure councils don’t block housing in the best locations. For example, the central Government will dictate walkable catchments and rapid transit definitions.
These are both things which caused debate when Wellington City was working on its district plan earlier this year. A panel of experts wanted to shrink what was considered “walkable” and didn’t want to recognise the Johnsonville train line as rapid transit.
Will it work?
Ryan Greenaway-McGrevy, an influential housing researcher, said the policy wouldn't be as good at incentivising new housing in existing suburbs than its alternative.
“Based on that metric this is a step backwards from the MDRS but it was always going to be,” he said.
Ultimately, the goal of both the MDRS and Bishop’s alternative was to ensure cities build enough housing to make up for the decades of shortage and reduce housing costs.
Bishop has even said he would like to see house prices decline. However, Donovan doesn’t expect that will happen — at least not in nominal terms.
“Housing costs as a share of income should fall. That’s the key metric, and it means productivity gains stay with workers and don’t just get passed on to landowners,” he said.
That said, the average house price could decline in nominal terms if enough cheap housing units were added, such as the smaller apartments with no carpark or balcony.
Bishop agreed there wasn’t likely to be “an immediate plunge” in market prices as these reforms will take several years before they start to impact prices.
Eric Crampton, an economist at the NZ Initiative who also contributed to the policy design, said he saw the new policy as a continuation of what Labour had done in government.
“Labour enabled a lot more density and made some progress on the infrastructure funding tools needed to enable growth. National will enable more subdivisions at town fringes, will make it easier to build affordable apartments, and will require councils to zone for more housing more quickly,” he said.
“Restoring housing affordability requires making up for a very long period in which housing supply was not allowed to keep up with demand”.
When New Zealand’s cities are finished playing catch up with housing demand, they will likely look very different than they do today.
88 Comments
There has been no shortage of land available....or a shortage of demand for property (until the past 6 months or so) and yet we lacked the capacity to meet that demand....how does increasing the potential supply of land increase our capacity to build?....for it is increased supply of housing (not land) above demand that may (emphacize may) reduce the cost of housing.
Nevermind that at the basis of this proposal is high level inward migration as the Minister has inferred....that is only going to add to the shortage of housing AND infrastructure demand.
You have supplied nothing....there was an incapacity to develop the existing land supply, why do you think increasing land supply will increase capacity?
If the supply does not increase above demand then there is no, repeat no, chance prices will drop....and the policy is to increase demand.
Again. by what mechanism will affordability improve with this policy suite?
Plenty of old places in the burbs getting to the point of being pulled down, damp mouldy single glazed horror stories to live in. Where there is one of these you can now build two modern smaller homes so not really the need to sprawl. The problem is still the land value in the desirable places that people would prefer to live and that will not get cheaper so its even smaller sections and smaller houses from here on out.
The best (and perhaps only) way to seriously solve the housing crisis is to reduce rents by way of regulating the residential rental market.
https://www.hastingsindependentpress.co.uk/articles/reviews-opinion/boo…
Yet this government is doing everything it can to increase yield and encourage the residential investment market.
No.
Rents never fall, regardless of what happens. If cost rise (interest rates rise, say) rent rise. If costs fall, rents stay the same, at best
Only Rent Control or Mortgage Control will have any effect on Rent levels (eg : only one home mortgage per IRD number is available at current bank Lending Ratios - which make them effectively cheaper. After that, any secondary mortgage has to be at Business Lending rates. That will stop amateur multi-property landlords crowding out sole home-owners, who may then be able to buy rather than rent - less competition for rental property overall = rents fall)
NB: Any changes will impact new entrants to the market. And they are the ones who will determine the prices paid to the existing property owners. So those looking to 'cash in' will find there is less 'cheap' money available to buy what they hold; prices fall. "If you can't borrow, you can't buy"
Rent controlled rents only end up going in 1 direction - up with a massive bang in time. We've been there, done that already (early 1980s including price & wage controls).
They can go down, 1 RE Agent currently has 200 vacancy rental properties in Wgtn.
https://oxygen.co.nz/resource-centre/blog/are-wellington-rental-prices-…
Or cap the accomodation supplement.
https://www.rnz.co.nz/news/political/521348/is-2b-accommodation-supplem…
The best (and perhaps only) way to seriously solve the housing crisis is to reduce rents by way of regulating the residential rental market.
I guess it depends on what you consider 'solving the housing crisis' to mean Kate.
You know I have considerable time for your excellent proposal, however, like all other attempts, it will fail if it fails to consider the population (number of people) to be housed (number of dwellings wanted). It's no different to ending poverty, of course we want to do it, but how do you define it. That is, there will always be a 'housing crisis' unless we have more houses than people wanting them in every location and that's before we get into 'quality'.
If we consider it being solved (example definition) when there is always 1 more rental/house available to for rent/purchase than people looking for a home to rent/buy. Houses are of relatively fixed supply and take time to build. As we saw during covid, population growth can be halted at the stroke of a pen (law). Our population cannot be allowed to increase by a 100,000 plus in a year if you want to solve the housing crisis. People say look at Japan (stable/decreasing population) and houses decrease in value as they age. I saw this in Invercargill and to a lesser extent Dunedin - low growth/stable/decreasing population and affordable housing was the result. In Invercargill you could buy a decent section and house for under 50k at the turn of the century.
Yes, they certainly do. It's one of the reasons I support a land tax, so that the 'hoarder' has to pay for the privilege of keeping more than they need.
Owning a home should be a net expense - just like renting is. Not a double your wealth every ten years scheme. When someone offers you a 'free' house and you say 'no' due to the holding costs of it since you don't need it to live in, then we'll be getting close!
There wasnt a rental crisis until Jacinda Ardern happened. Her War On Landlords is what has created the rental crisis. The best way to reduce it is to undo everything the last Labour Govt did.
In Christchurch, prior to 2020, you could buy a brand new house for $400k, if you wanted to move further out to the Selwyn or Waimak districts, you could get one for $350k. Christchurch did not have an affordability problem until Jacinda Ardern interfered, pushing up house prices, reducing supply, and thus increasing rents. Everyone told her that would happen, but she ignored reality in favour of ideology. So no, more Govt interference in a market that functions just fine when its left alone, is not the answer.
KW, think you are incorrect with your pricing of new houses in CHCh in 2020!
In 2020 you were paying more than $300k for any section in ChCh so not sure what the house at $350k was??
It was over $2000 per square metre to build so no way on earth you were buying new houses for 350k anywhere!
I said Christchurch was around $400k, outside of Christchurch was $350k - places like Woodend, Pegasus. I remember seeing the signs on the roadside advertising the house and land packages.
The Kiwibuild price for the Pegasus places was $400k, and they couldnt sell them. All Kiwibuild did was jack up the advertised prices because developers knew that if they didnt sell, the stupid Labour Govt guaranteed to buy them at whatever price the developer wanted.
https://www.stuff.co.nz/national/politics/123007986/fact-check-are-ther…
And I said prior to 2020 - it really helps if you bother to read my actual post. See this one, sold in May 2019 for $425k (CV of $415k) https://homes.co.nz/address/christchurch/marshland/7-te-rito-street/875…
HouseMouse I’m a bit confused about your stand on housing. Supposedly you live in a townhouse in central Auckland, yet you seem pro sprawl, want protected heritage zones, don’t like light rail, etc. It’s fine for you to have a townhouse in a good location, but everyone else should live out in the burbs.
130 or so schools are reportedly functioning beyond physical capacity in NZ with teachers having to teach students in the libraries and cafeterias.
20K+ school-age kids have been added to our population in the last 12 months alone, half of them turning up in Auckland. Ministry numbers show capacity has barely grown to cover 10% of the added demand.
No one expected this government to zero in on housing but they did.
Something people forget is that the right wing is a mix of value, not just corporatists, but more traditional conservatives for who family formation, connectedness to community, a duty of service are seen as foundational to a better society. All of these are undermined if people can't afford to start families, if they don't have stable dwelling to integrate with community in which they live or don't feel the pride that compels the selfless service on which our society is built.
There are some good things about liberal values but there are also some negatives.
I've just read it. Knowing you - from your parroting of my pen-name on (and all that that signifies about you, psychologically) I knew it would be a piece of shyte.
It's worse than that.
The joke is that most - probably all - of this will never happen. The global North, particularly the white English-speaking North, is collapsing, and the others know it. The reasons are the physical choices we have made (chewing into the planet like there was no tomorrow) and the social ones ditto (choosing to be rentiers, at many levels).
That is falling down around our ears. Pity some are tone-deaf...
One thing for sure is happening with the commentary about this new direction, is all those making money on speculative gains, were relatively quiet about having to explain(think) about their rationale, as the gains were proof enough of their argument, and now starting to be more vocal about their thinking process.
Which of course is being shown up for what it is.
It's not even about trying to explain land use economics 101 to some of these commentators, but why 2+2=4.
It's more than just ' It Is Difficult to Get a Person to Understand Something When their Income Depends Upon Them Not Understanding It
Have a read of:
Alain Beruads Order without Design Order without Design: How Markets Shape Cities : Bertaud, Alain: Amazon.com.au: Books
Demographia 2024 Demographia International Housing Affordability, 2024 Edition
NZ Productivity Commission report into Housing, although seems difficult to find now that the commission has disbanded.
Alan Evans Economics, Real Estate and the Supply of Land: Evans, Alan W.: 9781405118620: Amazon.com: Books and any of his other books.
Then come back to the table.
WHICH COUNCILS HAVE ALREADY ADOPTED THE MRDS?
PNNC?
WCC?
2 that spring to mind as both seemed fairly positive towards it, apartments in suburbs like aro valley , apartment living is much warmer and drier so much better getting rid of cold damp draughty shacks.
You seem to have that into of what councils have accepted it (likely smaller one tier 2 as less onerous).
PLEASE SHARE THIS INFO - buyer looking on tier 2 cities and want to know what I'm playing with!
Kāpiti is a tier 2 council and they have adopted MDRS rules;
https://www.kapiticoast.govt.nz/council/forms-documents/district-plan/o…
You wouldn't need any of this if houses just sold for less. It's always laughable to hear how governments are going to solve a problem as if they've already done it, when we all know they won't, and all you really have to do is wait for markets to eventually resolve obvious inequilibrium.
Housing Minister Chris Bishop’s new rules for how cities should plan for growth
Bishop’s new policy is designed as a way to give councils the opportunity to protect these suburbs, but only if they can do so without limiting housing growth.
Who asked for this 'growth'? Certainly not me.
So much discussion about what is right / wrong about Bishops answer to an entirely self-inflicted problem. Where is the discussion of the underlying cause - population growth and what we're trying to accomplish past what the last additional million people have 'added' to NZ!
Invercargill had a declining population for much of my childhood. It also had full sections with house and garage on them for $34,000 in 1999 - just like the one my cousin purchased. But growth was 'needed'...
Yes an an ex Invercargill lad myself, that is true, but not a solution. Your example of a house and land for $34,000 is way below replacement and shows the city in a Detroit-type collapse, which luckily growth renewal has pulled in up somewhat to get out of that.
The counter side to NZ style growth is every Invercargill is just an Auckland cluster%)&# waiting to happen.
Partly because of egos, and partly because they are all operating under the same rules and if any housing pressure came on Invercargill that allowed speculation, then they would be all in boots in all.
What places the size of Invercargill do in say Texas, is use the Toyota supply method, ie a good quality product offered at a good price relative to competitors and then as demand increases, rather than limit supply so prices go up, they just increase supply to match because they know that one of the main reasons for the demand was the price.
This attracts businesses to set up in the areas as it means they can attract good employees who want to come to Invercargill instead of the Mount, is due to good incomes, very affordable housing, and far more disposable money in their pocket for kids' education, healthcare, retirement savings and also a few holidays to the Queenstown or the Gold coast if the Invercargill weather is not your thing.
What it also does do is create stable New affordable housing (not like the $34,000 example you gave) but one of the reasons you don't get businesses, especially big businesses wanting to set up at present is, as soon as they announce they would like to set up business, then the house prices go up as the supply under the present system cannot go fast enough to meet the demand, and speculation occurs.
As a someone born in Gore, I better bow to the big city brains of Invercargill Dale!
I think the subsequent price rises in Invercargill prove both of us correct (you on the rules, me on the population link).
Really, I'm questioning the population growth we're seeking (via our immigration policy). It seems to have an awful lot of 'off-balance sheet' or unconsidered costs.
BTW, the 34k house wasn't flash but it was perfectly livable and meant without a huge mortgage improvement such as insulation and new double garage could be saved for and made on a very modest income.
In my opinion the government can seek to balance the need for more housing with the potential social impacts of dense, small-scale developments through a multi-pronged approach:
1. Diversity of Housing Types:
- Encourage a mix of housing sizes and densities, not just small "shoebox" units.
- Require minimum sizes for new housing to prevent overly cramped living spaces.
- Incentivize the development of family-sized units and homes with ample communal spaces.
2. Integrated Community Planning:
- Pair higher-density developments with investments in public amenities and services.
- Ensure access to green spaces, community centers, schools, and other critical infrastructure.
- Design neighborhoods to foster social connections and a sense of community.
3. Targeted Support for Vulnerable Populations:
- Provide additional assistance and services for low-income residents in high-density areas.
- Implement programs to address issues like overcrowding, social isolation, and child development.
- Collaborate with local organizations to build community resilience.
4. Urban Design Guidelines:
- Establish design guidelines that prioritize livability, sustainability, and inclusive community features.
- Require minimum standards for natural light, ventilation, and private/shared outdoor space.
- Incentivize architectural approaches that create a sense of place and human scale.
5. Phased Rollout and Monitoring:
- Implement policies in a phased manner, allowing for adjustments based on feedback and outcomes.
- Regularly monitor the social, economic, and environmental impacts of new housing developments.
- Engage with residents, community groups, and housing experts to assess the effects.
By taking a comprehensive and balanced approach, the government can work to address the housing crisis while mitigating the potential negative social impacts of dense, small-scale developments.
This will require careful planning, community engagement, and a commitment to creating thriving, equitable neighborhoods.
Glen Eden has an apartment complex adjacent to the station. Yet I would have thought a covered walkway to the station would have been provided.
Takanni seems to be a staion that could have a lot of apartments built around it .
but until planning gives walking priority over cars , there is not as much to proximity as there should be .
This is a big pull on regulatory barriers to new housing supply so it needs to applauded. Well done Chris Bishop. It is a continuation of Labour's reforms with the RMA national policy statement on urban development and the MDRS. Which was a continuation of the significant upzoning that the Key government pushed through with the Auckland Unitary Plan.
Yet there is still dithering on infrastructure funding reforms. Without this lever being pulled it is doubtful large scale housing supply will actually be delivered.
Also, the review of Kainga Ora by the current government has meant their build programme has been cancelled i.e. the state build programme lever has been pushed back to zero.
I have a lot of time for your investigation of NZ s housing policies so was surprised to see your support for Bishops announcement....until I read the qualifier ....." Yet there is still dithering on infrastructure funding reforms. Without this lever being pulled it is doubtful large scale housing supply will actually be delivered."
And that is but one of the issues...the other main one being the implicit demand growth fueled by migration at high levels.
This is pure politics to seem to be doing something while not upsetting the current paradigm.
I grew up in an apartment in Switzerland 40 years ago. It was a good life and I knew that houses were only for rich people. It's taking NZa long time to realise that, as population increases, not everyone can live in a stand alone house. Bishop is doing an amazing job, I'm really impressed with him.
A large number of us voted to curb population growth in 2017 and the resulting change in government oversaw much higher levels of net migration even prior to Covid lockdowns.
We've posted population growth numbers akin to Asian countries for years now, so might as well have the ghettos and slums in our major towns as are business-as-usual in places such as Shanghai and Mumbai.
This is intended to create a flood of housing potential that washes away land scarcity and makes building, buying, or renting a home much more affordable.
I think they'd rather have had a gently-gently approach but that opportunity likely passed after the GFC. Now they just need to get this done.
The good news is that by releasing latent demand all this new construction should create substantial economic impetus.
Doomers here blindly miss the chicken/egg predicament. “Ah yes Bishop the prodigal son has returned! This law loosening will help us build more houses!!”
Developers develop (sell) when the market is good. No one is developing shit in this market when supply is high and return is next to nothing. Developers acquire and hibernate till the housing market pumps. Then you’ll be back here dooming and glooming about Haaaiii Priccesss :( looll
Exactly. And of all times the government should want to scale back its own development via KO/HNZ this is NOT the time.
They should be full steam ahead with the state housing portfolio builds - especially if they want to keep immigration numbers up/where they are currently. It's not as if state housing is rent free. People pay 25% of their gross income to live in them. And that's a fair/realistic rent to income ratio. They should be leading the way for the private sector in terms of affordable rents.
Not the governments responsibility to supply new housing!
Why on earth should the taxpayer be providing new housing to immigrants cheaply, while the average Kiwi is having to pay big mortgages and rents, due to the mismanagement of the previous government?
What KO have built recently is still awful looking boxes, they need to keep out of housing!
There is no way it makes economic sense and there is no housing shortage at all for good tenants, unfortunately there is an abundance of tenants that landlords do not want to take on.
You mean 25% of their Govt provided benefits. When the Govt pays the beneficiary, and gets 25% of it back in rent, its not actually receiving any money. The taxpayer is still paying for everything. So yes, state housing is free to those who live in them, as they are not paying for anything from their own money but rather taxpayers.
100% KO should be our biggest builder. I would be interested in KO's $/m2 build cost as of late though.
Should they be building large standalone homes.....maybe not. Lived in a bunch of housing nz homes in the 80's & 90's, they were plain & basic but livable. The new KO homes in our suburb seem like high end mansions compared to those.
If supply costs decrease, you can sell at a lower price and take a bigger margin. That’s the entire point of these reforms. Supply and demand is not static.
There’s a $600,000 price discontinuity on Auckland’s rural urban boundary. If you don’t think that’s going to translate into housing once abolished, you’ve got another thing coming
NZ has never built large scale affordable housing outside of state building schemes where materials/design were standardised and production scaled. Developers still need to make a profit so letting the market decide won’t really increase building volume in this environment. If they stop KO building that will also make it worse.
I'm not sure these new rules will change anything. Housing is expensive nationwide, a 3 bedroom house built anywhere in NZ appears to be priced at just over a million, either building is expensive or the developers have set a minimum price expectation. If it was only large cities that were severely overpriced then these rules would make sense however everywhere is expensive such as Mangawhai and Turangi.
Well , actually , the point is nobody is forcing anybody to live in an apartment . They are there as an option for those it suits. The more that move to apartments , the more full size houses should be available for those that want them.
I couldn't stand living in Auckland as it is , even with a big section. If i lived in a city , I would want the advantages of a city I desire. That would be to be able to walk to most day to day shops , to have frequent public transport to most places i would want to go , lots of parks and reserves , and cycleways. People in our small town often moan about not having the range of shops the cities do , but actually we have 3 more towns within a 30 minute drive , and 3 cities within an hour and a half. Getting close to having to drive from one part of Auckland to the other. Plus so much specialised shopping is done online anyway .
"Stuart Donovan, a senior fellow at Motu Economic and Public Policy Research who is part of a housing expert advisory group providing advice to Bishop, said the 30-year requirement for live zoning would significantly reduce incentives for people to land bank, given the increase in other sources of land.
“When you take away those capital gains from land banking, your incentive is to develop now because things aren’t … going to get better for you than they are now – that’s my hope.”
https://newsroom.co.nz/2024/07/05/govts-housing-evolution-balances-inte…
Hope is a wonderful thing....developers hope to make a profit, and banks hope to avoid defaults and make a return.
The incentive is far greater than that, as others can now just bypass the land bankers to cheaper and in many cases better-located areas for development.
Some landbankers will have to take action because of that and others or just those that are happy to farm closer in and not be forced into development will just sit.
It's about allowing land to be available when the market needs it, and not being able to be held back by speculators.
Dream on. My recently completed new build cost double the estimate of 4 years previously.
Council approval took two years for simple non notifiable RC.
The same local council last week doubled Development levies to $56,000 for simple single dwelling.
No matter what the government says there is no way to reduce costs of building. The number of consents is currently running at 30% of previous year and still heading down. Existing houses always eventually move to close the cost of new builds. Why build when you can buy much cheaper.
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