Part one of a two-part post. Part two coming soon!
The Auckland Housing Accord was signed between the Auckland Council and government in October 2013, and ran for three years to the end of September 2016. It allowed for “Special Housing Areas” (SHAs) to be created, with new rules from the notified Unitary Plan, and streamlined consenting processes.
The aim of the Accord was laid out clearly in the opening lines:
“The Auckland Housing Accord between the Council and the Government is intended to result in increased housing supply and improved housing affordability in Auckland in the interim period until the Auckland Unitary Plan becomes operative”.
There were two clear goals here: increased housing supply and improved housing affordability. Goals worth having. But was the Accord a success (SHAccess?) in practise? It’s not a simple yes/ no question. We need to ask how much the Accord could realistically expect to achieve on its own, and whether the council and government also did everything they could to help in other ways.*
Setting targets
To determine if a policy is successful or not, you need to look at what its aims are, and how success is measured. Ideally, policies spell out their aims and give targets that can be measured. The Housing Accord was quite clear on both its aims and its targets. The targets were to achieve 9,000 consents in Year 1, 13,000 consents in Year 2 and 17,000 consents in Year 3, for a total of 39,000 over three years. “Consents” included “new building and subdivision consents in greenfield and brownfield areas”.
Essentially, whenever a piece of greenfield (undeveloped) land received consent to be carved up into sections, the number of sections would be counted. Whenever a building consent was approved, the number of new dwellings would also be counted, unless they were already counted under the subdivision criteria. As such, apartments and terraces were picked up under the building consent criteria, whereas freestanding houses were usually picked up earlier, under the subdivision criteria.
The targets above were the only ones set for the Housing Accord. Getting 39,000 homes or sections approved relates to the first goal of “increased housing supply” but doesn’t (directly) relate to the other goal of “improved housing affordability”. Arguably, this gave the parties an easier ride. Once the Housing Accord was signed, the government didn’t have to do much else, and the council just needed to make sure it processed plenty of consents.
Meeting the targets
The MBIE and council produced 12 “monitoring reports” over the Accord period, one every three months. Report #12 summarises some of the outcomes. Long story short, the Year 1 and Year 2 consent targets were both met, with room to spare. However, consents fell well short of 17,000 in Year 3.
Overall, 37,538 consents were granted over the three years, pretty close to the target of 39,000 (“96% achieved”). The parties congratulated themselves on a job well done. They hadn’t quite met the target, but they’d come very close. With no other targets defined, there was nothing for anyone to get upset about, right?
Two points before I move on. Firstly, there were actually 9,975 subdivision and building consents issued in the year before the Accord began. The Year 1 target was even softer than this, so it’s no wonder it was easily met.
Secondly, the Accord was announced in May 2013, but not put into effect until October 2013. The delay was necessary because they had to wait for the Unitary Plan to be notified, but it meant an easier ride to meet the targets – since consents were already on the way up.
A closer look at the consent numbers
The graph below shows building consent (dwelling) numbers all the way back to 1991, but section numbers are only available for the three-year Accord period. So focus on the blue bars!
The graph clearly shows the high consenting levels in the mid-2000s (boosted by CBD apartments), with consents falling sharply into the GFC period. This really hurt the construction sector, and was also the start of the current housing shortage. Consents have been climbing again since 2012.
As for the sections, note these are only the ‘additional’ ones which haven’t been given building consent yet. Otherwise we’d be double counting. In theory, these ‘additional’ sections mean there are now 11,500 more ready-to-build sections than there were at the start of the Accord.
Could building consents have climbed any faster than they did? Probably not. It costs money to get those consents, and developers won’t get them unless they expect to go ahead with the project. We’ve got a shortage of builders as it is, so the consents (and rate of building) probably couldn’t have gone any faster.
A better question is: how much slower would things have been without the Accord? More on that in part 2!
How many homes were actually built?
The information on how many consents got turned into homes is very sketchy. New Zealand doesn’t really have a consistent way of measuring home completions. The council did start to collect this information during the Accord process, and estimated that 7,920 homes were completed in year 3 of the Accord. This compares to 9,960 building consents for the year, and 13,760 consents total.
The council didn’t estimate completions in the first two years of the Accord, but I’d guess 12,000 homes. All in all, that means roughly 20,000 homes were completed during the Accord period. About half of the much more publicised figure of “39,000 homes” which were actually just consents.
Auckland’s population grew by 120,000 over the three years, so if we’d actually had 39,000 homes completed and ready to move in, then we would have been keeping pace. Instead, we had half that number.
But I’m being a bit harsh on the Accord here. The consented-but-not-completed homes are important too. Plus, there were other things the Accord did to help with the housing crisis. I’ll explore these in part 2.
* For what it’s worth, I think “did the council and government do everything they could?” is a simple question, and my opinion is that the council did pretty much all it could, and the government did bugger all (and took the opportunity to blame the council for everything that went wrong).
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It is all a bit of a sham. The special housing areas were all kicked off in 2014. We purchased in stage 1 of the Oraha Rd SHA, which was announced in May 2014. Title was due Sept 2016 but has now just been pushed back to Sept 2017. That’s ~3.5 years just to get the sections on stream, >4 years for the first houses to be built. No wonder we have a housing crisis when it takes this long to get through resource consenting and to develop the site.
Hey Elliot, you may not read this as you commented a while ago. Just wondering if you were still waiting for your house to be built on Oraha Road – or if you’ve pulled out/on-sold? We too have purchased in this estate and are STILL waiting for consent to start building. We signed the sale and purchase over two years ago and still nothing. Its so frustrating! Interested to hear from anyone else building in this estate and waiting………
Adding empty sections to the data is to count ‘ghost dwellings’, and belies the government’s (and many other commentator’s) conflation of land with dwellings. They might as well count every single parking lot, or other unintensly occupied but developable piece of land within the city too… buildable land can sit unbuilt on for decades.
And as to the problem of the affordability of any additional supply, there is only one answer to that and that’s public housing. The only force that can sustainably supply below market rate dwellings is a big well funded public body backed by taxation. In NZ that’s central government, as only it has the scale, and it tends to jealously keep taxation rights to itself. The government’s retreat from growing dwelling supply for the low income end of the market from the 1980s, here, as in the U.K., correlates precisely with Supply/Demand imbalance. And then increased inequality, and all the blights and increased social costs of the associated poverty.
So the SHAs and now the Unitary Plan have reduced the regulatory barriers to adding to dwelling supply (400k+ feasible dwellings are allowable now in AKL), but there is no funder and builder of scale and for the lower end of the market. Especially one that can ride out the boom bust cycles and keep delivering well built, solid and healthy but modest dwellings in places not too far from education and employment. Or well connected to these by decent public transport. Building year in and year out till there is balance both to the housing ‘market’ but also to the dwelling cost spread, ie until the city can return to having a full price range of liveable dwellings. Additionally this would add scale and solidity to the construction sector by smoothing out its cycles too.
Well put Patrick. I would like to see a lot more social housing that caters for low-mid income households as well as the destitute. Yes it will mean higher taxes and fiscal shuffling. So be it (if you want a healthier and more equitable society)
Yup, I agree with you both. The countries with working public transport systems also have state housing. Basically, NZ, we need to talk about tax. I’m going to make myself a t shirt saying “TAX IS GOOD” and see if I can drum up a few conversations. Shouldn’t be hard. 🙂
I wouldn’t wear that t shirt in Epsom if I were you…
Nah, they just have their own ones ones that say:
“EVERYONE ELSE PAYING TAX IS GOOD”.
The reality is we need more tax revenue to: build houses, pay key workers more and invest more into health/education. No know one wants to confront that reality though because it is ‘political suicide’. But is it really? Would labour hinder or promote their support if they raised taxes on salaries over 100k and introduced land taxes etc?
If crafted and pitched the right way I suspect they could increase their share of the vote
There is so much discussion to be had, so much ideology to challenge. The problem is that it is not only Epsom where I would be ostracised for wearing that t-shirt. Even people living without dignity despite working hard, and who would benefit greatly from a higher-taxes-for-the-rich, well-supported-welfare regime have been somehow brainwashed into thinking that such a regime would be unfair and make things harder for them.
Labour certainly should go there, and return, 30 years after their big treachery, to their home turf. But Douglas’ legacy lives on.
Tax is like induced traffic, really. The discussion needs to be frank.
Not so fast. Over a reasonable period returning our public housing system to growth shouldn’t be that much of a tax burden, especially if all the health, education, and crime benefits are counted. But even in strictly financial (rather than economic) terms, instead of funding landlords, as we do now, let’s buy, develop, and cycle dwellings. Hardly Rocket Surgery now is it…?
Also as with any progressive policy concentrate on the benefits as wells the costs. Those on the regressive side never even admit to costs.
+1.
If the accommodation supplement was progressively transferred to helping fund development of housing we’d see much better societal outcomes.
True. Including the full costs of health, education and crime is avoided precisely because it would shape everything we do considerably.
Crime benefits? Have you been to a state housing area? They are hardly utopias.
Personally I don’t think they are needed but we need to make it possible or even incentivised for the private sector to build reasonable housing at reasonable cost. Maybe ditch the building code expense for houses under 100m2
No serious person in the housing field advocates for ‘public housing areas’ or indeed any other system that segregates communities by income, yet that’s what happens with our market only model. Public housing funder working with the private sector to produce mixed value developments has been shown to work best overseas. For example the Victorian Housing Comission often buys say 30% of a development for state rental occupants which also helps get projects reach presale target so therefore helping to stimulate development. The resultant project is indistinguishable from a 100% private project.
But you then end up with a lottery based inequality. Some people get a nice state house in mission bay while others get one somewhere a lot less desirable. Even worse when people who haven’t done a days work in their lives are living somewhere amazing while a cleaner is working 60 hours a week just to pay their rent somewhere much worse.
“You know I can’t live in your ghost house”
+1
State house are managed by bureaucratic organisation, which means inefficient.
Best system would be government assisted shared ownership model, like The housing partnership ltd.
http://housingpartnership.co.nz
This is better explained here.
http://www.nzhf.org/housing-assistance/affordable-equity-faqs
It is like a rent to own model with flexibility.
Basically tenant can incrementally buy a share of the house ownership until fully owned.
The starting deposit can be very low, like 10k. Basically if the tenant can afford the rent, they can afford to start buying ownership share.
Tenants just need to pay rent for the share that is not owned and can technically stay there forever if they keep paying rent.
Owners are responsible for maintenance and they should naturally take care for it.
Capital growth is shared. And rent is kept affordable.
There is a community body and owners will have ability to manage the community to ensure healthy surroundings.
“And as to the problem of the affordability of any additional supply, there is only one answer to that and that’s public housing. The only force that can sustainably supply below market rate dwellings is a big well funded public body backed by taxation.”
Nope, more market rate supply will increase affordability through filtering. Old houses become more affordable because the people who would have bought them now buy new builds etc etc. It true you need government intervention to supply below market rate housing but that doesn’t mean the market rate itself can’t change through market mechanisms. What we need is significant land use liberalisation across the board.
It was a sham. Auckland Council didn’t want the accord but were pressured into it. So they dragged their feet every step. That meant their daft arms length organistions were free to stymie as much development as they could. Whether it was Watercare claiming they had no intention of building this or that trunk line or Auckland Transport claiming they had no money and if a developer wanted an arterial they would have to build it sometimes going as far as asking at hearings to have limits placed on development until certain projects were carried out it all turned out the same. Developers were put into an arms race against each other where the first through could build at no cost and then the next got lumped with enormous cost so gave up instead. Auckland Council paid lip service to the process only. One guy I worked for got his consent and said rather than houses he was going to use the land for free range chickens.
“Auckland Council didn’t want the accord”? An oversimplification surely? The council wanted the Unitary Plan to be put into effect more quickly, but this would have meant less chance to thrash things out through the hearings process, and the government wasn’t willing to change the legislation for it. So the Accord was a bit of a compromise. No doubt there was a bit of argey bargey, mostly driven by the government, but I don’t think it was a case of being pressured into signing something.
The Council didn’t want it. They thought things were going just fine and there was no problem at all. The accord happened because the Government saw risk to them in the Auckland Council’s stubbornness over greenfields development. Take another look at your graph and you will see the issue wasn’t the GFC. The issue was the LGAAA which the Government brought in in 2005 cheered on by Auckland City and the ARC. The idea was further restrict greenfields and magically people would intensify, as they mistakenly believed the two were perfect substitutes. The 2010 LG elections convinced the Govt that nothing would change unless they acted. Auckland Council caved and signed the accord but as they controlled the process they managed to bugger up any chance it would amount to anything.
“The idea was further restrict greenfields and magically people would intensify, as they mistakenly believed the two were perfect substitutes. ”
While they aren’t perfect substitutes our market clearly shows that stand alone dwellings are closer to the equilibrium point than apartments. The bigger problem with this approach was that the council expected intensification to occur without actually allowing it to occur.
Absolutely correct as to the trigger for the downturn in consents. In recent times there have been economic crises every 10 years or so, eg the 70s (actually two), 1987, 1998, 2008, but not in 2005. Maybe there will be another downturn in 2018, but who knows? – the past is not a certain predictor of the future.
I also agree with the substitution aspect. Forced intensification doesn’t seem to take account of demographics / preferences; it seems rather to be an ideological stance. I’ve always taken the view (rightly or wrongly!) that apartments are for the young and the old but are not generally desired by those with growing families (yes, I know there are exceptions). Disclosure: as I am now officially old we are about to move from a 3-level stand-alone house into a single-level apartment. The worst part is no man-cave – just a tiny locker and open carparks. The jury’s still out on that.
Old Jonno, Are you close to a “Shed”? Or want to set one up? I’m trying to convince my parents in law to buy near the Gribblehurst one. I think they’re great. Like community gardens, but grubby in a different way.
Good point Heidi, I’d forgotten about that option. Actually my son has an office and workshop in Mt Eden that he’s kindly offered me a corner of, funnily enough it already contains my workbench and a fair selection of my tools! And as I’m near the city Mt Eden is closer than Mt Albert. But it was nice to just pop downstairs in the evenings to avoid Masterchef and suchlike…
Nice how other people hold onto your things until you need them back. 🙂
Masterchef? Ha! So glad I gave up tv in 1984.
One requirement of apartment living is a good wireless headphone system. Ever read “No Carbon Man”? I always remember that in his NY apartment, which he and his family lived in for a year without electricity or gas, was pretty hot in summer… so they spent their evenings out enjoying the city, and thoroughly enjoying it. Mt Eden will be a great place to live in an apartment… community garden…
The Government wanted the power to override Council decisions, the Council resisted that and Nick Smith blinked. Tthat was the moment the Housing Accord died and became business as usual for Auckland Council. http://www.interest.co.nz/property/64516/auckland-council-odds-government-over-housing-plan-deputy-mayor-says-housing-accord-d
Oh will someone PLEASE think of the poor developers. These are the people who looked to get out of the affordability requirements the moment the opportunity arose. And to point the finger at Council dragging the chain on greenfield development. The fact was no proper planning had occurred for these areas, let alone infrastructure planning or funding. And just because the government dreams up some stupid process to ram through sprawl doesnt change those facts. Developers as per usual want to privatise the profits and socialise the losses.
So if the Government won’t build and the developers can’t build, then what? Oh right we have people living in cars now.
Much of it has been a sham.
Developer gets consent. Doesn’t build. On sells at higher price.
Rinse and repeat.
“* For what it’s worth, I think “did the council and government do everything they could?” is a simple question, and my opinion is that the council did pretty much all it could, and the government did bugger all (and took the opportunity to blame the council for everything that went wrong).”
The housing crisis in one sentence.
+1 spot on mate.
Is this the same council that recommended a terrible unitary plan that had to be completely overridden by an independent panel? Both government and council equally to blame, but at least council seem to be coming to their senses.
Fair enough… it certainly wasn’t an easy path to the mostly operative Unitary Plan we have now. When the council first released the “notified” version in 2013, it was pretty weak, and didn’t allow for anything like enough intensification. When this was realised, the council planning staff tried to allow for more, the elected councillors voted it down, and it did indeed take the Independent Hearings Panel (plus Housing NZ and others) to make sense of it all. The plan we’ve ended up with isn’t perfect, but it’s a big improvement.
But the Council has also been proactive in opening up land on the urban fringe, and getting it serviced. They’ve done a pretty good job on that. More in part 2.
How can you say it did all it could. The restrictive planning rules were its (and its predecessors) creation. It could have brought in plan changes in the mean time prior to the Unitary Plan. The PAUP itself was shown to be hopelessly inadequate and the judges had to pull it up to a bar minimum level. We should have a plan that allows for double the projected number of required houses in the next 30 years if we want a real competitive market. Allowing for just enough and no more makes it a one way bet for landowners.
The IHP just kicked the can down the road. Just because you up zone the western part of the Auckland Isthmus doesnt change the need for the central interceptor that is needed to service all that development and which is 10 years away.
There is, and continues to be, a complete disconnect between planning decisions and infrastructure investment.
Central interceptor has been planned for years. Watercare undercharges for waste water if they charged a reasonable return on capital they would be able to self fund. In the meantime, developments can include attenuation. Central interceptor is mainly about dealing with stormwater overflows rather than wastewater system capacity.
Good article. I think like Patrick a lot more could be done. As Patrick notes historically in NZ that means the State building houses for all the benefits he lists. I also think NZ/Auckland has not gone nearly far enough on removing NIMBY restrictions on building our cities up and out. Perhaps most importantly there is a need for much more infrastructure spending -especially in the multi-modal space -private vehicle mode growth is pretty much tapped out -NZ needs to grow up, learn the multimodal transport lessons of other successful cities in Asia, Europe and the Americas….
Special Housing Accord brilliant success and first step. Planners need to be fired from council for not opening more land-up. Now we need centralised Construction Materials Supply. State Made Houses, for private people to purchase from also to make it Cost neutral ministry = Backed-up by a State owned supplement: State made Concrete, Windows and Glass, Framing, State made Plumbing and cabbing, Sate made bricks. And all the Local Districts with own state proceeded contractors. Land is easy to solve Cost of build it s going to be harder.
“Planners need to be fired from council for not opening more land-up. ”
How would we do that? We don’t have enough money to fund the new infra.
Infrastructure not being up to “standard” could be a bit of an excuse in some cases no?
Could we not let the entire Kumeu to Hellensville be developed at 1 ach sections?
Septic Tank technology has improved massively, Grey water solutions. Water tanks work well in NZ and filters are pretty cheap.
Roads standards could be unsealed? I mean these are the things we could consider now no?
Yeah, let’s lock in auto dependent sprawl that we will still have to build roads for and serve with pt at huge expense.
I don’t have a problem with removing restrictions on Auckland expanding outwards, as long as the hidden subsidies of car dependency and infrastructure provision are removed and there are equal options for the city to build upwards too.
That is the point of my essay -using Tokyo as an example -which I write about here.
https://medium.com/land-buildings-identity-and-values/tokyo-does-not-subsidise-its-transport-system-98f064f097b3
No need to spend money on transport, we should have a commercially viable provider. Everything else is fairly cheap by comparison. Wastewater is the main other one which again could be provided by a commercially viable provider. It is massively underpriced in Auckland.
So you would replace a building materials duopoly with a state sanctioned building materials monopoly…… yeah nay…..
What would be better would be to use the guaranteed consistent supply numbers of State housing builds and KiwiBuilds to encourage the industry to move towards 5+ big vertically integrated residential and commercial construction and building material firms/groups.
This is a small enough number that they could invest to improve productivity, make gains from economies of scale etc. Yet their would be enough of them to ensure they behave competitively not like a cartel
nay yeah… Brendoharre Good with that also. Especially after having a morning beer to get through the news. what I said was badly written. Sure What you say is the economist model -I just think we are to late to for that to be effective right now. I say just get some good old fashioned state run Development in the actual raw materials and run these just like and GOE but also supply Kiwi-build at cost for their materials. It would not be a monopoly, other supply companies could still compete and we are smart enough now to make a state owned Enterprise run as a normal company with the market. Ironically, once the system is up to scale and the was more natural competition – We would sell the material companies off in a smart way o keep the industry running well. I think very similar to how Kiwi-bank was setup.
As a side issue on the question of tracking the actual number of housing completions, surely Auckland Council has a GIS system that would be able to track this? Such systems are becoming standard for asset management purposes, even for small Councils. You can also tie it to the rates database.
There is another benefit of the State building houses. It can use the opportunity to train a new generation of builders, giving young people stable jobs. Many of today’s tradesmen learnt their skills in government workshops in decades past.
As a pro free market capitalist – I think its time NZ gets real and provide some state run projects. Such as Kiwibuid, Rail workshops.
As others have said, public housing is the only option. Council and/or NZ government could have trained/hired thousands of builders and set them to productive work.
If countries can mobilise for war, can they not mobilise for peace?
There is a video of NZ mobilising in 1946 to house the homeless. It specifically shows how during the war house production declined, exacerbating the then housing crisis. So post WW2 there was a massive State house programme. It is really worth watching to show what sort of country NZ once was.
https://www.nzonscreen.com/title/housing-in-new-zealand-1946
thanks 🙂
If the government had overridden the Council, the pottery barn rule would have applied, like Secretary of State Powell used to describe invading Iraq. Effectively it would have meant the government being the one and only ruler of Auckland.
This would have meant government would have been responsible for a number of problems. Auckland’s planning and infrastructure. The deficit in the infrastructure funding. The government would have been responsible for explaining to the public what housing supply option they would use to house Auckland’s growing population affordably -National’s ideology and history indicates this would be car dependent sprawl. How popular would that have been?
Nick Smith and co didn’t blink, they were bluffing. The government could not afford to take control of Auckland. They needed/need a distraction and blaming Auckland Council was a convenient option. It was a way to keep difficult problems hidden.