Yesterday Phil Twyford announced that it would be Labour’s policy to abolish Auckland’s Rural Urban Boundary (RUB), as part of a policy to improve housing affordability.

Labour wants the Government to abolish Auckland’s city limits to get people out of cars, caravans, garages and tents.

Labour housing spokesman Phil Twyford said the urban growth boundary had to go because it has fuelled the housing crisis and people would not be forced into bad circumstances if the Government acted.

“The Government should rule out any possibility of an urban growth boundary in Auckland Council’s Unitary Plan if it is serious about fixing the housing crisis,” Twyford said.

“Over 25 years the urban growth boundary hasn’t prevented sprawl, but it has helped drive land and housing costs through the roof. It has contributed to a housing crisis that has allowed speculators to feast off the misery of Generation Rent, and forced thousands of families to live in garages and campgrounds,” Twyford said.

“Labour’s plan will free up the restrictive land use rules that stop the city growing up and out. It will stop land prices skyrocketing, and put the kibosh on landbankers and speculators.”

There’s no doubt Auckland has a housing crisis at the moment, with house prices increasingly dramatically over the past five years. Rents rose more slowly but the impacts for some families are still alarming. There’s also no doubt that planning restrictions have played their part in creating this crisis – by making it too difficult to build the required number of houses that Auckland has needed.

Addressing regional scale issues like housing and transport was one of the key reasons Auckland Council was amalgamated in the first place and why one of its first tasks was to rewrite the city’s planning rulebook through the Unitary Plan.

But will abolishing the Rural Urban Boundary help? To answer that question it’s important to understand what the boundary is, and what it isn’t. As its name suggests, the RUB is the boundary between land where urbanisation is anticipated and provided for over the next 30 years and land which is intended to remain rural over that time. If you take a look at the map below, it is the black dashed line that separates the yellow-coloured “future urban” zoned land from the brown rural zones:


It’s also important to recognise that the RUB doesn’t exist yet as it’s part of the Unitary Plan being decided by the Independent Hearings Panel. It’s quite a different tool to the old metropolitan urban limit (MUL) that was typically set up against the edge of the existing urban area and made any urban expansion a significant challenge.

The RUB, by contrast, isn’t designed as a permanent boundary. It provides for a substantial amount of greenfield growth – enough to meet 40% of Auckland’s growth over the next 30 years.  The scale of the areas in yellow is highlighted in an Auckland Transport video that looks at the future transport requirements to enable their urbanisation:

The main argument against the RUB is that it creates a scarcity of land where urbanisation is possible, which drives up the price of that land. Over time the high price of land translates into higher house prices and reduced affordability. Fair enough. But what can we actually do about that?

As Auckland Transport’s consultation video above shows, the RUB isn’t simply a line on a map: it’s a plan to provide publicly-funded infrastructure to new urban areas. If you wanted to expand the yellow future urban zoned areas on the map, you’d also have to find the money for additional infrastructure.

In other words, greenfield land is in scarce supply because it’s currently farmland that requires roads, pipes, train stations, parks, schools, hospitals and a myriad of other infrastructure investment to take place before development can actually happen. Making a dent in the housing shortfall by enabling more urban expansion to occur is therefore entirely about speeding up infrastructure, rather than whether or not there is a line on a map.

As we’ve talked about before, the costs of supplying bulk infrastructure to greenfield areas are large. It is time-consuming to investigate, design, consent and build these projects. There’s no quick and cheap way to make a whole heap more greenfield land “development ready”.

In fact, removing the RUB could easily disrupt existing infrastructure plans and slow down overall development. If you take a look at the work that’s been done on transport for future urban growth, the networks are optimised around the location of the RUB. Scattering small developments around the region could force AT and NZTA to react to piecemeal development rather than taking a more strategic approach to infrastructure development.

I suspect that the first thing to get cut due to funding pressure would be the city’s rapid transit plans, which have already been delayed long enough. This would have the perverse effect of putting a damper on the 60-70% of development that’s intended to occur within the existing urban area.

TFUG - Draft Preferred Plan - Northwest

In short, abolishing the RUB isn’t a straightforward proposition. It’s not actually obvious that you could abolish it, as infrastructure plans would simply turn into a de facto RUB.

Ironically, Twyford acknowledges as much in his press release, where he says:

There is a smarter way to manage growth on the city fringes by properly integrating land use with transport and infrastructure planning. There should be more intensive spatial planning of Auckland’s growth areas in the north, north-west and south. Land of special value can be set aside, like the northern coastal strip or Pukekohe’s horticulture soils. Corridors should be acquired and future networks mapped for transport and other infrastructure

Let’s unpack this. First, he says that he’d like to see “intensive spatial planning of Auckland’s growth areas” with “future networks mapped for transport and other infrastructure”. That sounds a lot like the process that Auckland Council and Auckland Transport are currently undergoing for the yellow-coloured future urban land.

Second, he says that “land of special value can be set aside, like the northern coastal strip or Pukekohe’s horticulture soils”. That sounds a lot like some sort of boundary between urban land and non-urban land, which is exactly what the RUB is intended to be. Basically, if you read beyond the headline soundbite, Twyford’s policy starts to sound a lot like Auckland Council’s current policy, just under a different name.

That shouldn’t be a surprise. After all, the current government has been looking at this issue for half a decade now, and they’re pretty critical of restrictions on land supply. If it was a simple matter to abolish the RUB, they probably would have done it by now.

So what could we do differently?

There aren’t necessarily any “magic bullet” solutions to land supply. Greenfield land needs infrastructure to be useful, and infrastructure is expensive and slow to build. Shifting some of those costs onto developers, either through development contributions, targeted rates, or design rules that reduce the need for hard infrastructure (e.g. stormwater pipes) can allow more of it to happen. But the problem is that the developers push back, which limits the gains that can be had in this area.

Consequently, other policies are also needed to enable housing supply. That means relaxing or removing restrictions on building height and density within the urban area. While Tywford and Labour have also said they support this approach, they devoted only a single sentence to it:

Freeing up growth on the fringes needs to go hand in hand with allowing more density – so people can build flats and apartments in parts of the city where people want to live, particularly around town centres and transport routes.

That’s a great aspiration, but to be useful it needs to be backed up by specific policies to limit the use of height limits and other density-killing rules like minimum parking requirements. For example, would Labour lift building height limits throughout the urban area? If so, how high?

Lifting building height limits and density controls would have some immediate benefits for housing supply. For one thing, the transport networks and water pipes have mostly already been built, meaning that there’s no lag time waiting for the infrastructure providers. For another, it would make the housing market a hell of a lot more competitive by opening up lots of new development opportunities in the places that people most want to be.

This would also have the benefit of allowing people to avoid the high transport costs associated with sprawling development patterns. Even given Auckland’s dispersed employment patterns, the further out from the centre people live, the further they need to travel to work. This map from a Ministry of Transport analysis of the 2013 census data which shows how far people travel to get to work based on where they live:

This trend is repeated around the world, with more spread out cities requiring a greater amount of travel and, consequently, a higher proportion of income being spent on transport. In some cases this can end up outweighing any savings in housing costs. If we’re going to lift restrictions on housing construction, it makes sense to prioritise lifting the ones that also pose a barrier to efficient travel patterns.

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  1. I’m sorry but it simply is not all about infrastructure delivery. For starters most of the costs are for roading and it is unclear whether large increases in roading capacity are needed. Until we have road pricing we will struggle to know. There is no reason why development needs to wait for investment in dual carriageway roads etc. Similarly for wastewater it’s currently massively underpriced. As for the money, Labours plan is for MUDs which have proved effective elsewhere.

    It actually isn’t about massive increases in fringe growth, it’s about creating genuine uncertainty and competition as to where that growth will occur. Our water and transport planners will need to get used to that concept. But the more important issue with infra is unpriced and underpriced infrastructure.

    1. Road pricing doesn’t mean you can magically put 10,000 people on a paddock with only a dusty country road as a connection. Same goes for water and other infrastructure

      1. Sure you need local level connections to the networks How long do you think that is going to take? Even in the best of worlds it is going to take 2-3 years for a paddock owner to go from signalling their intent to develop to people moving in needing to go to the toilet (and in our current reality longer – look at Long Bay for example). Sewer pipes dont take that long to lay.

        1. The elephant in the room is the surge or induced demand further along the existing transport network that happens. Ok so roading for these additional 10,000 motorists is quick and easily put in place, then the already congested roads and motorways they connect to will then require hundreds of millions of dollars to provide more roading space. Who pays? These 10,000 RUC’s? Yeah, Nah!

          More huge SOCIALISED subsidies, Nah, Yeah!

          1. Patrick, exactly. That is where road pricing comes in. The main network is priced and becomes self-sustainable and congestion free. Pricing will also enable us to observe actual demand / revealed preference which will allow infra investment desicions based on better info than we have now.

          2. So what is the chance of road pricing or user pays under this country party we have?

          3. It’s not just the roads – similar story with water and wastewater provisions. Laying a new pipe isn’t the issue. It’s having sufficient reservoir capacity, transmission capacity and pump station capacity. The more spread out your urban growth, the more all of this is going to cost. It costs more up front, of course, but it also costs much more when these assets have come up for renewal and the development contributions have long since dried up – so all the costs are borne by the general ratepayer.

          4. “It costs more up front, of course, but it also costs much more when these assets have come up for renewal and the development contributions have long since dried up – so all the costs are borne by the general ratepayer.”

            Adam, this is major issue with our current model. You can see that with central interceptor and other major upgrade projects Watercare cant fund on its own. Watercare is not allowed (by statute I think) to make a profit. i.e. It is not allowed to charge a fair return on capital. If you cant get a return on capital, then you cant self fund the renewal and upgrade of depreciated assets.

          5. “So what is the chance of road pricing or user pays under this country party we have?”

            Who knows, but that is the issue at hand. Given the sense the Labour party (NZs traditional party of progress and reform) has started talking in the last 24 hours, perhaps the question is when will they move on this issue.

    2. I’m skeptical of the MUD concept, because it seems like they would inherit many of the shortcomings of public-private partnerships. In principle, PPPs are a wonderful idea – get some private sector investment in exchange for a transfer of risk and innovation in design and execution.

      In practice, after a few toll roads failed financially in Australia the private investors became unwilling to accept demand risk, which is the most consequential one. So government accepted the demand risk, which in turn meant that none of the purported efficiencies in project selection were achieved.

      In addition, setting up a PPP “market” in NZ has been a slow and complex process. They involve complex contracts between private parties and the government, and an extensive business case and bidding process that can add 1+ year to the lead time. We’ve only had three or four PPP contracts signed in the seven years or so since the government introduced the policy.

      In the NZ context, I suspect that MUDs would inherit many of the same problems – they’d be slow to get set up and still involve public subsidies (e.g. a government guarantee).

      1. My understanding of MUDs is there isnt really a demand risk – it is effectively a special rate on property not tied to consumption. Current PPPs in NZ are far more complex and I dont think very relevant.

        Yes road PPPs would be subject to demand risk, not that that is relevant to MUDs for basic infra though I dont think. But now you have brought it up – demand risk doesnt dissapear just because things are publicly funded. The government, and in turn taxpayer, as the equity investor still bears that risk. Hence why we shouldnt have discounts rates too different from the private sector when assessing at infra investment. But I think that is off topic.

        1. Let me see if I’m right. New residents will have to pay not only a targeted rate for the MUD but also for other city projects through their rates, projects that will benefit other, existing areas? Example: Central interceptor. All of Auckland will be paying for this project, which is fine. But then why shouldn’t all of Auckland pay for new development infrastructure?

          1. Well I dont know what Labour have in mind but ideally Watercare would start charging at a rate that includes a fair return on capital to everyone. It would then be able to fund projects like Central Interceptor itself.

        2. Then we’re not really talking MUDs at all: we’re talking funding infrastructure out of targeted rates rather than development contributions. This is enabled by existing legislation, but it hasn’t been used very extensively. Here’s a partial list of targeted rates currently in force in Auckland:

          One reason for this, I suspect, is that the benefits of the most consequential bits of bulk infrastructure – e.g. arterial roads, major water schemes, wastewater treatment plants – don’t accrue solely to a single, discrete development area. So it can be quite difficult to figure out in advance *who* benefits and hence who should pay through a targeted rate.

          And you do *need* to figure out in advance, because (a) you might not have the funding capacity to build it if you can’t charge people and (b) if you try to charge the wrong people, they might sue you and get the charges overturned, in which case see point (a).

          Basically, the RUB isn’t an optimal policy, but it emerges from a set of real constraints. Overcoming those constraints is a good idea, but it’s not as straightforward as you’d hope.

          1. I am pretty sure that is how MUDs work – they have fixed charges per unit. The way I would see it working is a land owner who intends to develop signs a contract that says they will deliver x units at time x which will fall under the MUD, which would give certainty to the infrastructure provider. I dont think MUDs (or targeted rates) are a good way of funding core infrastructure like waste water treatment plants which cover a very large area. They should be self funding from user charges(regulated monopolies).

          2. “a land owner who intends to develop signs a contract that says they will deliver x units at time x which will fall under the MUD, which would give certainty to the infrastructure provider”

            That sounds like development contributions plus a piece of paper.

            “They should be self funding from user charges(regulated monopolies).”

            That seems to basically work in the electricity generation and distribution space, but observe how it’s taken several decades to set up a working electricity market. (And some people still argue that it doesn’t deliver effective price competition.) Given how pressing the housing crisis is, I doubt there’s appetite to undertake a lengthy, complex, and uncertain process of market reform before addressing it. So we fall back on public infrastructure subsidies!

          3. No development contributions are a lump sum paid at the time of development (well that is my understanding). MUDs would be financed by bonds tied to properties that get levied over a long period of time.

            The electricity sector is complex. It didnt take decades to set up though, they managed to do it pretty quickly. But what I am talking about for water would be more like making watercare a transpower or vector equivalent. We dont need a spot market for water supply or competition in wastewater treatment. So that is fairly simple. In fact we already have charging by watercare, it is just that it only covers operating/renewal costs (plus a little extra). All that would really need to happen is a law change to allow Watercare to make a profit, a bit of arguing with the com com, and then they multiply all our bills by 5!

          4. Allowing Watercare to make a profit doesn’t release them from the need to be financially responsible. They can’t build a pipe to everywhere.

            Also, I don’t think you’ve got Watercare’s charging model right. They charge lump-sum fees for new connections that are intended to pay for the long run average cost of infrastructure, and borrow to cover the funding gap in the interim. Annual charges pay for opex/maintenance.

            If they were on the hook to serve a lot of random development around the region, this charging model would come under pressure for two reasons:
            1. Timing of development in newly-served areas would become more uncertain, meaning that the funding gap between building pipes and getting connection charges could blow out.
            2. Water infrastructure is lumpy and difficult to scale to meet the needs of small developments. So they’d have to commit reasonable chunks of capital in response to piecemeal development. In principle, this could be offset by greater use of well water, but although Auckland has aquifers in some areas I have absolutely no idea what their condition is.

            Basically, there aren’t many readily-implementable options to keep infrastructure costs down, which means that releasing more greenfield land would necessarily require more public subsidies. There’s probably a case for spending more on infrastructure to enable growth (although why limit it to greenfield areas?), but let’s not pretend it wouldn’t cost more money.

          5. That model doesnt work unless DCs cover not only the cost of the new capital investment, but also have enough left over to fund future major upgrades and renewals. As I understand it, it does neither. Even if we had no growth, with the current model we would still need public subsidies as there is no money for replacement/upgrade of infrastructure. So Central Interceptor requires a public subsidy. Watercares model is – charge DCs to partly cover capital infrastructure, user charges to fund OPEX and then public subsidies to top up new capital investment and for replacement/upgrading of all capital investment (depreciation is a thing). Lumpiness is a common feature throughout our economy, it doesnt stop supermarket building new stores, or expanding and renovating existing stores etc.

            If we had a profitable watercare, the public subsidy issue goes away. And isnt that the only policy relevant issue?

            As fore “Timing of development in newly-served areas would become more uncertain, meaning that the funding gap between building pipes and getting connection charges could blow out.”

            Why? As I say above you need a legally binding commitment from developers in advance, but it takes several years to go from paddocks to flushing toilets. Also just because it wont be controlled by a central planner, doesnt mean it will be utterly random. Development will occur where it is most profitable. Building a subdivision west of Warkworth is likely to be less profitable than building one just north of Albany. Cities grew in the past without central planners – the development patterns werent random though.

        3. Big issues at the boundary for MUDs. You can end up with a situation where one side of a road pays thousands of extra dollars per year in MUD rates where the same house over the road pays a nominal amount. There are also further issues around accountability, administration etc. You’d essentially be adding in a whole new layer of local governance with all the associated costs as well.

    3. Yeah, agreeing with Peter’s points, it seems likely that targeted rates will be more effective than MUDs. But the council will need government support to fund the extra infrastructure; otherwise it will hit its debt limits faster than you can say Taxpayers Onion.

      I’ve started researching a series of posts on urban limits, so this announcement is quite timely. I see us moving towards a point where we can scrap the urban limits, but other things happen need to happen first, and removing the urban limits won’t be a magic bullet anyway. One, there’s the major geographical constraints around Auckland, and two, as Matt says, the infrastructure staging is likely to mean we end up with something not that different from the Unitary Plan system as proposed.

      1. If watercare was set up as a council owned enterprise and regulated monopoly (and allowed to charge at levels that cover the cost of capital) it would be able to raise its own debt. It would also under such a model be able to attract private equity. The same goes for roads.

    4. The real question everyone avoids is ‘ how big is big enough’?’. As humans do we ultimately devour every square meter if this country for housing? Where does it stop?

      1. I understand estimates (I’d be interested to know how these things are calculated) of NZ’s sustainable population land somewhere between 6-10 million.

        Assuming one-third in Auckland then you’re talking about 2-3 million.

      2. Len Brown’s PAUP is to have 40% of Auckland’s growth occur through sprawl. Historically Auckland has tended to work in the 30-35% growth though sprawl range. Typical cities of our size globally can hit the 25-30% range.

        Removal of the RUB would see us slow our sprawl rate back to about 30% of growth. Retention of the PAUP RUB will see sprawl of 40% (or more).

        How much is enough? I think the 30% we’d get by removing the RUB would be plenty enough sprawl.

  2. For some reason this blog still keeps trotting out the notion that building within existing urban areas is cheap and easy because the infrastructure is already there and can be simply tapped into to.

    If you speak with anybody who is trying to develop within the city areas they will tell you that this is not the case as for the most part the existing infrastructure, particulalry stormwater, is absolutely poked And cant be connected into without large cost, not withstanding the ever inceasing minimum standards that council keep imposing on people. The costs of upgrading and fixing the existing system is well and truly passed onto the developers and subsequently home owners.

    Developing in brownfield areas is just as if not more costly, time consuming and head bangingly frustrating that greenfield development.

    1. “as for the most part the existing infrastructure, particulalry stormwater, is absolutely poked”

      In other words, it needs an upgrade regardless of whether we allow more homes to be built in the urbanised area. Might as well get some development contributions to help defray the cost!

      “Developing in brownfield areas is just as if not more costly, time consuming and head bangingly frustrating that greenfield development.”

      Yes, without a doubt. But to a significant degree that’s the consequence of rules aimed at discouraging and limiting brownfield development.

      1. no, that’s the consequence of vast under investment in the maintenance and upgrade of public assets in a timely fashion to pre-empt development. The council has no money (for whatever reason) to do this work and sits on its haunches until Mr Developer comes along and then its all on.

        Also, Developer Contributions in my understanding (which may not be correct) do not pay for the direct upgrade works. Unless you are doing one of the giant developments where there is cost share agreement upfront with council (if you can get one and afford to pay the consultants fees) all of the costs of the public works extension/upgrade are the responsibility of the developer and then they still have to pay development contributions without any reduction to offset the public works they have paid for?

    2. Well said. Replacing infrastructure in “brownfields” is very expensive. People forget that wastewater pipes are not in the road berm. They go under backyards, gardens and houses. Replacing such pipes requires much planning, very expensive construction methods and restoration of properties to what they were before construction started. For water pipes, temporary supply has to be maintained to all properties while construction happens, and digging in the berm has its own challenges with all sorts of other utility service lines, many not well documented.

      1. Which might imply we should take to opportunity to document them?
        We had some engineering work done at our place. Council plan says a waste water pipe runs “at” one corner of our house. Which is a subsidence risk if the pipe cracks.

        Engineer laughs and says “Assuming it’s anywhere near there, last place we checked the council plan was out by 14 metres”

        1. How do you document what is located underground? Electric cables perhaps by sensing the electromagnetic fields, but empty sewer pipes are difficult. 14m may be true in old parts of the city, but even 1m (which is more typical of newer parts) can cause big problems. Some sewer pipes can be very deep as they depend on gravity for flow.

  3. > Corridors should be acquired and future networks mapped for transport and other infrastructure

    If this means German-style transit ‘burbs, I’m cautiously hopeful. As long as it doesn’t just mean ‘buy land for Moar Motorwayz’.

    Before the election I’ll need to hear a lot more, and a lot more specifics, about their plans for enabling density.

  4. I am all for greenfield development if it means fast trains connecting these satellite suburbs to Auckland. No point adding more motorways to these new areas because all they will do is clog the already overcrowded auckland motorway system. 30-40min train from the outer burbs is fine with me as I can do work on the train via laptop/tablet/iphone. The time is spent productively. 60-90min bumbling along at snails pace on the motorway will only result in me getting absolutely frustrated. There is nothing else you can do except drive and wait.

    1. 55 minutes from Papakura to Britomart currently, so there will have to be some pretty major investment in the rail network to get travel times down that far, especially if you’re talking further afield than Papakura…

        1. If the trains are going to be “express” trains, and run much faster than the existing ones, then that implies they’re going to have to overtake some of the non-express ones at some point – especially when we’re bumping up the frequencies on all lines, post-CRL. This doesn’t seem very practical to me – you could do it, sure, but you’d need to build rail “passing bays” and slow down some of the non-express trains. Is that really a net benefit?
          Perhaps someone with more knowledge of rail network design than me could let me know whether I’ve got the right understanding of that?

          1. Yes, it is possible. Weliington runs express services in peak hours simply by pathing them between stoppers. Timetable-modelling indicates that this would also be possible for Auckland, albeit with some trade-offs in the service frequency at by-passed stations and possibly in punctuality..

            For best results though, overtaking of trains needs to be possible. At its simplest this requires extra tracks and maybe platforms at one key intermediate station on each route. In a space-confined area this is not cheap but it is not as if the whole route needs to be altered. Already the possibility of overtaking exists at Newmarket where express trains to the west can bypass Newmarket stoppers. However up to now there has been little appetite for making use of this facility.

            Hopefully, planning in the run-up to the CRL will be increasingly open to all options and enable some of the current barriers to progress to be removed. The CRL project has the potential to bring about a step-change in public transport-thinking, not just in Auckland but in other areas also.

          2. Yes without at least some track additions express trains means a trade off between frequency and expresses [not to mention freight], and choosing express trains over higher frequency is essentially to prioritise further out travellers over closer in ones…so just another sprawl subsidy…. So by far the better plan is to make those long term investments in hard infra., and achieve both higher frequency and express services, these investmentments are amortised over a very long time so suit borrowing on to deliver, and anyway also add to capacity, redundancy, and are also good for other uses like freight and intercity.

            The only reason this isn’t happening right now is because of the longstanding political prejudice against rail capex investment that means its value is not reasonably calculated in our already socialised transport investment regimes.

          3. With 40% of Aucklands growth planned to occur in greenfield areas, express services are really going to be key to allowing acceptable connections to the rest of the urban area. Bypass tracks or an entire third main coming from the south is really going to be essential as part of the growth strategy.

        1. The CRL alone wont reduce travel times from the south, it just allows greater frequencies. It could of course force AT’s hand on dwell times though.

  5. Still think the whole discussion (by the political parties) is missing the main issue of investors that have caused much of the current “housing Crisis”. Just making more land available/building new houses only works if it is sold to those who either have one house and want to move or currently don’t own a house (via any legal entity) . if 50% or more of new houses /land is brought by investors (which seems to be the current level), affordability will remain an issue, which means all the effort to “race” to provide extra” housing areas will be invalid, and leave many service areas (public transport ,health, fire service, education etc ) struggling to . As an example, think about how many years has gone into planning Auckland Transports New Network, including the proving of those services, However it is not surprising that the political parties have trumpeted the easier options of wanting more land opened up, than the far harder football, of limited housing and land ownership.

    1. “Still think the whole discussion (by the political parties) is missing the main issue of investors that have caused much of the current “housing Crisis”.”

      That is just nonsense and I am glad the political parties have stopped talking it.

        1. Are you seriously suggesting in a growing city that needs more houses built, that the problem can be removed by reducing the number of investors. I struggle to see the link here.

          Anyway, what is the issue with property investment anyway? Investors own and build properties that people need to live in anyway, such as students, young people who haven’t decided where they are going to settle down, people on short term work contracts, and people like myself who think it’s madness to throw their hard earned savings into a deposit on a house in this current ponzi scheme.

          1. Those investors are swooping in like magpies in south auckland and other areas where first-home buyers would be looking for entry-level homes. Instead, they are up against these parasite investors. I agree with Tony H, investors should be banned from buying in these new areas. They should be left for first-home buyers.

          2. What Tony fails to see is that investors do not automatically mean high house prices, those ‘investors’ (I’d say speculators) are swooping because they see capital gains, which are largely due to real and perceived supply shortages, along with a ‘this time is different mentality’.

            Investors may be seen as the devil at the moment but there have been times in the past when there have been rental shortages, despite low house prices (early 90s) due to insufficient interest in property investment (because the sharemarket was more interesting). Medling with a particular group could cause more problems in the future, when a simple increase in supply will likely take the edge off prices, which will soon mean speculators will loose interest.

          3. I do agree that there is a time and place for property investment. But at the moment (and for the last few years, and looking forward), currently investors holding portfolios of houses and land banking have become an important issue creating in unwanted impacts on the general population. Various reasons for this, and I support many of the comments above in regarding how to help the current situation. My main point is that there is nothing being gained by brushing aside the Urban plans with no real alterative, just to build houses and (and use land they may be better utilised) if is not going to result in more people owning their own house, and stock not being available for rental due to the speculators not wanting to have tenant’s (which I know has increased through personal experience).

      1. Mathew the discussion about foreigners buying up housing, paying over the odds,etc is a conversation that is not going away. LINZ have now stated that their statistics are not accurate and I can tell you for free that central city Auckland properties are still being snapped up by predominant Chinese buyers. If you attend auctions daily you would know this. For political reasons the government is trying to keep this under wraps as long as possible. I’m not a Labour supporter but they are on the money in this regard.

        1. Have you been making a nuisance of yourself wandering around the auction room asking the perspective buyers whether they live in NZ or not!?

      2. Go look at a supply demand curve some time, and figure out the effects of the “top 5%” of buyers on prices.

        Look at it this way, house buying is basically “best price wins”
        Which is “winner bids $1,000 more than second place”

        So if out of the top say 4 buyers, 3 are from overseas and can bid even 5% higher than the fourth buyer, then removing those 3 doesn’t drop the price from buyer #2 + $1,000 to buyer #3 + $1,000, it drops it from buyer #1 to buyer #5 + $1,000, and the house price just dropped oh say $45,000

        1. Roger, you are right, but it depends on who the top 5 % of bidders are and I would highly doubt that it is only one group that is bidding the prices up, panicking first home buyers are as much part of the problem as anyone else. Rental returns on property in Auckland don’t justify prices currently being paid, which means people either believe prices will just keep escalating (risky) or that they will be able to time their exit from the market (also risky), or some other driver.

    2. +1. The issue of demand is still not being addressed. As long as we have a situation where 45% of houses sold are investment properties, prices will remain high. We are also not looking at immigration – is it sustainable for Auckland to welcome the high numbers we have seen in recent years?

      I am miffed by Labour’s proposal – are they suggesting that we should just keep doing what we’ve been doing for decades, only on a larger scale? More suburban sprawl?

      1. If supply exceeds demand, it doesn’t matter who is buying houses, first home buyers, investors, speculators, people with foreign sounding names etc, prices will come down. The reason prices are rocketing up is that with real and perceived scarcity, first home buyers outbid investors, and are then outbid by speculators and the circle/ponzi scheme continues. I think it’s safe to say speculators will disappear reasonably quickly if there is a prolonged drop in prices.

  6. But seriously guys – scandalously high house prices are acceptable collateral damage because of imperfect infrastructure development and management models? Seriously?

    1. Explaining why something is not simple to change is not the same as arguing that it should continue unabated.

      1. You are right. I should and do take your arguments in good faith. I just cant help notice quite a bit of equivocation about what in my mind is overall some of the best things weve heard from a politician in a while. Remember – he is also talking about raising density limits. But, while a soundbite of “abolishing density limits” would certainly have created some air time, I dont think anyone thinks that would actually make any sense.

      2. But you neglect the savings – if we get rid of the RUB that doesn’t only mean we get sprawl where none was planned under the PAUP, it also means we no longer have to finance all of the sprawl planned under the PAUP.

        We’ll change from the 40% sprawl planned by Len Brown’s council and revert to our historical growth pattern of a mere 30% sprawl or less. Every 3 houses that sprawl from Auckland are going to remove the need for 4 houses to sprawl from the exurbs. We save on the cost of sprawl, by having less sprawl.

        Let the market decide if we need sprawl far away in Warkworth. If the market prefers sprawl in Auckland instead, then this will lower the cost of development of Auckland.

        What is not to like? Is transportblog now a big fan of sprawl? Are you really hoping that the 40% sprawl planned in the PAUP is carried out?

          1. The RUB drawn up under the PAUP devotes a sprawl of 110,000 homes to development, this represents housing for 40% of the projected population growth of Auckland. Approximately 40,000 are allocated to be built around Auckland urban centre and the remaining 70,000 are spread around the external rural towns.

            Auckland growing in a natural manner and absorbing the same amount of population growth would require a mere 80,000 of sprawl outwards from Auckland.

            The RUB under allocates sprawl to Auckland (by about 40,000 houses), a scarcity of supply that is driving land costs through the roof and increasing construction costs in Auckland. Increased construction costs that have succeeded in slowing our rate of upwards build to such an extent that other large regional centres are building apartments 200 – 300% faster than we are.

            If we eliminate the RUB we will be able to build that additional 40,000 sprawl around Auckland and lowering land costs enough to induce an additional 30,000 apartments to be built in Auckland. We will not need to build 70,000 homes worth of sprawl in exurbs. Elimination of the RUB will reduce sprawl from 110,000 to 80,000. (Even lower sprawl is possible if we can persuade the council to up zone a few neighbourhoods.)

        1. It won’t happen like this at all. There are natural boundaries that Auckland is pushing against in most directions now. We’ve used most of the ‘easy’ land and will now have to skip over things like flood plains and tributaries. Things like motorways north have changed how people will settle.

          1. Dairy Flat, Paremoremo etc have a fair bit of potential. At the moment our development artificially jumps from Albany to Silverdale. Doesn’t have to be that way.

  7. By the way – Phil Twyford isnt just saying we should get rid of the RUB (in fact he wasnt specifically talking about the RUB), he also said we should get rid of the whole model of progressively staging land release. So you are right that if we get rid of the RUB but still have the same staging policy, things might not change so much. But that is not his proposal. Progressively staging land is basically the same thing as a (slowly moving) boundary.

    1. Is he really? As Matt points out, there’s quite a bit of ambiguity in his policy announcement. He doesn’t want the RUB, but he does want structure planning to align infrastructure and land use. Wouldn’t structure planning just turn into a process for staging land release? If not, why not?

      On your point above, this could be a really good idea. Or it could be another example of a politician promising to give everyone a unicorn when elected.

      1. I’ve come to the conclusion Twyford is trying to say nothing in the most words possible. I think they are just predicting the final outcome of the Unitary Plan so they can say told you so when the Unitary Plan allows for sufficient greenfields growth.

  8. That trip length map could almost be used as a cost of living map, with red being the cheapest, and blue the most expensive.

    Of course travel cost is only one part of the cost of living. Generally speaking, it’s cheaper to travel 20km in the ‘burbs, than live and work in the CBD. Everything in the CBD is vastly more expensive, ensuring there’s absolutely no financial benefit to living there. You’d only live there for non-financial reasons.

    The housing cost issue is becoming a bit of a bore. The reality is, New Zealand has an ample supply of affordable housing, and an ample supply of residential neighbourhoods with existing infrastructure than can handle significant growth.

    The problem isn’t, and never has been, lack of affordable housing. The problem is centralisation of NZ business into one small area. Decentralisation is the key. Get people back into work and living in the provinces and avoid all these issues in the first place.

    1. What is vastly more expensive in the CBD? Hallensteins have the same prices in Queen St and West City, ditto for McDonalds in Queen St and Lincoln Rd, some Countdown prices are a bit (not vastly) higher in Quay St than Lincoln Rd, breakfast at Columbus Coffee on Lincoln Rd same as in the city. Housing costs are the only major I can think of, even then a couple in an apartment ($225-$1,400pw) may pay no more rent than a couple in a 3-bedroom house in Swanson ($440-$650pw).

  9. Can we please get over the idea that land supply drives house prices? It doesn’t and removing the urban limit won’t make a blind bit of difference to Auckland’s house price nuttiness. Thanks.

    1. Yes. Thank you Donna. There has long been a conflation of ‘land’ with ‘dwellings’ on one side of the political argument and now it seems that same over-simplification is being adopted by another. So it goes.

      Grimes put is best when he said there are two barriers to dwelling supply: vertical and horizontal. It is regrettable that Twyford focussed so much on one and barely, and without detail, mentioned the other. Especially as the it is the vertical one that can most quickly be used to add supply at speed. And anyway the horizontal is already dead in the UP; this is just politics.

      1. Patrick, you agree with Donna?

        I’ve been yammering at you for months that land costs are totally divorced from house values and been getting no where. Then along comes Donna with a one line argument and you finally get it – well done Donna.

        Yes. Land cost has sweet FA to do with house values. Land cost is merely a construction cost.

        Phil Twyford wants us to lower construction costs so we can build more dwellings. You, Patrick, oppose this and want construction costs to be higher so we build less dwellings?

          1. You have to frequently push across multiple platforms in this modern world.

            Its been a good week for Auckland:
            – the mayor’s uber-sprawling Silverdale/Kumeu/Warkworth/Pukekohe mega-sprawl RUB plan is under attack and might yet be stopped.
            – the mayor’s constriction of Auckland City is under attack and might yet be lifted. Land costs can fall and we can build more apartments.

            Less sprawl and more apartments are on the horizon, it is looking positive at last.

          2. Seriously? You dont see some sort of connection between the daft MUL and high house prices? The only reason my house has gone up so much is because idiot regional planners convinced some idiot politicians we would all be better off limiting land supply. We got the result that they caused. Sure there is another channel, you can dump density restrictions but no one has done that and it seems unlikley that anyone will. That leaves sprawl as the last hope. Glad I already own!

    2. Donna (and Nick and Patrick) all the evidence is that that is the case. The availability of land (or more precisely building sites) is what is driving Auckland house prices. Hence you see sections with just a shack on them going for over a million dollars.

      1. Well that isn’t what the productivity Commission found; they concluded that the restrictions on increasing density are higher than further sprawl. Arthur Grimes too talks of the ‘vertical as well as the horizontal barrier’ and anyway of course land is not the same as a housing; they are indeed different things.

      2. You see shacks going for a million bucks… in the likes of Ponsonby. Not it Pukekohe or Kumeu or any other fringe area. Those shacks are free, people are paying a million for the land, clearly. But all that tells us is there is a lack of housing supply in Ponsonby, or in other words places like Ponsonby are very desirable and rich people will pay a hell of a lot to live there.

        The real question is, will having more sections available in Pukekohe or Kumeu, or Drury or any other edge expansion, change that? I would say no. The availability or not of greenfields sections on the fringe 30km out has zero bearing on what is happening in the Ponsonby market. It’s like saying the best way to reduce the price of a new Maserati is to put more second hand Corolla imports onto the market. Unlikely to have any effect!

        The only thing that is going to bring down the price of those million dollar shacks in Ponsonby is more housing in Ponsonby. Likewise, the effect of new supply in new fringe suburbs will only affect prices in other nearby fringe suburbs. A load more houses in Kumeu might have an effect on prices in Whenuapai or Westgate, but it won’t have any appreciable effect on the majority of the region.

        So sure, more edge development has some effect, but if we want a systemic affect across all suburbs and market sectors then we need to introduce more housing supply across a range of suburbs and market sectors.

        1. “The real question is, will having more sections available in Pukekohe or Kumeu, or Drury or any other edge expansion, change that? I would say no. The availability or not of greenfields sections on the fringe 30km out has zero bearing on what is happening in the Ponsonby market.”

          Thats wrong. There is substituability tight across aucklands housing market. Just because it wont be the exact same people buying in ponsonby and Kumeu doesnt mean they arent connected.

  10. The solution is simple enough. Split the Auckland Council into say six or seven competing areas, four urban and three more rural. Get rid of Auckland Transport altogether and give the transport function back to the Councils. The main difference would be this time dont bother with an ARC or ARTA. They were just a waste of space. The whole problem only started when people tried to plan at a regional level. I blame the Auckland Growth Forum for causing this whole problem in the first place. They should have called it the Squeeze Auckland Forum. Let the Councils where the growth will occur keep the rates that are currently channeled to the centre and use that money to fund the trunk sewers and arterial roads needed. Problem solved.

  11. Okay, so we’ve ‘freed up’ all the rural land (not that I actually agree with it) for development – then what?
    Then we have to build the houses. Does anyone seriously think NZ has the ability to build the 30,000-40,000 new homes A YEAR that are needed to bring housing costs down? It’s just not possible. Instead of training carpenters, plumbers, and electricians we’ve been saddling kids with Student Loans so they can learn how to become make up artists, fashion designers, and event managers.
    So we have the land but not enough labour to actually get the houses built – then what? Sure, factory building will help meet some demand but even they will require skilled tradesmen so they will be no great panacea. So labour costs will rise and ad further to the cost of building. We will effectively have given away our greenbelt for nothing.
    The only possible solution will be to allowed ‘skilled migrants’ to come to the country to build our homes for us. Cheap asian labour will be the required solution to our never ending housing crisis! Mark my words, that will be the next meme from the housing industry in the next decade.

    1. Agree. Even with more land doesn’t mean more homes will be built. Makes no sense thinking that this is the silver bullet. Pure idiocy.

    2. “Skilled migrants” are already hard at work in the numerous subdivisions around the Swanson/Ranui area, working for their fellow countrymen who have snapped up 450m sections at $500k a piece from from their other fellow countrymen, who completed the subdivisions started by mostly local landbankers (although one of the largest local landbankers has Malaysian owners iirc).

    3. I’m doing an extension at the moment and there can be 3 week delays for a concrete truck! 1 week minimum for a council inspector.

    4. What makes you think we have not got groups of Chinese builders here already? Have a look at some of the new developments around Albany/Greenhithe, there is hardly anyone else on the ground there.

    5. We save money which we would otherwise waste on dirt and pay builders more. Kiwis with previous building experience will be able to leave low paying jobs and move to higher paying jobs in the building industry. Apprentices will be paid more. This will result in wage growth – an unheard of phenomenon in NZ, but something I have heard whispers of occurring in construction booms overseas.

  12. Bit of a worry. Speculating about why Twyford has made his extremely unhelpful suggestion of abolishing any kind of limit on expansion, I can only think that they have convinced themselves that the government is about to act in similar manner and decided to get in first. If that is correct then the real focus should not be on what he says (after all he has no power to actually change anything) but rather on the statements of the Ministers of Housing and Finance. I would like to think that this is all hot air by politicians wanting to be seen to seen to be doing something but their comments do seem to be coming thick and fast in the lead up to the budget which will soon be delivered – well before we see the final form of the PAUP in 9 weeks.

  13. The main reason to scrap the RUB is that this will allow us to reduce sprawl, improve growth and increase urbanisation.

    [The RUB] provides for a substantial amount of greenfield growth – enough to meet 40% of Auckland’s growth over the next 30 years.

    40% is an absurdly high amount, enough sprawl to cater for 40 years of typical Auckland growth and the PAUP wants to implement this in 30. To support the PAUP is to support massive sprawl.

    The main argument against the RUB is that it creates a scarcity of land where urbanisation is possible, which drives up the price of that land. Over time the high price of land translates into [lower construction rates and higher rents].

    When the cost of building goes up the rate of construction goes down. The degree to which a project is effected depends on how sensitive it is to land cost – apartments are highly sensitive and retarded more than houses. To support the PAUP is to support reduced urbanisation.

  14. As Auckland Transport’s consultation video above shows, the RUB isn’t simply a line on a map: it’s a plan to provide publicly-funded infrastructure to new urban areas. If you wanted to expand the yellow future urban zoned areas on the map, you’d also have to find the money for additional infrastructure.

    Thankfully scrapping the RUB will not expand the yellow areas on the map, it will reduce the yellow areas – lower land cost, reduce sprawl and save ratepayers money.

    City of Auckland, anticipates a 2/3 population increase over the period of the UP. If Auckland City expands in a 70:30 ratio it will expand by 20% (= 2/3 x 30%) additional greenfield land over the period. 20% is about the maximum amount of land which without a RUB we will use, which is a lot less than the 26% increase the PAUP funds. Actually without the RUB the expansion is likely to be even better 75:25 with achieve typical urban growth patterns.

  15. “The RUB, by contrast, isn’t designed as a permanent boundary.”

    Yes it is, as far as is practical in a planning sense (i.e. until 2040ish). It is the MUL within the boundary of the RUB that is supposed to be progressively shifted over the next 30 years to accomodate urban growth, and it is this mechanism which might need to be abandoned to avoid the slow drip feed of land supply and enable greater competition between land developers.

      1. Plans are required to be reviewed every 10 years in NZ, so never could have held firm until 2040 unless every review confirmed it was still an acceptable mechanism to achieve the objectives and policies of the plan which themselves would be subject to ongoing change based on environmental concerns, technology, politics etc.

  16. Making a dent in the housing shortfall by enabling more urban expansion to occur is therefore entirely about speeding up infrastructure, rather than whether or not there is a line on a map.

    Council idiocy has defined this line in the wrong place, so the line does make all the difference. Auckland City needs 20% more land (see 11.03 comment) to grow naturally. Reduce allocation under 20% and the council will be choking off land supply driving up land cost and killing construction. Expand the allocation over 20% and the council will be subsidising unneeded sprawl. Council idiocy has drawn the line so the PAUP does both things badly.

    This council PAUP, as per above (11.03 comment), is adding 26% subsidising huge oversupply of sprawl.

    The PAUP also restricts the land supply to Auckland City, the 20% needed growth does not exist around Auckland City. You can look at the PAUP viewer and see for yourself, Auckland City gets to grow much less than 20%. The sprawl is oversupplied to Pukekohe, Kumeu, Silverdale and Warkworth; the sprawl is undersupplied to Auckland City.

  17. I was impressed with the comments by both Chris Darby and Phil Goff on National radio this morning and am not impressed with the way the Government is dealing with the whole issue. They have set up the Unitary Plan structure with reporting due next month but don’t want to pay for infrastructure except through the outdated NZTA roads only mechanism and haven’t allowed the City additional funding mechanisms beyond rates.
    This is bullying of a sort!

    Regretfully even Bill English seems to be losing the plot.

    1. To be fair to the government, it was incredibly hard to foresee Len Brown’s council acting the way it did. His election promise was a compact city with at most a 70:30 split. There was an anticipation he might deliver something like that.

      The surprise of the PAUP must have come with as much shock for them as it did for the rest of us. The PAUP finances massive wasteful exurban sprawl and restricts urban development by shoving land costs through the roof. It doesn’t do anything to fulfil the promise he got elected on.

      There is a degree of panic now, because no one thought the Auckland council would propose a plan so inefficient and basically sprawl mad.

    1. There was a post on here a while ago that showed the number of unoccupied houses being around 6-7 % so 20,000 is probably a conservative number. However, I also recall the number was pretty standard across all main cities in NZ and also historically across a number of censuses (or censii I guess?), suggesting it may well be just a background number of rental properties that are between tenants for a few weeks, undergoing renovation, people overseas on short term contracts etc. It might not be that easy to free up these houses.

      1. Ta I read the post which John linked to. If there was sufficient financial penalty I’m sure the occupancy rate of housing stock could go up. #reverseAirBnB tax? Would have to be done in terms of a society committed to housing all it’s citizens properly – that has clearly met resistance with $beforePPL

  18. As we’ve talked about before, the costs of supplying bulk infrastructure to greenfield areas are large.

    So let’s build less of it, by building it in places people want to live. Let’s build sprawl in urban places, the kind of places that can support urban growth. This will bring down the cost of urban land and increase the rate of urban growth.

  19. So if the government removes the RUB, then what? Then the council can choose to build the services that it is responsible for before the land can be used. So basically it’s an empty threat, unless the government decides to force the council to build the services. If the council doesn’t have the budget for capex then its debt/rates will increase. Government steps in to rescue the situation using emergency powers, sacks the Councillors, puts an unelected official in charge, and before you know it it’s ECan on a staggering scale.

  20. What we need is a package that includes removing the urban limit but also includes rates on unimproved value (land taxes) road pricing and ring fencing the funding of new urban infrastructure (eg MUDs). All these are possible. By themselves I agree they might not be fully effective. Together they have a good chance of solving the problems. Do we need demand side measures? In an ideal world we would have a housing supply that caters for demand not that restricts it.

        1. This is an interesting article and you raise good points. But it also shows that big structural changes are required in order to truly internalise infrastructure costs – MUDs, road pricing, and land tax. If you could get all that through I think it could work but if not the only other options are:

          1) Keep some kind of mechanism similar to the RUB (where it is set is a different argument)
          2) Have no RUB and massively subsidised infrastructure. In this case all the funds for infrastructure in the city would be sent out to the fringes.

  21. The argument here seems to be that removing the RUB isn’t going to work because AT won’t build the arterial roads anyway misses the point. The point is why is AT allowed to have a veto over development? Why do we let AT add to the housing crisis? Before they existed Councils took financial contributions and built arterials with them. Some Councils paid a half share of collector roads as well with local roads being built by developers. Since AT came along they take the view that financial contributions are these to spend elsewhere, if you want a road of any type you can pay. AT are more of a problem that the MUL numpties ever were. We will only solve the housing problem by constraining AT.

  22. Perhaps I am missing something obvious, but why is no one talking of the potential of decentralised infrastructure? All the conversations seem to be saying the old bulk infrastructure is the only way but it’s not. Isn’t that where MUDs have their place? Why is the debate being driven on the basis of constraining ourselves only to the 20th century centralised infrastructure model? Get the transport planning sorted then let decentralised communities ‘go for it’ on the basis of some transport planning parameters

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