The State of the Nation’s Houses

Auckland has a housing shortage.

Everybody likes houses. Everybody understands that everybody needs to be housed. Nobody wants people to be homeless, or even overcrowded.

People typically choose to live in a neighbourhood because they like that neighbourhood as it is. So, any change to that neighbourhood undermines exactly why people have invested themselves into that neighbourhood. New houses disrupt what people like about a neighbourhood (plus some disruption in the actual–and often protracted–effort of building: Construction sites aren’t exactly known for their eerily silence).

These two facts are obviously in tension with one another: housing construction has broadly dispersed positive effects, but highly geographically concentrated negative effects. Emerging from this is the familiar phrase: “I support housing, just not in my backyard”. It’s easy to dismiss “I support housing” as outright dishonesty, but often these same people will be gleefully voting at the national ballot box for politicians who are promising to build more. This is an insight into the heart of the issue: housing policy is primarily driven by local councillors whose electorate feels the negative effects of a given development more severely but doesn’t capture the positives. Government, whose electorate does capture the positives of new housing, mostly only provides a decision-making framework for housing.

Cities are places where people live close to one another. At some point the house you’re living in imposed the same disruption on its neighbours. If you don’t allow the disruption of people building near one another nowhere can grow into a city. Cities have to rely on an implicit social contract whereby you reap all the benefits of being close to other people, but sometimes tolerate the disruptions they cause, including new housing.

To enforce this social contract, the government has to step in.

This is exactly what Judith Collins suggested during her State of the Nation speech on Monday.

“I am calling on the Government to introduce urgent temporary legislation to make it easier to build a house, until the permanent RMA reforms are completed,” Collins said.

“The legislation would give [the] Government powers to rezone land and avoid frustrating consenting delays. It was done by National following the Canterbury earthquakes. It’s now urgent for the rest of the country.”

The policy would see much of the power over housing consenting wrested from councils and given to central government. The Government would be able to rezone council land to allow for more housing – both through greenfield developments and through intensification.

It would also suspend the requirement for infrastructure to be built prior to zoning and suspend the appeals process so district plans could be completed “as soon as possible”.

The government stepping in to tackle the housing crisis isn’t a new idea. The government is rapidly ramping up the production of state houses, it introduced a National Policy Statement on Urban Development (NPS-UD) which provides a set of principles to plan to, and is rebuilding the RMA from scratch. But you can only make so many state houses in the immediate term. The NPS-UD won’t be affecting plans until ~2024, and it’ll be a few years before those plans build houses. RMA reform may not even be out of consultation by the time NPS-UD hits. Even when it’s passed by Parliament, it may be some number of years before the RMA phases out and this kicks in. Collins is right: the government has a short-term hole in its housing agenda. Giving it power to step in to unilaterally rezone land without appeals would an incredibly effective tool for meeting its immediate housing goals, as well as its broader climate and transport goals.

Collins is also right that the surge in housing supply that was allowed to due rezoning Christchurch has been effective at holding down housing costs. However, Collins speech and accompanying letter to the Prime Minister focused primarily on how to enable more greenfields development, exporting the Christchurch model to the rest of the country. Whatever the pros and cons of greenfields generally, Auckland is not Christchurch. Christchurch sits in the middle of a flat plain, while Auckland is skewered by harbours and fenced in by mountainous forests. Auckland simply does not have the greenfield opportunities of Christchurch.

Last year, Auckland Council economist David Norman attempted to quantify the cost of the Rural-Urban Boundary, Auckland’s mechanism for deciding whether a parcel is zoned for rural or urban use.

Using low estimates of the cost of bulk infrastructure to convert farm-sized land outside the RUB into residential land, we find the RUB factor for residential land inside the RUB is at most 1.6% to 5.2% of the value of the average residential property inside the RUB. Compared to lifestyle-sized land outside the RUB, the RUB factor on residential land inside the RUB is at most 0.6% to 4.2% of the value of the average residential property inside the RUB. These premiums are dramatically smaller than suggested by previous work, which relied on pre-Unitary Plan data and had other limitations.

Fortunately we do have a template for affordability in Auckland: the Unitary Plan. Following its introduction in 2016, housing consents have exploded. StatsNZ’s Rental Price Index, which provides a quality-adjusted measure of rent costs, shows that Auckland is the only city in Aotearoa that is starting to become more affordable. The government should take the tools that Collins is suggesting, and use them to double down on the intensification-first approach offered by the Unitary Plan, while fixing what hasn’t produced housing.

In particular, townhouses have been popular across the city, and the government should consider re-zoning for Multi-Housing Urban (MHU) Zone across the city, which allows typologies like townhouses and 3-storey walk-ups (I have written previously about how that would fit into our suburbs). The Unitary Plan has also failed to produce any new development in extremely high demand suburbs like Ponsonby, Mt Eden, Parnell, Epsom, and Remuera. It is critical that we allow intensification within walkable and bikeable distances of our city centre to meet our climate goals.

Similarly, NZ has always seemingly suffered a cruel catch-22: we need density to justify climate-friendly public transport, and public transport to justify density. This is actually very easy to solve: allow density near existing and planned transit stations. This is one of the core objectives of the NPS-UD, and while the government shouldn’t try to pre-empt the trade-offs that councils are making, it would be worth using this tool to bring forward the obvious upzonings that that will produce. This should include the Dominion Road rapid transit, whatever mode ends up being built through that corridor.

[Climate Change Commissioner Rod] Carr has also been vocal about the need to fundamentally transform New Zealand society in the face of climate change.

“We are going to have to fundamentally change how we move about and how we move stuff about,” he told Newsroom.

“It means more active mobility, more walking, more biking, more public transport using electrified energy sources from renewables. It means EVs where appropriate. It means we use the internal combustion engine sparingly, in special use cases, until they can be swapped out as well. We need to get on with that sooner rather than later.”

Most importantly, with a set of tools like this, you may only need to use them once, if at all. Local communities know what makes their communities great, and when pushed, they know how to allow growth that keeps their neighbourhoods good, and they’d prefer that they let growth happen than having it be done to them.

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