The media are once again going off on the topic of housing affordability, after the release of the latest report by Demographia saying that Auckland is one of the most unaffordable cities in the world.

A survey of the median house prices around the world has revealed Auckland to be among the five least affordable cities to buy a house. The annual Demographia survey, released today, compares prices to incomes in 367 cities. Auckland is one of the worst in the world due to extremely high house prices coupled with moderate wages.

We’ve often talked about the issues with how Demographia produce their results. They take an overly simplistic view of the discussion, and exclude important factors. But while the scale of the issue is likely wrong, that doesn’t mean the general outcome – that housing affordability needs to be improved – isn’t correct.

We also disagree with their proposed solution of unfettered greenfield development. For Demographia, it seems that opening up greenfield land is always the solution, regardless of the question being asked. While land supply is an issue, they like to conveniently ignore the impact of planning regulations on existing urban land that prevents development across most of Auckland. They also like to ignore the cost to tax and ratepayers of providing the infrastructure needed to enable that greenfield development. For example, based on Auckland Transport’s figures it will cost about $67,000 per dwelling to provide the roads needed in the major new greenfield areas that are proposed.

Future Urban Land - North Transport Networks

Many people may want a home with a large backyard on the fringe of town, but many just want a home. A lot are prepared to forgo a large backyard for the added amenity of living closer to the city or other urban centres – but they are unable to do so, as so much development has been restricted.

This brings me to the main point of the post, the media (especially the Herald) who want to have it both ways.

While today they’re lamenting house prices, the Herald has spent much of the last few years championing opposition to one of the key tools that will help address housing supply, the Auckland Unitary Plan. From when the draft plan was released almost three years ago, they’ve given countless space to those opposing any change in Auckland. They’ve deliberately misled the public and recently they’ve even become so absurd as to call two-storey townhouses “Highrise” in their bid to whip up fear and anger over the plan.

Of course politicians of all stripes shouldn’t escape blame. Whether they’re also trying to whip up fear, generally oppose change or just have it happen in some other neighbourhood they are as much to blame. They also seem to me to have less desire to actually fix problems. After all, which of them are really going to stand up to house owning voters and say they’ll enact policies which could result in existing house prices falling or at best stagnating for many years as a result of changes.

Regardless of what you think the solutions are, it still feels like we’re some way off any real changes happening.

On a related note: I suspect we could see John Key include housing announcements in his announcement on Wednesday when he also announces support for the CRL to start in 2018. There have been suggestions the government have been talking to the council and CCOs like Watercare looking at what other big infrastructure projects could be brought forward to help speed up housing supply.

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  1. I believe Deputy Mayor Hulse summed it up very nicely on Twitter:
    @PennyHulseWest
    Herald : Outrage at Auckland 5th most unaffordable city. Outrage at Unitary plan allowing increased density enabling affordable houses. WTF

    Over the last week I have been rather sharp against the Government being entirely reactive rather than proactive as Council (for all its faults one might perceive it to have have been)

    The SHA’s came online when – 2013?
    That means for a medium development it takes three years for housing to come through so this and next construction season
    For the big developments like Wesley College (4,500 homes) they take five years before the first house is ready (so 2018 at the minimum).
    So housing whether Green or Brownfields are finally coming through (trust me there are builders and diggers through out the South with new developments)

    Panuku have their mandate and the first two High Level Project Plans for Manukau and Onehunga are due back to the Auckland Development Committee in March or April this year. From there we should be able to see what large scale urban renewal will take shape.

    Last but not least the Unitary Plan goes live this August. You can interpret that one as you see fit.

    1. Great news, there is a place called Swanson where the whole country is subsidising a rail centric commuting hub that services what are now and forever will be horse paddocks. We’ve poured in $millions with $billions to come and yet still horse paddocks. At virtually no cost at all we can change the Unitary plan to affordable housing.

      1. Angus, take a train ride to Swanson, you’ll struggle to find a horse paddock. Have a look at the plans for the 360 dwelling “Swanson Village” next to the railway station, https://www.facebook.com/permalink.php?id=400240290143882&story_fbid=468298050004772 and http://www.neilgroup.co.nz/future-projects/swanson-village/

        There are several subdivisions of 25-50 450m sections between Ranui and Swanson, as well as the “Bradnor Meadows” SHA on Birdwood Rd/Crows Rd. Also believe the 3.9ha Ozich orchard in Swanson has been sold (CV $4.2m).

        1. There was a brown horse grazing on a paddock on (I think) Tram Valley Rd yesterday. In the Countryside Living zone, minimum lot size 20,000m2, abutting the southwest edge of the railway station.

      2. Seriously, man, do you own property out in the wops that Auckland Council refused to rezone? You are always talking about this issue.

      3. Yes, we need more housing in Swanson. And how about building a 5 000 home “Waitakere township” around Waitakere Station and extend electrification up there and on to Keumeu, and eventually

  2. We shouldn’t get disheartened with being fifth most unaffordable. I am quite sure if we leave it to the current Council we can get ourselves right up to 1st place in 2 or 3 years. Let’s face it they really are trying their best, they wrote an Auckland Plan that excluded much greenfield development, they opposed HASHA when the government intervened to fix the problem they created and they are pushing for a strong Rural Urban Boundary. Ten more years of this and I will be able to sell up and retire to Havelock North or Wanaka or somewhere with a nice nest egg. Who says lefties can’t create wealth for people?

    1. Greenfields development is fine by me as long as those developers pay the full cost of infrastructure to connect them to the city, rather than expecting other ratepayers or taxpayers to do it for them.

        1. Bollocks. The only way that happens is if the builders pay those costs first. Unless you consider the ratepayer to be paying for them for the next 50 years to be “buyer pays for them”

          1. Roger you are talking bollocks. No developer builds things for love. The end buyer pays all the costs. Not sure what planet you are on?

    2. Sydney, Melbourne and Vancouver are building about twice as fast as Auckland. Wait a couple of years and we might be number 2, but it gets a bit risky we might vote in a different council.

      1. Talking about building rates is ok, but what population growth are they trying to build for.

        Highlighting supply without the supply side doesn’t explain much about how the growth in housing stock will affect the price.

    3. Don’t be so naive, the people who conducted that study and the journalists that reported it are all complete idiots, they used pre-tax median household income to compare the cost of housing across multiple countries, despite the fact that the level of taxation varies wildly between countries, being much higher overseas with the poorest quartile in both France and the UK paying ~50% of their wages in direct income tax for instance, with goods and services taxed at 25%, then there are sin taxes and petrol taxes and all sorts of other ‘fees’ like the TV license that go in on top of that. Using the PAYE calculator people in NZ pay ~22% on that household figure (actually I believe it is much lower than that when you take advantage of shared tax-credits and working for families).

      So you can’t use pre-tax income to measure housing affordability, you have to look at what people have left after the taxman comes as you can only spend from the post tax portion, and that portion varies significantly relative to wages over these countries they are comparing, they also failed to take into consideration tax implications and whatnot of house ownership, also there is no ‘average house’ within a country or over multiple countries, they should probably make some effort to separate these (for many, many reasons), there are no houses with 3.45 rooms or households with 2.1 people, you also need to eliminate older and younger people who are unlikely to be in the market for a residential house.

      And you have to understand, americans live in much larger houses, in England people live in little boxes, we are somewhere in-between. I mean this is not something that is easy to compare, and you certainly can’t draw much from it…

  3. Why do they want to upgrade the Dairy Flat Highway rather than linking to directly to SH1? That’s absurd. Just continue Kahikatea Flat road and Coatsville-Riverhead Hwy right through to SH1. Anything else is simply duplication for the sake of duplication.

    1. Perhaps someone at the council uncovered the original 1940s plan for the “northern outlet”, that was to continue the northwestern motorway to Northland via Dairy Flat (until the Harbour Bridge came along).

    1. You mean $200,000 per house (3 people per house x $67,000 per person)?

      [It wasn’t that long ago that $200,000 could buy an okay house in an established suburb, even on the North Shore. If all the infrastructure costs are charged to the developers of Dairy Flat (as they probably should be), then imagine what the price of a “starter home” out there in the (formerly) “greenfields” will be … $1M+? Not exactly a solution to an affordability problem, is it. It must be land-bankers bankrolling the calls for sprawl outwards into the greenfields, they would seem to be the only ones with something to gain from it (apart from the road-builders, pipe-layers, etc.) … but what % of the population are land-bankers, i.e., should we be lining their pockets, for doing nothing? – Disclosure: I used to be a Dairy Flat land-banker; but I always envisaged the area being green fields forever, due to it being part of a northern green belt, not suburbia.]

  4. And even if we allow “unlimited” greenfield development, then we would still only solve a small part of this problem. Not everybody is happy to move all the way to the edge of our suburbs.

    And also that $67k per dwelling for infrastructure? That is assuming all the people moving in there will limit their job search to Albany (in case of that map above). I would definitely not bet on that.

    1. The breakdown of the 67k is 7 k for the consultant employed by AT to delay the resource consent, 10k for arterial roads and 50k for AT to divert into whateverthehell their latest scheme for the Central area is.

      1. Ignoring the $20,000 per dwelling just on transport for all this greenfields development? Plus three waters and other roads.

        1. To provide an unbiased opinion on this we need the value of adding additional infrastructure for infill housing. They require more roads, water, hospital, schools et cetera. Providing only one figure is not balanced.

          1. Thanks. I’ve had a very a very quick look. As you can imagine don’t have enough time to go through a 228 page document, but in actual fact scenario B is more expensive on according to figure 43. It will cost more than scenario D. Running costs are actually really important, and the PT running costs are higher in scenario b. Just the actual cost of the infrastructure is only a tiny part. With the city rail loop for example the running/interest costs are going to be horrendously high based on what I last read, it’s not just the capital cost. And from figure 43 all the options are very similar prices with the exception of scenario a, and option D doesn’t look really any different.

            So if we base our figures on figure 43 then ultimately is very little difference, so the $67,000 is quite disingenuous, because as I’ve just shown there are costs for all of them. Now as I say I have had very little time to look at it so I have just picked this one out which I found, which also could be disingenuous, but proves the point. It’s easy to take figures and manipulate them to a particular point of view. It is a perfectly valid view that we expand the city outwards and based on that particular figure looks financially quite feasible.

            But really I’m primarily concerned about the ability for people to choose what they want. There may possibly be some extra costs, but there will also be some substantial benefits to the community in the expansion of motorways, the lack of destruction of green space in the city, better quality of life from having a garden et cetera. No one seems to go on about the environmental disadvantages of infill housing, where what were previously gardens which supported masses of insect and bird life will be destroyed for more concrete. In my garden I have massive numbers of monarch butterflies, insects and native birds. If that was removed they will have to go further out of the city to be able to live (or in the case of monarch butterflies potentially wiped out completely from Auckland if no one has garden space). That to me is a sad thing.

            So my primary point is there are valid views which suggest that we should be expanding outwards, but that does not seem to be acceptable to say this.

          2. Also thanks for the link to that informative document Matt. Figures 33 and 34 and the summary table of section 8.2 are instructive (and support my hunch, and one of the main themes of this blog, i.e., sprawl costs more).

            It seems the central government has chosen the worst option: Scenario D (e.g., SHA in Glenbrook Beach – wow!). No wonder Auckland Council pulled their hair out.

        2. That $67k per dwelling refers to just transport. There is no way we’ll get away with just that. A lot of those people are bound to end up working in more central areas (or the CBD) so we will end up having to widen the motorway / build an extra harbour bridge / widen the spaghetti junction, etcetera, for who knows how many more billions.

  5. Of course the Herald is trying to have it both ways – thats how they “make” it news – print the corporate tripe the Council and Government (or Demographia) release, find those who disagree with that stance, then print it as “opposition”. When they don’t get the right result, they then go in and sensationalise any old position to make up some “opposition”,and make that “news”.

    While it doesn’t make it right, it makes $$$ for The Heralds owner and stops a slowly deflating, and threatening to crash, empty balloon of air that is The Herald (piloted by John Roughan and co), from deflating even more quickly.

    Just like they behaved for the CRL – fully against for years, then they flip flopped the other way (grudgingly) and now they play both ends against the middle on the CRL and housing debates.

    All the while castigating the council for simultaneously “doing something” and also for “not doing something”…
    And while they also look the other way when the other elephants in the room like Congestion charging and regional fuel taxes to help fund better PT is continuously pooh-poohed by Central Government as “not gonna happen” and no alternatives are offered in their stead.

    The Herald [as well as other media] should be asking the tough, probing questions of the Government, the Council and the public on this and many other “growth”-caused issues – asking each as to what they are bringing to the table and what they are really doing to help solve the issues. i.e. looking below the surface issues and not just recycling the endless “shock, horror, look there’s a crisis” (of sorts, somewhere) stuff we see.

    The other thing is that the rest of the country may look on all this as Auckland’s current version of “bread and circuses” for the “latte set”.

    But the outcomes and issues here matter for the rest of the country too, even if they never want to live in Auckland or go there to visit anytime soon.
    Because if Auckland loses the battle to house, educate and employ the coming generations, then NZ Inc will lose out too.
    If Aucklanders start cashing up and deserting to the regions en-masse, then the regions house prices and will take a hike and affordability for the locals will take a big dive.

    The younger folk, won’t simply go live in Tauranga or Timaru instead of Auckland, instead they’ll go to Australia, the US or other countries – they’ll be plenty of off-shore demand and competition for their skills in the new few years.

  6. “We also disagree with their proposed solution of unfettered greenfield development.”

    Demographia – ignores the costs of expansion and underestimates the benefits of agglomeration. This solution would have an outward expansion, quickly exceeding capacity of transportation networks.

    Transportblog – ignores the construction delay a high land price imposes and overestimates agglomeration benefits. This solution will delay the construction of dwellings, driving up rents relative to income.

    If we open up greenfield development and free up development rules in the current metro area, we get a better solution than either of these options.

    1. I agree with that completely. Its the (largely unnecessary) rules stopping both up and out that are the problem.
      If there are really any positives to most planning rules and regulations (debatable in my opinion), are they really worth paying hundreds of thousands extra per house for?
      And if you sack the planners (500 or so from memory, probably 50 million P/A saving), that might pay for some of that infrastructure they will need to build.

      1. Yeah uh, somehow I have trouble placing the trust necessary in our beloved council to believe that they are getting a good price for all of their projects projects.. I suppose that is ok as others more than make up for me based on how often the same councilors get re-elected. Somehow I thought the Nats might summon the decency to squish this council after they tried blackmailing them for CRL funding by threatening to suspend development on the periphery, and then proceeding with the CRL despite lacking the funding to complete in an attempt to escalate the situation and make everyone look bad should it fall through. Seems like they came to an agreement behind the scenes though…

        1. There was never any blackmailing. In fact I actually heard that the modelling showed that with lots more greenfield development the business case for the CRL improved because it would create more congestion and therefore push even more to use longer distance rail trips. As for them starting work on the section north of Wyndham, that was necessitated by the Downtown Mall redevelopment which starts this year and been told by a number of senior people that they also wouldn’t be doing it without knowing the rest would be funded. Sounds to me more like the govt gave them the go ahead privately some time ago and have been working on the finer details for the rest since then.

          1. The government gave the go-ahead *publicly* way back in 2013. It’s hardly been a secret. The government just (publicly) maintained that it probably wouldn’t begin until 2020.

            In any case, we should all be getting a definite answer on Wednesday, you can write the post this blog was founded to write (“CRL To Happen”) and we can all crack a bottle of bubbly.

          2. http://www.stuff.co.nz/business/industries/63878529/auckland-city-rail-link-may-start-later
            http://www.radionz.co.nz/news/regional/133764/govt-rules-out-fuel-tax,-road-tolls-for-auckland
            http://www.stuff.co.nz/business/industries/10063954/Council-blamed-for-Auckland-housing-delays
            http://www.stuff.co.nz/auckland/75663293/government-to-fund-central-auckland-rail-link-two-years-early
            The council wanted the funding brought forward, and additional powers to raise taxation, I can’t find the articles but they were delaying a few developments citing transport concerns whilst asking for more funding and whatnot, you have to read between the lines, this sort of political bickering is commonplace everywhere in life. Anyway one railway tunnel isn’t going to cope with a ~1/3rd population increase by 2030, for starters (and I know transport is cumulative) not everyone lives next to a train, nor does everyone work in town which is really the only place the trains are going to go to infact only about ~140K work in town. And that is why people have cars.

            I would really like to see a cost-benefit analysis of this, including the amount of expenditure per transport user, the real cost of rail, and a comparison with other transport networks, because this is some serious money we are talking here. You can’t just add 1/3rd of the population to a city and only have token gestures for transport, yet this is being advertised as the center-piece of the Auckland transport network. Don’t get me wrong, I think an integrated approach utilitizing many forms of transportation that work together is the right answer, combined with increasing capacity on the arterial roads, but this I don’t think is going to deliver value for money and that is what it should come down too..

          3. Jacob, At the time I submitted to the Auckland unitary plan. The figures that I had (which may or may not be correct now) were the running costs of the rail loop would be $126 million and income $30 million. A bit of basic maths would tell you that is ~$90 million a year extra that the Auckland ratepayer has to find. Now some of that may be subsidised by the government, not sure, and to be fair the $126 million includes interest costs and probably now those will be down a bit further. But I totally agree with you I think that it is important to look at what the options are on the cost of each option. Conceptually I LOVE rail, it’s so easy and so much better than buses, but on a cost per user basis it’s very very high. As you point out only a very small number of people can use the trains. And even if the trains were on the north shore for example the park-and-ride stations except Albany are so woefully small or non-existent, they are not practical, and are designed primarily to go into the city

            When you talk about people working in town, if you read Len Brown’s op-ed piece the other day it was very clear he wanted everyone (or more at least) working in town. Having to commute into town doesn’t sound like a lot of fun, but that is the vision of the rulers of the city, if not necessary the people of the city.

          4. Stefan, there will be an increase in Council revenue from increased rates/leases on Council-owned land in the proximity of the CRL and the whole rail system/RTN. Also, there will be benefits to non-users of the improved rail system/RTN in the form of less congestion on the roads/time-savings, plus cleaner air and water for all, etc. What the dollar-values of this increased revenue and benefits are I don’t know, but if everything was added together, it would surely add-up to a great deal.

    2. “If we open up greenfield development and free up development rules in the current metro area”

      Sounds awfully like the proposed Ak Unitary Plan, if only leafy nimbys would stop resisting the second part.

    3. I don’t think you fully understand what Transportblog is trying to do, and its position within the debate.

      There are plenty of political actors who will argue for greenfield land supply. Property developers and exurban property owners, many MPs, most of the Herald’s op-ed writers, etc. Fundamentally, there is very little value in duplicating their efforts. Anyway, if you look at the SHA process, the Unitary Plan’s rezoning commitments, and NZTA’s state highway building, these people have gotten what they want – an ongoing commitment to rezone and service more fringe land.

      By contrast, the debate over intensification is much, much more vexing. The political process pays much more attention to people who don’t want to see it happen – e.g. wealthy inner-suburb property owners, most of the Herald’s op-ed writers, the allegedly libertarian ACT MP, etc. The policy gains that have been made could easily be rolled back by a future council intent on tightening the screws. The economic and social costs of doing so would be very large.

      In that context, it’s useful to have Transportblog clearly making the case against overly restrictive planning policies in places that are most accessible to jobs and urban amenities. It’s not that we are not aware of the issues you raise. It’s just that our limited time and attention is better directed elsewhere.

      1. Yes that is where I am at with housing affordability. The solution is to be less restrictive for going up and out. The solutions for going out are fairly obvious. Going up is much more difficult. But given how far we have sprawled out with stand alone housing then we need to put some serious thought into how to go up.

      2. ” Anyway, if you look at the SHA process, the Unitary Plan’s rezoning commitments, and NZTA’s state highway building, these people have gotten what they want – an ongoing commitment to rezone and service more fringe land.”

        I don’t know how you can say that when zoned fringe land is still an orde of magnitude more expensive then unzoned land. We don’t need great big wide state highways for inefficient SOVs we need a credible commitment to zoning enough land residential that the price premium of zoned land at the fringe is gotten rid of.

      3. Anyway, if you look at the SHA process, the Unitary Plan’s rezoning commitments, and NZTA’s state highway building, these people have gotten what they want – an ongoing commitment to rezone and service more fringe land.

        Yeah, that bunch of a-holes had a series of wins and the MUL expanded in some places. Unfortunately the same changes saw the creation of Large Lot zones within the MUL and property available for development was quite unchanged

      4. “By contrast, the debate over intensification is much, much more vexing. […] The policy gains that have been made could easily be rolled back by a future council intent on tightening the screws. The economic and social costs of doing so would be very large.

        Yes, those policy gains made could definitely be reversed. Nothing has really been built yet. Maybe we should hurry up and get it built, by making it profitable to build.

        In that context, it’s useful to have Transportblog clearly making the case against overly restrictive planning policies in places that are most accessible to jobs and urban amenities. It’s not that we are not aware of the issues you raise. It’s just that our limited time and attention is better directed elsewhere.

        Land costs are impacted everywhere within a constriction, not just at the boundary itself.

      5. Peter,

        What is your position on Auckland providing a subsidy on apartments, commensurate to the damages done by the tight MUL?

    4. I have no problem with opening up greenfield land if the costs to doing so are borne by those developing and buying sections. Same should apply to those developing within the existing urban area. Where the latter can benefit is through the greater efficiency it can enable.

        1. RB you don’t seem to understand what Matt and Roger are saying. They are saying that the ratepayer, through the Council, shouldn’t subsidise greenfield developments. That is they are fine with it happening if the developer, and then of course, the purchaser,, through the resultant price, covers all of those costs; new roads, the 3 waters, open space, reserves, landscape remediation and so on… Then development wherever it is would be on a level playing field cost wise.

  7. The elephant in the room is probably not so much the Auckland house prices (although they are bad) but the fact we now have a low wage economy. It has been the unstated goal of every government since 1984 to reduce the real wage. So when you divide the median house price in a first world city by the median wage of a 3rd world economy you get a ratio that is fifth most unaffordable.

    1. These things are not unrelated. When you stifle building development you increase house prices and suppress wages.

      Construction booms are really good for improving the wage rates and improving housing affordability.

      1. The point mfwic was making was that the macroeconomic policy of successive NZ governments since 1984 has been and still is a slavish following of “neoliberal” (neoclassical) “trickle-down”/”supply-side” (“voodoo”) economics – a theory/movement promoted by the rich (via lionised bought-and-paid-for economists) for the rich (obviously).

        Perhaps, at some stage, the rich (and their economist foot-soldier minions) will realise that it will be less messy for them if incomes rise rather than asset prices fall.

    2. Yes this is strange – income has exactly the same importance to this report as house prices yet this aspect is completely ignored by the media and commentators.

      If we increased income 10% (push NZ up 3 places to 28th place internationally for income) then ceteris parabis our housing affordability would improve 6 places to 12th.

      As a spin off in addition to housing everything else imported would get cheaper too, eg. travel, oil, iTunes, bicycles, Netflix, Vegemite, Tim Tams, Australian made ‘kiwi classics’ Milo and Weetbix, diamonds, emeralds, rubies and of course Fonterra milk (it’s priced internationally, right?).

  8. Why doesn’t the government get into the house-building business?

    Surely with economies of scale, it could knock out decent 2 bed terraces for 150k each if it built say 10,000 of them (1.5 billion).

    It could find the skilled workers through rapid training schemes for the unemployed and underemployed

    They could be build on Crown land or seized under the Public Works Act

      1. But John Key says National have done everything they can to stop house price inflation… I guess they didn’t think of that option?

        1. Because in general terms governments doing anything is woefully inefficient. And with regards to house price inflation the large part is due to the Resource Management Act. National has tried twice to overhaul this and been unable to do so.

          1. To quote Chris-M at interest.co.nz in response to the PM saying he is pulling every lever to fix the housing crisis. http://www.interest.co.nz/property/79662/pm-says-report-showing-auckland-4th-least-affordable-world-reflects-demand-auckland#comment-839825

            “If they are “pulling all the levers that they can”, then somebody else has their hands on the immigration lever, the zoning of residential land lever, and the enforcing competitive building materials markets lever.

            Who. Or is this just more B.S from somebody who has absolutely no idea what the telling the truth means.”

            O.Farr-Kinnell replied

            “They’re pulling something, but I don’t think it’s levers.”

            I could think of a few more levers -building more public/state /kiwibuild housing lever.

            The infrastructure/transport lever

            Etc.

          2. I think there is something people seem to be missing from that scheme, primarily where is all the land and builders going to come from, I mean there is only so much land zoned for development and that is currently owned, last time I checked there is not a big line of unemployed builders. After all there is not much point if all you are doing is outspending the general public in a price-war to hire all the builders in the name of communism, it’s not really going to increase supply is it, I mean supply is generally constrained because of the available inputs of production. Throwing more money at those scarce inputs is not going to increase production. The housing costs are not due to a lack of payment to property owners and builders… Its the same nonsense those wackos spout about education.

          3. Jacob you are a typical National party shill. You take one part of the argument, take it out of context, with distortions and exaggerations and miss the point entirely.

            For your simple mind here is the point -there are plenty of levers (not just the build public housing lever -although that has worked in the past) that National could have pulled to address the housing crisis in the last 7 years. The fact they haven’t show they lack the political will to provide affordable housing.

          4. They did that, well I am not actually sure if they have come into effect yet, but they said the plan was to introduce special development zones and force people to sell their land to developers if they just sat on it and land-banked. Anyway you are completely missing the point here Stefan, my point wasn’t that the Nats are the solution to the housing inflation, based on the housing inflation they clearly aren’t, but just because they got it wrong (or don’t care, personally I believe they don’t care, about 2/3rds of people are property owners so there are alot of people who are not unhappy about this), doesn’t make labour right which is basically what you are arguing.

            No my point was that labour are stupid, they have no reasoning capacity, they think you can just throw money at everything through government programs and fix every issue and ‘problem’. But most of these issues are not due to a lack of money, and in general throwing more money at stuff does not necessarily result in better outcomes, sometimes it just means things cost more or there is more wastage, if something is inefficient, well money is not the solution, education is a good example, we have an education budget which is increasing faster than inflation with little to show for it, yet you always here about how much better education would be if there was more money in it, in reality we know from past experience this is not the case. And then for everything else they go around trying trying to tax everything cheaper and better, like tax on poor peoples food, and things people like but they don’t, that will help people right? Don’t like something, tax it..

          5. Jacob, I think you have completely misunderstood me, I am neither a supporter of National or Labour. In fact on various things I might support either party, depends on the logic of their argument. There are a series of changes the Resource Management Act that were going to go through before the last election, but didn’t. These were going to provide much greater flexibility in land usage, and solve many of the problems we were discussing.

            After the last election these reforms would be have been supported by the act party and the National party, but unfortunately the National party lost an MP and now the Maori party have got involved in the act party won’t support them because they are giving special rights to Maori (my recollection on that exact reason could be wrong, but I know from TV coverage they are no longer supporting it). So some of the key things relating to land usage have been removed.

            Special housing zones was a completely different issue, and really intended as a short-term measure.

            Clearly neither National or Labour are the solution, housing inflation has been running away while both of them have been in charge. And I do think both parties care about this, the question is how can they solve it without creating an economic crisis.

            I don’t think I would disagree with your analysis of labour, although I wouldn’t call them stupid. They have a particular agenda and they are trying to achieve it, and they have different ways of trying to achieve it than National.

          6. Stefan and Jacob I think if you investigated the housing issue rather than listen to MSM you would find Labour much more active on housing issues.

            KiwiBuild is just one leg of their policy platform. Labour are doing a lot more thinking about planning reform – http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11553128

            Labour has raised the construction material price rorts – http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11356841

            Labour want to address the demand side of the out of control Auckland housing market, such as banning foreign buyers.

            Labour are much more genuine about undertaking transit oriented housing developments which given the stage of Auckland’s city development has to be part of the solution.

            The pressure will be on National to respond. It will be interesting to see what John Key comes up with. What he announces around the CRL will be critical -he has wasted 7 years – he cannot afford to waste another year and go into 2017 with no solutions to the housing crisis.

          7. I have no idea what that has to do with New Zealand. If you read books by anyone who was involved with the fourth Labour government, especially Richard Prebble you will see the incredible levels of inefficiency in government run organisations. Some of that has now been rooted out, but in my experience they still run far less efficiently than they should. Current example is the Auckland City Council IT project which has increased in budget massively, still not delivered anything.

          8. Stefan we live in a mixed economy where the government has to regulate the private sector and sometimes provide services that the private sector would not provide due to market failure.

            You view that government is bad, inefficient, wasteful…. while the private sector is good, efficient, competitive and always correctly allocating resources is naive and simple thinking from the 1980s.

            As for Richard Prebble -even he sees the value of the government stepping in to ensure the only uncongested transport corridor is not lost.
            ‘Richard Prebble: Rail is the only corridor left’ http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11480088

    1. A big part of the problem, is that developer/builders generally do not want to build small, affordable units, when they can build larger units with more profit margin. Being independent they will, of course, build the options that give them the biggest return. Very few developments, apart from Hobsonville Point, are deliberately targeting some small units (not micro-slum type units, just small units). Average size of new suburban NZ houses is, after all, over 210m2 each – and on an average 400m2 section, about 50% of the land is sitting idle, i.e. in front yards, side yards etc. If we build more sensible houses, using less land, and using less resources (i.e. smaller), then we don’t nee to enlarge the city so much… But someone needs to build them first. And that needs to be driven by the public sector, rather than the private sector, or else we’ll just get more of the same, when the next Demographia survey rolls round in 12 months time….

      1. Guy, Whilst I accept that some developers may not wish to build small units, in part because of profit, I’m not convinced about that for all. I think they build on what people demand. Because I work from home we need a house of around 200 m², just to be able to fit our family. Land sitting idle is not actually doing nothing. It is supporting insect and bird life. These are very very important things for the environment filling it up with more concrete is not necessarily a good use of the land. I have personally planted a lot of trees to attract and feed native birds and Monarch butterflies, and hopefully the threatened Admiral butterflies. More intensification will make them more threatened in an urban environment as their nettle food source will not be able to be provided in teeny tiny food gardens that might appear in apartments. But if we have gardens people like me can plant nettle and encourage them to survive in our urban environment, and help pollinate our trees.

        1. Stefan as I detailed on Peter Nunns last article on zoning, new housing supply isn’t matching new demand wrt the size of new households in NZ. “67 per cent of the increase in demand is for one- and two- bedroom houses, only 12 per cent of the supply is in that sector; 73 per cent of the new supply is in large homes (four or more bedrooms).” -Generation Rent p.140 by the Eaqubs

          I think the point of standalone housing on tiny 400 sqm sections is the alternative is building terrace housing and then the side path/fence areas can be moved into the back yard and be more useful for growing plants, being a barbecue area, kids playground etc.

          Finally I think the consensus on Transportblog is people want choices in the type and affordability of housing. If for you 4 bedrooms and a garden is fine that is great because you have lots of choices -especially if you don’t need to travel -others want something smaller, cheaper and closer to amenities -like employment centres are not so well catered for.

          1. And given the price of the land and development, and the size of the respective houses, how much of a price difference is there between a 1-2 bedroom house compared to a 2-3 bedroom one, I assume you are talking about actual houses with land at the front and back and not a unit/townhouse, or an apartment. I suspect the answer explains why we are seeing 3+ bedroom houses as opposed to smaller dwellings, unfortunately I believe you are right in that many people are living in dwellings which exceed their requirements and smaller (less bedroom, not necessarily cramped, tiny apartments) but decent townhouses/apartments are required to meet this demand, but this is not materializing.

            I believe it is important to have a mixture of different sized accommodation, as peoples needs are not fixed, they change over their life, however people often take these things to the extreme, advocating that we all live in little boxes like they do in crowded Asian or European cities. And I think its a shame that beneficiaries get to monopolize the smaller dwellings that housing NZ has built as it appears (purely from visual observation) that they make up a fair proportion of such small non-apartment dwellings.

            Actually I would of prefered national to have the guts to sell of the odd bits of land housing NZ owns, split it into a couple of competing SOEs, develop some of the blocks into entry level terrace/town-houses and open them up to the rental market.

            Transferring the housing subsidy away from housing NZ to the Accommodation supplement and making the whole thing transparent instead of hiding it by charging sub-market rates. Unfortunately they just want to give these away to charities, probably the least useful thing they could do with them. It really is a lost opportunity.

          2. “advocating that we all live in little boxes like they do in crowded Asian or European cities” -Noone is advocating for that. What they are saying is that people should be allowed to make that choice. Some people are happy to live in that sort of housing for a good chunk of their lives.

            The current restrictions on density make it hard for people to make that choice as it is hard for the market to build it.

    2. “Why doesn’t the government get into the house-building business?”

      Because first up, it would have to admit to a market failure of the (hands off, the market will provide – yada yada yada) current policies if they did and thats simply not acceptable to National, their support Party of one (Act) or either of their supporters.

      They’d also have to get into the building supplies and off-site fabrication businesses too, because otherwise they’d not be able to get the houses up any cheaper than most developers could.
      And then where would they get all he trades people to work on the new houses? Retrain prisoners into chippes, sparkies and plumbers?

      So instead they aim for a short term demand-side term fix and to ship all waiting for a Sate House people out of town so they can then say “look theres no more demand for state houses, ergo, we should sell them off cheaply for redevelopment…”

      1. “Because first up, it would have to admit to a market failure of the (hands off, the market will provide – yada yada yada) current policies”

        Our current zoning rules are hands off? Wow.

        1. No, Greg was talking about the ridiculous fairy tale (neoclassical economists’ theory) that “the market” is some kind of god that makes things “materialize” (or not; only “the market” can say).

          1. We don’t even remotely have a free market in property. The Council and the government limit the use of land which changes people’s behaviour when they can finally do something with the land. So definitely not a free market.

          2. Stefan, no. “The Council and the government limit the use of land.” ? No.
            We have a very unregulated land use system, compared to most places in the world. The RMA permits residential housing on suburban properties. That’s hardly limiting…

          3. I wasn’t comparing it to anywhere else. I simply saying that it is not a free market. And the fact that it isn’t is one of the reasons that we have problems with house pricing in Auckland because the land price is the thing that has grown out of control and that is constrained by lack of supply (and substantial costs when trying to free it up)

          4. Agree with Stefan. Blaming the issues of the housing market on a lack of government intervention makes no sense.

        2. Well, when you compare to the front-runner in the Unaffordability stakes (Hong Kong), yes, NZ is remarkably hands-off. For most suburban housing, housing needs to meet the building code, and that is all. Our RMA allows any size building within a certain range – i.e. max Site Coverage of 40% etc, and what it looks like, what the plan is like, where the bathroom is etc – all is completely up to you (the boring similarity is due to the developer rolling out 20 of the same plan, not to government zoning regulation). The developer changes the paint colour every few houses from a ‘tasteful’ range of beige and greys.

          By contrast, in Hong Kong, the Government owns all the land, and sells it direct to developers, and stipulates the plan dimensions (such as New Harmony flats at 15m2 each, in cruciform blocks 40 stories tall). You don’t know how lucky you are…

          1. So what you are saying is – look at Hong Kong with even more regulation and even higher prices, it could be worse. I agree it could be worse! But it could also be much better.

        3. …which of course may have something to do with the fact that Chinese buyers love the freedom of buying property in relatively unregulated places like Auckland, and Vancouver, both of which have massively sharply growing Chinese populations.

          The freedom from regulation (i.e. hands off approach) is appreciated by both us, and also those from more regulated societies.

  9. I don’t know if there are any real gains to be made in Auckland affordability, through any means, as long as the current virtual free-for-all in property speculation continues. We’ve gotten to the point where people are just buying and selling million dollar homes amongst each other, until they reach the point of cashing out to the backblocks and taking the tax free windfall with them, leaving the buyer of their property to continue the same cycle ever faster for fear of being left holding the baby when the growth slows (let alone stops).

    The whole thing is now completely divorced from housing demand or the real value of accommodation, but I am convinced that central government will never take concrete action – to the contrary, they will prop up the bubble as long as they can – because they’re terrified of finding out just how deep the rot has gone. So at some point we’re going to overstretch the external factors that let the Auckland bubble keep going, the people who can extract their paper gains quickly enough not to lose them will run for the horizon, we’ll get a really shattering recession and all hell will most likely break loose.

    Happy Monday!

  10. Good article by Shamubeel Eaqub: House crisis puts Auckland’s future at risk. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11579491

    Shamubeel in his book ‘Generation Rent’ gave us the important factoid that although roughly two thirds of homes are owner occupied, only half (49%) of adult kiwis live in an owner occupied home -this is because renters live with more people -renters do not pay to leave bedrooms empty but owner occupiers frequently do.

    This means a slim majority of adult kiwis and a bigger majority of future kiwis will directly benefit from housing becoming more affordable.

    Hugh Pavletich one of authors of the Demographia housing survey which set off the NZ Herald housing affordability media coverage is interviewed here. http://www.radiolive.co.nz/We-live-in-a-housing-hell—Housing-commentator-Hugh-Pavletich/tabid/506/articleID/111892/Default.aspx

    Hugh is a polemic -everything is black and white -I am not such a fan of all his solutions -city planning wise they seem like a return to the 1950s.

    But I do like his clarity of housing affordability being a moral problem. Especially the bit in the interview about unaffordable housing causing people to live under bridges and that if homeowners go into negative equity when the housing crisis is resolved then that is tough but they didn’t care about people living under bridges when houses were unaffordable did they…..

  11. The Herald also did an article on what these 5 priciest cities average homes actually look like. They are apartments – except Auckland where the pricey average home example is a freestanding house on a 1000sqm site surrounded by gardens. Why don’t they compare 1000sqm sites with freestanding houses to income in various cities – or xsqm 2 bedroom apartments to income in various cities? Demographia surveys are just stupid, but make great headlines.

    1. 1 reason could be that Auckland doesn’t build a lot of apartments. Melbourne, Sydney and Vancouver are building a lot of apartments. Hong Kong is almost entirely apartments. Auckland is building houses about 4x faster than apartments.

      1. Angus you are quite the stuck record on this; Auckland is increasingly building apartments, yes more would be better, as would a reduction in the regulations that limit them happening, but it is simply untrue to say they are not happening now, they are and at an increasing rate:

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