Every weekend we dig into the archives. This ‘Flashback Saturday’ is a bit different from our usual, and as part of our “20/20 Vision on Housing” programme we’re doing a retrospective on ex-blogger Stu Donovan’s housing posts.
Stu is an economist and engineer, now living overseas. A decent chunk of Stu’s 170-odd posts for Greater Auckland were about housing, and while some were quite technical, they were always a pleasure to read. Stu owned and lived in a 50 square metre apartment in Auckland’s city centre; as he became based overseas more, he rented it out but still found time to write about it.
Stu has even been kind enough to write an extra update, just for this post:
While the core emphasis of these posts still remains, my views have evolved somewhat since many of these posts were written, especially in two related areas.
First, even with the dramatic intervention of the Independent Hearings Panel to increase the supply of dwellings in the Unitary Plan; even with record levels of dwellings now being consented and constructed; and even with more moderate levels of net migration, the cost of housing in Auckland is yet to fall. To me, this implies Auckland Council’s draft Unitary Plan clearly did not provide sufficient capacity for housing. I hope the planners, politicians, and organisations that supported decisions to reduce the supply of dwellings have reflected on their choices to the extent where we can do things differently in the future. After all, we’re over one-third of the way through the 10-year Unitary Plan cycle, so it’s not too early to start thinking about how we might update the Unitary Plan in the next iteration. And, of course, if we really wanted to tackle issues with housing affordability, then I suspect formal mechanisms exist through which we could submit a Council plan change to enable more housing.
Second, I think it’s fair to say that recent evidence suggests the Unitary Plan process didn’t place a high enough weight on the urgent need to reduce carbon emissions. In the midst of an accelerating climate emergency, where countries around the world–New Zealand included–are struggling to reduce their emissions and avoid dangerous levels of warming, the Unitary Plan still contains policies that, for example, designate large areas of Auckland as “single house zone”. Other policies mandate the provision of more parking than the market would deliver on its own, purely for reasons of convenience. Such policies are anachronistic relics of a bygone era in which global warming was not an issue; we are–in many places–literally playing with fire if we allow these policies–which lead to a less compact, more car-dependent city–to persist. People’s sensitivities about “neighbours” and “car-parking” simply must take a back-seat to reducing emissions. Starting now.”
In a series of three posts (1, 2, 3) called “Demolishing Demographia”, Stu looked at a report by Demographia which compares ‘median house prices’ to ‘median household incomes’ and concludes that Auckland (and other NZ cities) have very unaffordable housing. Stu pointed out that, based on other (arguably better) measures, Auckland and NZ housing affordability had been quite flat over time, rather than getting worse. This series, I think, does a good job of questioning why Demographia gets so much traction and press in NZ: their analysis is very simplistic and frankly outdated. Effectively, their one solution, trotted out each year, is to just remove urban limits and that will magically fix everything.
Of course, house prices (in Auckland, NZ and much of the developed world) have gone up a lot since 2013 when Stu wrote these posts. We’ll look at that later in the year.
Denser cities often have ‘economies of scale’, or can produce more efficently. Things like public transport and parks work better (or more cheaply), and businesses benefit from having a larger labour pool and ‘knowledge spillovers’. Stu looked at the idea that denser cities can also can also offer benefits to consumers – such as more events, things to do, more social opportunities etc.
Urban Development Authorities
In another post he asked whether Urban Development Authorities should be able to compulsorily acquire properties (not sure if he reached a firm answer on that!). UDAs have a fairly short history in New Zealand, but a much longer one in Australia. Hobsonville Point was probably the first large-scale one, run by a subsidiary of the government’s Housing New Zealand. This has now transitioned into Kainga Ora, and still no compulsory acquisition powers; but these may come in future.
In his last few posts (“I like my house“, “We need to talk about Brisbane“), Stu reflected on debates about intensification and higher-density housing in Auckland, writing
“I don’t understand why some people try to stop intensification in Auckland.
Why do people think it’s beneficial to prevent levels of intensification which were perfectly normal in Auckland 100 years ago, when my building (and others nearby) were developed? Levels of intensification which are perfectly normal in cities overseas, like Sydney?
I’d like to think that if opponents of intensification knew me and my tenants, then they might stop trying to prevent houses like mine from being built. They might even start to accept that it would be a good idea to let people like me to live in the types of houses that *we* prefer. Rather than force us to live in houses that *they* prefer. Houses like the ones which they live in, which have balconies, car-parks, and all manner of expensive bells and whistles.
I hope that by the time I return to Auckland the debate on intensification will have progressed.
I’m soon moving overseas, where excessive rents from my apartment in Auckland will help fund my lifestyle. Ironic? Yes. Sad? A bit. Unusual? Apparently not.
I can’t help shake the nagging feeling that New Zealand’s most valuable export is not dairy or tourism, but young people. Problem is we don’t get paid for exporting young people. In fact, we invest in them – only for them to live, love, and pay taxes somewhere else. Some come back of course, but what of those who don’t? I know of many people my age who fall into the latter category – indeed I may end up being one. Sorry Mum.
Notwithstanding all this I do like my house, and I actually quite like Auckland. If Auckland is able to move beyond the naysayers and allow intensification in a big way, then in a few years it might be enough to bring me home. If it doesn’t, well in the words of the His Royal Highness, the Prince of Bel Air, “smell ya’ later”…
“Auckland doesn’t stack up as a place to live. Sure it’s nice, but having spent the last few years living in Brisbane and Amsterdam — and with the option to live in either of those cities — I’ve slowly and begrudgingly come to the realization that the cost of housing in Auckland detracts too much from overall quality of life. I can’t honestly say to my partner that Auckland is a better place to live. And we’re the fortunate ones; we have a choice. When you see people — families even — living in cars and/or on the streets, then you start to realize the long-term socio-economic problems that are being caused right here, right now”.
I’m also fond of this quote (from here, and Stu has lived in a few different countries):
“No other country in which I have lived dedicates such a disproportionate amount of oxygen to the machinations of a single, relatively uninteresting market” .
It’s important to note that Stu’s not saying housing isn’t important – it certainly is – but that NZ is unique in how much we all drone on about house prices, capital gains, property investment etc.
The Brooklyn Apartments in Parnell, along with a few others like Courtville and Old Courtville, are superb examples of urban living in Auckland. Loved by just about everyone but particularly by the residents of those buildings, they were built in a bygone era and presumably to slightly different Building Code rules and District Plan requirements. I’m not sure if they were built as luxury pads back then, or if they provide more space than current apartment ‘standards’, but they do seem to be an admirable precedent to follow. In New York, London, Amsterdam, etc, apartment buildings like these exist by the thousand. What I’m wondering is: what is stopping us in NZ to build more buildings like the Brooklyn?
Great post thanks, John and Stu.
I’d recommend anyone who has environmentally-conscious friends, or community groups, that don’t understand the need for a compact city should use it as a talking point, particularly:
“I hope the planners, politicians, and organisations that supported decisions to reduce the supply of dwellings have reflected on their choices to the extent where we can do things differently in the future… I think it’s fair to say that recent evidence suggests the Unitary Plan process didn’t place a high enough weight on the urgent need to reduce carbon emissions. In the midst of an accelerating climate emergency, where countries around the world–New Zealand included–are struggling to reduce their emissions and avoid dangerous levels of warming, the Unitary Plan still contains policies that, for example, designate large areas of Auckland as “single house zone”.”
Oh, but doesn’t everyone know? Apartments and terraced housing can only possibly be slums. 😉
“To me, this implies Auckland Council’s draft Unitary Plan clearly did not provide sufficient capacity for housing.”
This paper https://www.aucklandcouncil.govt.nz/about-auckland-council/business-in-auckland/docsoccasionalpapers/reality-check-impact-zoning.pdf makes the point that there is between 10 and 25 times more dwelling space zoned than the projected current housing shortfall.
So they are arguing there is enough land zoned for development. To be convinced of their argument, I’d need to see some market analysis – how many different developers were active etc. And some validation of the housing shortfall figure. Still it is possible that the constraint is not about zoning.
If it’s not, I wonder if there are constraints somewhere along the planning, consenting, infrastructure provision chain that are making a big difference. If there are compact cities with low housing costs it would be good to know more about their planning rules etc.
Great posts & I remember some of these Stu.
I am in favour of an even more compact city than the Unitary Plan provided for but I’m not convinced it’s not going to very soon provide for the housing we need and or prices fall. Seems to be the real delay in this is an initial construction industry shortage of providing for it or lag & hence the rising or holding or prices. Looking at consent numbers really taking off. I see much activity going on around us and else where, but some of the projects seem to be very slow in finishing.
This is probably more anecdotal than anything, just my 10c worth.
Demographia have got something correct: the only possibility of truely affordable housing will be in sprawl. Compact builds are just too expensive compared to chucking a Bunnings flat pack on a flat sprawling section.
Personally I would much prefer a compact city – however I have the money to afford to live in one. But I can’t see why my preference should be forced on other people.
To me the only fair response is to remove all the unnecessary red tape on both density and sprawl and let the market choose.
I don’t agree, Jimbo. Here’s one article from the costs of sprawl series from years ago: http://www.originalgreen.org/blog/2012/costs-of-sprawl—the-speed.html
It’s worth looking at that picture comparing the size of Renaissance Florence with an Atlanta interchange, and thinking about the vast amount of wasted infrastructure that comes with sprawl.
Compare the lengths of pipes and cables, the lengths and widths of roads, the carparks, the interchanges… this all costs big money. Some of it’s paid for by rates and income tax. Some of it’s being put onto our children’s bill. Some of it is reflected in higher transport costs, which pushes everyone’s costs up, including tradespeople and builders’ fees and building supply costs up. Which results in more expensive houses.
And that’s on top of the higher taxes to cover the higher public health costs from car dependent inactivity and road trauma, and the higher public servant bill (because teachers and health professionals, etc, have to be paid more to cover their transport, and land has to be bought to accommodate their cars…) it just goes on and on.
If we want cheaper living, including cheaper homes, the more compact we can make Auckland, the better.
Agree Heidi. I did forget to mention that I think the real cost of infrastructure needs to be charged. But I’m sure that some people would rather own a house in the middle of no where and an hour long commute on a clogged motorway than rent an apartment in a central suburb. As long as everything is priced correctly without subsidies then people can choose what suits them best.
Stu , an excellent piece.
I note the Unitary Plan was set in place against the back drop of “Low Carbon Auckland (2014)” with a defined carbon reduction target.
“To me, this implies Auckland Council’s draft Unitary Plan clearly did not provide sufficient capacity for housing.”
I am not entirely sure that this is true. Within about 400m of where we live there are 6 apartment projects that were consented and didn’t reach the build stage (Summer Gardens, three on Anzac St, one on Burns and another on Byron.) In this small area 300 apartments could have occured; and this doesn’t count the considerable portion of land that Council tried to sell on Huron St – the piece of land where Council thought a multi storey car park was what Takapuna really needed.)
Although perceptions are changing there remains a considerable portion of the population, though fortunately diminishing, that believe they need a house. (Although we currently have a house I imagine our next move will be to an apartment.) For most who want a house that means that they will need to look towards the outskirts of the city because that’s where they can afford to buy. We have two daughters in that situation.
Unfortunately in terms of an emissions perspective Council does everything that they can to facilitate this outwards movement. If the road is congested they build more roads, which others pay for. If people complain that they can’t access PT then Council/AT spends huge amounts on free park and rides, which others pay for. In the case of the North West they have dragged their heels on public transport.
Should more land be made available for intensification within the city boundaries? Undoubtedly yes, but I don’t think the land price is the major contributor preventing the uptake of apartments.
Yes Auckland is hellishly expensive in terms of housing/ land prices and something needs to be done. I wonder what the impact on housing costs was with the arrival of air bnb that very quickly removed a significant amount of housing stock from the market?
All the transport budget in Auckland seems to go to building roads and PT to the sprawling suburbs. I have lived in the central isthmus for 25 years and I really can’t think of a single transport development anywhere near us (unless you count the southwestern motorway which I don’t). Even light rail is now all about moving people to the airport.
If the government or council actually developed some decent non-bus PT for the central suburbs I’m sure the developers will come in droves. But while all the money is being spent elsewhere there is no incentive for a compact city.
What ever happened to ATs plans to build light rail on Sandringham/dominion/Mt Eden/manukau roads? I bet that would cost less than the stupid airport route and seriously promote well located development.
Yes, I agree. Or even decent electric bus on priority lane PT in the central isthmus. Yet the big programmes on rethinking our arterials seem to be floundering because the change-averse managers are too comfortable with what they’ve done in the past.
Gosh does Auckland have a transport budget? I thought they didn’t which is why we are now having to pay an extra 10 to 40 cents more a litre for petrol in comparison to other places around NZ because they can’t pay the bill for their “great” roading plans. If we had a better public transport system, something more like Japan and Singapore then it would decrease car usage on the the roads. I’d rather pay for that than a bloody great tunnel that I never use.
I’ve never used Waterview either.
Weak stuff. Enable intensification all you want, it will make minimal difference.
The longer we cling to the neo-liberal dogma of solving housing through planning deregulation, the longer we won’t solve the issue.
The only way the issue will be properly addressed is through the government building housing en masse – social and affordable. Leasehold, rent to buy, and shared equity.
Is that really a proper solution though? If cars were massively regulated and very expensive would the best solution be for the government to build cars?
Not sure about that comparison. Housing is a fundamental human need.
Is housing massively regulated in Auckland? Arguably, the Unitary Plan is one of the most permissive plans in the western world.
And even if an unbiased market could be the solution, it’s simply not the solution when we’ve had decades of it being so skewed. I agree, Zen Man, and I wish council would get into providing housing too, given they are the owners of many of the carparks.
Swap cars for food then. Imagine every loaf of bread having to go through council consent. Sorry you can only sell vogels in Epsom not Pams.
Even if we do have the most permissive plan in the western world that doesn’t mean it isn’t massively non permissive. There are still all sorts of stupid rules that just aren’t necessary. The only rules I think make sense are height to boundary (but the current rules are often too restrictive) and safety related rules.
The council shouldn’t be telling me how big my front or back yard has to be, how many car parks I need, how long my house has to last for, who can build my house, how many houses I can put on my land, etc, etc.
I think Council does need to regulate things that have an impact beyond the property boundaries, though. So the ratio of permeable to impermeable area is important – it has a big impact on flooding and waterway health. And the insulation and energy efficiency of the building is important because it affects the energy needs of the city moving forward, the carbon emissions we create, the public health outcomes. (I won’t talk about carparks… 🙂 )
” If cars were massively regulated and very expensive would the best solution be for the government to build cars?”
JJ, you mean like in 1960’s NZ? The immediate solution by families was that they owned many less cars and family members walked and biked.
The major difference in the hierarchy of needs is that people need houses and they don’t need cars.
“I wish council would get into providing housing too”
I never used to think so but why not? If a case is made out to spend endless amounts on roads then why not houses?
And Heidi please talk about car parks. Auckland Council has over $200 million, and probably knocking on $300 million invested in car park buildings. What investment would produce the better outcome for Auckland? Subsidised parking that barely covers the cost of capital; or another 450 odd apartments that could help alleviate desperate housing need and ease pressure on the rental market that is costing the government dearly in terms of providing short term accomodation and accomodation supplements.
The government will inevitably have a strong role in the next decade, whether Labour or National – I’d take out “leasehold” from that list though, shared equity would be better and simpler. Will try to look at some economic arguments around that in a later post; appreciate the reminder!
Leasehold has been widely used throughout Europe.
But whether it’s that or shared equity doesn’t really matter. The key is to markedly improve access to home ownership. The government is disappointingly like National in its market- dominated approach. The is patent market failure.
Even by the government building housing and selling at no profit housing would be much more affordable.
Mr Zen: The thing is the government has to comply with regulations, thankfully, so even with a massive state led building programme it is essentially that planning and building regulations are good. They need to protect, but not restrict. Not enable poor building practices like leaky buildings, for example, but do enable good locational and form outcomes seen in great cities the world over.
So, like with the transition to the post carbon society, there’s not one single silver bullet but a combination of critical moves that are required.
There are about 30,000-40,000 homes empty in Auckland. Why? Owners are living somewhere else and the Auckland home is a holiday space. Rents are too high, the average person has to pay about 3/4 or more of their pay packet to the landlord (if they are renting privately). The increase in rates (that is land and water rates together) is now sometimes being added into the rent but there are a lot of landlords getting the tenants to pay the water rates separately. Auckland pays double or triple the rates compared to other areas – rate payers add up your water rates for the year and then add in your property rates to get the real cost of your rates per year. Auckland Council has the cheek to say we pay the lowest rates in the country. I’d rather put a water tank on my property and not pay water rates. If my water tank is low then I’ll happily pay someone for the water to refill it. That will work out cheaper than being on the Watercare system.