Demographia is a pro-sprawl think tank in the USA that publishes density and house price data for cities across the world. They’re often seen using their statistics to argue that the only way to deliver affordable housing is with suburban fringe expansion into greenfields land.

Demographia’s data on housing affordability has come under fire in the past for slipperiness with definitions and misleading choice of measures. But their analysis of population density has gotten less attention – although it’s even more riddled with errors.

Demographia’s approach to calculating density is simple but misleading. They have simply calculated the total number of people in each city and divided it by the total land area covered by that city – including unpopulated areas like parks and reserves. This measure of average density is actually quite irrelevant. For example, Demographia uses it to claim that Los Angeles is more dense than New York.

As Peter outlined in this recent post, what is much more relevant is the density of the neighbourhood that the average person lives in, rather than the density of the average acre of land in the city.

For argument’s sake, consider a village of one hundred acres with one hundred residents. By the measure of area weighted density the density is simple, one person per acre. Does this represent the reality of how people live? Well it could, if everyone lived alone in a separate house on an acre of land. But what if they didn’t? What if everyone lived in a single apartment block in the middle of town that sat on one acre of land? Well then the density the people actually live at would be 100 people per acre. That’s a hundred times more dense… but the same density by Demographia’s measure!

And what if it were something more complex? What if a quarter of the town lived in the one apartment building, half lived in eighth-acre sections around it, and the remaining quarter were spread out over the rest of the land? Doesn’t that sound a bit closer to the reality of most cities? One person per acre means nothing for this theoretical town, half the people live at eight times that density and a quarter at fifty times the density.

Just in case you’re still unsure, in the image below the dots represent dwellings and each box has the same number of dots in it. Overall they have the same average density however in reality they would feel like two very different places.

patterns-of-density

In short population-weighted density is a much better indicator of the density of the neighbourhoods people chose to live in, and a much better way to describe cities and housing.

With that in mind, it was a simple task to take Peter’s data and throw it on a chart. In simple terms these show how many people live in neighbourhoods (Census meshblocks to be precise) grouped by density in Auckland, Wellington and Christchurch.  I’ve also picked out the density level that Demographia says each city is.

Auckland Wellington Christchurch charts_Page_1

Auckland Wellington Christchurch charts_Page_2 Auckland Wellington Christchurch charts_Page_3

It’s easy to see a few things here. First of all we can see that neighbourhood density can vary quite a lot within cities. One number just can’t describe how people live. Second, we can see there is something of a bell curve. Most people live within the middle range of densities, those living very low or very high are small in number, but that middle is actually quite broad. Third, we can see how far off Demographia is. Their supposed summary statistic isn’t anywhere near the middle of the curve, it’s actually near the bottom in each case.

For example it seems the Demographia figure describes the density at which roughly five percent of Aucklanders live. Nine percent live at lower densities, and 86% live at higher densities. Many people live in neighbourhoods that are two or three times more dense than Demographia’s misleading average. In short, Demographia’s figures are irrelevant for the vast majority of Aucklanders (and Wellingtonians, and Christchurchers). They don’t reflect how the majority of people choose to live.

Sorry Demographia, your data is plain useless.

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106 comments

  1. To be fair to Demographia, that mistake of averaging density over area rather than over population (weighted density) is a very common one. It doesn’t make it less of a mistake, but it does mean that they’re not being uniquely misleading in that regard. Furthermore, they do have a point that allowing greenfield development does allow for cheaper, bigger housing. The cost of new housing is mostly dependent on the cost of land and the cost of construction: allowing plenty of greenfield land to be developed makes land cheap and single-family houses with only one or two stories are the cheapest type of housing available per square meter. Even allowing higher density cannot beat that, because the cost of building multi-family housing is higher, especially if they are tall enough to warrant concrete construction or steel frame. So higher densities will likely have more expensive land and housing will be more expensive per square meter, so people will have to pay more or choose smaller housing.

    However, Demographia is mono-obsessive on the cost of housing. They completely ignore other costs of that style of living that they favor. For instance, the cost of owning and operating one car per adult in each household because low density forces most trips to be made in cars. The cost of building all the infrastructure to these sprawled out houses. The cost of building motorways to open up new greenfields for development when you inevitably run out of land. The social costs of isolation, the costs of traffic deaths, etc… All of these are ignored by Demographia, all they care about is the housing cost, everything else is irrelevant. In many cases, houses are cheap because they are in many ways subsidized by advantageous rules and public investments.

    Donald Shoup became famous by writing “The High Cost of Free Parking”, maybe someone ought to take Demographia to task writing “The High Cost of Cheap Housing”.

    1. I’m not sure you can arbitrarily separate out infrastructure and construction costs. Actually land isn’t the most expensive part of greenfield housing, that goes to the installation of streets, power, sewer, telecoms etc and the earthmoving that goes with it. Someone has to pay for that, if not the purchaser then it gets lumped onto the city as a whole.

      Likewise high density doesn’t cause high land prices, it’s just currently we make it illegal to build high density anywhere except where land is naturally expensive because of desirability. You try and build a house in the same place the land will cost the same price.

      You’re also missing the point that whole high density housing tends to sit on expensive land, it uses far less of it. I worked out not long ago that my 100m2 apartment on the city fringe sits on about $55k of land (being that I share the site with 37 other apartments). Show me anywhere in Auckland where you could buy enough land for $55k to build a 100m2 cottage.

      1. Indeed, land is quite cheap in greenfield developments, never said otherwise.

        What determines the value of land? There are plenty of factors, but you could sum it up by saying that land is worth what people are willing to pay for it. And what people are willing to pay for land is dependent on the revenues they can get from that land. So all else being equal, if you allow higher densities, then the income from the development of the land is much higher than if it was just a single-family house, which can make land much more expensive. I actually have a real-life example to show this dynamic, when Oakland, California imposed minimum residential parking requirements in 1961, they effectively capped the density by limiting the number of units that could be built on one lot to the amount of parking they could fit on that lot. The result was that the value of land fell by 33%. This case study is mentioned by Donald Shoup in this document: http://www.uctc.net/papers/351.pdf, check for Table 4.

        Of course, if you cap density too much and you run out of land, you enter into shortage dynamics which can push land prices way up. In this case, allowing more density does effectively lower the cost of land per unit. That I completely agree with. Overall, capping density does reduce land value as long as you’ve got plenty of land to develop (situation of plenty), but when your low density results in running out of land to build on, then land prices start increasing very fast (situation of shortage), at which point the only solutions are to either allow more density or build motorways (if possible) to open up new land for development to solve the shortage situation.

        At least, that’s my understanding of it.

        1. Agree with all that except the last sentence, which is too mode specific; ‘at which point the only solutions are to either allow more density or build motorways’. It should read: ‘at which point the only solutions are to either allow more density or improve access to new areas through transport infrastructure.’ Motorways are certainly not the only way to access more city proximate land, and because they and all their associated parking and other roads are so land hungry are certainly not the most efficient.

          1. Indeed, you’re right, I was too much in “standard thinking” mode. You can build rapid transit too to open up new lands, though it is exceptionally rare that the first rapid transport link that is built to a greenfield area is rapid transit. I think that covers all the bases in terms of transport mode that can open up new areas… bikes are too slow, typical streets will already open up all the land that cycle paths could. Pedestrian paths are even slower.

            So to sum up: to deal with a land/housing shortage, you can either increase density in built up areas or open new lands for developments by building new rapid transport infrastructure (motorway, rapid transit) to it.

        2. Simon Vallee: I am glad someone has stated that last para – it goes to the heart of getting the theoretical analysis of these problems, correct.

          I would say from the international evidence, that there is nowhere in the world where horizontal growth has been constrained, where building “up” has resulted in affordability – not like median multiple 3 affordability.

          Hong Kong, I believe, is the world’s most built-UP city. Its median multiple is around 15 for an average “housing” size of something like 80% less than that of the typical median-multiple 3 city which of course has freedom of horizontal growth.

          I believe the reason for this is that the process of building “up” has never been made as “competitive” as the process that converting greenfields land to housing has been. Affordability is the result of developers actually competing with each other to get land as cheaply as possible from alternative users of it – i.e. rural users. There is so much rural land, its price everywhere is not pushed up by the potential for conversion to housing.

          Building “up” on the other hand, even if it is open slather and no restrictions on it at all, has to involve demolitions of existing structures, and the use of capital equipment – cranes, concrete placing machinery, etc – the availability of which constitutes sufficient constraint on the rate of supply of housing, that the same “competitive” effect is never gained.

          The argument that land sells for “what people can afford to pay for it” would be regarded as unacceptable for food or clothing – we expect prices of necessities to be reduced by competition, to “the lowest that competitors can bring it to market for”. It need not be any different in housing.

          It is completely untrue to suggest that the “costs of greenfields growth” are anything like in the same order of magnitude as the reduction in housing costs that is possible. There is no study that shows anything of the sort.

  2. What would be really interesting and informative for amateurs is to add suburb names to each density bar as an example. Where does ponsonby fit for example, pt chev, te atatu… whatever. Presumably easy enough to pluck these from the constituent data?

    1. Could look at some rough indicators, but with the mesh block data used each of those suburbs would have dozens of ‘neighborhoods’ .

      It’s easy to see the CBD right at the end of the scale however

    2. Yes that would be interesting, examples of that big 4000 people /km^2 density hoods for example.

      Clear description of how dispersed and centre-less Christchurch is, in fact there seem to be some 5000 people living at a density of 0/km^2!

        1. It is indeed useful to look at the distribution of density. Alain Bertaud does this. You want the density to be in the RIGHT places. This is often not the case in cities with horizontal growth constraints. Of course cities are usually denser at the centre, but how they grow outside this is important. A growth boundary or a proxy for one, inflates land prices so much that developments end up disproportionately weighted towards “higher density at the fringe” while intensification closer to the centre is slow regardless of whether upzonings and permissions have happened. The latest McKinsey Institute report on global housing affordability points out that there are tens of thousands of sites with development permission in London and other British cities that are not getting developed – while there is a shortage of over 1 million housing units.

          You can see with your own eyes in NZ and Australian cities now, townhouses and small apartments going up just inside the growth boundary! This sort of thing results in average commute distances being just as bad as if a more normal distribution of density had been allowed to prevail, with FEWER people living a bit further away (and of course some greenfields EMPLOYMENT allowing for efficient short commutes by some). But the low cost of sites everywhere in Houston and Dallas means that they have MORE intensification going on when it has been allowed for (and it is a myth that Houston at least has ever lacked locations where density and building “up” is allowed).

    3. I’ve made a wee map that you can have a bit of an explore with: https://koordinates.com/layer/7322-new-zealand-population-density-by-meshblock/
      The meshblocks are all colour-coded by density: if you zoom right in, there will be labels showing the exact figure (in people per square kilometre).

      The lifestyle exurbs around Waitakere are 100-300
      Titirangi is 500-1000
      Greenhithe is 1000-2000
      Off the main road, Remuera is 2000-3000
      Royal Oak is about 4000-5000
      The old inner west suburbs like Ponsonby or Grey Lynn are 4000-7000
      The northern end of Mount Eden with the hidden apartment buildings is about 6000-7000.
      The few areas of denser redevelopment like Freeman’s Bay or Don Croot Street are 6000-10,000
      The CBD varies, since meshblocks are quite small. One meshblock covers Aotea Square and has a density of 0. Some meshblocks cover a single apartment building and half the road out front, and have densities over 100,000.

      1. Was just going to post this! Good work on putting this together, really helpful tool – with the aerials on and zoomed into the text for each block you get a really good calibration of density ranges for our context.

        Coming back to Peter’s point – extrapolating your numbers above, Demographia’s presentation of data suggests that Aucklanders all live in Remuera densities. Just goes to show how in touch with on-the-ground facts their approach is.

        For comparison – an international source:
        http://densityatlas.org/casestudies/index.php

        1. …and thats the back blocks of Remuera. Remuera Rd itself is actually extremely dense, it’s thick with apartment towers and mid rise blocks.

          Quite funny, but I think the old money heartland of Remuera Rd might just be the most dense corridor in Auckland, outside the CBD at least.

  3. Demographia focuses in on affordability not density, as measured by the ratio of medium house prices to medium household income. In the last survey it favourably highlighted the fact that Tokyo-Yokohama with a population of 37milion people had an affordability of 4.4, compared to 8 for Auckland.

    The conclusion that Demographia makes is that restricted planning regulations gives monopoly pricing powers to both bureaucrats who extract higher fees/poor service and to landowners who extract huge capital gains from those needing a basic necessity -housing. Demographia thinks it has empirical evidence that this pricing power exceeds the private sectors ability to build up. So the gains from increasing density go to old landowners not to the new high density home owners/renters.

    One of the authors of Demographia -Hugh Pavletich is well known to favour Houston’s liberal planning regulations and institutions like MUDs -Municipal Utility Districts because it adds competition for bureaucrats/infrastructure provision and for landowners/developers.

    1. “Houston’s liberal planning regulations” – Those planning regulations are only liberal in relation to sprawl. Building high density is just as difficult in Houston as in Auckland, which is why Houston has sprawled so much – “and colour as long as it is black” thinking. It isn’t a free market.

      Demographia just ignore facts that don’t suit their argument. That is because they are ardent neoliberals and so ideologically opposed to multi-family housing or public transport.

      If it was a real free market in Houston and the rules were as liberal about density as sprawl, then articles like this wouldn’t be written:
      http://www.houstonchronicle.com/news/houston-texas/houston/article/Development-rules-change-targets-housing-4422075.php
      http://houstonstrategies.blogspot.co.nz/2012/01/is-our-lack-of-zoning-myth.html
      http://www.slate.com/blogs/moneybox/2011/11/30/the_myth_of_zoning_free_houston.html
      http://www.planetizen.com/node/69093
      http://www.houstonpublicmedia.org/news/1365611975/

      1. Yes, but Houston does not have so much anti-density “zoning” that it can’t be done anywhere; and there is no evidence from the prices of the more compact housing that does exist, that there is an under-supply of such housing.

        If you search a good RE site in Houston and apply a filter at $120,000 for townhouses within 5km of the centre, you will find dozens of them. THAT is what I call “housing choice”.

        On the other hand, no city with a UGB has anything comparable under $500,000 and it is often closer to $1 million.

    2. “Demographia focuses in on affordability not density”

      I think what you meant to say is: Demographia focus on affordability as a means of manipulating density.

      1. Exactly. Demographica has a product to push and manipulates/obfuscates/omits anything that doesn’t support its argument. It is well funded by the sprawl industry and uses claims of affordability to prop up its tendencious conclusions.

        Frankly the idea that the urban form and transport conditions in Houston are

        a. Ideal or
        b. not the result of specific conditions [esp. physical geography + energy resources + state subsidy]

        is ludicrious.

        1. On what measures? Congestion delay? Average commute times? Local tax burdens?

          I would like to see ANY model growth-contained planned city add 20% more population in a single decade like Houston and see how their congestion and commute times turn out, let alone housing affordability!

  4. One criticism of Demographia is that it focuses on Anglo world and US cities in particular. This seems like a huge database of cities to get empirical results from. But there is less diversity than it seems. The major transport funder in the US is the Federal government through there funding of the interstate highway system. This single provider of resources has had a huge impact on the framework for urban development for US cities. Compare Raleigh in North Carolina a city the size of Greater Christchurch. In percentage terms it is the fastest growing city in the US. But is this really something that Raleigh is doing? Possibly in part because it doesn’t stop development. But look a bit closer and you will see great radial and ring motorways provided by State and Federal government.

      1. Sorry Matt L I do not get your argument. To me all transport modes are public goods -it is like education, policing etc. People don’t refer to policing as a subsidy to the pro justice group? It is a necessity that only the state can provide…. There is different modes, efficiencies and choices that are resolved through the democratic process.

  5. Demographia is rightly highly critical of British housing affordability but it has never investigated how German cities have maintained affordable housing for over half a century. It can be argued because Germany has maintained affordable development this has help assist in keeping its industrial base. It has not had a collapse of manufacturing exports like Britain has. For New Zealand which needs to diversify its industrial base this is important consideration which we should investigate further.

    1. Germany is so affordable because it has a right to build in its constitution and Germans aren’t afraid of renting or density. The German government has a policy of housing prices dropping over time and that is what has happened. The whole Anglo world’s economy has been built on a Ponzi housing scheme that encouraging sprawl (as NZ has since the 1949 National government) helps to propagate.

      Germany also has a very low home ownership rate because tenants have a lot of rights. It is almost impossible to get rid of a tenant unless you or a family member wants to move in.

      It is the liberalised housing market that Demographia claims Houston is, but Houston is actually the opposite.

      1. Agreed +1 about Germany.

        I think there is some lessons to be learnt from Houston too. The way they structure MUDs is clever and in some ways is not that different to Finnish -democratic body corporate rules for apartments and row houses were I used to live. But Houston expanded on that idea for bigger developments.

        1. For me the weirdest thing with Houston though is that the City/State government will spend public money to enforce private covenants. Covenants that have been out in place without any consideration of what is best for the area or what will result in the best housing/transport outcome. Only on what the residents voted for based on their prejudices and misconceptions.

          Let’s always keep in mind that Euclidean zoning was primarily intended as a way to keep non-whites out of new residential developments in the 1940s.

          I doubt that happens in Finland.

          1. I absolutely agree that the absurdly low density of many US suburbs is a consequence of “exclusionary” tactics. It goes beyond “race”, to the issue of funding of schools with local taxes, and desires to exclude households that are likely to have “many children” and “disruptive children”.

            NZ does not have this problem, and allowing growth on greenfields won’t have anything like the same effect here.

            The very insightful Thomas Heller describes an experience he had in Seattle 20 or more years ago. He was constantly pointing out that “exclusionary” large-lot zoning was always tending to decline in effectiveness because the cost of land relative to incomes was steadily falling – this is the norm as an economy develops. Plus, house structures depreciate – this means that suburbs always gradually come within the reach of lower and lower income buyers as time goes on.

            A local politician asked Thomas; “so we could preserve our suburbs character better if there was some way we could inflate land prices”? And Thomas said, “of course anti-sprawl growth boundaries are proven to do that”….. and he says the politician’s eyes lit up……

          2. Goosiod – There is nothing weird about Govt. enforcing private covenants at all. Because if you look at the history of individual property rights, covenants and zoning, – once individuals had individual property rights, then like-minded individuals got together and by doing this agreed to how they would live together. This also meant excluding those that did not want to live like this. From this councils formed and took over the administration of the covenants and provided other services (like police) to enforce these covenants. As cities grew councils put their own general covenants (zoning) over larger areas, under which the communities could still have their more restrictive covenants.
            There is nothing weird about Govt. enforcing private rights, just as in our ‘bundle of rights’ the Govt. will ‘enforce’, if needed, my (private) right to have clear title.
            This point about how MUD’s operate seems to be missed by many. The best analogy I can think of for NZ is it’s like the best Development and Body Corporate Management on steroids. This starts with the developer identifying his market and having the legal framework which enables him to buy the land and develop the product in the most affordable way possible and then provide an operating structure to ensure its long term success. And of course, in a BC, the success of many high density apartments is in how they are run. And that is why developments like the Woodlands have high density, medium density, and low density, BUT all at low medium multiples.
            MUD’s covenants are more a reflection of what collective individuals want, than any zoning I have seen in NZ. This sense of community is so strong and well enforced that they can legally resist outside pressures to change. Just like any individual should have the right to say what happens inside their own property boundary, so should streets, neighbourhoods and communities. But of course this does not sit well with those on the outside that think they know best, and to quote you Goosiod,
            ‘Covenants that have been out in place without any consideration of what is best for the area or what will result in the best housing/transport outcome. Only on what the residents voted for based on their prejudices and misconceptions.’
            Considering ALL towns grew from the common wants (or as you put it, their prejudices and misconceptions) of a group of individuals, you are saying that ‘you’, not ‘them’ know what is best for the area.
            That quote is disappointing coming from any person, but more so because you are a solicitor, although not really surprising.
            The counter intuitive nature of the Texas way for us NZers is, once I can secure in my own property rights, then I am less phobic about interfering with other people’s rights. The Texans are very pro individual property rights and yet are not Nimby’s. Although as more ‘carpetbaggers’ move into Texas, this is changing.

  6. Another part of the world that Demographia hasn’t investigated is Japan. This country had a famous property boom in the 1980s but somehow that has gently deflated while in most of parts of world, Britain in particular, boom follows bust follows boom.

    It has been suggested by Phil Hayward (who others unfairly label as a blind neo-liberal ideologue) that this is because in Japan the State has built the transit system and owns the land around the transit stations. This has allowed them to do two things. To be an anchor on property price booms by providing stable long term leases. Secondly as landowners they can increase density easily as their leaseholders demand it without all the self centred nimby protests.

    1. Yes Japan does do that and NZ did it in the Lower/Upper Hutt in the 1940s. It is a model that works and we should go back to it.

      However, Phil will never get anywhere with suggesting that approach in the current political climate. It is only roads, roads and roads. Roads can never replicate that clever development model.

      I know you were impressed by places like Houten in the Netherlands – But again that would never pass the neo-liberal sniff test as it is doesn’t funnel enough money to the private sector.

      1. Goosoid – we therefore have two competing potential approaches. Roads – or your public-transport-oriented planning that concentrates gains in values of property, sets up wealth transfers, “prices people out” and sets up repugnant social injustices.

        This is why I endorse roads and cars. I will only endorse public-transport-oriented planning under the conditions where it actually works. See my long comment here yesterday:

        http://voakl.net/2014/10/17/the-reaction-to-my-presentation-to-the-auckland-development-committee/#comment-9919

        Doing the public transport oriented thing properly along with allowing MUD-style development everywhere else would be the ideal mix IMHO. And I am grateful to Brendon Harre for pointing out that a lot of criticism of the motivations of people like me is unfair.

        1. Phil it is this sort of comment from your above link that is enormously insightful that I wish others would follow up on.

          “if the government has retained ownership of the site, it has carte blanche re redevelopment and addition of extra stories and so on. Everywhere that private owners own the site, those private owners expectations of higher and higher rents as time goes on actually act as a brake on the kind of development that will be to the benefit of the mass transit system. The government or its subsidiary that integrates operation of the mass transit system with operation of the sites, can be motivated by BOTH the addition of floor space and hence payers of floor rent, AND the addition of more riders to the mass transit system. The private property owner has a different set of motivations entirely.”

        2. “concentrates gains in values of property, sets up wealth transfers, “prices people out” and sets up repugnant social injustices.” – Where is your evidence that PT oriented development does any of these things?

          Evidence Phil.

          1. Raf Manji CCC Finance councillor in reply to Bill English’s allegation about planning causing poverty said this.

            “Local Government planning rules were not the only issue and the Government needed to play a more active role to help solve the city’s housing problems, Manji said. “The Government should just buy out waves of rural land on the outskirts of the city . . . and build 5000 to 10,000 homes on it. The price of the land would be at rural prices and that’s where you get your affordable housing.” Land rezoning led to “huge windfall capital gains” for the owner, but did not reduce house prices, Manji said”.

            If this idea was combined with Phil’s Japanese suggestion or your Lower/Upper Hutt example, maybe done in a Kiwirail version of this http://online.wsj.com/articles/transit-agencies-get-creative-1406668928 or a Bus version as advocated by this guy http://buswatchnz.blogspot.co.nz/ we would get somewhere re affordable housing with genuine transport choices. If MUDs were also added to our planning repertoire we would be learning from the best in the world.

  7. Once I actually looked into the ‘liberal planning regulations’ of The Woodlands which was constantly being touted as an exemplar of Houston affordability through sprawl. The ‘liberal regulations’ are as or more restrictive than Auckland (RC equivalent to paint your house for example). There is also a much higher proportion of multi-unit, multi-level dwellings than Auckland has. Using Google Streetview and standing on the Waterway Ave I don’t see sprawl – just 7-8 level apartment buildings in a supposed exemplar of affordable sprawl.

    1. The “liberal planning regulations” that allowed “the Woodlands” to be built in the first place, is what matters.

      A large property investor hires a creative urban planner to design and build an entire small city on $5,000 per acre land. The result is, as you observe, no lack of all kinds of housing including apartments, in the right places, and all mind-blowingly good value for money.

      Oh, and local employment in balance to residential!

      It is THIS potential, as the result of liberal planning regulations, that keeps housing affordable everywhere. IF it was POSSIBLE to do a “Woodlands” anywhere in NZ, Auckland would be as affordable as Houston.

  8. Looks to me as if Wellington and Christchurch colours have been swapped between individual graphs and composite graph – Christchurch actually lacks the uptick at the denser end.

    1. You mean like Alain Bertaud’s “spatial distribution of density” graphs? I absolutely agree.

      I go on a lot about this. The obvious massive flaw with the approach at the head of this thread, is that it says nothing about how efficiently distributed that density is. And even that is not the be-all and end-all – obviously dispersion of employment and co-location efficiencies matter too. You can have low density everywhere and still have an average commute time that is on the low side of normal.

  9. The thing about Demographia that worries me, is that they get taken seriously. For the most part, they’re charlatans. And yet, both the media and the politicians like to quote them as if they are gospel. Thank you for this article, exposing them as the frauds they are.

    1. They don’t get taken seriously – they get used as a fig leaf for financially interested parties and their backers to, essentially, say “Whenever somebody criticises your sprawl project, just talk about this study to defend yourself”.

    2. Demographia started calculating these densities BECAUSE – this is STILL a problem with Wikipedia, for example – there are density figures out there and in common use that use “municipal boundary divided by people inside it”.

      Hence “Auckland City” when it went from an inner municipality to a “super city”, dropped considerably in density. Just because of where the boundaries are drawn.

      This analysis, for example, falls into the same absurd trap that many “experts” do, of saying Los Angeles is extraordinarily low density:

      http://www.businessspectator.com.au/bs.nsf/Article/property-Australian-house-prices-urban-sprawl-supp-pd20110902-LB3FC?OpenDocument&src=sph&src=rot

      The “land area” inside the municipal boundary has heaps of rural land and national park land!

      Demographia deserves credit for moving the analysis forwards from this prevalent nonsense. By all means do even better data sets – but “population by neighbourhood density” has its own flaws too. We need to know how efficiently the density is distributed.

      And in any case, there is no correlation between density and average commute times, and the correlation between density and congestion tends to be that it is worse for density. The cost of infrastructure per capita over the long term is a U-shaped relationship, too – it starts getting higher, not lower, once a particular density is passed.

      As for vested interests, there is nothing like the incumbent land owners in cities vested interest in their land values being inflated – “sprawl” involves only a fraction of the profit-making and at least it involves actual doing of stuff rather than sitting on one’s fat backside in one’s leather armchair smoking a cigar and watching the property portfolio rise in value.

      1. “there is no correlation between density and average commute times, and the correlation between density and congestion tends to be that it is worse for density” – Evidence, Phil, evidence. Otherwise these are just words.

        “The cost of infrastructure per capita over the long term is a U-shaped relationship, too – it starts getting higher, not lower, once a particular density is passed.” You are probably right (though no evidence of course) – but even if so, Auckland is a long way back from the negative side of that U-shape.

  10. The politics, power and profit of private sector led suburban development…….

    It is interesting to see just how much Auckland in particular, followed a style of development, promoted from within the US from the 1950s on.

    And history repeats……… take a drive through the “New Auckland” sprouting on the hills all round Orewa, quite an eye-opener showing as it does, a particular vision for Auckland’s future look, actually almost identical to carbon copy “cookie-cutter” developments also happening around Tauranga and Christchurch.

    The fight to build large-scale, high quality terrace style housing developments within a walk-able and cycle-able “town environment” is at the front line of the next round of battles. This is where Hobsonville is a stand-out victory, applauded indeed by the PM at the official opening if I can recall.

    To Transport Blog – keep up the good work promoting this style of housing, using numerous overseas good quality developments as case studies, in addition to Hobsonville.

    1. Yeah, Britain did it better, they avoided evil developers making modest amounts of money actually building houses, and concentrated the zero-sum gains in land values to the point where they were 120 to 320 times higher than otherwise by 1984 – and I notice in the latest Cheshire, Gibbons and Overman book that the top end factor in fresh 2010 data analysis is now over 900.

      Much more sensible allowing rentiers to gouge everybody, price the bottom quartile out of home ownership and life opportunities, and create congested, under-productive cities with severe spatial concentrations of inequality.

  11. Nick, another point to note here… since Demographia take an average density across the entire urban area, it will always tend to show lower densities than the method Peter’s used, which looks at meshblocks. That’s because it includes large parks (as you mention) but also employment areas where few people live and so on.
    This particular point is not a criticism of either method – it’s just something to be aware of – but it does mean that the figure reported by Demographia would probably be at the low end of the distribution for any city you look at.

    1. Which suits their ends of course as they are trying to claim that no one is happy living at density.

      Then there’s the additional issue of comparing arbitrary political areas and calling them ‘cities’. The way they get to a low density for New York for example is because the legal entity of New York City includes hugely disparate places including the emptiness of upper Long Island and so on, which is as different, and non-urban, to Manhattan as you can get without just throwing in the Amazon or the Arctic.

      1. The happiness tends to relate to “choice”.

        People who choose density tend to be happy. People forced into density, like in the UK’s cities, tend to pine for something else. I am aware of academic work with this finding in the UK.

        In any case, there is a scientific way of determining where the unsatisfied demand is. If house price median multiples are high, you have a market that incorporates extractive economic rent, which should not be mistakenly labeled “amenity value”. Once the median multiples are low, you can work out if people are being forced to over-consume land, by the added amounts of land per section actually ending up negative once a certain size has been reached. This is the case in some parts of the USA.

        If, as in the UK, you have to pay MORE per square foot for a larger section, that is evidence of forced under-consumption of space, as is persistently high median multiples in cities that are LOSING population. Planners need to learn to trust “revealed” preferences and not think they can do surveys and then zone “just right” amounts of each kind of housing. That is a guarantee of gouging, same as import license quotas of the “right” amount being auctioned.

  12. Ok – so, what I am wondering, is how to get Meshblocks that don’t include the area of the street. I’m looking at a series of books by a+t publishers, and they define population density differently from you guys. So is there some way that you could get some calcs made that automatically figured out what the density of the actual buildings were (NOT including the roads). You’d have to get the Meshblocks data, link into the system to find out how much space the roads were taking up, and then subtract one from another. Sounds way too complicated to me, but you guys maybe able to make it work. Worth a try?

  13. In terms of the relationship between transport modes (and in fact, any new infrastructure) and new housing projects – which comes first? – and the assumption that the housing ‘must’ come first: the Germans routinely build new transit – tram lines, metro extensions, bus routes – into large new development areas FIRST, thereby providing easy access for construction workers and immediate attractions for buyers/renters without the sacrificial aspect of being the first to live somewhere which is short on context and infrastructure.

    One of the principles behind this is to avoid establishing a car-reliant population from the start – good transit is expected in German cities. The Germans obviously have a massive car industry and expect most households to own one (one!), however they are not expected to live in them as Kiwis do and ensure that most workplaces, schools and other community services are accessible without necessarily resorting to cars.

    Having just spent a week in NYC talking to property developers (housing and tech industry) in several of the five boroughs, they are all crystal clear that access to good transit is the crucial trigger point for starting a new project – whether the apartment is selling for $50million or $0.5million, private or social rental. The number of residents per sq km in NYC ranges wildly, as per the NZ examples, but for instance the Borough of Queens (urban/suburban) has approximately 7,900 residents/sqkm while Manhattan (high density urban) has an eye-watering 26,700 residents/sqkm. And they keep flooding in! How are these not happy people? As they say in the US – home of deeply entrenched, lowest density, car-based suburbia – ‘go figure!’

    The new Mayor of NYC, de Blasio, has committed to building 200,000 affordable housing units in the city as well as extending and improving transit lines and cycle lanes to increase the attractiveness and liveability of the city. And the birth-rate is going up, so some people are having a good time…

      1. I am sure that Germany has a number of factors that enable it to get this right without having to have Houston-style open slather on greenfields.

        There is always a threat of compulsory acquisition if land owners are getting too greedy. “Replotting” is common to assemble efficient sites, with heavy government involvement.

        There is a mutually beneficial relationship between tax breaks and incentives for landlords, and rent controls and protections on tenants. The tax breaks and incentives mean that the rent controls and protections on tenants do not dis-incentivise rental property investment, as happens in New York.

        Then it has to have a beneficial effect on land rent, that car drivers can cover so much territory between splattered rural exurbs and towns, and cities, at any speed they want! I find it ironic that the country of BMW’s and autobahns is said to work “because of its good public transport system”. Actually car ownership and use is priced out of reach of the poor, meaning that high-value people are not obstructed by congestion created by low-value people; and the expensive PT system is the provision for the priced out poor. Even so, many poor ride bicycles, which Germany has quite a good mode share for.

        Anglo attitudes to the egalitarianism of car and road use, makes this sort of construct impossible.

        1. “many poor ride bicycles” – And many rich as well, including all the doctor friends of my stepfather and many other people in suits and expensive clothing.

          Anglo attitudes to the egalitarianism of bicycles and road use, makes this sort of construct impossible.

          “car ownership and use is priced out of reach of the poor, meaning that high-value people are not obstructed by congestion created by low-value people” – Wow – just wow. Is that really the way you think? You should move to India, you would love the caste system:
          http://www.bbc.com/news/world-asia-india-19572583

        2. “Even so, many poor ride bicycles…”. That was not my experience in Europe. People from all walks of life used bicycles and PT. For all sorts of reasons -convenience, lifestyle, exercise, fresh air…. not just affordability.

          I think it represents ‘revealed preference’. I think the good thing about the Germany/Northern Europe/Japan is that say a family of four. One partner may need a car to get to work. The other partner might work locally and uses PT. Of the two kids one might be walked/prammed to say day care and the other bikes to school. They also use walking/biking/PT for other trips like shopping/ visiting friends/family. But they have a car (not multiple cars) for this too and for longer trips.

          The really good thing is that every transport/housing mode choice is better than what we have in NZ. Motorways, PT, bike-lanes, pedestrian friendly shops….. While keeping housing costs at half of what we pay. This gives enormous strength to those economies and despite face headwinds from other factors such as aging populations, the euro…. these countries are productive, exporting powerhouses in a diverse range of industries.

        3. I think Houston and the 200 other affordable cities in the US are better than NZ, mainly due to their affordable housing. That there is good choices for affordable high density housing in places like Houston. That they too support a strong diversified economy. But because multiple transport modes were not planned for from the outset there is problems trying to retrofit this at a later date. As illustrated by this article, http://www.houstonchronicle.com/news/transportation/article/String-of-collisions-renews-concerns-about-rail-5645305.php#/0

          Finally I think this argument is nuanced, intelligent and requires a lot of public engagement and I thank you Phil for raising the bar in this respect.

          1. But Brendan how can you say Houston has good choices when there is only one type of housing on offer, single family dwellings far from the centre. How is that a choice? That is not the operation of a free market, that is a piece of social engineering that forces people to live ion one kind of housing regardless of their preference.

            I also don’t see what Phil is adding to the debate. He presents no evidence or citations – just makes bald statements as if they are facts – and coincidentally all match his POV of sprawl = good, density = bad.

            And you yourself have pulled him up above on his wildly inaccurate statement on cycling. Phil appears to have no idea how things work in Continental Europe and just bangs on about the UK – I know you have experience of living in Finland and your comments are much more balanced. Every time he comes on here he lowers the bar of cited evidence massively.

            I agree the UK is a disaster and some of the biggest problems we have in Auckland are when we have copied the UK, like privatising public transport. But we have to look beyond the English speaking world and that is what Demographia and Phil H don’t do. I think the English speaking world has completely dropped the ball on cities in general (with a few exceptions) and we have very little to learn from other Anglophone countries.

          2. Goosoid no one is perfect. No one has a monopoly on having all the right answers. Kiwis need to stop talking past each other. We need to respectfully listen to each other and then intelligently move forward. Both you and Phil as examples make intelligent points and instead of acting like kindergarten children we had an adult conversation as a country we might actually get somewhere.

            Here is a quote from Demographia that others have childishly dismissed as a ‘fraud’. “Housing… in Tokyo-Yokohama, with a 4.4 Average Multiple (average house price divided by average household income) Osaka-Kobe-Kyoto has an Average Multiple of 3.5…… Despite these ratings Japan has the most affordable housing of any megacities (over 10,000,000 residents) in the Demographia Survey.”

            Compare this with Auckland’s multiple of 8. Auckland carries twice the debt, twice the interest payment burden per household. Why?

            Phil has an intelligent explanation not childish arguments. http://voakl.net/2014/10/17/the-reaction-to-my-presentation-to-the-auckland-development-committee/#comment-9919.

          3. Goosoid re Houston’s housing choices. I think there is a reasonable amount of densification in the centre where there is housing choices and an attempt at new transport options as my above link discusses. But I agree that elsewhere it is mono-modal automobile stand alone housing sprawl.

            Note even if Northern Europe it is roads/motorways plus PT, cycle lanes etc. There is only the odd place like Freiburg that tries new development with no access for cars.

          4. I am trying to elicit evidence from Phil. If that is childish then so be it.

            I am not convinced by any of Phil’s statements (I can only call them statements not arguemnts as they have no citations).

            I will leave you to agree with on how great auto dependent sprawl is. Phil will never be convinced by any arguments as he doesn’t rely on them himself. I have better things to do.

          5. Goosoid sorry I did not intend my comments about being ‘childish’ to be taken personally by you or Phil. I have a great deal of respect for your comments and input. It was a more general comment about kiwis. That often we quickly align ourselves with one ‘camp’ or another. That each ‘camp’ does not talk to the other. We talk across each other. On this blog this often happens with the ‘affordability’ camp and the ‘public transport’ camp. There are exceptions. I think Peter Nunns is doing a great job and I hope that this results in greater understanding and maybe even one day a combined camp of housing affordability and transport choice.

          6. Goosiod – if there is one person that cites more research ‘evidence’ than anyone else, its Phil. My evidence is based on having worked in, and studied all types of development in both Texas and NZ for nearly thirty years, and my conclusion is that restrictive zoning allows large amounts of non-value added costs in the development of property, all at the expense of the home purchaser. And by having less discretionary income because of this, the owner is poorer for it, and for many owners they are poorer to the extent they can only afford walking, a bike or PT as their choice of mobility, which is different than using these forms as a preferred first choice and was the point Phil was making about ‘more poor use bikes.’ But it would seem that some PT advocates don’t care the reasons you need to use PT, as long as you get the numbers up.

          7. Hi Gooseid,

            just following up on this topic as I didn’t see a response to my previous questions/topics raised on an earlier blog entry:

            Because of this, people don’t want denser options, precisely because that brings smaller houses and in some cities, like Auckland, unaffordable housing. As I mentioned earlier, being 10s of kms financially doesn’t set people back and besides as has been said it has a dispersed employment base, so your scenario is unlikely to exist enough to be an issue.

            The use of the phrase sprawling is something I have to call attention too as well in the local context. How much of New Zealand’s land has been urbanized?”

            What I am saying above that is relevant to this discussion is that precisely because land has not been restricted in places like Houston they have affordable housing for all points in the [income] market. Meanwhile in Auckland, a restrictive zoning policy (among other aspects) has brought unaffordable housing especially for the genuinely poor and lower class income earners. If you choose to bring in the sprawl topic in as part of your response, let me ask again: How much of New Zealand’s land has been urbanized?

            best regards,
            Matthew.

          8. Matthew your question is frankly meaningless and I have dealt with it before. That the Southern Alps are not built on is entirely irrelevant to any urban form debate in Auckland. The pressure to build on the extremely productive farmland of Pukekohe by density controls that mandate, yes, Sprawl, in Auckland is a disaster for everyone [except that landowner].

            Additionally when will you Houston obsessives get a grip on the problem transport poverty [inaccessibility] to nuance your monotonal advocacy for everyone to live in little detached houses at the end of the motorway?

            Here’s a chart showing actual trip length in Auckland, not some other fabled city on a flat plain at the heart of a petro-state. You will note that the further out you live the greater your trip length which a good proxy for the financial burden of your dwelling location. And this is not just trip length to the city centre but all trips taken as recodred in the 2013 census. Those who live further out still spend more getting everywhere than those who don’t. More sprawl = greater transport costs for everyone, but especially those on the freshly ruined countryside at the fringes:

          9. Hi Patrick,

            you may have addressed the question before but you haven’t answered it. Do you know the answer? Please, just yes or no. if you do know, then give the actual number. I am well aware of the percentage of land in New Zealand that is part of the Southern Alps (I presume you are too).

            Now, directly addressing your point about trip length. Earlier in another thread I gave a cost comparison for longer trips versus lower cost housing. I assumed a 50 kilometer commuter trip one way (or 100 kilometers a day). (I now see that this is an overstatement in terms of an average.) Anyway, on that basis, with the new more affordable housing now being built, the homeowner is $2000 better off (assuming a 10% deposit and a 30 year mortgage at current floating interest rates) a month than if they lived closer to town with a far higher mortgage and a shorter commute.

            So, “Those who live further out still spend more getting everywhere than those who don’t” is factually incorrect once you take into account the cost of housing and transport.

            I note that the Auckland Council has (so far) handed over 63 SHAs to the Government under the legislation, with the Deputy Mayor quoted (Herald link below) as saying this land area has resulted in the size of Hamilton being added to Auckland. As I see it, this Government sees land as a major factor in the high cost of housing and so if enough land is opened up, I think the new housing will be more affordable. Personally, this is what I want for low income earners so that they can live how they want in Auckland. And, based on my knowledge of how much land has been developed in New Zealand, and Auckland, we are nowhere near what is defined as sprawl. I think we never will be.

            http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11342750

            best regards,
            Matthew.

          10. I save over $4000 a year by not running a car because I live centrally enough that I don’t need one. So if it costed me $2000 a year on a mortgage (it doesn’t) then I am sitting pretty.

            My apartment actually costs less than any warm, dry house at the edge of Auckland too, so my housing AND transport costs are lower. Thank you density.

      2. Hi Sailor Boy,

        I said $2000 per month, not per year. So doing the maths again:

        $2,000 * 12 = $24,000
        $4,000 * 1 = $4,000

        $4,000 – $24,000 = $20,000 worse off.

        Further, if you want an apartment at the edge of the city, then of course it will be cheaper than the standalone house at the edge of the city. So the mortgage costs for that apartment will be even less, thus making a greater saving on the same apartment in the center of the city (main reason of course being cost of land and the associated costs related to that). Even if I am wrong, and the apartment is the same price (and it may well be, given all the extra types of construction related to that type of building that you, teh owner have to pay for), you are still worse off.

        How much did your apartment cost you? And, what was the deposit? How long ago did you buy it?

        So I would ask you again, how does it feel, with your own hard earned cash, being $20,000 worse off?
        And, how much of New Zealand has been developed, a question I am still waiting to be answered on this blog entry?

  14. Do we require to increase our population? If so where are we going to get all the extra people? What types of people (skilled? Rich? Poor?) what type of culture? What effect of NZ culture will this have?

    Will the gains out weight the losses?

  15. people start using PT when its convenient ( that is it goes where they need to go), it is reasonably priced ( most compare it to the cost of driving and parking their vehicle), and is comfortable and reliable.

    Auckland PT seems to lack the basics, as it doesn’t go where people need to go, due to Auckland decentralized sprawling nature. Taking more than one PT to get somewhere ups the prices and can sometimes leave people waiting. Not to mention the increase in price.

    If the basics are right, people will use PT

    requires some forward thinking from the planners

    1. I’m guessing you chose where you live based on car-based factors…? Can you expand on what exactly is not working for you when it comes to PT?

  16. Matthew/DAS – I can answer both your points from above in one go.

    “restrictive zoning allows large amounts of non-value added costs in the development of property” – I absolutely agree.

    “because land has not been restricted in places like Houston” – Land has been restricted in terms of limits on density. What you mean is that greenfield land has not been restricted.

    Where we differ is that I think those points apply as much to anti-density controls as it does to anti-sprawl controls. You seem to think I am advocating the current containment policies in Auckland. I am not.

    What I want to see is a real free market. If Aucklanders don’t want density then they won’t buy it. Thing is, good quality dense housing is being snapped up faster than it can be built. At the same time, cheap houses on the fringes remain unsold. That is real stuff happening right now, I am not crystal ball gazing.

    That means minimum controls on up and out. So with density some height controls maybe and with sprawl, perhaps preserving some green areas and prescribing that decent PT must be provided.

    Surely you can’t disagree with that or else you are just advocating policies to offer people no option but sprawl and you have no evidence that is what people want.

    1. Goosoid I agree with that and I hope DAS and Mathew do too. I quite believe you that there is pent up demand for medium density housing from the 2 to 13km radius in Auckland. That seems to be the missing part of the housing supply as demonstrated by the graph at this point in the video1.10,40 from Alain Bertaud http://www.youtube.com/watch?v=8H9gnHfUriA.

      Of course by making land cheaper on the fringe the competition effect will make land cheaper in more central locations. Cheaper land on the fringe should in my opinion be provided the German/Japanese way with effective public transport/cycling links provided from the outset. If developers try to avoid competition on the fringe or more central locations then the government should pragmatically use compulsory acquisition to nudge the market along as Phil above reports Germany does occasionally and Japan does a lot.

      1. “by making land cheaper on the fringe the competition effect will make land cheaper in more central locations” – It might if there is also a lot of housing built in the inner areas. If housing is only made available on the fringes, it is likely to make central locations even more expensive as there will be a premium associated with being able to live somewhere more urban.

        I agree with you totally on the German/Japanese/Scandinavian/1940s NZ style of housing development – it worked well in NZ then and it works well now in Northern Europe. It creates well connected communities where people have options other than the car and a large lot house.

        Problem is that I suspect DAS and Matthew would see that kind of planned development as “socialism”. Happy to be proved wrong.

        1. Goosoid cheaper land on the fringe will translate to cheaper land in the centre. I think the question is will that translate to a plentiful supply of affordable new medium to high density housing centrally. The answer will depend on how easy it is do. As you say we must ease the planning restraints of going up as well as out.

          I cannot speak for DAS and Mathew but their is some hints from the ‘affordability’ camp that they hate crony capitalists destroying the productive economy more than they do socialism!

          1. “cheaper land on the fringe will translate to cheaper land in the centre” – why are you so sure? As far as I know from looking at house prices online, inner city housing in places like Atlanta and Houston still commands a hefty premium over housing located 30kms out of the centre.

            I guess the difference may be smaller than in Auckland but I still doubt inner city housing there is seen as affordable by the majority. So again, you are forcing people to accept living on the fringes by not offering affordable inner city housing. To be clear, by inner city I mean the Isthmus and southern parts of the North Shore.

            Why will that be different in Auckland? Or are you assuming there will also be lots of good quality dense housing built in the inner city? Not likely under the current form of the Unitary Plan and even less likely if the horizontal restrictions were released now without changes to the planned density restrictions in the Unitary Plan.

          2. Goosoid for two reasons. Economic logic. If land at x distance from the city centre is cheaper because you have a right to build then due to competition at x minus 1 land will become cheaper. And so on. The centre will still be more expensive but not as much so.

            Secondly empirical evidence. Residential land and therefore housing is cheaper in ‘right to build’ Germany than fringe restrained UK. That includes good quality inner city German apartments compared to the UK equivalent. For all its flaws Demographia also compiles good empirical evidence too. When logic is backed up by empirical evidence I think it is a strong proof.

            I think I have read some evidence showing height restrictions linked to more expensive housing -Munich maybe? So it is really important that Auckland’s unitary plan does not restrict increasing density too.

            I think all our governments -Central and Local should have a goal of reducing housing costs in relation to income like Germany does because there is no one silver bullet. It is about addressing a whole range of policy settings.

          3. So cheaper rather than cheap – sure.

            But unless there is cheap smaller housing offered – like terraced two storey townhouses – I still see lower income people being forced to the fringes. They will then have all the burdens of auto dependency as now.

            That is unless we see real TODs put in place on the fringes with good connectivity by bicycle and local PT. Lots of Houtens all over the place!

          4. All good guys, but with good high density dwellings the land cost becomes a small fraction of the total so they don’t have to be at the end of the m’way, Houten-like or otherwise. They can be built where many actually prefer to live; inside the existing city, and on Transit and cycle routes too.

        2. Goosiod – And I’m happy to prove you wrong. I don’t consider it socialism, but even if I did, I always thought I would make a very good ‘benevolent dictator.’

          Yes there is a very good place in NZ for what they do in Germany and Japan, and in my opinion that is the very role of Central Govt, followed by local Govt. to do. IE they set the post generational framework for these this to happen, they show individuals, developers etc. a glimpse of the future so so we can mentally prepare and plan for. At the moment their thinking is little more than one election cycle.

          And in that regard, your comment on ‘free markets’, is that there is no real free market (you mentioned socialism almost in the same sentence as free market), just what Govts. allow or not, and therefore it is they that have allowed the conditions to exist so we have this housing affordability problem.

          I agree, allow more unrestrictive zoning to build up and out. In Canada most houses have basements – let people also build down, and use up all the dimensions, BUT without infringing on peoples individual property rights with regard to shade and sunlight, noise and pollutants (not views unless they had already been zoned in). So that if the residents of Franklin Rd got their S#*T together and agreed individually and collective covenants to protect the character of their street, then they should (and can) be allowed.

          Covenants should have a given life on them, on the expiry of which the owners should vote to whether to extend them or not.

          It’s not that this change that is the issue, it how change is managed. Even the houses on Franklin Rd have had numerous modifications to them over the years, like insulation upgrades etc.

          The main point still, however, is that NZ has a housing affordability issue, which restrictive zoning up and out is causing.

          Imagine if you will (without fear because you have already purchased a house at inflated value), if housing ownership and rents were a third to half less, is it just possible, that I might have more money to pay for the true cost of roads and PT fares, and be happy to pay that?

          1. Then I think we actually agree. Who would have thunk it.

            I don’t see socialism and a free market as incompatible because socialism is not communism. We have to really call Northern Europe a socialist area (or social democratic at least) but no doubt they are a free market – albeit a controlled one that has the social benefits as its yardstick.

            On covenants – I have no problem with private covenants and actually I don’t see any need to have a sunset clause on them. From my experience, they have a natural life as after a while no-one wants to pay to enforce them after w while. That is what happens in NZ.

            I think it is a much better system than the MUD publicly enforced covenants in Texas as they will have no natural expiry period as there is no financial motivation to be lax on enforcement if the public purse will pay.

          2. Yes who would have thunk it?

            But having written and had to administer many covenants, the MUD style is better, in that a rule that is not enforced, or is left ‘on the book’ for some nutter to pull out of the hat decades later, undermines all rules. If it shouldn’t be there, then it shouldn’t have been put there in the first place, or should be removed by consensus.

            And to me, one of the issues we have in NZ is no clear direction or statement of intent on housing, transport etc. from the Central and Local Body Politicians, which follows onto developer behaviour and then onto the insecurity that individual property owners have about their rights.

            A game is always easier to play if everyone knows the rules, and the ref. is consistent in enforcing those rules.

  17. “Goosoid cheaper land on the fringe will translate to cheaper land in the centre.” I have never found that assumption convincing. I don’t find your’economic logic’ convincing. I have never purchased a house by starting looking in a suburb I dislike and moving ‘in’ until I can afford it. I (and everyone I know) starts with where we would prefer to buy and move ‘out’ until we can afford it. Your argument seems to be that the fringe control is like a paddling pool – so by removing the edge all prices will flatten. Doubtful – the ‘centres’ suck prices up, it’s not the edges pushing them up. For empirical evidence why not look here instead of Europe? By your logic prices dropping in fringe Auckland suburbs would cause prices to drop in central suburbs, however we had years recently when real prices in fringe suburbs were going down while central suburbs had sky-rocketing prices.

    Sure there’s a step in land price at RUB, but that doesn’t mean removing RUB will change price everywhere.

    1. Aa – Your pool analogy is a good one, and following that thought you will see the logic of the water when it hits the pool fringe does intend cause the centre to rise as well.

      But whether you agree with the analogy or not, the empirical evidence shows this. This price curve from CBD to fringe is consistent in every city, irrespective if the city has restrictive zoning or not. And it is consistent that cities with high prices on the fringe have higher CBD prices relative to cities with lower prices on the fringe, and the cities with the lowest fringe prices are those cities with less restrictive zoning, especially if that less restrictive zoning is for outwards expansion. It is the fringe that sets the prices, and naturally enough some of the fringe is restricted by geography, but most of the restriction is man-made, just like the upwards restriction is.

      The problem with Auckland and other restrictive zoned land, is that buying land at inflated prices tends to lock in that price so even if the fringe restriction is relaxed, the older land is set at the old price and won’t readily come down, to use the pool analogy, it’s more like the pool was filled with concrete rather than water. The only way developers can get value from this high priced land is to increase density, and the only way for purchasers to afford this is to buy into this higher density, irrespective of what their first choice may have been.

      1. “irrespective of what their first choice may have been” – I must say I do object to your automatic assumption that everyone would choose to live at low densities if all was equal. It may not be your preference but many people do like to live at higher densities, even people with children.

        I imagine a lot of people are living in fringe suburbs when they would much rather be in suburbs with higher densities similar to Parnell or Ponsonby. If good quality medium/high density housing was on offer in more places in Auckland that demand could be met.

        1. “irrespective of what their first choice may have been’ – That is why I used the word ‘may’. And of course one should also never assume that just because people live in high density, that is what they WANT.

          1. Have owned both now and far prefer a quality medium density development. Focus on the word – quality – for there is much shit out there. Patrick Fonteinmay have gone under but his research for the Kensington Park development has set up the best medium density development in the Auckland region. Hobsonville Point is the only one that comes close but is on another scale and has it’s own issues. Luckily John Sax took over and is on his way to completing Kensington.

      2. DAS I think your concrete example is why the government will need to lead with affordable examples, along the whole land rent curve. Driving down land prices. Houten like fringe developments, medium density housing on crown owned city land (there is plenty of State Housing that could be replaced with medium density housing) and so on. Eventually developers/property owners will get the message of what is affordable and competitive housing/development.

        I don’t understand why the public allow the majority of the amentity value in our cities to accrue to relatively small group of property owners in the form of massive capital gains. They didn’t create the value and if this process is allowed to continue their parasitical behaviour will destroy the host.

        1. you mean like the Govt. getting approx. $1,400,000 per ha from the fringe land at Hobsonville, or the deal they have just done with Fletchers at Hornby to build ‘affordable’ housing.

          1. Yes but the government instead of driving residential land prices up to 1.4 million+ a hectare in some bizarre race with crony capitalists the government would act for the common good by driving residential land prices down. Reducing the whole land price curve in our cities -maybe halving central prices and reducing fringe prices down to rural values of $50,000 a hectare.

        2. I agree 100% in this respect. The time has come for some real gov’t planning around housing and transport. That will make a huge difference.

    2. aa of course as a buyer you look centrally (or your preferred location) then move away from it until you find residential land/housing that appeals and fits the budget. Sellers of residential land/housing are also valuing there property in the same way. Once you put constraints on going up or out that property immediately rise in value because you are giving property holders monopoly pricing power. You are also adding bureaucratic gatekeepers into the system that tend to add cost. This leads to perverse outcomes. In the UK the situation has deteriorated so badly that councils are sending up spy planes to catch people illegally living in garden sheds. http://www.dailymail.co.uk/news/article-2346759/Council-uses-spy-plane-thermal-imaging-cameras-catch-immigrants-living-illegally-garden-sheds.html New Zealand, being fifty years behind the UK, our councils’ fascist tendencies haven’t developed to such great heights. But even so some kiwis are creatively finding ways to bypass councils’ development restrictions. http://www.stuff.co.nz/the-press/christchurch-life/avenues/10140577/Humble-abodes-use-space-wisely

  18. Sorry DAS you’re just repeating the same old slogans. I said the pool is a simplistic bad analogy – water is flat. Prices are not flat across urban areas – there’s other things happening. I have given you a recent example here in Auckland of fringe prices going the opposite direction to central area prices and you just just ignore it and claim the ’empirical evidence’ shows the opposite to what we see here. There’s good reasons that 200sqm in Ponsonby is worth a lot more than 800sqm in Weymouth – and it’s not because Weymouth doesn’t have unlimited 800sqm sections.

    1. The pool analogy wasn’t mine but sometimes analogy helps explain an idea, but in your case sometimes not as again you have missed the point, which is the flow of everything (in this case growth) tends to be out, until it hits a barrier (in this case a restrictive growth fringe). This barrier then pushes two things up, density and price. Some of this density is first choice for some purchasers and some of it is second choice for others due to lack of their first choice which would have been lower density at the same price they ended up buying the higher density at.

      And again you miss the point amount your example about a smaller dearer Ponsonby section and larger Weymouth section in that irrespective of whether they are in a restrictive or low restrictive environment, there is a relationship between the two. In a restrictive zoned environment BOTH prices are higher relative to if the sections had been in a low restrictive environment.

      And the lip of higher prices you get on the restrictive fringe is again classic restrictive growth symptom and has been explained by others many times.

      Just like a wave rides up on the end of the restrictive edge of a pool 🙂

  19. I’ve never understood is why Demographia use cheapest as the measure of best. I happily pay a much higher proportion of my income on housing to live somewhere that is has more opportunities, more interesting, more culture/arts, less driving etc. Most people seem to do the same – hence Manhattan is more expensive than Houston. There’s nothing stopping Manhattenites moving to Houston until the price/income ratios in each location are equal. But they don’t – it’s way to simplistic.

    1. Your ignorance is appalling. You are confusing higher priced housing with quality, rather than just having more non-value added costs.

      And to compare Manhattan (the CBD) with Houston (the city) when two thirds of the workers that work in Manhattan commute into it everyday, that’s your come back?

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