Since I moved to Auckland, I’ve been trying to make sense of local trends in house prices. Why have they risen over the last decade? Will they keep going up, or crash back down to earth? What’s driving all this?

Over the last few years, a lot of the focus has been put on the role of planning regulations in pushing up prices. I’m sympathetic to this focus, as it looks like there may be a few barriers to building the kind of city I’d like to live in. But I also suspect that the causes are a bit more complex than planning alone. After all, housing markets are big, confusing (and confused) things.

Others are more confident that planning was what done it. For example, the annual Demographia Housing Affordability Survey states, quite confidently, that planning regulations – an “institutional failure at the local level” – are the main cause of high house prices:

The purpose of the Demographia Surveys is to alert the public and policy-makers if housing exceeds 3.0 times annual household incomes, that there is institutional failure at the local level. The political and regulatory impediments with respect to land supply and infrastructure provision must be dealt with.

Former Reserve Bank governor (and former leader of both National and ACT) Don Brash made matters even clearer in his foreword to the 2008 edition:

The affordability of housing is overwhelmingly a function of just one thing, the extent to which governments place artificial restrictions on the supply of residential land.

In short, planning rules – especially metropolitan urban limits – are bad. Very bad. They are the main reason that houses in some places are unaffordable, which Demographia defines, somewhat arbitrarily, as median house prices that are more than three times the median household income:

Demographia affordability categories

Now, according to Demographia, Auckland currently has a “median multiple” of 8.2: “severely unaffordable”. Based on their figures, the median house price in the city at the end of 2014 was $613,000. (This actually seems low – perhaps they’ve converted it to USD?)

In order for Auckland to meet Demographia’s definition of an “affordable” market, house prices would have to fall by $390,000, or 63%. Given that they think that urban planning/metropolitan urban limit policy is the main cause of high house prices, we can take this as their estimate of the cost of those policies. $390,000, per house.

This is obviously a very large number. If house prices fell back to the “affordable” level, it would have ruinous effects on NZ’s financial system and household wealth. (Frankly, this does not seem like a very good outcome.)

So that’s Demographia’s estimate. Recently, several New Zealand economists have taken a more detailed look at the costs of planning regulations in Auckland. For the most part, they analyse the impact of planning rules that were put in place by previous councils:

  • Motu’s paper on the costs of planning regulations concludes that they add between $32,500-$60,000 to the cost of a new standalone house and $65,000-$110,000 to the cost of a new apartment. These figures were sourced from a survey of developers and accounted for the impact of a number of individual rules ranging from balcony rules to section size controls.
  • NZIER’s paper models the impact of urban limits and height/density limits. (This paper uses a similar approach to the one I discussed here.) It concludes that these two rules cost households the equivalent of $1800 per annum. In present value terms, this is somewhere on the order of $30-40,000 per household (depending upon what discount rate you use).

[Disclaimer: I know the authors of both studies and have a great deal of respect for their work. In a professional capacity, I provided comments on earlier drafts of both papers. This is somewhat unavoidable given the size of New Zealand…]

Here’s a chart comparing Motu and NZIER’s estimates of the cost of planning regulations with Demographia’s estimate:

costs of planning regulation chart

In other words, these estimates suggest that Auckland’s planning regulations explain only 10-30% of the difference between Auckland house prices and a median multiple of 3. Even if we add together the estimates from the two papers, we don’t get anywhere near explaining the gap.

So: whose estimates of the cost of planning should we believe?

Personally, I trust Motu and NZIER’s analysis, as it’s backed up by empirical research and/or economic modelling, whereas Demographia’s is mainly justified by rather repetitive and self-referential haranguing. Consequently, I don’t think we can conclude that planning regulations are a sufficient explanation for Auckland’s relatively high house prices.

That doesn’t necessarily mean that we should be sanguine about planning regulations. While things will change under the Unitary Plan, the costs associated with existing rules are reasonably large. And, in contradiction to Demographia’s claims that constraints on greenfield land supply are the biggest problem, both papers find that existing regulations place higher costs on higher-density developments.

The Motu paper finds that existing planning rules add twice as much cost to apartment developments as to standalone houses. Similarly, the NZIER paper finds that height limits (and other controls on density) are slightly more costly than urban limits. (This is partly because Auckland is mostly surrounded by water, meaning that preventing land from being used efficiently is much more deleterious than it would be in a city with more land.)

If these issues aren’t addressed, it may be more difficult to get the Auckland that we want: a city that gives people better housing choices, that lets them live in places that are accessible to jobs and amenities, and which efficiently accommodates the next Aucklander.

What do you think about the cost of planning?

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96 comments

  1. It seems to me the true cost of planning isn’t in the direct costs imposed on a development, but on the dwellings that are not built because of planning regulations. It’s the granny flats, additional houses (particularly in rural areas), the four storey walkups … basically it is hard to build anything except a big detached house on a tiny section. That constricts the supply and forces prices.

    I think that is what the Demographia costing is measured. It would also be interesting to see multiples of income for housing for comparable cities – similar sizes, with geographical constraints like Auckland.

    1. Good point. Though pretty sure both Motu and NZIER would have considered that in their analysis.

      The bigger question is whether prices would drop by $390,000 if we got rid of the urban limits, which is what Demographia are basically saying. I think the chances of urban limits having that much impact on prices is extremely low.

    2. Agreed – overly restrictive rules can prevent dwellings from being built in the right places, at the right times. This is factored into NZIER’s results, which account for the costs people face as a result of having to live further out and commute longer distances.

      However, this isn’t necessarily _more_ costly than the financial cost to comply with the planning rules (or, alternatively, to go through the resource consent process to avoid the rules). Consider a case in which someone owns a bit of land and would like to develop a house on it. Planning rules and processes add $50,000 to the cost of building the house, which makes it unprofitable to develop.

      This leads to artificial scarcity, which in turn pushes up the prices that people are paying for houses in the area. If prices rise by $50,000, it becomes profitable to develop even with the rules in place.

      1. My concern is that you are prevented from a lot of intensification because of the rules. Land prices don’t matter – it is just hard to build anything cost effectively except a standard detached on a tiny section. Meanwhile, 3bed terraced houses in Stonefields are going for $0.9M…. it is insanity.

  2. How about a different angle. As you mention Auckland is surrounded by water pretty much so expansion is difficult. Maybe Auckland has simply passed it’s ‘use-by’, and the government should look at creating a new city in a location with decent-ish weather that has masses of land around the centre and start again from scratch using good projections? Canberra style? There won’t be much left that Kiwis can buy before long anyways. Just a thought.

      1. The replacement of productive agricultural land with low density housing seems a little short sighted. What would this strategy do to our long term export earnings?

        Their is an argument that these export earnings would fall in the medium to long term as cheap fertiliser comes to an end, but accelerating the process by converting productive land and the effect it would have on food prices is probably an opportunity cost I’m not sure we’d be that keen on.

        1. Destroying local food production does nothing for the future sustainability of a region either. Makes us even more reliant on long-distance transport and mass retail solutions.

    1. Neither Canberra nor any other invented city is a kind of good model. Would Canberra exist in any meaningful way without government? In other words it is subsidised by every other part of the nation. Wellington, after all, would remain a charming fishing village and ferry port and little else without being the capital. And why? Because cities grow where they are for good economic reasons, almost always related to natural geographic features. And they wither away when they lose these advantages. Governments should not be in the business of trying to invent ones that don’t have any natural cause to be. Auckland is a natural gem to live and work in; our task is to not fuck it up by destroying its setting with more endless undifferentiated autodependent sprawl and associated uneconomic, severing, and vile oceans of tarmac.

  3. At roughly $1,500 – 2k sq/m to build which makes the average 3 brm house of 150sqm anywhere between $225k and $300k just for construction, I can’t see us reaching their prices unless a) there are some major changes in construction pricing (materials etc) or a move to smaller, less complex homes (you need 3 toilets, why?) or a rapid increase in factory built homes and a change to cheaper mass building – terraces are an example.

    1. The NZIER paper found that increasing construction sector productivity would have twice as much of an impact on prices as loosening the MUL. More on this next week…

    2. A very good point. Our parents bought Keith Hay/Neil/Beasley homes in the 60s/70s which were built off-site and had only 1 toilet. When my parents built a new home in the mid 70s the council held up consent because they planned a second toilet in the workshop, and the council feared it would used as part of an illegal flat.

      1. Neil’s parents’ experience is absurd. Holding up a consent because of something the *might* happen shouldn’t be a valid cause. The house *could have been* used as a hair salon, or a kennel, or a jihadist safe house. You don’t do anything about it until something actually *does* happen that violates the consent or other law. In other more efficient parts of the world you take your small-project drawings to the city having had plumbing and electrical sign-of, the city reviews them for a couple hours or days, and issues the permit if there are no issues. What’s so hard about that? except it isn’t the development culture of NZ.

        1. Luckily we’ve come such a long way from that small minded what if type thinking in building and traffic planning since then. 😛

  4. You cannot allow Auckland to keep moving further and further out. Sprawl kills the city and makes the city very car oriented. We should be intensifying what we have, especially around transport hubs. Under the unitary plan, Auckland council will allow much taller development in town centres. We cannot sustain the dream of single detatched housing and we need to start looking at terraced housing and apartments to fix the housing problems.

    1. The council may have planned development around town centres, but apart from New Lynn we have seen very little.

      1. There has been a fair bit, a fair bit coming through in Grey Lynn area, Mt Eden area, Parnell has apartment block going up, Newmarket, Newton and in the City Centre. It’s happening and the Unitary Plan isn’t enforce yet. Not to the extent we need, but it is happening.

  5. The Motu paper looks at the costs of building on a piece of land given current rules and a piece of land if those rules were removed. The assumption is that development can occur. That means it doesn’t include the wealth effect or dead weight of the Metropolitan Urban Limits (MUL) or Rural Urban Boundary (RUB). Arthur’s earlier paper looked at the MUL and found it significant and binding. http://www.motu.org.nz/publications/detail/spatial_determinants_of_land_prices_in_auckland_metropolitan_urban_limit

    The newer paper looks at the getting a development through the Council critics and complying with their building rules.

    1. Which suggests that you could add together the results of the Motu and NZIER papers, as the latter modelled the effects of the MUL. That gets you into the range of $60,000-$100,000 in cost per standalone house – i.e. still not a complete explanation for Auckland house prices.

      1. Yes. Probably the driver at the moment is the fact people are not leaving NZ in droves but the Govt is still ‘replacing’ them. Ad that to speculators based off shore and we have a bubble.

  6. It is definitely not just planning. I’ve been trying to formulate my own explanation for this but haven’t yet gotten to the point that it’s ready for prime time. In Peter’s Sunday reading post there is an article about just this question – what distinguishes a housing market from other kinds like cars or door knobs. The article isn’t well written but contains good explanations of the vagaries. It’s the article from LSE.

    1. Yeah, land markets are something that I don’t feel like I understand well enough. I haven’t gotten much past Karl Polanyi’s observation (in his fantastic book The Great Transformation) that land markets fail to approximate the neoclassical ideal due to the fact that land is not _produced_ by market actors in response to the interaction of supply and demand – it _pre-exists_ the market. (In this respect, it’s very similar to labour – or, as non-economists call it, human beings.)

  7. Planning certainly plays a role. It’s supposed to, but sometimes you get it wrong, and sometimes planning rules are taken over by the passage of time.(One problem is that planning operates in a political environment which distorts attempts at rationality, equity, efficiency, or reducing externalities. Also, as rules become embedded, people get used to them and act accordingly, making much safer for them if the rules don’t change no matter how much they may not like them.) In the US for instance, planning and codes don’t let you build the kinds of main streets or town centers that we may have grown up with, or those that we’re spending lots of money to revitalise today. Not to mention trying to duplicate with New Urbanist design. In many American cities planning regs, design standards, etc. are written for suburban land use and subdivision types. It can be something as simple as not allowing ground floor retail in a parking structure, or not allowing a dry cleaner to be located beneath residential or other mix of residential and retail, etc. Fire codes play a big part and fire codes tend to take precedence over planning.

    But there is far more to it than that. Planning still doesn’t affect much of the valuation of land, or all the elements to consider in a land purchase that differ greatly from any other “product.” So putting the blame squarely on planning, as Demographia does – and always has done – is just promoting a purist pro-market ideology, an ideology that has no analogue in history.

  8. Something else that Demographia doesn’t take into account is that housing tends to be more costly in places where people want to live. Amazing.

  9. http://croakingcassandra.com/2015/05/19/high-house-prices-a-blunder-of-our-governments/

    Really interesting piece here by Michael Reddell. He talks about the RMA restriction of supply and the increased immigration being the explanation for the absurd house prices in Auckland. Makes a good point, and doesn’t appear to have a politcally driven motives. I like his style too – seems very much open to challenge and the possibility of alternative explanations. Strongly recommend you click through and read his paper.

    1. Right Pierre; I almost stopped reading when he started quoting Don Brash, Owen McShane and Roger Kerr. A bigger collection of extreme right wing ideologues it would be impossible to find.
      I stopped taking it seriously after reading this: “intensification isn’t something that anybody really wants that much of in New Zealand.”, presented as fact. This is seriously disingenuous at best. Intensification is definitely wanted by lots of people: me for one.
      This is just Demographia’s ideology: it’s all down to pesky regulations. Get rid of all regulations and everything will be fine; such as leaky buildings? That deregulation worked well didn’t it?

      1. What evidence is there that ‘no one wants intensification’? None is ever offered, and with good reason. The facts all support the contary view; that there are plenty of people who will happily live more intensly; the price spread shows people pay more to live in closer denser places, the fastest growth in residents is in the AKL inner city, 48.5% between the last census’. This is nonsense, and it’s the starting point of the argument! What abject bollocks.

        Just tired ideology thinly dressed up as argument. Phhhht,

        1. Well no one likes dense places like Paris or Manhattan which is why they are expensive and full of tourists, whereas low density urban areas like Toledo OH and Houston are obviously better as no one wants to go there and they make the ’emptiest cities in the US’ list. Who would want to walk along the Sienne looking at Notre Dame when one could be walking alongside an empty freeway looking at a pile of rubbish?

          1. Everyone worth knowing wants to live in Paris, San Francisco and Manhattan.

            Poor people are perfectly suited to living in the banlieue, best place for them.

          2. I can’t comment on Toledo OH, but Houston is the fastest growing major city in the USA giving a lie to your claim that “no one wants to go there” ! In contrast, more Americans left New York than any other US city (many obviously heading to the sunbelt) with the Big Apple only maintaining its population growth due to the equally great influx of immigrants. Of course the interesting aspect of Houston’s success its dramatic population grown has not been at the expensie of its housing affordability ratio which remains at around 3 times average annual income which continues to drive smartgrowthers crazy. Its top place in population growth, IMO, is probably due to Houston having the highest disposable income (while NY ranks near the bottom) in the US … an factor much more important than total income that most discussions focus on.

          3. Ah yes Houston, clearly they’ve cracked the key to growth and housing affordability: an oil economy. We should get one of those.

          4. Nick, your sarcastic, flippant reply is clear evidence supporting my comment:
            “Of course the interesting aspect of Houston’s success its dramatic population grown has not been at the expensie of its housing affordability ratio which remains at around 3 times average annual income which continues to drive smartgrowthers crazy.”

            Thanks

          5. In response to Wellington Commuter: I think you’ve got a point, but it’s not _precisely_ the point that you think you’re making.

            Newly published economic research (https://www.nber.org/papers/w21154) finds that cities like Houston and Atlanta have grown more rapidly, in spite of their low productivity, because high-productivity cities like San Francisco and New York have limited their growth through restrictive planning regulations. So the sprawling cities aren’t succeeding because they’re great, but because they’re getting the spill-over from productive, high-amenity places.

            Here’s the thing, though: the high-productivity cities are arguably _more_ constrained by density limits than by growth boundaries. Both San Francisco and Manhattan could do with more height. Silicon Valley is happy to build office buildings and subdivisions, but woe betide anyone who tries to get a mixed-use, medium-density development through.

          6. Hardly, the fact they have a sprawling wealthy city doesn’t drive me anything. It’s beside the point. The question is what relevance is it to Auckland or anywhere in our part of the world?

          7. Wellington Commuter – thanks for the links – “This is the secret of Houston’s phenomenal growth over the past decade. It comes not primarily from relocating or retiring Americans but from first-generation immigrants and from their children born in Houston”.

            I’m sure Houston is nicer than high homicide rate Central American countries. But I fail to see how Mexicans wanting to escape from drug violence only being able to afford to live in Houston has any bearing whatsoever on appropriate urban forms for Auckland?

            In addition I would suggest that the growth rate of a city has nothing to do with the desirability of it’s urban form. If it did we should aiming to be like Lagos, Nigeria or similar. Growth rate often indicates the close proximity of lots of poor rural dwellers leaving the countryside. People go there because it’s all they can afford – not what they most want (which is indicated by price)

        2. Why do we need the MUL then? If people want to live in intensely developed locations, they are not going to find that in Waimauku.

          1. “they are not going to find that in Waimauku.”

            Quit true. So the blight isn’t, as you suggest, so called lifestyle blocks, but rather heritage protected suburbia on the door step of the CBD.

          2. They’re both blight and intensification is prevented by this stupid council in both cases. We are prevented from increasing density in both instances, by mind-bogglingly stupid rules.

            I just don’t understand how people can be against one of the stupid rules and in favour of the other.

        3. Is it a sign of people’s desire for intensification or simple economics? City apartments are cheaper than houses / townhouses.

          1. It’s just like in Manhattan, which is home to some of the richest people on the planet. Simple economics has dictated that the whole of the island is given over to low-density housing. Same deal in London, where the desires of wealthy residents have led to the conversion of dense housing areas into country estates. Oh, wait: http://www.economist.com/news/britain/21596539-capitals-skyline-growing-mess-let-boris-sort-it-out-ascent-city

            The classical assumption has been that people with higher incomes will want more space. But lately, that desire appears to have been overruled or moderated by the desire for _proximity_ to people and opportunities.

          2. What makes you think you can separate economics from desire anyway? People don’t make decisions based on wistful thinking in a vacuum devoid of reality.

  10. I took from the piece that in his opinion the prices were driven by the intersection of immigration and land use restrictions, and that the effects were largely unique to Auckland (compared to the rest of the country).

    In other reading I found this (http://www.theguardian.com/world/2015/may/25/auckland-nears-1m-average-house-price-as-experts-warn-of-property-bubble) which quoted $800k one bedroom apartments for sale. In the comments someone pointed out that there were three listed in Auckland at this price (and I clicked on the link and checked. Sadly true.)

    So, there are clearly insane house prices in Auckland and I am interested in what is causing this. Reddell puts forward an argument with some justification … leaving aside the question of intensification, do you think he has a point? I’m interested in counter-arguments as to why the price has gone so crazy in Auckland, but not elsewhere.

    ps – I’m all for intensification done right… Auckland needs it.

    1. Don’t be too sad about the 1 bed apartments (two are the same unit). They are not ‘small’. Both have views/locations that are extraordinary. They are for sale – they haven’t actually sold. Besides looking at the most expensive 1 bedroom apartments is kind of meaningless – there’s 64 listings of Auckland houses over $5m which doesn’t mean every house is over $5M.

    2. Well have you been reading this series of posts by Peter on dwelling cost? They clearly show that the standard demographia view, repeated in your link, is at best a huge oversimplification.

      Any argument that starts with sweeping generalisations without evidence is surely worthy of scepticism. The standard ones, constantly used by this end of the political spectrum are:

      no one wants intensification
      no one will live in an apartment /terrace etc
      no wants to catch a train/ bus/ tram
      no one wants to ride a bike outside of recreation

      These statements are forcefully contradicted by the facts on the ground in Auckland now and are simply a universalisation of the writer’s own anti-urban view or interests projected onto the world. And are bullying anti choice and anti freedom in their effects.

      1. Maybe those statements are ‘forcefully’ contradicted simply because that is all people can afford? The reason Auckland housing is so expensive is two-fold – simply supply (they aren’t making any more land, plus we are surrounded by water) and the unstoppable central city buy-up by the Chinese, forcing suburban prices out of control too. No great mystery. Consent charges and the actual price to build the dwellings are fairly irrelevant.

      2. The irony is that those claims are usually trotted out in order to defend zoning that limits density and imposes high minimum parking requirements, or to oppose any attempt at loosening regulatory limits on densities. But, if people truly didn’t want to live in high-density housing or high-density areas with little parking, then those making those claims would have nothing to fear from removing these regulatory obstacles, because developers are not going to build things for which there is no demand.

        I mean, basically, the argument is “People absolutely do not want high-density urban areas, so we absolutely need regulations to prevent people from building lots of them and going to live in them in droves”. Do I need to point out how self-defeating it is?

    3. I don’t think Reddell’s piece is bad, but I don’t think it’s a complete explanation of the dynamics of the NZ housing market. In particular, he’s avoided discussing:

      1. Non-regulatory constraints in housing production – e.g. a lack of flexibility in the supply of skilled builders, issues accessing development finance, and people’s choice to not bring land to market (i.e. land banking). This is a serious exclusion.
      2. The impact of other policy changes on demand for housing – in particular, financial deregulation in the 1980s, which the OECD finds to be one of the main drivers of house price increases: http://www.oecd.org/eco/growth/housingmarketsandstructuralpoliciesinoecdcountries.htm

      In addition, he has committed a classic error, which is to confuse the impact of the RMA, which is national-level regulation, with district planning provisions, which are local-level regulation. Based on the planning documents that I’ve read, the introduction of the RMA was _not_ associated with any major changes in district planning rules. (Although it did give people a mechanism to get around the rules by applying to the Environment Court for a variation.)

      Basically, all of the planning rules that we’re discussing – from minimum parking rules to minimum lot size rules to height limits to the MUL – were put in place prior to the RMA and subsequently rolled over. In the absence of any attempts to tighten planning rules as a result of the RMA, I don’t think it holds water as an explanation.

      1. There was certainly a change in focus as a result of the RMA. Pre the RMA development was allowed for (in terms of zoning) 20+ years in advance, and this was well understood by the market. It was only in the 90’s that the concept of a permanent “hard” boundary was developed. The supply of zoned land has subsequently dwindled since the 90s.

        1. Citations please?

          The most comprehensive paper I’ve read on the history of Auckland’s MUL suggests that similar policies have been in place, in one form or another, since the 1950s/60s. The MUL policy has always had the aim of providing for 20 years of growth and has been (and will continue to be) extended where needed.

          Available here: http://www.aucklandcouncil.govt.nz/EN/planspoliciesprojects/plansstrategies/unitaryplan/Documents/Section32report/Appendices/Appendix%203.1.8.pdf

          1. Peter, I was basing my comments in part on that paper!

            Here is some recent data on land supply

            http://building.govt.nz/UserFiles/File/Publications/Sector/pdf/residential-land-available-in-auckland-report.pdf

            3 years of supply, so quite a bit less than 20 now.

            http://www.aucklandcity.govt.nz/council/documents/regionalplans/aucklandcouncilregionalpolicystatement/ACRPS%20Policy.pdf

            Link above is to the 99 RPS. It discusses the change in focus from peripheral growth to intensification. Far from a continuation what has gone before, it is very much about changing the planning process and development outcomes in Auckland.

            So I think it is fair to say post the RMA their has been a marked shift in policy towards restricting fringe development and this has lead to supply constraints.

          2. Nice; appreciate the references. Especially the reminder about that MBIE paper, which I read when it came out but haven’t come back to much since then.

            I suppose that different people tend to emphasise different bits of the story. There’s certainly some evidence that we’re running out of vacant land within the MUL. However, there are also some indications that we haven’t been as serious about upzoning as we need to be. I’d point to pages 46-52 in the MBIE report as a potential indication that we’re not doing enough to facilitate apartment development.

            Finally, the question of how much development capacity is “enough” is an intrinsically tricky one. Take the Special Housing Areas. According to the latest monitoring report (http://www.mbie.govt.nz/what-we-do/housing/pdf-document-library/auckland-housing-accord-monitoring-report-5.pdf), 529 dwellings had been fast-tracked to consent in the first 15 months of the programme. Over time, the SHAs are intended to provide space for 43,000 new dwellings.

            In other words, if the current rate of consenting continues, the SHAs would provide for 100 years of growth (!!). Obviously, it’s not going to go like that in practice, though…

          3. Yeah I totally agree lack of up zoning is a problem. The ARC growth strategy developed in the nineties explicitly included a plan of up zoning. The problem was the district councils didn’t follow through and do it. Hence one of reasons for the Auckland Council I suppose.

  11. The Metropolitan Urban Limit (MUL) or Rural Urban Boundary (RUB) around Auckland is a swathe of hobby farms which are ultra-low density, highly car dependent and extend for many miles. They are a blight and completely useless.

    We could convert these areas to suburban, increase density of Auckland by a factor of 10 to 20 and keep much more rural land productive. Instead by having a MUL, which creates this problem, we are encouraging the spread of this blight across the entire greater Auckland area.

    1. I would rather see them converted into high density urban villages around a railway station with travel by bicycle made easier than travelling by car. Just like Houten in the Netherlands. If you want to expand, build another train station and repeat.

      1. Our current draft plan is to have a twin track railway line running under utilised through ultra low density housing, purely because that is what is there now and someone has drawn a line.

          1. Between Karaka and Paerata there is to be a mixed rural/countryside living area next to the southern line. At Paerata where there is to be an urban environment, next to the railway tracks there is to be a “rural zone”.

            Between Swanson and Kumeu on the Western there is to be more mixed rural/countryside living.

            Please note: if you travel into the “rural zone” you will find lifestyle blocks that already exist.

          2. So all that land needs to be rezoned to take the gloves off for density and mixed use development within at least 1km of the train stations.

            Plus no park n ride at the train station and lots of bus and cycle lanes. Fixed it for you!

          3. goosoid,

            They’d benefit more than most from a lot of car parks in the park n’ ride. The enormous lifestyle block suburbs of Auckland have no bus services and need to use cars.

  12. Can someone save me the trouble of reading the Motu paper and explain why there is such a big difference between the effects of the regulations on stand alone dwellings and apartments?

    1. More regulatory restrictions and cost demands on appartments. Things like minimum parking which adds more cost to appartments as it generally nvolves building car storage under or above ground.. Also density maximums, height restrictions, setbacks, etc, like parking mins, prevent efficiencies of scale by limiting the number of saleable or letable dwellings per site.

      1. All of those add to the cost of apartments more than houses. But you also get to meet Mr/Ms Urban Designer. They come in two flavours, those who are practical and can design things and usually come from an architectural or landscape architect background, and the second newer type who are basically just critics. With apartments you will probably meet a critic. Then its off to the Urban Design Panel and more critics. The poor designer will try to make changes to appease them then you get to do it all again.

    2. Do you mean “what specific rules add cost to apartment development”, or “why is it seen as justifiable to add more cost to apartments”?

    3. Under the MUL we allow only very low density development in most of Auckland. We restrict medium density developments to a small area of Auckland. We restrict high density to an absolutely tiny area within the small area.

      1. That should be under the district planning rules, not under the MUL, the MUL is a district planning law.

  13. Planners do not stop building no matter how much they try to. Alot of their ideas are absurd and then you now get the urban designer following their pet theories.Planners do however slow everything down, to the point that investors give up. I have worked for several clients whose initial enthusiasm rapidly evaporated ( after 1 year of preliminary meetings ) because we were trying to build an innovative urban village in the middle of suburbia. We had all the neighbors on board ( they loved it ) but the council planners and especially the urban designers couldnt understand the concept of high density living. In the end we gave up and scaled it right back until the unitary plan is finalised. That amounted to losing 6 much needed houses that were affordable and targeted at single/couples. Nothing has really changed , 30 years ago the Papatoetoe Council stopped a 15 unit terrace house development because they were worried about the suburban context.
    Lets face it the planning rules become irrelevant almost immediately because housing fashions change almost overnight. Look at living in the inner city. 30-40 years ago it was illegal to live in the inner city and some of us went o great lengths to live in warehouse, office buildings and the like under the planners radar. I have serious doubts that the huge amount of time and money that is tied up in the planning process is really worth it and does very little to support good urban development. Even now we see innovative apartment ideas like the Daisy which are already far ahead of the unitary plan rules. There needs to be a radical rethink of how we allow growth to occur far beyond what we are doing now.
    On a different matter the Verrans corner roundabout redevlopment is getting major flak from the community over AT poor consultation, and poor planning. What used to be the best intersection ( in my view ) has now become a major mess of congestion with major conflicts between pedestrians /buses and general traffic.

    1. It would be better to have more flexibility and an assumption anything can be built unless real adverse consequences are identified (not just paranoid fantasies dreamed up by the local NIMBYs). Rather than now where there is a rule and you have to apply to depart from it.

      Also more control around design and outcome rather than just prescribing the type of housing that can be built.

      To be fair to the Council, the rabid reaction of NIMBYs to any change to a neighbourhood must make life difficult.

  14. Just saw Julianne Genter showing the “spot the outlier” chart above, printed on an A3 sheet in full colour (nice to see our taxes and TB posts being put to a good use) in parliament during her speech on the Budget debate a few minutes ago.
    Way to go Julianne.

  15. There is a danger measuring sucess only in dollar value. As we intensify good planning rules will become increasingly important. Just look at the disastrous apartment buildings built in Nelson Street under John Banks when planning rules were made “more flexible”.

    How much do we value sunlight? Outlook? Apartment size and mix?

    Nelson St demonstrates we cant trust developers to deliver on these.

    1. I agree but the answer is design standards not planning ones. That period was marked by extreme cynicism by the consenting authority; the thinking goes as follows. No one but the poor/students/immigrants will use these things and no one cares about the city centre, so lets just let anything go up and collect the dev contributions and rates and rush back to the ‘burbs without looking left or right as we drive up Hobson St. Horrific city hate, snobbery, and dereliction of duty by a nasty grasping Council. The same one that flogged off the pensioner housing and Airport shares; all of which would be so much more valuable to the people of Auckland if still held.

      1. Patrick – I find it curious that you state “design standards” not “planning rules”. These should be one in the same. Any planner worth their pay understands urban design principles. Just that the Landscape Architects and Architects now calling themselves “Urban Designers” dont appreciate this. My training as an Urban Planner included study into Great Streets, Garden Cities, Jane Jacobs etc. The profession that I feel is really letting us down is Architecture, captive to penny pinching developers, and the results speak for themselves.

        1. To the contrary, I think Patrick hit the nail on the head. Planning rules are not the same thing as design standards, and hearing a planner confusing the two is worrying in itself.We unfortunately do not have a design-literate planning system, which is evident in our urban environment. The parts of it that are worthwhile are because of Architects and despite planning, IMHO. I really don’t believe that any RMA-based rule created a good design in and of itself. 5m setback does not a good street make.

          1. Not having a design literate planning system. Totally agree, the RMA is yet another hangover if the 1980s and was an outright attack on planning.

            And economists being blameless! The Chicago school has a lot to answer for!

        2. All this mutual finger-pointing between planners, designers, architects, developers, etc!

          At least the economists aren’t to blame 😉

    2. Realistically, though, what would have happened on Hobson and Nelson Streets if those apartments hadn’t been developed? Those two streets funnel traffic to and from the motorway, and a poor street environment sets the scene for poor-quality building design.

      My suspicion is that the choice is between high-rise shit and low-rise shit. If you look around Auckland there are plenty of ugly buildings surrounding unhospitable roads, and they’re not all tall.

      1. No I don’t accept that those are the only options. Their height is not the problem. The first problem is that most of them were so badly made that they’ve had to be re-built because they leaked. Next they meet the ground appallingly, often only offering at grill to a parking garage instead of some form of activated human space; be it retail, or an other kind of usable public realm. Then the fact that many are balcony access which is a dreadful form of planning that is neither necessary nor desirable. I could go on, and it is true that improvements to these blocks would have added to their cost, but also to their value and to the desirability of the neighbourhood.

        It is important to not slip into the assumption that because a certain thing occurred in the built environment that it was inevitable and there was no other possible present. This is status quo bias and a cul-de-sac for the mind.

        These buildings seem to to wallow in their miserablism; they are determinedly cheap and tacky. Conceived as such. The consenting authority certainly could have drawn a line though much of their worst aspects without jeopardising their business cases. I reckon.

        1. Just to be clear, Patrick, I’m saying that the underlying problem with Hobson and Nelson is that they are high-speed motorway access routes. The miserable buildings are an effect, not a cause.

          1. Fully agree with that, and in fact i would argue that was the condition that encouraged the Council to be careless with what they approved there… self fulfillingly.

  16. It is worth investigating the effect cheap credit has had on housing affordability. Central government stimulus measures around the developed world since 2008 have generated vast amounts of credit that have found little productive use given lacklustre demand. An example of this is the contraction in commodity based industries such as mining and oil. As a result there has been significant growth in the stock market and other investment classes such as housing. Investors can now borrow much larger sums of money than in the past due to historically low interest rates which in turn elevates purchasing power. When everyone’s purchasing power has increased at the same time and there is the same amount of housing product available it simply raises prices. Increase in prices creates what some call ‘The Wealth Effect’ where individuals feel wealthier and in turn spend more of their disposable income. This is viewed as good for the economy with housing affordability for those not in the market an unfortunate by-product. Rapid increase in housing prices is not unique to NZ so could be viewed in the context of global economic policy and investors putting excess capital to use in search of yield.

  17. Perhaps another reason for high prices at the apartment end is market failure in off-the-plan apartments. In Sydney or Melbourne that have more mature apartment markets, a price spike in dwellings would normally lead to a high sign-up rate in off-the-plan apartments. For example, some recent buildings in Melbourne have been almost fully pre-committed to Chinese. Why is this not happening in Auckland at the scale required to meet dwelling demand ? So I Googled “off plan apartments Auckland”, and there were many stories of woe, of investors who committed to them and were served with shoddy workmanship and apartments that were worth less than their purchase price. Perhaps better regulation of investor rights in this sector would unleash capital that is at present too timid to invest because of perceptions it is too risky because of a few shonky operators. There should be a lot gained from studying the rules of how mature markets operate such as Vancouver.

    1. Good point. That definitely sounds worthy of investigation.

      There are always challenges with managing change in cities – the rules that worked yesterday may have become an impediment to getting to a better outcome tomorrow. At the same time, it’s difficult for policymakers (or anyone, really) to identify what might be needed before the fact.

      We often seem to bring in overseas experts to provide the _vision_ for Auckland, but it seems like Aucklanders have plenty of vision. Perhaps we need to be flying in people to help us design the rules and processes that will deliver on our visions.

      1. Isnt the need for “off the plans” apartments a sign of market failure. If we had a mature residential market you would have big players who actually had capital rather than expecting prospective buyers to effectively fund the development. The whole concept is dodgy as you will never really know the quality of what youre buying.

        1. Which is why State led, transit oriented developments would work so much better. The funding and capital gain are then captured by the State development agency and help fund the next development.

          But of course the neolib religion won’t permit this because State development = bad/Communism; private interest in “free market” = good/”trickle down economics”.

          The outcome is irrelevant as long as the doctrine is adhered to. In that way neo-liberalism reminds me of the Catholic churches stance on contraception.

    2. Having lived in some of the more recent off the plans apartments around Sydney I’d say that they aren’t really the answer, the workmanship and finish by the two major players isn’t that great, so I’d agree with Realist that it’s more of a failure than a strength.

      My thought is the strong sales are a lack of supply, which is bought about by planning rules, NIMBYism, low building sector productivity and lack of places to build, some of which overlap.

      I don’t think there is an easy answer, especially as transit and congestion change travel pattern equalibriums and the desiability of suburbs/locations.

      1. Yes very complex – hence why National are failing so dismally in addressing the problem. How about breaking up Fletcher Building as a start!

        1. If they were a monopoly and there were significant barriers to entry in that market, maybe there would be a case, however I’m sure there are other construction companies who can do similar work, or JV/consortia who can bid, so I’m not sure the unintended consequences of some form of ban which I’ve not thought through would be warranted.

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