Yesterday, the government announced an ambitious new plan, a grabbag of housing policies ranging from okay to highly laudable designed to lower the price of housing. However, this package is a donut: a tasty outer with a great big hole in the center…
For decades, New Zealand has faced two major shifts in the general population: significant growth, and significant aging. During the same period of time, the number of houses consented each year has been both internationally and historically low. Meanwhile, congestion has grown exponentially, meaning the cost of provisioning new transport infrastructure at the edge of the city precludes opening up more land for development. These have all produced a perfect storm which has made land extremely scarce.
Consequently, the price of land has skyrocketed.
It is stated often, but perhaps not enough, that the primary driver of housing cost increases has been the cost of land. Houses have significant intrinsic value, but that value shouldn’t passively increase: given time, houses rot and fall apart. Empty plots of urban land sell for sums similar to their developed counterparts. The missing centre of the government’s donut is a package of policies which deal with this reality.
To see a decrease in the average cost of land, we would have to see population growth weaker than the growth of urban land stock. This would either require massively slashing population growth, or an unprecedented amount of taxpayer money spent on sprawl infrastructure. Each of these things would have severe unintended consequences on the economy and environment, so should not be depended on. This leaves us with a single path forwards: economising on our land use. In other words, we need to intensify.
This not an unsolvable problem, or even an unsolved problem. Auckland has already started doing it. Since the introduction of Special Housing Areas, and then the Unitary Plan, we’ve had an explosion in the number of dense housing typologies being built here. The result? Stagnant rents while the rest of the country surges!
However, flattening out is not sufficient. There are more than 180,000 households in New Zealand who are under financial stress due to the cost of renting. At the other end of the income spectrum, our housing costs are pushing young talent to other countries and stopping other talent moving here. To have house prices fall, there has to be an expectation of rental price decline in the short, medium and long term. To do that, we need to understand what Auckland’s Unitary Plan hasn’t accomplished, fix that, and then export to the rest of the country.
Intensifying by land value
The first and foremost issue with the Unitary Plan is that high land value areas, exactly where it makes sense to intensify, were all but excluded.
The most important signal that the government can send is that high value areas are earmarked for intensification. As part of it’s long-term RMA reform, the Randerson review of existing urban planning has advised that
We see three further ways in which New Zealand’s approach to urban land use regulation
might be designed to achieve more competitive urban land markets:
• more use of land price data and analysis to inform regulatory decision-making
• ensuring new capacity is targeted to high-demand areas
• ensuring a flexible approach to the design of land use regulation.
One implementation of this may be to produce suburb-by-suburb housing targets proportionate to aggregate land value, which local governments would then have to provide for in their urban planning. Such a system would keep housing affordable, not just across the nation, or the city, but at a hyperlocal level, while still allowing for local input into designing their neighbourhoods.
While building tall with wide site coverage are important ways of intensifying, one of the most effective ways of intensifying is by removing space for cars. While NPS-UD has gotten rid of car parking minima, many PT-starved areas will likely still demand land for cars. Kāinga Ora should be directed to provide Transit Oriented Developments on top of, and around, as many mass transit stations in the city, as possible, where people can confidently live car-free, or at least, car-lite.
Manukau Station put a university on top of it, and it’s a massive success. Aotea Station will soon be providing apartments, offices, and shops above it with the Aotea Central development. Similar developments could be achieved along many other rail stations in Auckland. The government could use it’s fast tracked consenting process to make sure these are an early part of its building programme.
Taking this a step further, we need to be capturing the land value increases driven by mass transit investment. This could be accomplished by a strategy of acquiring land around stations before they’re announced and/or built, or with a capital gains tax/land value tax including primary residences. This would provide a revenue stream for local and central transport agencies making much needed investments into our transport infrastructure.
We also need to be making sure that private development around transit can happen at sufficient scale. With NPS UD, the government is directing local councils to upzone for 6 story developments within walking distance of rapid transit. But in many places in Auckland, our frequent bus services are producing better public transport outcomes than rapid transit trains. Frequent bus routes along each of the isthmus arterials (Manukau Road, Mt Eden Road, Dominion Road, Sandringham Road, New North Road, Great North Road) must be included in this upzoning.
The government must also consider forcing councils to bring forward their NPS UD implementations. Although in theory, councils are presenting their updated plans next year, they will then spend years in front of independent panels. It could still choose to do what it did with it’s abolition of parking minima, sending it through a shorter process, meaning it’ll be affecting change on the ground next year, not in 2025.
Enabling Apartments in THAB zoning
Another major issue is that the Terrace Housing and Apartment Building Zone does not allow certain outcomes that would typically be described as terraced housing or apartments on most sites. In particular, THAB Zone has requirements to provide side and frontal setbacks.
Side setbacks are only set at 1 meter, which may seem inconsequential, however on a 10 meter wide site that amounts to 20% of the land eaten away. Likewise, above 8 meters, recession planes (also known as height-in-relation-to-boundary rules) in THAB are so steep that they impose effective 3 or 4 story height limits on narrow sites. These effects put together mean that apartments are only possible on large sites, precluding the vast majority of THAB zoned land from development.
As the government is forcing councils to zone for 6 stories near rapid transit stations, it needs to be clear that this means allowing 6 stories in practice, not just by explicit height limit. Consequently it needs to force council waive or reduce setbacks and recession planes when THAB zoned sites are adjacent to other THAB zoned sites.
One particularly notable gap in our intensification is 4-5 story buildings. This is because the building code mandates that at 4 stories, residential buildings must provide elevators for reasons of accessibility. This is important as it greatly increases the number of potential homes that mobility impaired people can live in and visit. However, the crudeness of mandates mean that if a building of that height isn’t economic, and it’s not viable to go higher, then that doesn’t get built at all. A better approach, that would likely also produce better outcomes for disabled folk, would be a lump sum payment for builds that comply with Universal Design principles. For many people, elevators are core transport infrastructure and should be funded as such.
Allowing ground floor retail in apartments can also counterintuitively enable more intensity. Without setbacks, living on the ground floor can be undesirable as pedestrians can peer into your living space. Developers will generally try to find another use for that bottom floor, and when shops are not possible, it will be dedicated to parking instead.
Abolish single family zoning
Under the unitary plan, single family zoning (and it’s cousin, “multi housing suburban”) remain the the popular zones. Allowing gentle intensification by-right by enabling typologies like below would mean most existing landowners would be able to cheaply redevelop their properties.
The government has finally stepped up by sending a signal that their goal is affordability, but while tax rules and subsidies may make things more affordable for some sitting on the margin of renting and ownership, building houses needs to be at the centre of their housing programme. There are many pathways there, but it must embark on at least one.