In the first part of this post, I talked about how the Housing Accord signed by Auckland Council and the government had two clear goals: “increased housing supply and improved housing affordability”. Those two goals are clearly laid out in the first sentence of the Accord. Despite the two goals, the Accord had just one “target” which progress was measured against: for 39,000 sections or dwellings to be consented over three years (and it didn’t quite meet this target).
Housing affordability: the forgotten goal
Although “housing affordability” was meant to be a key focus of the Accord, it gets almost no attention in the final monitoring report which covers the full three-year Accord period (October 2013 – September 2016). Affordability is not mentioned anywhere in the report. The executive summary doesn’t mention house prices at all, and only two slides out of 49 relate to prices:
The image is a bit blurry even in the original presentation, but as we all know, house prices in Auckland rose massively during the Accord period. The median price rose 45% over the three year Accord period, from $570,0000 to $825,000. Even with low interest rates, it became much harder for people to buy homes.
The other way to look at housing affordability is through what happens to rents. Of course, Auckland rents rose over the Accord period. Rents rose 15%, which was roughly in line with national trends. Given Auckland’s rapid population growth and that few new homes were built, I’m surprised rents didn’t go up more. It’s likely that, on average, there are now more people squeezing into each Auckland home, and this was probably a factor in keeping rents down.
What else did the Accord do?
The Housing Accord wasn’t just about consents. The Accord enabled policy changes, so that the council and government could try to meet the target they had set. The main change was allowing for “Special Housing Areas” (SHAs) to be created. Once a property was defined as an SHA, the landowner could use the rules from the Proposed Unitary Plan rather than the old rules from previous plans, and could deal with the council’s “Housing Project Office” to get planning permission faster.
Over the three years, 154 SHAs were defined, “with an estimated dwelling capacity of 62,500 dwellings once fully developed”. However, this capacity will take many more years to achieve. In the 3-year Accord period, only 3,000 sections were created, 2,600 homes were consented, and 1,700 were completed. Allowing for some overlap in the ‘section creations’ and the ‘home consents’, the SHAs probably contributed just under 5,000 consents towards the target of 39,000.
So, SHAs weren’t much help for achieving the Accord target. Many of them were long-term projects, which will start to develop faster in the post-Accord period. Many of them may only have gotten as far as applying for “plan changes”, or “resource consents”, which to be fair, were the only stages that the Accord was helpful for. Everything after that is up to the developer, not the council.
SHA status had a time limit – it was to expire at the end of September 2016, so property owners had to use it or lose it. But that didn’t necessarily mean they actually had to develop the land. SHA status meant they could push ahead with getting a plan variation (e.g. getting ‘future urban’ zoned land rezoned for residential use) or a resource consent (e.g. saying they have the right to build X homes or apartments on the site). Plan variations are permanent, and resource consents last for five years and can be renewed for another five.
As such, even if SHAs didn’t have homes being completed and ready to live in by September 2016 – even if they didn’t get any sections or homes consented by then – they still moved closer to being developed.
The system wasn’t perfect. There were landowners who gave up on the SHA system, and used the old rules instead. There were landowners who tried to speculate on SHA status, either land banking or flicking the properties. But the system did help to get more properties development-ready, and over time that means more competition. This means landowners don’t have as much monopoly power, and it should help to bring down prices for development land. Ultimately, it means cheaper homes. We didn’t see that during the Accord period, but we might be starting to see it now.
Too sprawl focused?
During the Accord period, almost 1,700 hectares of land was rezoned from “Future Urban” to residential zones which let houses be built. Did the Accord just kick-start the sprawl industry?
As noted above, the 154 SHAs apparently have a long-term capacity for 62,500 homes. Of course, most of these are greenfields: urban expansion on the city fringe, or “sprawl” to use the more common (but negative-sounding) term. “Long-term capacity” isn’t really a thing for apartments. Only 20,000 homes of that total capacity were likely to be ‘brownfields’ or intensification.
The Auckland Plan target is for Auckland to build 400,000 new homes in the next 30 years, with 50%-60% of new homes in the next 30 years to come from intensification. The Accord didn’t do much to help these.
So yeah, in a lot of ways the Housing Accord probably did kick-start Auckland’s sprawl industry. But at this point in the city’s development, that probably wasn’t a bad thing. By the time the GFC hit, Auckland was essentially hard up against its urban limits, with councils battling amongst themselves and with developers over whether and where they should be extended. The councils merged in 2010, but it took some time before the Auckland Plan and Auckland Unitary Plan outlined plans for greenfields expansion. Auckland had a growing housing shortage, and very little housing was being built.
Intensification is a good thing, and Auckland needs to devote a lot of effort to making sure it happens, but the reality is that housing on the outskirts of the city is better than no housing at all. The SHAs were a necessary step to getting this housing underway. Now that we’ve got a Unitary Plan which unlocks a lot more capacity in the city itself, I’m hoping that we’ll see a lot more intensification in the years to come.
Was it politically popular?
Hey, never mind the policy evaluation, what matters is whether the Accord was politically popular, right? On the whole, I think it was. Although there was criticism of some individual developments – really, just about any new development has to go through that – no one really seemed to question the underlying rationale for the Accord itself. People like Bob Dey and myself were probably among the more sceptical.
The government was obviously pretty happy that it was seen to be Doing Something – since Auckland, they’ve gone and signed Housing Accords with nine other councils. The idea of riding into town like knights in shining armour, getting credit in the local papers and then being able to blame the councils if it goes wrong must be pretty appealing. It helps to shore up local votes, and takes attention off the fact that the government has much more ability to affect housing demand (and supply) nationally, and hasn’t done enough about it!
I could say a lot more about the Auckland Housing Accord, but I think I’ve hit the main points above. Overall, there were certainly some positive outcomes from the Accord. Some housing is now complete, or getting underway, faster than it would have otherwise. It did give some support during the transitional years with a new council, putting together a new Unitary Plan while the development industry tried to recover from the post-GFC slump. But on the whole, you’d have to call it a partial success only. Grade: C. SHAtisfactory, just.