Housing is a normal good. That is, it’s something that people tend to want more of as their incomes increase.

“More” doesn’t necessarily mean “larger”. People do tend to prefer larger homes as they get wealthier, but that’s not the only thing that matters. They may be willing to compromise on space in exchange for a higher-quality living space – bring on the granite countertops! – or a home in a better location. A “better location” could in turn mean anything from proximity to jobs (resulting in efficient use of valuable time), proximity to shops or cultural amenities, location in a good school zone, or access to parks or beaches.

One interesting phenomenon is that people seem to be willing to travel further to work than to consumption amenities (ranging from retail to concerts). In their fantastic book Cities and the Urban Land Premium, Dutch economist Henri de Groot and several co-authors provide some data that shows that people are, on average, willing to travel considerably further to work than to consume. They show that this results in a higher urban land premium for accessible inner-city areas, as vibrant downtown areas have the most varied and interesting consumption opportunities.

Furthermore, you’d expect this premium to rise as incomes rise, as people with more disposable income will have an increasing preference for close proximity to consumption and cultural amenities.

Is the same thing likely to be true in Auckland? Nobody’s done a survey, but we’ve got some data on the distance that people actually travel to access jobs and retail.

In a paper two years ago, I analysed Census data on commuting distances in order to understand what Auckland households spend on housing and transport. I went back and re-analysed that data to get an estimate of the distribution of commuting distances in Auckland. This data suggests that 50% of Aucklanders commute less than 9km, while less than 2% are super-commuters travelling longer than 50km.

As a point of comparison, I used data on retail spending patterns compiled by economist Susan Fairgray in a 2013 report on the Auckland retail sector. Based on electronic card spending data, Fairgray estimates that 50% of Auckland retail spending is done within 5km of people’s homes. (See Table 3 on page 58 of her report.)

Here’s the chart. As in the Netherlands, distances travelled to consume drop off more rapidly than distances travelled to produce.

Distances travelled to jobs and retail in Auckland

There are several implications for how we build cities. The first is that we should expect retail, personal services, and recreation to be widely distributed throughout the city. Large tracts of houses without good access to shops and recreation are not likely to be awesome in the future. There are various ways to cater to these needs, ranging from mixed-use zoning that allows retail and housing to colocate to distributing small retail centres throughout suburbs (a la Auckland’s tramway suburbs).

The second thing is that we should think more carefully about how preferences for centrality are changing. The consumption amenities that cities offer play an increasing role in their success or failure. Some important consumer amenities tend to be located centrally. For example, nightlife and entertainment districts are almost always located near the city centre – think of Ponsonby or K Road in Auckland. Likewise, museums and public art galleries are usually located downtown – e.g. Te Papa in Wellington or the Auckland Art Gallery – to maximise the number of people that can access them.

Auckland Art Gallery
Auckland Art Gallery

As demand for consumer amenities will tend to increase with rising incomes, we’d expect demand to live close to them to increase in the future. Meeting this demand in a growing city will, in turn, mean building more apartments.

But wait! If people also want more living area as they get wealthier, doesn’t that mean that they’ll reject apartment living? Won’t apartments simply be too small to meet their needs, even after taking location into account?

Interesting question.

It is the case that new apartments tend to be smaller than new standalone houses in New Zealand. Over the last five years, the average standalone house consented in Auckland was about twice as large as the average apartment consented in Auckland.

However, there’s no universal law that says that apartments have to be small. Policy can play a big role in keeping apartment sizes down, or enabling them to be more spacious. As LSE economist Paul Cheshire observes, planning policies (and other things like tax policies) can have the unintended consequence of discouraging adequately-sized housing:

If you really want to plan to protect and provide better access to green space and open countryside without artificially constraining land supply and forcing up house prices, then Green Fingers (or Green Wedges) would seem to be the best solution. That is what more egalitarian Scandinavians have. Copenhagen has its Green Fingers – really brown urbanisation along the radial routes out of the city with protected countryside each side. Denmark has not just got cheaper housing: according to the Dallas Fed’s data, the real house price has increased by a factor of 1.6 in Denmark compared to 3.4 in the UK since 1975 but new houses in Denmark are a lot bigger: 80% bigger in fact.

As Cheshire’s example of Copenhagen shows, it’s possible to build dwellings that meet people’s needs for living space and preserve usable open space around cities. You just need to be willing to build intensively where you do build – and integrate it with rapid transit.

copenhagen finger plan
Source: Living Rail

For a less anecdotal look at the issue, I used Eurostat data to measure the relationship between dwelling size and dwelling type in 29 European countries. Here’s a scatterplot showing the relationship between the share of dwellings that are detached houses (X axis) and average dwelling size (Y axis). Observe how there is almost no relationship whatsoever. If anything, there’s a slight negative relationship – countries with more standalone houses may have slightly smaller dwellings, on average. (There’s probably an income effect in there that I haven’t controlled for – richer countries tend to be more urbanised, which will tend to mean more apartments, and also have larger dwellings.)

Eurostat detached houses and average dwelling size chart

But basically, there doesn’t seem to be an inescapable trade-off between dwelling type and size. Apartments can be small… but they can also be large. And cities that are willing to let people more apartments get built will, in addition to being more affordable, give people more opportunities to realise their demands for both space and proximity.

What do you think of this data?

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  1. Well I think we’re in the process of finding out. Auckland is intensifying, both in terms of location, more are living centrally and in terms of dwelling typology. I am seeing a lot of bigger appartments in my travels. It’s happening, and quite fast, despite the restrictions on building.

    A little aside on Denmark’s property market: demand is strictly controlled, foreigners just can’t buy residential property. Otherwise the market would be skewed by German holiday home demand; Denmark is pretty much Germany’s coastline! I’m sure this has a great influence on the stability of the market too.

    Demand and supply, eh?

    1. Exactly! Remove foreign buyers from the market and Auckland house prices (along with the rest of the country) wouldn’t be anywhere near as expensive as they are. For the most part foreign investment in NZ housing isn’t at levels much higher than traditionally with one major exception – China. In the last year China has had US$1 Trillion of money spent on property outside of China. The bulk of this has ended up in places like Vancouver, Toronto, London etc however a good chunk of it has also ended up in Auckland. Even if it was only 1% that is US$10 Billion! (NZ$15B). Even if all of that wasn’t on Auckland residential housing then you might be looking at around NZ$10B. $10B buys over 13,000 $750k houses. This has been going on for years…. $10B buys 20,000 $500k houses (what houses used to cost a few years ago). THIS is why we have out of control house prices in Auckland! 5 years of 10-20,000 houses per year means between 50,000-100,000 houses in Auckland have been sold to China buyers alone (which when you talk to real estate agents, or use that information the Labour Party released – non scientific mind you but not necessarily inaccurate either, gives you an ideal of the scale of the issue). And this is only for the last 5 years and probably on the low side and which corresponds with the period of our house prices going through the roof.
      There are only around 500,000 or so houses in Auckland so for around 1/4 of them to be owned by Chinese foreign owners is a huge deal.
      Yes there are other foreign buyers (Americans, Australians etc) however as mentioned none of them (or even collectively) own anywhere near the amount that the Chinese do. The other difference is that we are allowed to buy a house in Australia, or the USA, or the UK (or most places). We are NOT allowed to buy property in China however (even if you live there). What’s good for the goose is good for the gander as the saying goes. There should be an immediate ban on Chinese foreign ownership of NZ property (extend it to most other nationalities too if you like) and they should be forced to sell within 2 years.
      You would solve the housing crisis within 2 years as the current shortage would be completely erased and the current level of building is nearly enough to cover the annual need for new housing (and likely will do as it further ramps up).

      1. Bruce, I know you’re responding to Patrick’s offhand comment about Danish policy, but please make sure that any further comments you make on this post are addressed towards the original topic. That goes for everyone else as well. If you want to discuss foreign ownership of property, I’d recommend you head to interest.co.nz or something.

        1. Sure the fingers looks like an interesting policy that does in theory look like it would work and make sense.
          Where it can come unstuck is when there is a lack of PT within the palm area of the hand as people commuting from the fingers aren’t going to use PT for that if when they reach the palm they can’t easily connect and get where they need to go so then you just end up with lots of “super-commuters”.

          As an aside fuel prices are on their way back up and it is noticeable most days that traffic levels have dropped off slightly over the past month (except for the days when the motorways are doing their usual thing whenever there is an accident). It would be more noticeable except it is being counter-acted by more people moving to Auckland with a subsequent rise in vehicle numbers.

      2. Bruce I would beg to differ on the effect on house prices that foreign buyers are having. The media like to report on averages and the effect of overseas buyers but after sitting in an auction room for 3 hours on Tuesday to see what our neighbours house sold for so we could get an ideas what ours is worth I found things very different to what gets reported. There were Chinese buyers there but once the $1.5M places in Howick and surrounding areas were all sold they left and most of the cheaper places couldn’t even get an opening bid, so the average price of those that sold was high ($1.2M). The average price gets skewed when the multi million dollar places sell but the cheaper houses do not.

        I know this is a little of topic but Bruce was the one that brought up the effect of overseas buyers first.

        1. Again, it’s not relevant to the topic of this post and I would prefer it if people didn’t derail the thread.

    2. Do you think perhaps the cheaper housing in Copenhagen might be because of their lower average density (2052/sqkm for Copenhagen Urban area cf London urban area 5632/sqkm)?
      Maybe intensification policies really have a huge impact on affordability.

        1. They haven’t put Copenhagen on their list so we don’t know what it is on that measure. But this report notes that on the OECD definitions it is around 2000/sqkm.(page 44) https://files.lsecities.net/files/2014/05/Copenhagen-GEL_20May-Final_Full-report_1page-layout.pdf
          Maybe it is no so much about density but that they allowed growth and suburbanisation to occur. The result was a decline in density from 1955 to 1985. The finger pattern means houses can be close to PT but this report suggests jobs are not so well located.

        2. Every western city declined in density 1955-85, and most if not all increased there after. The great sprawl era anomaly, now well into correction. AKL is no exception, despite the continuation of sprawl era transport policies.

        3. It’s on the list under the Danish spelling (Kobenhavn). Similarly, Munich is listed as Munchen, and Lisbon as Lisboa. Don’t ask me why these foreigners don’t adopt the correct English spelling of their city names.

        4. Those tricky foreigners! Sailor Boy was closer to the truth suggesting I use my AA discount at Specsavers. I didn’t realise if you click the graph twice it gets bigger.

      1. Average density will vary wildly depending on how much area you take into account.

        You could for instance look at Brussels. If you look at areas a few km away from the centre, then in Auckland you’ll find low-density tramway-era suburbs, while in Brussels you’d find terraced housing on much smaller lots — 200 m² would be considered huge in that area. Streets in Auckland are also large — even the smallest streets have a right of way of almost 20 metres. It is very obvious that Brussels has a higher density in central areas.

        The picture is quite different when looking at the entire urban area. Auckland has a quite well-defined boundary, with suburbs on one side and almost nothing on the other side. In Brussels it’s hard to find a boundary at all. Further out there’s a vast area with houses scattered around in the countryside, which can still be considered part of the city (in terms of having lots of people commuting to the city). Those dispersed areas further away may very well mean that Brussels has a lower average density.

        1. Also I find it interesting to note how we get that density over there. Some of the municipalities in Brussels have a density of over 10,000 per km². But there are not actually a lot of high-rise apartments in those areas, but mostly terraced houses and low-rise apartments. The buildings are almost exclusively made up of what we call over here the “missing middle”.

  2. The data regarding consumption vs production travelling distance is quite telling. Seems like the current approach is to zone higher density housing along rapid transit routes, which works for commuting to CBD, but how many of those people then drive down to the local mall/supermarket on the evenings/weekend for all their errands? Our whole suburban structure needs to adapt as density increases to allow more amenities within 5mins walking distance, which means more use of mixed-use residential zoning. This will be difficult as long as retail developments follow the centralised big-box model.

    1. Yes, in my view absolutely everywhere should be zoned mixed use as a default, there should be no such thing as pure residential zones; these are just cultural, social, and employment deserts. And then specific zones for industry etc be identified as variations. But sole dormitory suburbs are a lousy outcome.

      After all the Victorians had no zoning and it is the mixed use places that they made that have become our best and most desirable places to live now. They are accidentally dynamic; now getting apartments and more intensive use because of the historical accident of commercial mixed through the residential.

      Zoning should become so minor as to largely be irrelevant. Negative environmental externalities can be controlled separately. Zoning is a dumb tool.

      1. Regarding no-zoning and intensification there is an interesting slideshow from some architects about Houston -showing the city is not just about endless low density sprawl.


        If Houston had been given a Green Finger PT rapid transport system instead of or in addition to its motorway system (supplied and paid for by federal govt) then the city might have been quite similar to Copenhagen?

        1. Brendon really, Houston again? This is a place so profoundly different from any condition in Auckland in every possible way as to be near meaningless as any kind of model. It’s as ludicrous as saying the city should emulate the charming building typology of Positano or the gondola mode share of Venice.

          Among the features that Houston-obsessives (not that I am accusing you of being one of these) routinely ignore include the availability of energy and in particular oil and gas wealth and low price, the vast subsidies from elsewhere of the absurdly dysfunctional State Highway network in Texas (the biggest in the world! Ironically part funded by the urban economies of NY and CA). That it is the most expensive place in the US to move within, despite these subsidies. The scale, the topography, the artificial low tax (no state income tax because of oil wealth) etc etc etc… Enough already.

        2. Radial highways have been paid for by the US Federal Interstate Program long since, but I am one who argues that this was a mistake. The cities that have nailed their traffic problems the best, are those that have done the best locally-funded ring-roads and grids of arterials. This includes Houston.

          I too disagree with the Houston obsession; we need to be comparing Auckland with Indianapolis, Nashville, Raleigh, Kansas City and numerous others that are a comparable size. The nature of the local industry that supports an urban economy is not crucial – it can just as easily be the excuse for housing unaffordability, land price gouging, and bubble volatility. If Houston had Auckland’s planners, they would be saying “of course our median multiple is 9, because everyone wants to come here and our economy is so vibrant with the fossil fuels industry”.

          What we need to be asking, is how come housing affordability is achievable regardless? In many cities that now do not have it, they did have it once, including New York and Los Angeles. It is too much coincidence that the end of this always corresponds with the land supply becoming subject to rationing, even if this is unintentional rather than centrally planned.

          To link this to Peter’s questions about clustering in consumption (versus employment), the potential for the right kind of planning is strongly affected by the prevailing “site rent” conditions. Will rezoning for higher intensity, and heavy investments in radial PT systems, merely cause a hike in site rents and not “price in” anyone? Far easier for the US cities with their low, flat urban land rent curves, to end up “pricing in” potential new residents and businesses if the demand really is evolving in this direction.

        3. Just a question, Phil: Have you ever actually *been* to the US? It’s a really different place than New Zealand, in a lot of ways that are difficult to understand by looking at statistics or maps.

        4. Patrick I readily admit Houston is an extreme case, which we cannot copy -it has a different geography and no one in NZ is going to pay for a sixfold increase in motorway provision. But there is often lessons to learnt from extremes.

          Houston’s dispersal urban growth model has been well covered in Transportblog over the years and we probably don’t need to go over that old ground.

          I think Houston’s genuine intensification urbanisation model, based on extremely liberal zoning in its inner core since 1999 is new material. It was new for me. It is relevant to our discussion about agglomeration, proximity etc. I would think anywhere that has been able to replace suburbia with 3 story apartments would be of interest to Aucklanders?

          Here is a discussion about a Houstonite who doesn’t own a car!


          The article mentions the agglomeration in the form of Texas Medical Centre the world’s biggest medical centre, so Greenlight might find that fact thought provoking too.

  3. Changing density has very little effect on prices, as the market will always seek to maximize returns. Sure, building more apartments may mean they can be sold for $700k instead of $750k, but if the same space in an outer suburb or different town is $400k, it’s not really much of an advantage.

    Proximity to employment is why it’s daft to have so many jobs in one small area. It only forces up living prices. That’s why a small apartment in the Auckland CBD is more expensive than a McMansion elsewhere.

    Dispersement of employment is key to better house prices and higher quality of living. And I don’t mean spreading it around Auckland, as that just means lots of movements between suburbs. I mean nationwide dispersement. Someone going to work at the office in Napier every day faces no traffic congestion, a 10 minute commute no matter where in Napier they live, better air quality, easier access to nature, and lower prices for pretty much everything.

    1. If you think it’s such a great idea, why don’t you get the migration to Napier (or wherever) started? Otherwise you’re really just blowing hot air.

    2. Having traveled to Napier for work on several occasions, as nice as it is, I find that Wellington and to a lesser degree Auckland are more what I’m looking for, both in terms of work and social activities.

      Everyone should be able to decide to live as they wish, which will require a range of changes to how the unintended impacts of the planning rules actually effect outcomes are calculated and mitigated, whether these be transport planning or urban planning.

    3. But agglomeration benefits are so essential to office type work Geoff, how can New Zealand ever compete if we choke off the natural growth of employment in Auckland due to an ideological preference for small towns? Employment in downtown Auckland is not of the public sector, by and large, and has accumulated in that geographical space organically – not by irrational decree but through the collective choices made by employers.Imagine if ASB bank decided to move HQ to Napier from Wynyard Quarter, Napier has no existing headquarters for any major national bank, nor a school of finance or a ready made workforce of the other professionals required by a bank – it would have an immediate recruitment disadvantage. With a headquarters now in the provinces, it is likely ASB bank would be forgotten about by corporate customers who could more easily do business with a bank located more closely to their own HQ then one so far away. In Napier ASB would be out of the ideas loop and would likely fall behind the other banks, who have the advantage of being close to their customers and their competitors.

      Its not just fiance that benefits from agglomeration either. My field is healthcare, where it has been proven that higher volume centres have better outcomes than low volume centres – this is driven by the increased specialisation that is permitted in a large tertiary hospital. You are more likely to survive a heart attack at a hospital that sees a lot of them then a regional hospital that sees fewer. If you have cancer, you are better off at a large oncology centre where there are many oncologists who can each develop an expertise in a narrow range of cancers, than one where the oncologists must be general as there is no close by expert to turn to. The division of labour still drives productivity across our whole economy, we’d be foolish to turn our backs on our urban centres which encourage it.

      1. But agglomeration benefits are not exclusive to “central location”. In fact the increase in agglomeration benefits as economies develop, is all to do with eliminating the need for all sectors to compete for a limited amount of centrally located space. Transport and communications are inputs into agglomeration benefits as well as proximity, and in fact these things have substituted for proximity, to net advantage.

        Furthermore, as there are multiple types of “complimentarity” in clustering of activities, and varying requirements for space (warehouses, malls and hospitals need more space than law firms) and varying abilities to generate income to pay for that space, it is essential to harness the market’s abilities to let complex needs play out via freedom of the actors.

        One beneficial result is clusters of different types at different locations, that suit each one – it is common knowledge among urban economists in the UK, for example, that their planning system makes it impossible for anything like Silicon Valley to evolve in the UK. How smart is this? I am glad Peter Nunns is starting to read Cheshire, because he is one source of vital insights like this.

        1. I’ve been reading (and discussing) Paul Cheshire’s work for years. For example, his work with Christian Hilber on office prices in the UK is an invaluable analysis of the harm done by building height restrictions, while the paper he wrote with Stephen Sheppard on Reading’s greenbelt remains the best example of a robust welfare analysis of planning regulations. I would recommend these papers to all interested readers.

          Empirically, I would agree that there are multiple types of agglomeration economies, including variations between industries. That’s pretty clear if you look at industry-level agglomeration elasticities – productivity in finance and professional services benefits much more from weighted job density than productivity in manufacturing. And the mechanisms are likely to be different – no surprise, given that manufacturing products are delivered in trucks and office products are delivered thru wires or in meetings.

          However, the point of this post is that agglomeration economies in *consumption* are likely to follow a different geography than agglomeration in production. For one thing, the distances over which they operate appear to be shorter. That has implications for policy that we could easily miss by focusing solely on work.

          Finally, we have this wonderful technology that allows us to transform expensive land into comparatively affordable floorspace. It’s called an elevator.

        2. These are important questions of analysis, Peter, and I am glad you are looking at them. But you seem to take something different out of Cheshire’s work than what I do. The cost of office space in UK cities is hundreds of times too high not because of “height limits”, but because of the green belt / land rationing approach that makes all urban land more expensive by this factor, and crucially, distorts the way the market derives land prices in such a way that “site values are elastic to allowed density”.

          The assumption that allowing more building “up” will reduce floor rents, actually depends on the urban land price curve being low, flat and differentially derived. This is the case in Houston now and was the case in New York for decades (but is no longer). New York had a massive advantage relative to London in that building “up” did indeed continually “price in” considerable new participants to the local specific agglomeration, global finance; while London was a rentier’s paradise and highly exclusionary long since. It is confusing the issue to blame “height limits”, when in fact the correlation between floor rents and building “up” in cities where the overall land supply is rationed, runs in the direction that the more building “up” there is, the HIGHER the floor rents are. Is Hong Kong the most price-competitive global city? It is certainly the most built “up”.

          London could easily have sacrificed its sight-lines and its character to a whole lot of building “up”, but as long as the Green Belt and land rationing policy remained, it is an illusion that this would have made floor space and housing more affordable. But as Cheshire and colleagues – and our own Arthur Grimes – have posited, merely rezoning to allow higher density development does not necessarily translate into actual supply when the site values are elastic to allowed density (due to overall land rationing). The site value inflation itself is a signal to owners to “hold”, not develop. London and UK cities have had massive swathes of upzoning in one Planning cycle after another, that has never translated into “supply” as guesstimated by the Planners. If the solution is merely “far more drastic upzoning” than has even been done before, well, it is taking far too many decades to work this out while real human beings are paying $300 per week for a crawl space.

        3. Section 2 in the first Cheshire paper I linked to describes how building height limits can impose costs regardless of the level of land prices. And New York is, incidentally, a perfect example of how building height limits can impose significant costs even in the absence of any restrictions on greenfield land. (In fact, it would be administratively impossible to apply an urban boundary to New York, given that it spreads over three states and many more local government areas. Given this, it’s interesting that you argue that its land market has become inefficient.)

          In a world in which demand for locating in any given place is, ultimately, finite, it is simply illogical to say that constructing more floorspace (vertically or whatever) results in higher prices than would have arisen in a counterfactual scenario in which less was built. In other words, it’s better than the alternative.

        4. I have actually had a bit of correspondence with Paul Cheshire on these points and he even kindly met with me for a couple of hours when he was in Wellington a couple of years ago. To address your points in separate comments:

          New York “urban area” managed to have a relatively flat urban land rent curve for decades precisely because it was sprawling freely for dozens of miles in several directions. However, its fringes have now run up against municipalities with their own zoning rights, that are “rural” – the effect is the same as a Green belt and the residents are the same types as the residents in UK Green belts. This had inadvertently rendered the NY urban area land market inefficient. This means that the era is over, where building “up” did result in more space at stable floor rents. All the incentives are now wrong, just as they are in Auckland, and just as they have been in UK cities for decades.

          I would agree that the growth that has occurred miles inside the NY urban area fringe in the meantime, was wastefully low density (the reasons for this, is education policy and school zoning, and large-lot mandates being the default exclusionary mechanism). But it is too late to change this now; upzoning (if it were politically feasible) would merely result in housing on smaller and smaller sections without the unaffordable prices of average “housing” falling – as we are witnessing in Auckland.

        5. Part of the cost of building “up” is of course the cost of building the structure stronger and stronger to support its own weight.

          I would argue from the evidence, that there has never yet been sufficient rezoning to higher density to prove that affordability can be attained thereby, the evidence is most plentiful for UK cities; and they have tried pretty hard, adding bigger and bigger margins of “excess potential supply” to try and “make sure this time”. So what might happen if all height limits everywhere in the city were simply abolished? I would argue from the evidence in the era prior to ubiquitous automobility and the earliest skyscraper building booms in the absence of height limits, that there will always be sufficient chokes on supply of floor space, that it is impossible to replicate the availability of superabundant land supplies beyond the urban fringe. There is almost no limit on how many suburban houses you can be building simultaneously; but adding floor space by going “up”, will always have constraints on the rate of supply, such as the availability of cranes, concrete placing equipment, other machinery, and son on; plus the reality that each level of floor space can only be added after the ones below have been completed.

          I do not believe there has ever been a price-stabilising supply of floor space through building “up”. If large supply volumes have ever occurred by building “up”, it has been by way of a boom that was followed by a bust. New York floor rents did not resume their 1929 nominal values until 1959. In fact the speculative building frenzies of the pre-automobility, pre-low-land-rent era, have scarcely ever been equaled since. There was no lack of building “up” in Spain’s boom of the 2000’s, and affordability was ultimately achieved by way of a bust with consequences that will linger for a long time. Melbourne now has an obvious speculative frenzy in apartment building accompanied by bubble prices – would the granting of greater freedom than exists, to build “up”, have resulted in those apartments hitting the market at prices that would have stabilised the market?

        6. “Part of the cost of building “up” is of course the cost of building the structure stronger and stronger to support its own weight.”

          Yes, marginal cost curves slope upwards. So what? Land prices rise 6-7% for every 10% increase in urban population. Does that mean that we should limit city size to keep land prices down? Absolutely not.

          “There is almost no limit on how many suburban houses you can be building simultaneously; but adding floor space by going “up”, will always have constraints on the rate of supply, such as the availability of cranes, concrete placing equipment, other machinery, and son on”

          So let me get your assumptions straight:
          * Construction machinery is scarce when used to build apartments, but infinitely abundant when building subdivisions
          * Infrastructure planning, funding, and delivery is not a constraint on building houses in paddocks
          * There is an arbitrarily large supply of flat, easily developable, non-flood-prone land in convenient locations.

          Yeah nah.

        7. Lastly; regarding that “finite demand for a location”. Cities simply grow fastest when their land prices are set by differentials relative to the cheapest land available to the local economy. Under these conditions, a city can “price in” as many comers as is possible, both by building “out” and by building “up”. This is what is happening in Houston now, and it is how New York urban area ended up so much more populous than London or Hong Kong in the modern era.

          Cheshire and colleagues believe that the reason for higher prices of housing “units” when the average size is smaller, is because of the bidding war for “more space” at every income level. The counter-example is Boston, which suffers from a de facto Green belt in the form of rural municipalities with their own zoning rights. Within that de facto Green belt, the mandates for large lots are among the most pervasive of any US city, so it is 1/3 of Auckland’s density. Yet its median multiples are around 6 (Atlanta, just as low density, is <3 because it does not have land supply problems). So why have the low density mandates not made Boston one of the MOST expensive cities? I hold that this is because the "bidding war for more space" effect is more severe than the "migrants wanting in" effect. The fact that there is demand for location in Boston, makes the median multiple as high as 6; but there is no “bidding war for more space” effect, because once you are in Boston, you are probably consuming more of it than you want. This also helps Portland not suffer a median multiple blowout like Auckland, because it has so much very low density suburbs still, unlike Auckland.

          In the case of cities for which there is location demand, and which have a land supply problem, and which allow denser building, the denser building allows more people “in” BUT sets up the “bidding war for more space” effect. Another outlier example of a different nature is Liverpool – hardly a “growth” city, yet its median multiple is now 7.6. At a population density of 4500 per square km, obviously there is still not enough availability of housing with “more space”, to avert this effect. Your point about the need for larger apartments is a very good one; but consider that in Houston, in the central area where there is now more Fortune 500 Company head offices than any other city except New York, apartments of all sizes are drop-dead competitive in price. Ironically, the call for “smaller apartments” in cities with a price problem, will only worsen the problem as I describe. But in a city like Houston without a price problem, there will be apartments cheap enough for anyone who “wants in” to the central agglomeration, and they will not need to be small.

        8. Peter: “Land prices rise 6-7% for every 10% increase in urban population.”

          But incomes rise too, with the agglomeration benefits (which far more clearly relate to outright size than they do to density). That is why the median multiple of 3 is so pervasive, regardless of the size a city has grown to – until something goes wrong with its land supply. The UK has piddly little cities with median multiples of 8+. The causative factor is the land supply.

          So let me get your assumptions straight:
          “Construction machinery is scarce when used to build apartments, but infinitely abundant when building subdivisions”

          No, you do not NEED the construction machinery you do for tall buildings, in subdivisions of houses.

          “Infrastructure planning, funding, and delivery is not a constraint on building houses in paddocks”

          This was, for decades in most first world cities including Auckland, not a cause of land price inflation. There is still dozens of cities where it is not a cause. In fact I should have included in my argument, the extreme difficulty and costliness of doing the infrastructure for multiplication of the population in areas already covered in buildings that are just “not tall enough” yet.

          “There is an arbitrarily large supply of flat, easily developable, non-flood-prone land in convenient locations”.

          There is “enough” developable land to keep almost all cities in existence, affordable provided it is allowed to be developed. The amount of land actually taken for growth in a given time frame in a city that is growing in a typical, strong but stable manner (as we were from the 1950’s to the 1980’s) is laughably small relative to what is actually out there. The abundant (versus rationed) availability of it does not mean that the rate of development expands to fill the “vacuum”; in fact there is authoritative literature that states that the conditions of automobile based development rendered supply less speculative, better matched to demand, and more stable, than the preceding era’s booms and busts.

        9. One rstriction to building up might be that the properties are already in use and might be the wrong size and shape to effectively add that extra floor compared to building the first floor on greenfield land.

          This might mean it takes longer to amass enough sites to undertake effective up building.

          Alan W Evans describes in his book Economics,Real Estate & the Supply of Land that trying to amass the required landholdings faster leads to a massive increase in price. As the seller’s have a localised monopolistic pricing power.

        10. “If large supply volumes have ever occurred by building “up”, it has been by way of a boom that was followed by a bust.” That happened in London in the late 1960’s I had a lecturer who worked on a new office building that was finished and then knocked down before it was occupied to build an even bigger one on the same site. By the time they had finished it the land was worth so much more.

        11. Mfwic there is an examples of property cost escalating at a hugely variable rate in London in the 1950s in my article here

          “Land prices that the developer paid varied wildly -for instance in two adjoining cottages that were valued around £1000, the developer paid £1800 and £45,000 respectively.”

          I think there are two lessons to be learnt from the difficulty to build up.

          Firstly, up zoning needs to made as easy as possible because at any one time only a small proportion of existing urban use will intensify -thus my discussion about voluntary land reallocation in the above article, which I hope would make intensification easier to occur anywhere in the city where the right supply (agreeable neighbours) and demand (agglomeration/amenity) factors meet. Removing upzoning planning restrictions should be done as widely as possible. For instance if any property owner can plant a tree that can grow much taller than 3 stories, height restriction should not be less than 3 stories in any of our cities. Also if neighbours are reciprocally agreeable to removing setback and shade plane restrictions then this should be automatically allowed at minimal to no cost.

          Secondly, don’t put all our eggs in the one basket. Cities should be allowed to build out and up. Use a sensible strategic plan like Copenhagen’s green finger plan. Plan the public transport and the walking/biking amenities from day one….

        12. Phil I don’t think Greenlight was necessarily promoting Auckland’s CBD. He was just pointing out the agglomeration diseconomies of moving the central office of a large firm like ASB from Auckland to Napier.

          It is conceivable that a sub-centre could rival a city’s CBD for some amenity activities -for instance London’s Dockland area.

          Greenlight might not work in Auckland’s CBD. Most of Auckland’s hospitals are not in the CBD -but his point about specialisation and agglomeration in big cities is still valid.

        13. Interestingly we used to have a situation where corporate headed offices were ‘forced’ to set up in a little town. They mostly used to be in a little fishing village called Wellington, ‘forced’ there through the need to be near the centre of political influence, the court, if you will. More recently through various changes that it are interesting to speculate about, including but certainly not limited to, earthquake fear, they have been able to feel freer of this necessity and have almost all moved to the biggest centre of urban agglomeration in the country. Some perhaps going even further and leaping the Tasman to exploit this advantage further. These are decisions that are not taken lightly; you can be sure no firm chooses to pay higher rent for the hell of it. We can conclude there are very real tangible advantages in such locational decisions. Agglomeration effects are really not very complicated, and cannot be twisted to support dispersal. That is simply contradictory.

        14. He is right about agglomerations but his comment seemed to me to be making the mistake of advocating “central location” rather than “multiple clusters” of specific types, which is where the benefits of agglomeration have actually mostly come from. It is common sense for regional hospitals and universities with their large campuses, to be where land is cheap, and where congestion is not being generated by multiple non-complementary local sectors all falling over each other. Furthermore, it is common sense for these to be where there is plenty of spare land for complementary activities to move in – Silicon Valley evolved near a large exurban university campus.

        15. Patrick, economies are not built on the kind of sectors that cluster as you are describing them. They are mostly the lucky recipients of weightless income, transfers; and as Peter is pointing out, consumption matters for them too.

          It is nice for the lucky economy like the UK’s where a lot of the wealth transfers are from offshore; the global finance sector does for the UK what manufacturing does for Germany. But you can’t plan this luck into existence. If you think wealth transfers within your own national economy are a net benefit, this is like standing in a bucket pulling on the handle and expecting to lift yourself up.

          What really matters for the national economy, is allowing for sectors that actually create new wealth by utilising actual resources – I recommend “The Flow of Money: How Local Economies Grow and Expand” by William Fruth.


          There are other sectors nearly as weightless as global finance and bureaucracy and it is nice if you can have them – music downloads, for example. But urban planning can’t plan this kind of activity into existence, there are so many other factors that matter more. Even Silicon Valley evolved, at the time, on low cost exurban land. Sir Paul Callaghan’s favourite exemplar high-tech manufacturing exporters are overwhelmingly suburban and not even in Auckland. And I always agreed with his thesis that this is where the national economic future lies.

      2. I just want to point out that Kiwibank, New Zealand’s only home-grown bank, and NZ’s fastest growing bank, actually has its call centre in Hastings (close to Napier). It seems to be doing very well away from the bigger centres.

  4. I think the green fingers concept is great strategic concept. I wish we were doing that in Canterbury so there is some structure to our extreme dispersal across the Canterbury Plains.

    It wouldn’t be hard to create a Cantabrian hybrid rapid transit/Green hand. With the existing rail network being a thumb going to Lyttelton and a pair of fingers going out towards Rolleston and Kaiapoi/Rangiora. Add an arc of light rail going between Airport, University, Riccarton, hospital/Museum/Art Galley and then out to New Brighton. Construct some bus lanes to the Northern and South motorway connecting to a couple more fingers. Then put parks and protected environments between all the fingers……

    Bang NZ gets another high amenity mid sized international city……

    NZ has basically already done that in Greater Wellington and hopefully Auckland is going to get a bigger version of a rapid transit network.

    Peter (or anyone else) I would think this Green finger model would work well with the recent variable road pricing proposal too. The discussion of variable road pricing and these urban form debates has focused on Auckland -how do you think they apply to our other cities -such as Christchurch or Wellington?

    1. That seems like an eminently reasonable idea. It’s probably not *that* different to what’s happening at the moment, as growth seems to be mushrooming up around satellite towns along the state highways. But in my view a decent rapid transit network is essential to making it workable in the long term. That doesn’t necessarily mean steel rails, at least not right away, but it should at least include busways / bus lanes.

      The other aspect, which is much less discussed in the NZ context but which also seems important to the outcomes observed in Denmark or Netherlands, is good structure planning to ensure that the resulting neighbourhoods are reasonably walkable/bikeable and accessible to the RTN. We’re a bit to addicted to the US model of roads socialism plus lassez-faire subdivision development, as evidenced by Phil Twyford’s knee-jerk reaction against road pricing this morning.

      1. You are right about not being *that* different. It is kind of directing an already natural process of ‘revealed preferences’. But as you pointed out it would allow those dispersed communities to orientate around amenities -configuring streets/paths etc so walkability and cycling is possible to local shops/parks/rivers/coastline… and of course the rapid transit hub.

      2. My reading of Phil Twyford’s announcement is he isn’t fundamentally opposed to variable road pricing. Phil didn’t outright state Labour would not implement such a scheme. He seemed more concerned about equity effects than the government is i.e. the issue of low paid workers who have to travel at peak times when variable charges would be at there highest being worse off. So he would want more rapid transit public transport for poorly served areas to address this issue.

        Phil Twyford’s major complaint seem to be that Auckland could have been receiving a regional fuel tax for the last 8 years and addressing these transport inefficiencies and inequities issues. Instead the government has made a dog’s breakfast of Auckland transport and housing issues. Proposing to implement a variable road pricing scheme in 10 years time is more evidence of a lack of joined up thinking and not taking housing and transport issues seriously. It is just more tinkering…..

      3. Peter, I am pleased with the points you are highlighting now. The point about the difference between green fingers (actually in your examples, it is green spaces between fingers) and green belts or boundaries, is the effect on urban land values when there is a boundary or any land supply quota effect.

        The whole point of “green fingers” in their correct sense, is that these are designated as off-limits to development, so as to preserve green space relatively accessible to all, as an urban economy grows without land supply quotas, in between the green fingers. Possibly an even better approach is simply “green spaces” designated off limits to development, systematically spaced to achieve even better access to all. Parks, in other words. It is the allowance of development “everywhere else” (other than the green spaces, heritage locations, infrastructure corridor rights of way, etc) that is necessary to avoid urban land rent gouging and speculative frenzies. As Bertaud and Angel point out about the Manhattan Plan of 1811, it made these kinds of designations literally a century out from the growth actually occurring. We lack this kind of far-sighted approach, so that now Auckland Council is paying heinous sums of money for space for “parks” decades after the areas have been developed.

        The problem with the radial fingers approach to land supply quotas, is that the amount is nowhere near enough to avert the land rent gouging and speculative frenzy that is averted by having the superabundant surrounding countryside all open to development “except for” designated parts.

      4. Looking now at the actual document you link to, Peter; they do not use the term “green fingers”.

        In fact, they say: “Green wedges of undeveloped land will remain between fingers”, and “Under the guidance of a regional planning body, urban areas are confined to linear corridors that are linked by transit and extend like fingers from the central core. Green wedges protected from urban development fills in the space between the urban corridors.”

        You should not use the term “green fingers” in this case, because it means something else. Aberdeen’s Plan includes “green fingers” as I was describing them. But even then, the policy is not synonymous with competitive supply of land for the urban economy, which requires “development allowed everywhere BUT…” (in contrast to “development ONLY allowed at XYZ locations”…)

  5. Interesting. If you look at an aerial of the greater area of Copenhagen it is hard to see a hand shape. Maybe they were drunk. Hermann Rorschach would probably say it’s evidence of schizophrenia.

    1. Pretty sure that specsavers do free eye exams for AA members mfwic. If you can’t see the hand shape, you probably shouldn’t be driving.

      1. Maybe they do have the answer. We could grow a finger out thru Kumeu to Helensville, one via Dairy Flat to Warkworth, another via Karaka to Kingseat, and from Whitford to Clevedon.

      2. Sorry Sailorboy I forgot to return your insult. If you can see a hand shape just because someone did a sketch of one over the top of blobs then perhaps you really are gullible enough to believe in inkblot tests.

        1. Alternatively, you can really, really *not* see a hand if you really, really don’t want to.

          That AA test comment was perfect.

        2. I think that it is fairly obvious that ‘hand shape’ doesn’t mean the literal shape of a hand, but rather thin digits extending radially from a central body, which is very, very much visible.

        3. Yes if you ignore all the bits that dont look like a hand then it looks exactly like a hand. The same does for a squid or that Alien in the movie.

        4. Both of which would be apt measures to describe the pattern of development clearly visible from aerial imagery. Glad we could clear that up.

  6. Copenhagen allows development along fingers at the edge of the urban area, feeding urban development and is preserving its green-space. It is a very good city to use as an example of what can be achieved with competent planning.

    Auckland prevents development along its fingers and instead subsidises sprawl in exurban centres – this incentivises exurban development, consuming very large areas of green-space and leaves Auckland with slow urban growth.

    The inherent inability of exurban developments to offer public transport options as efficient as suburban developments leads to greater pollution. Whilst the restriction of urban land creates price distortion to the detriment of urban development. It is so sad to see Auckland pursuing the failed strategies of sprawl, with all its negative outcomes.

    1. Which fingers should we be developing to emulated Copenhagen. We are doing the Northern motorway SH16, and NIMT to the south already, what else could we do??

      1. We could do it better. When you smear your hand with paint and lay it on a piece of paper, you get those little gaps in the print where your knuckle joints are.

        In the hand print of Copenhagen those gaps (which are green-space) are typically 100 – 500 m across, this close proximity allows cohesive and useful density effects to occur. People are able to walk from one “finger bone” to another, cycling commutes are facilitated and public transport becomes viable.

        In Auckland the SH16 finger of Kumeu is more than 3 km separated. The NIMT finger likewise places 3 km of space between future Drury and Paerata. Then we have the SH1 finger north of the city, there is to be a gap of 5 km to Dairy Flat/Silverdale and then another 25 km to Warkworth. The Auckland sized gaps seem designed to prevent people from walking, make cycling difficult and cause public transport a real challenge. The Auckland sized gaps are ideally suited to motorised private transport.

      2. Oh and the amputated stump that is the Swanson, horse paddocks and all that. But not allowed to talk about that on this site.

        1. Angus, you’re talking about areas that may be developed in the future, but likely to be very far away. You’re right that the Rural Urban Boundary from the PAUP leaves gaps, but that’s because they try to focus the development around existing town centres, transport networks etc, and no doubt there are also topography and servicing considerations. Even so, they’re trying to allow for 30 years of greenfields growth in those areas, up to 160,000 homes.
          Swanson is at the edge of the current urban limits, and those are not being extended based on the PAUP. So it will remain at the edge of the urban limit. Past there, there’s some extremely challenging terrain along the railway line to get to Waitakere. Everything south of the railway line, and Waitakere village itself, is within the Waitakere Ranges Heritage Area (not to mention outside the urban limits) and is unlikely to see further development to any great extent.
          If you have an issue with this, take it up with the council – they’re the ones who have put the urban limits where they are, and said that they want to extend the limits in other places rather than around Swanson/ Waitakere. But as it stands, those areas will not grow (past Swanson); other parts of Auckland will grow hugely; and that’s where the money on transport infrastructure should go.

        2. Trying to focus development around transport nodes is exactly why the Auckland Council will fail. Auckland has always been about its coast. People would prefer to live in Whitford, Karaka or Stillwater rather than Paerata, Ranui or Avondale. Yes it costs more for the infrastructure but rational people base decisions on costs and benefits not just costs.

        3. Not so fast. The evidence certainly supports coastal [actually east coastal] location as one of the two major determinants of residential land value. What’s the other one? Proximity to the centre. So it ain’t just sea views and begin weather that people want, they also very clearly value being near the big bad city. Sorry dispersalists:

          And I should add that real Rapid Transit is a fair substitute for actual proximity. For example the CRL will effectively move all stations on the Western Line closer to the City Centre, this is why intensification on RTN station nodes is the right policy and will clearly succeed so long as the planning regulations support that newly intensive built form, and that real RTN levels of service are maintained and improved to these locations, all day, off peak, and weekends.

          Residential land value per m^2 2014

        4. John, If we were progressing something similar to the Copenhagen approach, where we added land progressively outwards from the city, we’d be expanding with a typical city growth 75:25 or 70:30 development mode like Copenhagen and add a mere 120,000 houses. Unfortunately we have forbidden to add new land to Auckland and are putting in infrastructure for those 160,000 houses, mostly single dwelling car centric exurbia. All of this planned sprawl will occur, because as we’ve restrict suburban growth the apartment growth in Auckland has become very slow – Auckland as a region is planned to be progressively more sprawl orientated.

          The fact that this Auckland mega sprawl plan exists at a time when the whole world is becoming less sprawl orientated is galling. So yes, I do have a problem with the council.

          As to the providers of transportation infrastructure, they’re going to get real good at building roads and car-parks (maybe with electrical charge points).

  7. Businesses compete each other to open a shop that is closest to their customers yet profitable.
    So consumers have choices, and they will go to the closest amenity.

    In order for business to compete, high volume essential business, such as supermarket, fish and chips, etc…, have to open close to people to competitive.

    Where as low volume occasional consumption, such as Museum, luxury shops, concerts, specialized hobby, fine foods etc…, business would open as central as possible to get a wide catchment as possible, and also add value though agglomeration (either specialization or scale)

    Higher density city would in average allow specialized business to be bigger and more specialized, yet provide more choice and competition for commodity business nearby.

  8. Peter, on apartment size vs stand alone house size, there are apple with apple comparison issues that are never taken into account.

    Apartment floor size in all countries I am aware of, is generally quoted as living space only (excluding any basement car parks, if any, that are included in the price), whereas standalone houses in NZ where the garage is attached (as they mostly are) always include the garage as part of the quoted total floor area. This including the garage is a developers/real estate trick to increase the floor area so on a $m2 rate, the house seems cheaper. North American and UK apartment/houses, whether the garage is attached or not, only quote the living space m2.

    Further, many better apartment complexes also offer storage lockers in the basement, the floor area is not taken into account, and the greater % of off site storage complexes are rented by apartment owners due the the lack of space provided at their apartment complex. The cost of this rental is not factored into the apartment cost.

    Also depending on the bias, or ignorance, or just the inability of getting like for like data, of those gathering the stats, total area might only be living area, or could include garage, patio/decks, conservatory, and even whether the measurements are taken from the interior wall or exterior wall sides.

    In summary, while the overall size of apartments is smaller than stand alone house (no surprises there), the size of many apartments is not as small as the stats led us to believe, and stand alone houses are not as big.

    1. Apartment sizes can also included shared areas, such as hallways and lifts (in some countries anyway, I don’t know about NZ)

    2. Good points Dale. And James – no, NZ apartment sizes don’t include the common areas, if you’re looking at the size for an individual apartment on a sales website, for example. But if you look at building consent information for an entire apartment building, then the figures will include common areas.

  9. This whole article is extremely interesting and informative, sorry I have only been throwing in replies to existing comments until now. Good stuff, drawing our attention to all this, Peter Nunns.

    I did not know of De Groot et al and their finding that people’s willingness to travel considerably further to work than to consume, “results in a higher urban land premium for accessible inner-city areas, as vibrant downtown areas have the most varied and interesting consumption opportunities”. I recall reading something else highly confirming of this, that “reverse commuting” is actually a phenomenon growing just as fast as inner city living itself. That is, many of those who are choosing to live in the inner city, are commuting out to a suburban job.

    This also has implications for the consequences of “pricing out” more people from the inner city, usually inadvertently, through unintended consequences of overall planning policy packages. That is, suburban shopping centres increasingly try to offer compensating opportunities to their clientele, as there will obviously be demand there for those opportunities. I also suggest that travel time (and hassle) matters more than distance; many “inner suburb” residents will head outwards to remoter shopping malls, rather than in to the city.

    1. Phil; I do marvel at these unsupported sweeping statements: ‘many “inner suburb” residents will head outwards to remoter shopping malls, rather than in to the city.’

      What on earth do you base that on? Your wide experience in Naenae? Well the “inner suburb” residents in my house go no further than a few hundred metres for all our shopping, except that which is delivered. We live in the 21st century as well as a city; you seem to have no grasp on lives that are different from your own curiously exaggerated version of auto-dependent suburbia, like a cartoon or sitcom from the 1960s.

      If many of Ponsonby and Grey Lynn are driving away, where? I don’t know; Westgate, Albany, Pakuranga? to shop, how on earth do you suppose Farro and Nosh stay in business?, and why would Countdown have just opened their third Grey Lynn store, not to mention Fruit World, Bhana bros, etc. Then of course there are the extremely busy inner city supermarkets, with, shock horror, NO CAR PARKING AT ALL, how can people live like that?

      All of your long winded rants just seem to be one long generalisation from your particular very quiet suburban lifestyle. Which of course is entirely valid, and something you’re welcome to, but that simply does not explain how cities function nor describe any kind of ideal for many people.

      1. Calm down guys -you both have made some good points. There is nothing to be gained from tearing into each other…..

      1. It’s a shit mall for starters and the road layout is an absolute nightmare – one way in and out (unless you head north) and it has a narrow shared space section meaning that there is no actual proper road access for cars (it is always jammed and it is not exactly in an area with a lot of walk up foot traffic).

        1. It might be a brilliant mall, if that isn’t an oxymoron, it might not be the usual array of all the same chain stores with the same stuff, but still why would we drive there from ‘inner suburbs’?, that idea can only seem likely to someone who starts with the assumptions that city centres and inner suburbs are so horrible that time and money must be spent sitting on a motorway to avoid them… This is just the circular expression of locational and transport mode prejudice.

          Inner suburbs people are, by definition, already in inner suburbs and close to the city centre, it is a shorter journey by every mode, for greater choice. Elsewhere above Hayward claims people should only make local journeys, well, except people in the centre it seems, who must flee the horror of more choice, greater vitality, why? So they can drive and park, this also being one of his assumptions; the innate superiority of driving. Well this isn’t how cities work. Driving to the fringes is an option, and we might take it now and then, but it isn’t the rational, nor the observed majority behaviour.

        2. I’m not arguing that someone would go there from the inner suburbs, I’m just pointing out that it is a shit mall (and that is compared to how shitty most NZ malls are too) with mostly shit shops, poor layout etc. Eventually when it is complete it might be a different story but for now most either go to the old Westgate mall or over to Albany.

        3. I’m sure it will develop, but it doesn’t seem to be being designed for this century, compared to say Sylvia Park, which is both actually connected to the RTN and now attracting offers beyond the chain stores.

          Bruce I’m responding to the absurd claims by Phil Hayward further up.

    1. From that article:

      “The doubling is driven by market demand for smaller product”

      No doubt “demand” for “smaller meals” would be the result of basic food ingredients being hiked in price like urban land in Auckland.

  10. “…data suggests that 50% of Aucklanders commute less than 9km, while less than 2% are super-commuters travelling longer than 50km…”

    The crucial factor for the proportion of short-distance commutes in a city, is its dispersion of employment. An additional important factor for the TREND in super-commutes and average commute distances, is how steep the urban land rent curve is. An important additional factor for commute TIMES, is the level of congestion on the entire road network.

    It also matters what proportion of households are incumbents whose location choices are greater because they would be buying and selling their property at the same current market price level. In a city with recent severe inflation in the entire land price curve, a higher proportion of newly formed young households will be forced into inefficient locations. This effect can be artificially minimised by the rate of formation of such households being stifled by the high costs, period. As I said in response to Peter’s 2014 study on “housing plus transport” costs in Auckland (with Geoff Cooper and others):

    “…anyone who has experienced hunting for their first home at an unlucky time and being shut out of an inflating market by prices rising faster than they could save a deposit, would tell you that as the years went on, they were progressively “priced out” worst of all, from the more efficient locations. It is infuriating to these people to have ivory-tower academics and bureaucrats tell them from on high, like a medieval papal theocrat, that “we are increasing your housing choices” and “saving you money”.


    1. If you dispersed my employment from the city centre to say, Botany or Manukau or Albany, you would double my commute length and double my commute time. I would be doing literally twice as much travelling. How exactly does that lead to a short distance commute.

      Or are you expecting me, my partner, our whole staff and everybody families to move out to Botany or wherever to follow the office? Does everyones partners and families have to work in Botany too, do their children only get to go to school and university in Botany?

      What you are suggesting is our business be effectively restricted to only employing people who are willing and able to locate themselves and their housholds in Botany, or wherever it is you’ve decided we should disperse our workplace to. You are also effectively suggesting that anytime someone changes jobs they should move house to a new part of town, and have their family leave their jobs too. Either that, or you are saying people should be restricted to only working next to where they live. How does that work?

      Am I to say that the piano tuner who lives next door is only every allowed to tune pianos in New Lynn? The guy would go broke pretty quick if he couldn’t access a regionwide market of clients, likewise my business would go broke too if we couldn’t recruit staff from across the city rather than just one suburb.

  11. Brendon Harre makes some good additional points on top of mine, about why building “up” in an overall-land-rationed city never restores affordability lost when the land rationing was introduced. The thread is getting too long up there.

    I want to make it clear, as I have tried to before, that I am not saying “sprawl is the only solution” – I am just arguing that we need to understand that freely-allowed sprawl WAS what our past era of housing affordability AND our assumptions about the effects of rezoning to higher intensity, was conditional on. Once we get a consensus on that, we can start intelligently considering alternative approaches that do not have the toxic unintended consequences of the current policy mix. Many of the exemplar cities that we wish to replicate, but are doing it the wrong way, happen to have policies in their mix that are not even on the table here for discussion. Europeans, for example, are not culturally hung-up about compulsory acquisitions and site assembly and re-plotting; and more government-agency direct operation in the property market.

    The Japanese kill two birds with one stone by integrating fixed-route PT operation and the ownership of sites proximate to stops, and developing the entire “transit oriented” sub-section of the local economy as an “attractor”, including rents aimed at maximising “customer” (renters-and-riders) numbers. Our Anglo property rights system does the opposite: maximises capital gains in sites and prices out renters-and-riders.

      1. Phil,

        Auckland’s land rationing system is an interesting beast. Like you point out above, it is a restriction on urban development. The idea is that we are to get NY without the Tri-state area, with a mystery step in the middle to make it somehow work. Anyway we can compare Auckland to regional urban centres, like Brisbane, and see how it fares as a result of the policies (hint: not well).

        But the funny thing is the other side of the equation, the land rationing of Auckland creates more sprawl than used to be normal. One of the reasons rates are going up so much, we are having to pay for more sprawl which is very expensive in terms of infrastructure. Prior to this council we were sprawling in the sort of 70-30 mode typical of normal cities. Suddenly though now we have to pay for 60-40, and with the very slow apartment construction that 60 is looking increasingly doubtful.

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