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.

This pie chart is dedicated to Matt L, who if memory serves me correctly, really loves pie charts.

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!

Conclusions

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.

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9 comments

  1. My $0.02 worth is to say that overall the SHA were a SHAm. The only way they would have become a SHAlvation would be if the government had further stepped in and either developed them itself or backed developers to do so. The key to Auckland’s future is to increase density massively in the old ACC area and to not intensify most of the rest of the city except in transport corridors (anything else simply adds more cars to the roads and isn’t intensification in the positive sense). I have a feeling that the future zoned Dairy Flat is going to be one huge SNAFU even if they do actually build the dedicated busway through it. All it is going to do is add another 5000 cars to the roads leading to the North Shore. In that regard it would almost be better to extend the existing urban area at Albany to make it contiguous rather than having a satellite Dairy flat development.

  2. Targets (as written in the accord) were for dwellings AND sections (against which the targets have well exceeded), but OR was taken to be the interpretation for the reasons you outline (and others).

    This is also illustrative example of this governments erroneous conflation of faster decisions with good decisions – we will have plenty of time to regret at our leisure i suspect.

    1. The rhetoric throughout, even when the draft Accord was announced in May 2013, was about it enabling 39,000 homes. The figure was highlighted many times, whereas of course it was actually consents not completed homes.

      Because of that, you couldn’t add the full number of section consents to the full number of building consents. That would be a gratuitous double count, clearly not in line with the spirit of ‘39,000 homes’ or with the idea of the target being a stretch goal. So throughout the monitoring reports, they accounted for overlaps in those two measures. That is, if a piece of land was counted when it received subdivision consent, it couldn’t be counted again when it received building consent.

  3. Having a developable land doesn’t mean the land is feasible to develop now.

    For example building a brand new dwelling inside undesirable suburb with under performing school wouldn’t make as much profit as building the same dwelling in double grammar zone with all the nice amenity and luxury house nearby.

    So most development would wait until it is the best time to develop that yields highest profit.

  4. “but the reality is that housing on the outskirts of the city is better than no housing at all”

    Don’t you think that the accord could have been focused on intensification and come up with an outcome on par or better? I’m just thinking of all the roads that wouldn’t have to be built; that’s a lot of energy, land, resources, ecology wasted.

    Seems to me the mindset was stuck on greenfields housing.

    1. The Accord needs to be considered in context. It was announced in May 2013, but it relied on the Unitary Plan being notified, which didn’t happen until October 2013. It was also reliant on what was in the notified Unitary Plan. Frankly, that didn’t allow for enough intensification. This was made very clear through the hearings process, which is why the final(ish) Unitary Plan we have now allows for quite a bit more intensification.

      SHAs had to use the rules from the notified Unitary Plan, so that limited the opportunity – but this was really the fault of the Plan, not the Accord. Sure, the Accord could have been written with a completely different set of rules – e.g. SHAs could do whatever they liked and didn’t have to follow any planning requirements at all – but that wouldn’t really have been in accordance with the other legislation, the Unitary Plan hearings process and the need for democratic input etc.

  5. It was a sham. The Council didn’t want it so they subverted the whole process with their CCOs to make it difficult to actually develop. But even with their best efforts to stop development the SHA process at least provided a path for plan changes. Remember part of the Unitary Plan process the Council lobbied for was a rule that there would be no private plan changes until the process was complete. The SHA process reopened a path so in that sense it did provide a small benefit.

    1. And why would you place the blame at the feet of the Council?

      The government imposed a process on the Council and provided them no funding to address the infrastructure issues.

      Central Government is to blame for this complete SHAM!

  6. Could it be possible that some form of wooly “accord” with flowery platitiudes and lofty vague goals of tens of thousands of houses was quickly dreamt up to allow National to say, look we are doing something, when we’re actually doing very little/nothing at all. It was championed by the substantless Nick Smith let’s not forget and it their well established MO.

    One of the major components of housing unaffordability is speculators/investors buying house upon house almost ad infinitum it seems, mortgaging off the back of each other, inflating prices as they went, quickly making your average dwelling unaffordable to your average person. And in doing do the few are taking what was the many available houses off the market sapping supply.

    National steered well away from addressing that until far too late and even then left enough loopholes in the regulatory frame work to drive a bus through.

    Hence nice to have housing accords are one thing but this is a multiheaded hydra.

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