Over the weekend Bill English was interviewed on “The Nation” about the budget and how it contained very little to respond to Auckland’s housing crisis. The Minister seemed very keen shift housing discussion away from the budget, instead laying the blame on the Council (well one that hasn’t existed for 6 years).

Bill English - The Nation May-16

Yes, but we don’t make the decisions, Lisa. Auckland City Council make the decisions. Even the government can’t build a house in Auckland unless Auckland City Council frees up the land, provides the subdivision consent, processes all the consents, provides the building consent and allows the house to be occupied…

…This kind of takes us back to where I started here — the people in the cars, the first-home buyers who are locked out of the Auckland market, Auckland infrastructure. People will look at this and think that you are effectively asking those people to hold tight for at least another year so that you can afford to give tax cuts.

No, that’s not the case. For instance, for the cases that have been in the media around living in the cars, a lot of those are a bit more complex than people might realise. But in any case, we have more money than we can spend on places, on houses for people in serious housing need in Auckland. The problem isn’t money; there’s enough of that. The problem is getting enough houses. Even though Auckland City is actually completing 40 houses every working day, it’s still not enough. And that’s why in the next few months we’ve got to work hard with the Auckland City Council to get more houses, because the government can’t just magic up houses; they have to be built by real people on real land. And that’s controlled by the Auckland City Council…

…Okay, well, just let’s look at some of those figures. I mean, experts can’t agree exactly, but they think that we’re down about between 20,000 and 50,000 houses in Auckland — we’re short of those — and that we need to build about 13,000 a year to play catch-up. We’re not building 13,000 a year, so the supply must be getting worse.

Well, and that’s in the hands of the Auckland City Council, who are the people with the legal and community responsibility to get more land available so that more houses can be built faster. We’ve been through this in Christchurch. You can ramp up the construction workforce. You can change the planning rules. In Christchurch, house prices are flat to slightly falling, despite the fact that two or three years ago there was very substantial demand. And I might say the same kind of stories about it. Now, there was a lot of tension at the time in Christchurch as the system cranked up supply to meet the strong demand.

The thing is you point the finger at the council there, but the council has been very clear about the fact it needs help with infrastructure. it says it needs 3 billion in the next 10 years for infrastructure. Where do you think that money’s coming from? Because the council’s nudging its debt ceiling. It can’t rate people off their properties. So where is the money coming from?

Well, fundamentally, that’s Auckland’s issue to deal with. We are certainly contributing. I mean, right now we’re in intensive negotiation for a contribution of over $1 billion from the taxpayer to an Auckland City Council transport project called the Central Rail Link. Now, in the normal course of events, they would pay for that. We’re negotiating where taxpayers will pay for that. That’s a significant reduction in the burden on the council, and it allows them to pay for other infrastructure.

Minister, isn’t it central government’s responsibility to assist with that infrastructure?

No, fundamentally it isn’t. It is the council’s responsibility. That’s the deal. They get to decide on how their city is planned, and they get to pay for the development. And for a lot of the people living outside Auckland and inside Auckland, there are real benefits from growth. And part of the puzzle here is that as more people turn up in Auckland and as incomes rise, growth is good. The council benefits from that, and so do ratepayers. And so they’ve just got to work out a better alignment between the funding and the growth.

A lot of blame laid on the Council (and also a weird interpretation of what’s happening with the City Rail Link as usually government has paid for 100% of rail infrastructure projects, it’s actually odd that the Council is paying around 50%, but that’s a whole different debate!)

This “blame the Council” game is also popular with a number of supposedly informed commentators:

But is this a fair criticism? Is the Council holding back land supply and slowing down the construction of desperately needed new housing? This is worth looking at a bit further.

One of the reasons the government amalgamated the eight previous and often bickering councils that governed Auckland and set the newly formed single council the task of coming up with a 30 year vision for Auckland (The Auckland Plan) and bringing together all of various plans and civic functions of Auckland.

Where the Unitary Plan provided the vision, the main tool at the Council’s disposal to enable or restrict land supply is through the Proposed Auckland Unitary Plan. Compared to the old plans that governed development and use of land, the Unitary Plan enables around 11,000 hectares of additional “Future Urban zoned” land to be developed. At a broad 60/40 split between growth inside and outside the old urban limits, and at a high population growth rate, this is enough land for around 30 years of greenfield land. As I explained in this recent post, it is a really really big amount of land. This is not the plans of the previous councils and addressing issues like land supply was exactly why the government amalgamated the council in the first place.

So the Council has certainly outlined its intention to enable a lot more greenfield development to occur in the future. In a basic sense, the amount of “land supply” has gone up a lot. Let’s leave aside the question of whether this is enough “Future Urban” land and focus for now on the criticism that the Council has been far too slow to increase land supply. There’s actually a decent amount of evidence to show huge hurdles have been cleared to speed this process up. For example:

  • Government made changes to the RMA to allow the Unitary Plan hearings to be fast-tracked in at least half the time the process would normally take – although it’s worth noting that the Council originally requested that the plan would be granted immediate effect upon notification and which the government rejected.
  • Special Housing Areas were established that essentially brought forward the Unitary Plan (in its proposed version) and created a fast-tracked consenting process

In some cases Special Housing Areas were rejected by the Council, which could be seen as a way of slowing down land supply. However, in the main these occurred because of transport problems on the State Highway network, which is owned and operated by the Government through NZTA.

Of course the Council is not blameless when it comes to decisions it has made to increase housing supply and improve affordability. In February this year the Council made a completely stupid decision to withdraw its evidence from rezoning hearings because a majority of the councillors were worried about three storey buildings in suburban areas, areas with existing infrastructure where new development could happen tomorrow if the planning rules allowed it. As expected that proved completely pointless as other submitters such as Housing NZ were still allowed to use the Council’s evidence.

Overall it’s hard to see what more the Council could have done over the past few years to speed up the supply of greenfield land. The fact is that developing this land takes a long time – not just to go through the RMA processes but also to get that land serviced with infrastructure and ready to build. Even with all the money in the world, a major wastewater pipe or new road takes a number of years to build and greenfield growth often can’t occur without it (no point building new houses if the taps don’t work and the toilet doesn’t flush). It’s time that politicians and supposedly informed commentators realised this.

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  1. So he claims Council is solely responsible for funding Auckland infrastructure but his Govt is happy to throw billions at East-West link and AWHC? The incongruity is eye-watering.

  2. “Overall it’s hard to see what more the Council could have done over the past few years to speed up the supply of greenfield land.”
    1/ They could have written a sensible Auckland Plan- instead they continued the ARC nonsense that constraining Auckland would result in intensification at no social cost.
    2/ The Government gave them unprecedented powers under the Unitary Plan to put forward what ever they wanted without the risk of appeals. All the had to do was convince the Independent Panel it was a sensible option. Instead they annoyed everyone with a dud draft. Dropped the intensification out of the notified version, tried to slip back in at the end as if no one would notice and then withdrew their evidence when people did notice. They have wasted their chance.
    3/ They could have zoned all the special housing areas in the first place. Instead they opposed these areas until it became obvious the Government would act unilaterally, then they claimed to support the SHA process while having their own Council owned organisations Watercare and Auckland Transport try to stymie them.

    1. 1) Rubbish. Did you not read the above? 40% of growth is enabled outside the old ARC urban limits.

      2) So you’re saying they should have enabled less development?

      3) So they should have live zoned areas with no infrastructure? That seems pointless.

      1. Brian the notified unitary plan had what they called a 70:40 split (yes I know that equals 110% but they said they had an extra 10% in case some wasn’t developed.) But the 40% is largely FUZ or future urban zone, that is land that might be urban one day if the infrastructure can be put in and if and only if they agree to a plan change. The point you apologists try to ignore is that we have a housing shortage because the Council and their predecessor the ARC planned it that way. We are now at the point they wanted us to be at. They thought limiting growth out would push up prices and that would make intensification viable. They thought apartments were a perfect substitute for houses and they thought they knew best. They choked Auckland’s outward growth and now people cant afford a house. It was already bad enough and they did this us to make it worse. Well done Auckland Council – you won!

        1. Nothing wrong with apartments. There is a huge demand for them in the isthmus and around suburban built-up areas. The problem is height limits which NIMBY lobby groups terrorise the council with. The Council is partly to blame though for rolling over to these NIMBYs. The Independent Hearings Panel is going to crush them later this year and it is going to be a beautiful sight. Auckland needs to grow up as well as out.

          If John Key and Bill English really want more housing supply, then their National Policy Statement needs to come with increasing supply up into the skies and out into the hinterlands. They need to tell their NIMBY voters to get stuffed.

        2. Yes there is nothing wrong with apartments, they just aren’t a perfect substitute for a house. My point is the Council has caused the problem through their insistence on choking outward growth based on ideology and dogma. Saying people should have accepted apartment towers in their backyard isn’t going to solve the problem. People don’t accept them. It was up to the Council to provide a solution to growth that was politically acceptable and they failed to do that. They failed absolutely despite being told by many people along the way including me at the Auckland Plan hearings. They caused this mess, thank goodness we have a government that will whip them for it. As for the PAUP, you don’t know any more than I do what the panel will recommend.

        3. But most of the discussion was not about apartment towers.

          I remember the brightly coloured flyer back in 2011 warning me that the entire area where I lived was going to get zoning which would permit 2 storeys. TWO! Most houses over there had in fact 2 storeys, but still, how alarming.

          And that was within walking distance of Birkenhead town centre. The last thing you want to do if you don’t want traffic to seize up is pushing any new development out beyond walking distance to anything.

          Talking about substitutes:

          • Houses are no perfect substitute for apartments either. How many couples living alone without children need a 5-bedroom house? Right now, in most places you either suck it up and pay through the nose for that big house, or you go flatting with other people. Once you go away from the CBD apartments are far and few between.

          • Talking of which, flatting is not a substitute for an apartment.

          • Maybe you don’t have children but you still like the quieter atmosphere of a suburb. An apartment in the CBD is no substitute for an apartment in the suburbs.

          • Dwellings on the edge of the city (say, in Silverdale or even in Warkworth) are no substitute for dwellings in more central areas. Living this far North is only feasible if you have a job on the Shore. While from more central areas you have a lot more choice of where you go looking for a job. You’ll also end up in a very different type of area — the cul-the-sac ratmaze with strictly only housese + huge parking lot + mall. If you don’t like that, you’re out of luck further out.

          It wouldn’t be so bad if we would still remember how to build a nice neighbourhood. But as it stands now, most ‘nice’ neighbourhoods were already built a century ago, and zoning pretty much rules out having any new ones built.

          • A house on a 600 m² section is not a substitute for a townhouse on a 200m² section. Given a land price of $1500/m², the former is about half a million dollar extra, which puts it into an entirely different market. Also a large yard requires a lot of work to keep up, and some people just aren’t the gardener type.

        4. Roeland we can blame people for not wanting a bar of intensification in their area. But people have always done that. Everyone knew that. That is as pointless as blaming water for running down hill. The total cockup we are in is because the ARC put a collar around Auckland and stopped the city from expanding. Or where they didnt stop it like Long Bay they made the process so long and difficult and expensive that other developers gave up. The Auckland Council made a conscious choice to follow that plan without much intensification. Now we have a crisis. They did it, there is no point trying to push blame onto existing land owners who were protecting there own. The Council used Portland as one of their examples to us. But where do the poor people of Portland live? The answer is in some other city because they didnt let them in in the first place. In Auckland they get to live in a car.

        5. Maybe I misunderstand why people organise these protests.

          They’re not protesting against intensification

          Often there’s no change, and you still get all these protests. As in allowing 2-storey housing in an area full of 2-storey houses. And often with about the same density too.

          Maybe organising these things makes them feel important, or it gives meaning to their life. Maybe they’re protecting the value of their millions of dollars land holding on the outskirts. Maybe they’re already owning a home and retired so they just don’t give squat if other people can’t afford a home or have to commute 3 hours per day. Or maybe they are really stupid enough to think that high-rise buildings have only 3 storeys. Maybe it’s just some political thing, instigated by people who don’t like whoever is in charge right now.

          In any case, these protests should be ignored and considered extremely harmful.

        6. Roeland, I think you hit the nail on the head with your last suggestion: “Maybe it’s just some political thing, instigated by people who don’t like whoever is in charge right now.” – I think if Palino was mayor there wouldn’t be any protests or outrage or Auckland 2040 groups, just cheerleading people happy to cash-in on the huge tax-free windfall of their property values increasing overnight with the potential of imminent up-zoning in their areas. I think it’s just a sour grapes anti-Len reaction thing; there’s no rational explanation for it (according to the prevailing dominant economic ideology that we’re all supposed to behave in accordance with, as rational representative agents).

      2. John you really are spouting nonsense here; apartments are housing. You don’t like them? Big deal; you don’t have to live in one. There’s lots of housing types I don’t like; especially fugly McMansions at the end of the motorway, but so what? It takes all sorts to make a city, and all sorts of people will make all sorts of dwelling choice trade-offs. Currently apartments are selling like hot cakes, so someone is buying/renting them, if they stop buying or renting them then I’m sure they’ll stop being built.

        Also we know that Auckland is undersupplied with dwellings for smaller households; singles, couples, or threes, the current market is proportionately over-supplied with big family homes. Yet it is these smaller family units that are growing as a proportion of the population, while larger families are falling. Apartments and terraces are likely to continue to find a ready market given these facts, and the desire by many for closer in locations.

        Try to get beyond generalising your own taste if you really want to add to the discussion.

        1. Actually I do like them. But in an economic sense they are not a perfect substitute. If you want a house and have to have an apartment you will be on a lower indifference curve. The reason people are only building large houses is because the constraints have worked so well the land value is too high to be used as starter homes. The perfect example in the Caribbean Drive area on the North Shore. In the early 1990’s Neils were building little rectangular 3 bedroom houses with one bathroom. By the time the Unsworth subdivision had finished the land was too expensive and only used for 5 bedroom houses with ensuites for wealthier people. The reason for that was the ARC and their MUL. There is no oversupply of large homes. It is just when there is an artificial constraint then wealthier people bid up land so only expensive houses get built. The answer isn’t to lament that St Helliers residents dont want apartments near them. The answer is to cut up more land. The Council didn’t allow that and so now younger people cant buy a home. Blame the Council, blame the planners who advised them and blame the sheep who kept bleating about sprawl like it was a bad thing, rather than accepting it was the practical way to provide for growth.
          Patrick if you were opposed to sprawl then J’Accuse!

        2. Council policy has unintentionally played a role in the prevalence of large houses being built, however density rules/minimum site sizes for subdivision, coupled with maximum building coverage controls have resulted in larger houses being built. Once minimum site sizes are set developers build to the maximum building footprint to maximise their profit.

          The changes which council are proposing for Auckland’s subdivision/.density controls is a huge missing part of the housing supply debate. The majority of existing density/subdivision controls will be drastically changed/removed to enable a mix of housing types within existing neighbourhoods. Controls that currently limit one large house on a 500-375m2 section will be gone enabling smaller houses to be built within a building foot print similar to that which previously only enabled one large house. It is these changes which enable the quickest increase in housing supply in Auckland.

        3. There are no ‘perfect substitutes’ in housing; all dwellings, no matter how similar, are specific, especially with their most defining of characteristics: location.

          Shelter is shelter. It can big or small, well or badly built, over here or over there, it all adds to the supply side of the market. In fact I would argue that location is a more defining characteristic than type. The idea that a dwelling in Warkworth is a substitute for a hot market in Ponsonby is highly questionable; That 60km makes it more different than whether someone else has a dwelling above or below yours. Whereas an apartment in Ponsonby is a substitute for a detached house in Ponsonby.

  3. Land supply is more than just the ability to build in a paddock or the backyard of an existing house.
    It is conditional on the roads, water, stormwater, sewer being in place and planning rules, consents, RMA, inspections all being processed/actioned.
    These are all hurdles and they are all “the councils” responsibility to plan/build/enact. The disproportionate rise in house prices has been going on for many years now, and “the council” should have stepped up already.
    Yes the government is in charge of state highways but these aren’t built to access single houses or subdivisions. And they may pay a contribution towards the councils costs for local roads, etc., but it is the councils responsibility to make them happen

    1. Also electricity, gas, phone/broadband, fire stations, police stations, (dare I say train stations?), schools, hospitals/health clinics, etc. – who pays for that? Does Auckland Council have to pay for all that now?

      Just up the road/tracks from the Beehive, Central Government built and paid for the Hutt Valley and Porirua Basin, served with new double-track electric railway lines (including a very long tunnelled section). Doesn’t Bill English know this? Is Central Government going to recoup this from Wellington ratepayers?

      If not, why is it okay for Central Government to build and pay for major parts of Greater Wellington when it was growing, but not Auckland all of a sudden?

      (Is it because John Key’s mates want the Ports of Auckland, Watercare, etc. in their portfolios, but they don’t want Wellington’s assets?)

  4. Most intelligent people can see through their scapegoating for the last 8 years of inaction on housing. At a time when they should be working with the council to reach solutions their arrogance shown is incredible.

    We want a prosperous city to live in with appropriate infrastructure accommodated for so we are not stuck in traffic. The mind boggles at what lunacy the government are thinking will achieve this.

  5. Firstly National denied there was a problem for years. Then we are told that the issue is owing to supply from our high inward migration, including a large component of foreigners who are here on student visa’s and or going through the process to gain residency, not just Kiwi’s coming home!. And part of that migration is the allure of cheap labour, another conflicting policy. However we are now led to believe by all in sundry in this government that this not a crisis, it’s a “challenge”. Thing is Auckland Council don’t control immigration except try to deal with the aftermath of it. Rod Oram stated in the most recent Sunday Star Times that of our 2.8 % growth, 1.5% is attributed to immigration. It is not hard to see the temptation of a poll driven government to milk immigration for all its worth because it misleads us into thinking our country is growing on the back of real production from their fantastic economic management. But it’s not and there’s a price to pay and its housing and affordability and its getting dearer by the week.

    So ignoring immigration have they done anything meaningful to address speculation and those who hold multiple houses or even empty houses? Not really, tinkered here and there, given the punters a 2 year limit but that’s about it. And even now if they were to pump out the houses wouldn’t speculators just suck up a large proportion in this real life game of Monopoly? Course they would. Another issue is leaky houses. That 90’s brain explosion to de-regulate the building industry is now sucking up valuable building resources that could go into building new homes. And if Nick Smith gets his way there will be more compromises on quality over quantity if only to save their bacon and we will get the whole problem all over again..
    Therefore having done next to nothing that would have a real long-term effect we are now mislead that it is Auckland Councils fault, the very organisation that National created. If there is no other option and NO crisis, why override democracy National??

    1. Not sure I agree that speculators will just suck up all the new houses. There housing market is way out of line with incomes and even rents in many parts of Auckland, it’s likely a significant increase in supply would depress the price of housing, and speculators don’t tend to be very interested in falling markets.

      1. Yes speculators can suck up a lot of housing, even way beyond the point where anyone needs it. That’s how we got all those ghost estates in for example Ireland.

        And then at one point someone will figure out there’s no actual demand, just speculators bidding against each other, it all comes crashing down fast. We’re obviously not there yet in Auckland, but if we don’t control speculation, prices might remain this high until we have a surplus of 50,000 houses.

        1. I agree speculators can suck up a lot of housing, I’m just not sure they will suck up a significant amount of new building. The market is already showing signs of being near the top in my opinion, simply because some demand is being removed as first home buyers can no longer afford the asking prices. A significant building programme could be the beginning of a fall in prices, but that’s just my opinion, if I could actually predict the market I probably wouldn’t be commenting here!

        2. I don’t know what exactly happened over there. But from the pictures on the internet, those ghost estates were mostly new builds. Some were left behind partially finished when the bubble burst. People ended up living between those partially finished houses in the middle of nowhere, stuck with a big mortgage.

          Arbitrary link with a lot of pictures — http://www.dailymail.co.uk/news/article-2531852/Exorcising-Irelands-ghost-estates-Demolition-begins-housing-projects-built-economic-boom-left-country-300-000-homes.html

        3. Actually it is amazing how much speculative oversupply of housing and partially finished subdivisions can happen as part of a bubble. Spain is even more of an example of this, than Ireland. And in the 1920’s bubble in the USA, there was more speculative “subdivision” than there was in most later episodes of strong supply (matching demand) without price inflation. It took around 25 years for most of this speculative subdivision of land to actually be cleared by the market – even as automobile based developers leapfrogged over it. The speculative stuff was a mess of unpaid debt and urban design that nobody wanted.

          I believe the crucial difference between the speculative frenzies of oversupply, and truly elastic supply that keeps prices stable, is that the former is enabled by land being rationed by some mechanism – even if it is infrastructure provision. The “rations” can be quite generous, so generous in fact, that oversupply is possible – but the truly elastic supply has a feature of “unpredictability” – developers go almost anywhere and obtain land at close to true rural values and compete with each other to get the best value houses onto the market. MUDs enable this unpredictability, but older developers in NZ will tell you that Councils used to be co-operative enough that it was possible to obtain greenfields sites without the owners gouging.

      2. You are assuming that speculators are smart enough to figure that out before the market slumps. To which I say (not once, but twice in 5 years “Dutch Tulips”

  6. It may be the council’s responsibility to make things happen, but they can’t happen overnight, or in the next five years. Don’t forget that all this crisis growth in population is only a relatively new phenomenon, and it wasn’t all that long ago when central Auckland properties were worth next to nothing. So, whether we like it or not, we have to exercise some patience here because unless there is proper planning and the work is carried out to a high standard we are going to end up with disasters. e.g – there are roads around Auckland that are now having to be completely reconstructed because they couldn’t even take a bus.

  7. Funny how it’s the Councils responsibility to build the required infrastructure and Central Government won’t interfere with Council but when a tool like congestion charging or tolling is put forward as a way of raising capital then Central Government won’t allow it to happen, talk about hypocrisy!

    1. Yep, when a solution the government don’t like is proposed they block it, and then blame the council. Half the council is to blame for siding with the nimbys and the government is to blame for its demand-side inaction.

  8. Housing affordability is not only a national problem. It’s something that’s hitting a lot of cities really hard as rates of urbanisation accelerate and the world gains 80 million+ new people a year. Also, if you’ve got some spare cash or can secure a loan to invest, rentals look pretty attractive.

    I like the New Economics Foundation’s video & manifesto that succinctly describes the problem with the system: [youtube https://www.youtube.com/watch?v=rVX3c_O3RSY&w=475&h=285%5D

    I’m not in any particular camp politically atm, some of what’s happened was certainly predictable, but I wonder if another government would have done much better. When we build more houses we will be able to house more people, but is there any real guarantee the new supply will tip the trend away from renting to (affordable) owning?

    Have any other (successful) cities successfully reversed the trend? How?

    1. What are you basing your statement that ‘rentals are looking pretty attractive’ on? On the Auckland Isthmus at least rentals are currently giving a terrible return on investment, our place would probably go for around $750,000 at the moment and we are paying $460 a week rent. Even if you paid cash that’s are return on investment of just 3.2 % before even accounting for expenses, might as well just put the money in the bank and not risk capital losses.

      1. Yep, rental property investors looking for yield would be snapping up rentals outside Auckland. Are the capital gains attractive over the medium/ long term in AKL? I see that the rate of investment will slow…until the rents catch up. It is not a nice situation.

      2. Yes, there are some good yeilds in other parts of the country that’s for sure. Just my opinion, but I wouldn’t think capital gains in Auckland in the medium term wouldn’t be particularly great as they are already very over priced at the moment.

      3. It makes sense if you’re buying not for now, but for 50-100+ years in the future … in the meantime, keep it empty (hoard it) to withdraw supply and fuel demand (corner the market).

        (If the reports from people on the ground we’ve heard from in the media in the past two weeks are accurate, even Housing NZ seems to be getting in on the act and playing this game; keeping lots of state houses empty while the list to get on the emergency housing list grows – while the rising revaluations of Housing NZ’s stock will boost their balance sheet, I don’t see how that helps to pay for the dividends to the NZ Government, unless they’re notional bookkeeping dividends, not cash).

        1. Not sure who would by a house a 50-100 year investment and then leave it empty, that’s basically guaranteeing a return of about -0.5 % with rates, and also any capital gains would have to overcome the house itself loosing all its value in depreciation as it would be completely worthless after 50+ years of not being occupied. I doubt there are many investing with this strategy.

    2. That is an interesting question about reversing the trend, Louise. The fact is that historically, all cities have been “unaffordable” – in the era before suburban development happens (and urban land supply increases, usually ten times faster than population). The chronic existence of illegal slum housing in most of the developing world, goes along with median multiples in the formal housing market, of 10 to 20 – and this for very small apartments as the average housing unit. Victorian Britain, USA, Europe, etc were all like this too.

      The trend was reversed in most of the first world in the decades following WW2; and it was reversed by the new phenomenon of automobile based suburban development. It is a slam dunk to prove this. Deliberate planning policy to prevent this kind of development, is logically responsible for destroying the benefit of housing affordability. Again, proving this is a slam dunk. The argument has been re-run numerous times on this and other forums. The dozens of cities that have kept their median multiples down below 4, are all cities that have not interfered with the “elastic housing supply” norm of the 1950’s, 60’s, 70’s etc.

      There may be some cities in Florida that abolished the growth boundary strategy following the 2000’s bubble and crash, that have not seen a return of inflation and unaffordability as there has been in all the other bubble cities. Yes, the US housing bubble is being re-run again; look at the median multiples in the same cities that bubbled last time. And the same cities that did not bubble last time, are again, not bubbling.

  9. The elephant in the room here is income inequality and they don’t want to talk about that. Rich people have lots of disposable income so they borrow to invest at low rates. Poor people are trapped in a cycle of renting and unable to save. So little wonder the market is failing.

  10. ” Auckland City Council transport project called the Central Rail Link. ”

    Auckland City Council hasn’t existed for years, and the project is called the City Rail Link. Perhaps a little telling that Mr English doesn’t know whats going on in Auckland?

  11. Blame game going on in all directions but all could of done better and have made mistakes. Things will now take time to catch up, important we have or start to get things right or we will still be debating in 30 years time. The last thing we want though is rushed band-aid & expensive fixes so he end up with a bunch of sub standard housing or infrastructure. People and resources seem to have a huge lag in momentum from what I have observed over the years.

  12. Personally I think the council are more to blame – the unitary plan is still a joke. Upzoning is occurring where there are less NIMBYs, not where there are better amenities. In my opinion they would be better off with sprawl than having density only in the outer areas areas (which is the perfect recipe for slums).
    But it would help if the government built transport infrastructure that can actually move a decent number of people…

    1. That was pretty much my thought.
      Look at Manurewa.
      Let’s take a short dead end street on the wrong side of the railway track from the shops and public transport.
      We’ll “forget” that we just consented a 10 bedroom boarding house there, so that we can SHA 2 sections in order to put 39 dwellings into 2100sqm, thereby more than doubling the population of the street.

      But we won’t bother providing any amenity upgrades or improving access to the existing amenities.

    2. Top comment, Jimbo. The result of this kind of perverse mix of planning actions, is to distort the spatial distribution of population density in an urban area in the direction that average commute distances are increased. Alain Bertaud pointed this out about Portland more than 10 years ago. I believe it can be literally seen on Google Earth – every city with growth containment planning, has unnaturally dense developments near the urban fringe and even way out beyond it. In contrast, if you look at more naturally evolving urban areas, the density drops pretty uniformly from the centre to the fringe and beyond. A density curve on a graph looks like Mt Fuji. This is an efficient spatial distribution of population density. But the growth-containment cities tend to have spikes in density way out at the edge of the curve, and a concave look further in. Basically, the focus should be on intensifying in the right places, and NEVER arbitrarily prohibiting splatter suburban greenfields development, which always gooses the land values (and causes more intense developments where the opposition is less, which is usually “the wrong places”).

  13. Didnt the council request the government allow them to make the UP operative on notification? And the government disallowed it? That was quite a big deal I thought.

    1. The Council also wanted to do the hearings in-house. ie a new planning document that they would write, would have immediate effect and to which they would make decisions with no appeal. Dont you just love our Council?

      1. The point ai am making is when exactly were they supposed to have made these plan changes? Were they supposed to run other district plan changes in parallel with the UP process?

        1. That is exactly what has been happening under the SHA process. The Council were free to make changes to the Operative Plans before the PAUP was notified. As I understand it the Council asked for the limitation on plan changes during the PAUP process. In the past Council’s have made variations to Proposed Plans throughout the whole plan development phase. The Act provides for Changes to an operative Plan and Variations to a proposed plan.

        2. Fair enough, but the entire city could have been an SHA. The government rejected that.

    2. Yes – it potentially is. While it’s important to undergo a hearings process in order to make sure the new rulebook is appropriate (and that it does what it’s intended to in terms of enabling urban development), that also entails a fair bit of regulatory uncertainty. And that suppresses development in the short term. For example, why would you choose to develop your land in 2013 if there was a chance that the final Unitary Plan rules put into place in 2016 were going to allow you to build more?

      However, it’s also possible to use regulatory uncertainty for good as opposed to ill. For example, what if the government had legislated for a *more enabling* set of provisions to go into force while the Unitary Plan was being assessed? Higher height limits, less onerous consent processes, etc. This would have two benefits:
      1. It would development to speed up, rather than slow down, as there would be a risk that the final rules would be less enabling than the interim ones.
      2. It would allow us to observe the *actual* effects of development, which would be a valuable input into the hearings process.

      1. Peter, did you mean to write “1. It would [incentivise] development to speed up, rather than slow down, as there would be a risk that the final rules would be less enabling than the interim ones.”?

  14. A few points here:

    1) As always, when I’m talking land supply, I mean both zoned for density in town and for expansion in the suburbs. MUL/RUB is part of the problem, but far from all of it.
    2) Yes, processes for changing zoning take time. But can you really, with hand on heart, say that Council has done as much as it can to allow restricted discretionary and discretionary activities as it is legally allowed to do? Does Council have to side with residents’ associations quite as often as it does?
    3) Infrastructure provision is a big part of the problem, but that’s also bundled in with the incentives problem. For a council getting up around interest limits, laying down infrastructure is risky if there’s a chance it could take a while for development to get going. So there’s a built-in incentive to restrict growth at the boundaries. This will drive some decisions around opening up more land at the fringes.
    4) I look at things like the Tekapuna car park and wonder why council didn’t sell it to a developer with a requirement that there be apartments there built within two years.
    5) I look at the unitary plan and wonder whether Council really needed to back down in quite as many cases where it had proposed densification and decided to give in to the local objectors instead. Those were discretionary choices by council in the unitary plan hearings.

    I think you strongly underweighted the second part of what I said in that tweet.

    Suppose your staff keeps doing things that are the opposite of what you want them doing, but that are consistent with their KPIs. “Yes, it is Keith’s fault that the TPS reports don’t ever get out on time. They’re his responsibility. But, all his KPIs are on this other stuff…maybe we should look at that.” You could just keep yelling at the staff, or you could change the KPIs. The latter is better.

    If central keeps blaming council for doing that which is in council’s incentive to do, and central can influence council’s incentives, then maybe it needs to be thinking about carrots rather than just yelling at council all the time.

    1. On point 2 I don’t think you understand how the RMA works. Discretionary and restricted discretionary are assessed against what’s outlined in your planning documents. The Unitary Plan process has been to update them from when they were written in 1993.

      Yes, literally until the Unitary Plan takes effect all developments must be assessed against plans written 23 years ago.

    2. Good points Eric – as you observe there’s a lot of moving parts and nuance here.

      One comment on this: “Does Council have to side with residents’ associations quite as often as it does?”

      To be honest, it’s hard to tell if it *is* siding with them or not. It’s certainly true that some local body politicians consistently turn up in the media opposing any new development and/or praising egregious concern trolls. But council staff, who make a lot of the on-the-ground decisions about how to proceed with consents, may have a different view. It’s hard to say, because staff don’t have the ability to say what they *really* think in public. (I know a few planners, inside and outside councils, who would surprise you with their liberalism.)

      “If central keeps blaming council for doing that which is in council’s incentive to do, and central can influence council’s incentives, then maybe it needs to be thinking about carrots rather than just yelling at council all the time.”

      Yes, excellent point. I think we’d be in a better position on this if this government hadn’t axed the regional fuel tax immediately upon taking office, or if they’d said yes to an Auckland congestion charge. Either of those two things would have given Auckland more ability to fund infrastructure and efficiently manage its transport network.

  15. There is plenty of blame to go around and, of course, includes the local government. However, around US100 billion is leaving China every month. A fraction of that is coming here and pushing up asset prices. Mr. English can do something about that but chooses not too. Until that is addressed it won’t matter that much what the Auckland Council does.

    1. There are whole streets around Albany and Greenhithe where that has happened in the new subdivisions. The houses are all 6br, 7 bathroom monstrosities and they all look alike.

      1. For the people who bought to live in them they are probably their dream home. A Greenhithe agent told me they have sold a few houses to Chinese people who dont live here and dont want the hassle of tenants so that is why there are more empty houses. They just wanted to get cash out and hold it in an asset in another country. Maybe we need to introduce squatter’s rights like England and Wales.

  16. Take Panmure for an example. Here the council has been proactive, it has built a flash new station and bus interchange and zoning around the station to allow apartments and mixed use. It is an attractive area with good civic amenities and pleasant open spaces. Yet it has remained car yards and old shops???? Why have developers not stormed in and built a new town?? This is a pattern repeated around the city.

    1. Niall, just as the boomers are conservatives investing in what they know, houses, the developers are also quite conservative repeating patterns that have worked for them in the past. There are precious few examples of where a developer in Auckland has successfully intensified around a transport hub with a mixed use model. So given the choice between doing that or an office block, or apartments in the CBD, another mall or tilt up warehouse near the airport they are passing up the unknown. That is where the government could help rather than laying the ground work so they look like heroes when they lead the cavalry over the Bombay hills to rescue us from living in our cars. It’s a pathetic example of vanity politics.

      1. If there was profit in it the developers would build. They haven’t, so there can’t be any profit in it. If you think they are wrong then by all means get yourself a loan and have a go.

        1. I think its more about risk adversity. It’s natural for government to take on risk initially to prove a model and then the private sector can embrace and extend.

          The kind of township re-development I think many of us yearn for hasn’t happened in New Zealand so it’s unproven and the demand hasn’t been demonstrated/unlocked. This is where local and central government comes into the fray. They need to show confidence and provide cohesive master plans for township re-developments. Give confidence to developers that planning will permit the kinds of densities and urban environments that make things affordable, efficient, attractive and of course profitable.

          We will hopefully see some of this with the work Panuku will be doing in the coming years. Time will tell if their efforts provide a more general model for private developers in other parts of the city.

    2. would you build a 2 storey terrace where you could wait 3 years and built an 8 storey apartment building? Panmure was stupidly underzoned and thus was not worth developing on until UP comes in in September.

  17. To answer the original question, yes.

    The council has gone about the process the wrong way. The Unitary Plan should have been in place first prior to exploring the compact city model.

    Instead we’ve ended up with a city in which land for building is scarce and has too many restrictions on what can be built.

  18. Yes but Bill, you get to decide what happens with tax revenue and fuel tax revenue and the like. Let us spend Auckland’s share on Auckland for a few years. The rates base is too small to do everything we need to.
    Nimbyism is an on-going issue for developments.
    He says the council gets to decide on how the city is planned, but that’s rubbish. The governments sticks its nose in all over the place, particularly with infrastructure.

  19. I was working in Hobsonville the other day, for the first time since the early stages of the development up there – it is the pits. Rows upon rows of two storied buildings, barely more than two rooms wide, all looking exactly the same. Even the backs of buildings butting onto the Wilsons carpark in Greys Ave in the central city look more attractive.
    The only place where any imagination has been even remotely displayed is in the Somerset old folks village where there at least a choice of several different designs to choose from.

  20. Typo; start of 6th paragraph of text: “Where the Unitary Plan provided the vision,” – should be “Where the [Auckland] Plan provided the vision,” (I think).

  21. Omission; 9th paragraph of text: “Of course the Council is not blameless when it comes to decisions it has made to increase housing supply and improve affordability. In February this year the Council made a completely stupid decision to withdraw its evidence from rezoning hearings because a majority of the councillors were worried about three storey buildings in suburban areas, areas with existing infrastructure where new development could happen tomorrow if the planning rules allowed it.” – should be “Of course the Council is not blameless when it comes to decisions it has made to increase housing supply and improve affordability. In February this year the Council made a completely stupid decision to withdraw its evidence from rezoning hearings because a majority of the councillors were worried about three storey buildings in suburban areas, areas with existing infrastructure [and existing three storey buildings (including the house of Auckland 2040 front person)] where new development could happen tomorrow if the planning rules allowed it [and in most areas the planning rules currently do allow it, under the existing District Plans].” (from observation).

  22. There’s not enough mixed ownership models in NZ. We don’t all have to live in or own large “palaces”. Shared ownership provides the balance of essential housing and avoids the outdated development that we see in new subdivisions. How about Auckland Council dispose of some of its ACIL airport shares and take ownership of land that is leased to a variety of affordable housing types. Dwellings that accomodate differening numbers of occupants who have a stake in the property. There would also be a proportion of rentals for short term use. You could start with reclaimming much of Mangere Inlet – about 1000 acres with a peripheral waterway that generates power. It would provide scope for 20-30,000 mixed use / mixed ownership dwellings. Its near to trains, roads, jobs, hospital, retail and the airport. A tough project but the positive outcomes outweigh the downsides.

  23. ‘Minister, isn’t it central government’s responsibility to assist with that infrastructure? No, fundamentally it isn’t.’ Wrong Minister – in the rest of the world it is. In London, the new Crossrail route is 40% central government funded with 60% coming from Londoners and also interestingly London businesses. http://www.crossrail.co.uk/about-us/funding

  24. The ARC and legacy councils are largely, if not entirely, to blame for Auckland’s Housing mess. Part 1 of the Auckland boom occurred from 2001-2008.
    The various councils bickered, and there was an absence of both professional and political leadership. The fundamental lack of upzoning that occurred during those years set us up for the current mess. End of story.
    Anyone with some nous could see this coming. I was lobbying councils 2006 through 2009 ,making submissions on plan changes, writing articles, talking to a soon to be new PM. It’s just absurd that it took until just the last couple of years for some meaningful change .Some may say better late than never. I don’t agree. The damage has been done, thanks to a fundamental lack of policy insight in the first decade of this century from both central and local government.

    1. To be fair the Councils had the LGAAA imposed on them. The ARC insisted intensification was the way forward and made sure the Metropolitan Urban Limit constrained growth. But they failed to get any real traction on intensifying the more central parts. So we ended up with nowhere that could grow except apartments in the CBD. The Auckland Council could have rejected the ARC approach but chose not to. Add to that the unconstrained immigration and we get what we have now.

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