One of the toughest challenges facing the Auckland Spatial Plan is ensuring that the city builds enough housing – most particularly ensuring that it builds enough housing through intensification. The plan’s goals in this respect are pretty bold:

The Development Strategy contains policies to maintain our rural and urban distinction. It promotes urban intensification and carefully managed peripheral growth. A high growth scenario of an extra 1 million people living in Auckland in 30 years, means an extra 400,000 dwellings. Of these, 300,000 dwellings can be accommodated within the 2010 Metropolitan Urban Limit (MUL) through intensification. This equates to a 75:25 split between growth in existing urban areas and growth in new greenfield land (currently classified as rural land) and rural satellite towns. Existing greenfield areas are already identified (“in the pipeline”) or under development within the 2010 MUL. This will provide capacity for around 30,000 new dwellings. These areas will generally be developed before new greenfields are released.

300,000 new dwellings within the MUL over 30 years represents a level of construction that we just haven’t got close to meeting over the past few years, particularly in terms of the amount of intensification that has been happening. So where are all these extra houses going to go, and perhaps more importantly, how can we actually ensure intensification happens?

This is an important issue to resolve because the drums are already starting to beat about how having a fairly fixed “rural urban boundary” is going to drive up house prices. This may be true, if we don’t built enough houses inside the urban limits. Having an urban boundary will undoubtedly drive up land prices, but if we also see an increase in density that should offset the issue as we make more efficient use of our land. Logically, the higher land values get, the more financially viable it becomes to undertake intensification – to make the best use of your valuable dirt. The problem comes when we both chop development outward and development upward, something that I would argue has clearly happened in Auckland over the past decade.

The red areas in the map below highlight where Auckland Council envisages most intensification occurring over the next 30 years, although obviously a lot will also happen in the city centre, city fringe and the various centres around Auckland: The corridors are also proposed as areas of intensification, but generally at a later stage of the plan’s implementation.

An interesting map to compare the one above with is outlined below (although it doesn’t go as far south as would be ideal). My fellow blogger Stu Donovan put this map together, and it quite interestingly shows the average value of land in various parts of Auckland:In general this map tells us the parts of Auckland where intensification is most likely to make sense. These are the city centre and its immediate surrounding suburbs, the central isthmus and coastal areas to the north and east of the city centre.

Suitability for intensification also relates to other issues, such as heritage constraints and the location of transport (and other) infrastructure. The map above clearly highlights that proximity to the city centre is a key factor in determining land values. This means that intensification is most likely to be attractive to the market the closer to the city centre the particular site is. Combining these matters leads to the following locations being obvious priority areas for intensification:

  • The City Centre
  • Takapuna (already proposed as a metropolitan centre)
  • The City fringe area, particularly in areas with less heritage/character constraints such as along Great North Road, New North Road, around Newmarket and the inner parts of Dominion and Mt Eden Roads.
  • Onehunga (proposed as a town centre)

Significant infrastructure projects outlined in the Draft Auckland Plan are likely to change the map above once completed. For example the City Rail Link will bring sections of western isthmus within a much shorter train trip of the city centre, likely resulting in a boost to land values and thereby an increase in the market viability of intensification.

Development to higher densities may become viable in places further out from the city centre in the longer term, probably first to the north and east and later to the west and south, as land values increase to the point where it makes sense. But one would certainly think that if we really want intensification to happen, we need to be more mindful than has happened in the past about where it will work for the market, and where it won’t. Where market-attractive areas coincide with other factors, like good transport infrastructure and less heritage/character constraints, then I think we really need to take these “low-hanging fruit” opportunities and ensure there are minimal constraints to this development happening, obviously as long as it happens in a high-quality way.

It is essential that intensification actually happens in Auckland if housing affordability is to be improved, therefore it is necessary for a greater level of alignment between where the Auckland Plan envisages intensification and where there is a market demand for intensification. Simply put, if there is no market for intensification in an area, then it will not happen, housing supply will not be increased and house prices will continue to go up (and thereby the pressure for urban sprawl will increase).

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42 comments

    1. There’s actually quite a lot already there. I used to deliver leaflets around Greenlane while the Project Greenlane street upgrade was happening and most places seemed to have multi-unit letterboxes.

      But I would agree – the Newmarket to Penrose corridor is very suitable for intensification. Based around the town centres of Greenlane and Ellerslie.

  1. “It is essential that intensification actually happens in Auckland if housing affordability is to be improved,”

    You’re essentially arguing that the way to make homes cheaper is to drive land prices up. I sort of see how you’re getting there but the result you expect is counter-intuitive. Evidence from Sydney and London suggests that you will end up with some reasonably affordable apartments at the low end, but extremely expensive apartments at the quality end and prices for detached houses that are just crazy. Demand for apartments leads to apartment development regardless of the land price, but if land prices are cheap then the price for apartments will be cheap and the demand will be greater.

    “to make the best use of your valuable dirt”

    The dirt outside the MUL isn’t valuable at all. A lot of it has cows and stuff standing around at extremely low densities. That leads to a situation where livestock has plenty of room while people are housed at high densities. That sounds wrong in concept, although it is certainly true already.

    1. You’re essentially arguing that the way to make homes cheaper is to drive land prices up. I sort of see how you’re getting there but the result you expect is counter-intuitive.

      Sort of. I think I’m more saying that if we’ve made the decision to have urban limits (because we’re concerned about infrastructure costs etc.) then we need to ensure that we build a lot of intensification to ‘make up for it’. However the only way intensification seems to happen is if land prices get high enough for it to ‘make sense’. Remember we don’t necessarily need to build cheap new houses to improve affordability, we just need to build more houses so supply is increased in total. For want of a better description, if the “middle class” can choose an inner-isthmus terraced house then they won’t be competing against the “working class” for places further out, improving the chance of those on lower incomes actually being able to afford a place.

      Evidence from Sydney and London suggests that you will end up with some reasonably affordable apartments at the low end, but extremely expensive apartments at the quality end and prices for detached houses that are just crazy.

      That might be an acceptable outcome in the inner isthmus when Auckland is a city of 2.5 million. In successful big cities land is valuable, that’s a sign of their success – if you want a lot of land with your place then you’re going to have to pay a lot for it. But that’s probably OK as long as there are plenty of alternatives, like terraced housing for those who prefer it, apartments for those who prefer them and detached houses (probably either quite expensive ones or quite far out of the city) for those who prefer them.

      Demand for apartments leads to apartment development regardless of the land price, but if land prices are cheap then the price for apartments will be cheap and the demand will be greater.

      I think high land value is more the “canary in the mineshaft” that apartments/terraced houses are becoming financially viable. Why aren’t we seeing this kind of development around New Lynn at the moment? Because developers simply can’t make it stack up for them, they can’t sell the end product for enough money because it’s not currently an attractive enough place for the market to be there for apartments/terraced houses at a price which stacks up for the developers. This is likely to change, for example, if the City Rail Link brought New Lynn within a 20 minute rail trip from town, and this uplift would be reflected in higher land prices.

      The dirt outside the MUL isn’t valuable at all. A lot of it has cows and stuff standing around at extremely low densities. That leads to a situation where livestock has plenty of room while people are housed at high densities. That sounds wrong in concept, although it is certainly true already.

      That would potentially be fine, if those people living in greenfield areas “paid their way”. The problem, as outlined in various studies, is that while sprawl enables cheaper land, we pay for it in the end through more expensive infrastructure (roads, pipes, schools etc.) In effect, the public subsidises people to live in sprawl. The net cost of adding a person to New Lynn would be pretty low as the infrastructure now exists to cope with them.

      1. “That would potentially be fine, if those people living in greenfield areas “paid their way”. The problem, as outlined in various studies, is that while sprawl enables cheaper land, we pay for it in the end through more expensive infrastructure (roads, pipes, schools etc.)”

        Auckland has been developing outwards since the 1840s. We all use and pay for infrastructure, regardless of whether it was built in 1850 or 2010. The way that council-provided infrastructure has been paid for is via the rates paid on the property, which are significantly higher for urban property over rural. This is a huge amount over a long period, which will eventually run to hundreds of years.

        Regardless of that, I don’t think minimising infrastructure expense should be the number one priority. Maximising quality of life should feature highly in the priority list. People will disagree about the factors that define a high quality of life, but I doubt many people would argue in favour of a small amount of personal space.

  2. There’s certainly no shortage of land in Auckland to develop into housing, drive down Gt North Rd out to Avondale and you’re confronted with empty lots and huge lots filled with used second hand car sellers. Smarter more integrated developments should also be encouraged, in Europe it’s quite normal for a supermarket to have 3-4 levels of apartments above it – whereas in Auckland we build a big carpark and a big shed for the supermarket – again a huge missed opportunity in my mind.

    If we look into the downtown area then we’re confronted with vast swathes of empty land particularly on the Western side of the CBD – a major issue here will be to make sure we get good urban design not more of the ghastly apartments that have ruined parts of Albert, Hobson and Nelson. In addition, Eden terrace is prime for major redevlopment and this will certainly take place if the rail loop is added – removing the minimum parking requirements will prevent development in this area becoming car focused as well.

    In short, I honestly don’t think focusing most new dwellings into the existing MUL to be an issue at all, and will make Auckland a better place for, the major issue will be central government attempting to undermine the Auckland Plan so that their mates who’ve been landbanking at the city fringe make some money.

  3. This seems like it will all become a moot point with Nick Smith announcing the
    Government will override the council and force them to open up the MUL – much as I suspected would happen.

  4. This seems like it will all become a moot point with Nick Smith announcing the Government will override the council and force them to open up the MUL – much as I suspected would happen.

    1. As little as I doubt that this is exactly National’s cup of tea, [citation required].

      Hey, at least we don’t have a nanny state, right? Right?

        1. Shall we just move the council offices to parliament already. It’s obvious we don’t know what’s best for us. Alternatively they could do what they did in Environment Canterbury and eliminate elected representatives. “Sorry Len. We’ve decided to go another way.”

          To be honest I wouldn’t worry too much. You can enforce the MUL regardless of what Nick Smith says. You simply refuse to provide services to areas outside of what you consider the MUL. If the government wants sprawl they can provide the services. Lets see how the rest of the country responds to the government subsidising Auckland housing developments.

        2. “If the government wants sprawl they can provide the services.”

          I’m sure they’d be more than happy to do this if they gained the rates revenue from the new developments. That’s a no brainer.

          Central government has an interest in housing affordability. Auckland already has unemployment higher than the national average. If you make housing more expensive then that is increasing poverty and that is a problem central government has to deal with. You can validly argue about the impact Auckland Council’s decisions have on housing affordability, but I don’t think you can argue that Auckland Council has carte blanche permission to create problems for others to solve.

          Also, Auckland is currently asking central government to fund most of a tunnel and other transport infrastructure that the mayor has promised but cannot deliver. If you want central government to butt out of Auckland affairs then you can’t expect central government to write out blank cheques for Council projects. There has to be some two way accountability.

          Also!, inter-regional meddling isn’t a new thing. Left to their own devices, most West Coasters would be developing mines and developing their regional economy. They’re not allowed to and that is mostly because of political pressure coming from voters in the larger cities.

        3. I’m sure they’d be more than happy to do this if they gained the rates revenue from the new developments. That’s a no brainer.

          Much like the income tax increases from the CBD rail tunnel should be collected by the council?

          “Central government has an interest in housing affordability. Auckland already has unemployment higher than the national average. If you make housing more expensive then that is increasing poverty and that is a problem central government has to deal with. You can validly argue about the impact Auckland Council’s decisions have on housing affordability, but I don’t think you can argue that Auckland Council has carte blanche permission to create problems for others to solve.”

          How will increasing removing the MUL affect unemployment? I didn’t realise that the MUL also capped the number of jobs in the city. So central government can create a problem for Auckland, i.e. forcing them to build more and more services and then wash their hands of it?

          “Also, Auckland is currently asking central government to fund most of a tunnel and other transport infrastructure that the mayor has promised but cannot deliver. If you want central government to butt out of Auckland affairs then you can’t expect central government to write out blank cheques for Council projects. There has to be some two way accountability.”

          The government is saying to Council to put in policies to increase the BCR of the tunnel. This invariably means intensification and centralisation. This goes against what the government is arguing for which is to drop the MUL and allow Auckland to spread from Hamilton to Whangarei. This would reduce the benefit of the tunnel, making it less likely to gain funding. If the goverment was prepared to negotiate then I would be prepared to listen. But right now they are threatening to overrule the council and eliminate the council’s ability to decide Auckland’s future.

          “Also!, inter-regional meddling isn’t a new thing. Left to their own devices, most West Coasters would be developing mines and developing their regional economy. They’re not allowed to and that is mostly because of political pressure coming from voters in the larger cities.”

          Developing mines on conservation land you mean? Land held by the government for the people of New Zealand? As far as I know there is nothing to stop people from mining private land. National Parks are not regional assets though and decisions should be made on a national basis. If the West Coast council wants to open up one of it’s regional parks for mining that’s their business.

        4. JamesB: “How will increasing removing the MUL affect unemployment?”

          It doesn’t. But limiting the supply of land raises the cost of land and therefore the amount of income needed to live in Auckland. That means more chance that those people on a fixed low income (such as beneficiaries) will drop below the poverty line. With the associated social and economic costs to central government.

          There are obviously benefits in maintaining the MUL and these might outweigh the costs. However if the costs fall on central government then they must have a stake in the decision.

          “Land held by the government for the people of New Zealand?”

          So Auckland land belongs to Auckland and West Coasters don’t get a say. But West Coast land belongs to everyone and Aucklanders get a say. That doesn’t sound even slightly fair.

        5. Hardly Obi, you are conflating the cost of land with the cost of housing… Which is only appropriate under restrictive planning schemes that force people to only live in homes surrounded by large tracts of land.

        6. “It doesn’t. But limiting the supply of land raises the cost of land and therefore the amount of income needed to live in Auckland. That means more chance that those people on a fixed low income (such as beneficiaries) will drop below the poverty line. With the associated social and economic costs to central government.

          There are obviously benefits in maintaining the MUL and these might outweigh the costs. However if the costs fall on central government then they must have a stake in the decision. ”

          So why did you mention unemployment as a factor to consider when removing the MUL? What I am arguing is that if the government abolishes the MUL then the council will be forced to take on additional costs. Surely the council should have a stake in the decision. My arugment is that if the government doesn’t want to negotiate then the council should use what powers it has to force them to.

          “So Auckland land belongs to Auckland and West Coasters don’t get a say. But West Coast land belongs to everyone and Aucklanders get a say. That doesn’t sound even slightly fair.”

          If you had bothered to read what I said.

          “Developing mines on conservation land you mean? Land held by the government for the people of New Zealand? As far as I know there is nothing to stop people from mining private land. National Parks are not regional assets though and decisions should be made on a national basis. If the West Coast council wants to open up one of it’s regional parks for mining that’s their business.”

          If you would read it carefully you would see that I have no problem with mines being approved outside of national parks and other state owned land. Any decision made on the disposal of state owned land should be made by central government.

        7. “So why did you mention unemployment as a factor to consider when removing the MUL?”

          Auckland’s unemployment is higher than the national average and the rest of the country is subsidising the city. There is no room for increasing the size of the required subsidy. The situation would be different if Auckland had none-to-low unemployment.

          “If you would read it carefully you would see that I have no problem with mines being approved outside of national parks and other state owned land.”

          The land outside the MUL is a mixture of parks and farm land. But farmers aren’t free to make decisions regarding the fate of their land. You’re sort of arguing that it is okay for West Coasters to mine on private land, but not okay for Auckland region farmers to build on private land. This assumes that the Council is sovereign in NZ and both central government and land owners are subservient to it. That isn’t the case… central government is sovereign, local government has delegated powers, and land owners have what ever rights are granted by central government. That might include the right to sub divide and develop their land, even if the Council is opposed.

        8. Farmers aren’t democratically elected representatives. They have the right to subdivide the land if they so choose, however why should the council be forced to provide them with services at a cost to all rate payers in order for them to make a private profit?

        9. Obi, I call bollocks on your assertion that the rest of the country subsidises Auckland. We’re about 1/3 of the population, but over 40% of the total tax take is from Auckland and over half the company tax. We subsidise the rest of the country, if anything, but sure as hell they’re not subsidising us. Such a basic error in anything resembling fact makes the rest of your post hard to accept.

        10. The governments own figures from their initial submission to the Auckland Plan state that Auckland has about 33% of the population but gets about 31% of the governments opex. That figure increases slightly when you include capex but overall it is still below the population share. Add to this Aucklands share of the national population is growing and you see things are increasingly becoming unbalanced. Based on the figures they provide, if Auckland was to get 33% of all government funding there would be an extra $900m per year.

          By comparison Auckland is only asking for about $200m per year for 5 years to help fund the CRL

        11. Matt, really? If the last gov deserved to be called Nanny this one is Super Nanny, way more meddlesome and micromanage-y. Summary over-ridding of local government is anti-democratic and just plain bossy ie: ‘Nanny’.

        12. Sorry, I didn’t think I needed to put up the sarcasm flag. Clearly this government is so drunk on power that they’re incapable of spelling “exsheshive”.

          It’s a study in brutal irony that Labour got the nanny tag for:
          * trying to protect children, in the face of verdicts allowing parents to use fence palings, broomsticks and riding crops as implements with which to beat their kids;
          * putting low-flow shower heads as the last of a long list of options – you had to pick at least one, but the shower heads weren’t mandated unless you didn’t choose any of the others – to save power in new houses;
          * mandating an energy standard for light bulbs that was still weaker than the outright ban that the United freaking States has coming into force next year

          while National has outright demolished democratic representation in one region, racked up more invocations of urgency in three years than Labour managed in nine, and now declared that they’ll override an elected local body’s decisions on how to manage their local area, but still, somehow, remains the bastion of freedom and good governance.

  5. Obi, one of central government’s biggest costs when it comes to urban development is the cost of building new schools. The council does most of the other stuff (roads, pipes, parks) but government does schools. It would be way cheaper for the govt to have existing schools get bigger than to have to build new ones.

    The amount being spent on all those new Flat Bush schools is probably in the hundreds of millions.

    1. The new Ormiston High School cost in the vicinity of $50m, according to a guy I know who’s a teacher there. $50m for a high school to service 40k people, and that’s all coming out of the Consolidated Fund, plus the costs of an additional principal (and deputies/assistants) and other administrative staff, the grant costs for operating a Board of Trustees and a Parent-Teacher Association, and on it goes. The ongoing costs of a new school are far from nil compared to expanding an existing one.

      1. $50m for a school? I know it was a while ago now but Britomart ‘only’ cost $211m – pretty good value for money I think.

  6. Let’s put it this way – decades of allowing Auckland to expand, mostly unchecked, has got us to where we are now. Wouldn’t it be a good idea to let the infrastructure catch up a bit before getting even bigger. Hell, Flatbush and Botany were started from scratch all within the past 10 years and how much public transport infrastructure exist for them? Botany is a terrible example of how a town should be developed.

  7. I should add that I think the best way to promote intensification and reduce sprawl is actually not through a forced limit like an MUL but through better pricing of the impacts that sprawl causes. We have a rating system that is in general is a calculation based off your property value which means someone living in say Mt Eden will pay far more than a person living out on the edge of town. The issue with this is the amenities and services that the council provides cost a lot less per person than for the person out on the fringes. If we could change our rating system to deal with all of the cost impacts there would be a natural limit to how far the city would sprawl and it would help make intensification more attractive which encourage more of it.

    As an example, a 1/4 acre section near town might have rates of $1000 per year because it is an area which is easy to provide services for and where the council wants development to happen, if that was turned into 10 apartments each apartment might only pay $150 (there would have to be some increase). By comparison that same size section out on the edge of town might have rates of $3000 per year due to the extra costs associated with its location(which would include things like environmental costs). By doing it this way it becomes more desirably to live in that area due to the cheaper living costs so developers would build more. The other thing is because you were letting the market decide on how much someone was prepared to pay the likes of Don Brash can’t really complain and if they start pushing for the system to be changed to allow more land it is a simple question of asking why they think everyone else should subsidise that.

    The biggest downsides are that it would make the rating calculation extremely complex that only few would truly understand, it would push up costs quite a bit for those living near the edge of the current MUL so would be seen as unfair and it would take years for the true flow on effects to be seen.

    Note: I used to live in an apartment on the edge of town, the rates I paid there were not much cheaper that the ones I now pay out in the suburbs

    1. This sounds really complicated and I’m not sure if you are correct in saying that it costs more to service the edges as opposed to the fringe- if you are talking about operating as opposed to capital costs.

      What should happen is that greenfield developers (and therefore the buyers of their developments) pay the full costs for development of an area- that should include roading (not just within an area, but a contribution to those roads that will need to be upgraded because of the development), utilities, PT, schooling, parks, emergency services (the establishment, not operating costs).

      1. Yes it is complicated and thats why it would never happen. In the areas closer to town you have more people using the same infrastructure so on a per person basis it is cheaper. As for loading the costs onto the developers, yes that happens to a degree but if you tried to force all costs onto the developer then all that does is push up the construction costs which does nothing to help improve affordability for buyers. It also does nothing for the ongoing maintenance costs which are picked up by the taxpayer/ratepayer and maintains that market distortion.

        1. “In the areas closer to town you have more people using the same infrastructure so on a per person basis it is cheaper”.

          That assumes that density is higher the closer you get, and this isn’t always the case. And generally the infrastructure nearer the centre is older (think ancient sewage pipes) and needs more maintenance.

          “It also does nothing for the ongoing maintenance costs which are picked up by the taxpayer/ratepayer and maintains that market distortion”

          Operational costs (which include maintenance and the like) are paid for by the ratepayers and taxpayers, which would include those living in the new development…so they would cover their share in the same way everyone else does.

    2. Oh Matt! You have just put into words the very thing that those of us living in northern Rodney feared when we were forced into becomimng part of the “Super City”. Many people here said that we would end up with increased rates (yes – already happened) and less services as our rates would end up paying for the expensive infrastructure demanded by the new council for the inner city. Many of us living in rural land don’t get many services at all – we collect and treat our own water and most of us have our own waste water treatment plants. Bear in mind that many of us living in the country did not want to become part of Auckland and were quite happy living in our own little paradises in the country. Nor did we want Mr Joyce’s road that will just encourage growth that the area is ill-equipped to cope with.
      If our farmers and lifestylers get rated off their land who do you think will buy it? Developers – that’s who!
      And while we are on the subject – it is somewhat schizophrenic of the Auckland City Council to mandate a MUL and then nominate places like Warkworth for priority development as satellite cities. This Auckland Plan provides the raison detre for the P2W motorway which will encourage the very sprawl that everyone seems so set against.

      1. Watcher, if it was implimented properly it would actually work out better for you, as an example if you don’t have town supply water or wastewater then you shouldn’t be charged a cent for it, if however you subdivided your land and as part of that put in town supply water then you should pay a rate for that equlivent to the impact on the network. The whole idea would be to rate properties based on the services and infrastrucure they have and use rather than an arbitary land price whcih can be artifically inflated

        1. Only in some parts, in others it is a general charge but water is only one component and there is no reason why all other activities couldn’t be priced in rather than relying on a general charge.

        2. Transport is the big cost that sprawl generates. Not only the requirement for new roads but also the congestion on existing roads that auto-dependent development creates.

          Case in point being all the congestion around Pakuranga that exists because so much auto-dependent development has occurred in the southeast of Auckland.

  8. @ Arnie. Alas if developers did really pay the full cost of their developments (including the environmental costs) then developing would be so expensive nobody would ever do it. And we’d end up with a massive housing shortage. This is kind of what has happened in some ways over last 3 years as nobody is building much since the recession.

    1. The lack of construction has nothing to do with the cost, though, except where developers have thrown their toys (and usually won) over the level of their contribution to the Council’s construction of supporting infrastructure. Mostly it’s just the apparent difficulty of getting consents for new construction, and I’m sure some of that is down to developers wanting to push beyond the MUL and being told “No!”.

  9. Love the map!

    It confirms that, contrary to the mass car-induced urban exodus of the mid 20th century, people value the amenity and accessibility available in the original central suburbs.

    Nice one Stu!

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