Going for Housing Growth: Filling the housing donut?

Hot take: it should be affordable to live in Auckland.

You may not be surprised to learn I’m not the only one with this hot take. Indeed, the Minister of Housing recently took the notable step of saying house prices should come down, something common wisdom says should be a politically toxic thing to proclaim out loud.

Many factors contribute to high housing costs. The expert consensus is that the core driver has been insufficient supply to keep up with changing demand as the population grew, some of the population aged, wages rose, and existing housing stock got old; that, plus the fact that housing supply has been primarily constrained by low-density zoning.

The Unitary Plan helped, but it still has holes and generally does not quite go far enough to unlock enough capacity to fill our housing needs. Set-back mandates and restrictive rules around recession planes (i.e. how close to the property line you can build, at what heights and angles) have led to poorly designed sausage flats, and missing opportunities for a perimeter-block housing approach.

The biggest hole in the Unitary Plan — sitting right in the middle of our maps — turns our city into a housing donut, by focusing intensification into lower-demand areas that are poorly served by public transport, like Te Atatū and Flat Bush.

Filling the housing donut is critical for a lot of objectives we care about. For example, building homes not just in bulk but in the right places helps us unlock the productivity benefits of agglomeration, reduce the need for car travel, and develop the kind of mixed-use neighbourhoods – shops, schools, housing, parks and workplaces within walking distance – that people love.

To try and address this centrifugal effect, the previous government launched the National Policy Statement on Urban Development (aka the NPS-UD) and subsequently the Medium Density Residential Standards (MDRS), but these have both been consistently undermined by Auckland Council.

Earlier this year, the Minister of Housing, Chris Bishop, directed Auckland Council and its independent hearings panel to fast-track the NPS-UD reforms, given the uncertainty caused by the MDRS repeal.

However, Auckland Council is pushing out deliberation on more housing until 2025 at the earliest, arguing that because every walkable catchment area might possibly be affected by flooding, it should delay rolling out more housing in all of them. Given the time it takes to consent and build things, it’d be 2028 before Auckland saw a single apartment built according to 2020-era reforms!

Enter: “Going for Housing Growth”

So it was a welcome surprise when last week the Minister announced “Going for Housing Growth”. This is a suite of policy reforms designed to a) direct councils to increase housing capacity, and b) make it easier to build the kind of homes that people actually want to live in.

Let’s take a look at some of the key elements of the proposed policy.

Housing Growth Targets

The crown jewel of the new policy is replacing the MDRS (the hard-won and formerly bipartisan policy to unlock three-story townhouse development in the suburbs) with a broader mandate to unlock 30 years of land for housing supply.

Measuring hectares of bulidable land land with a unit of time is a strange thing to do – what does 30 years of land look like? Essentially, it means we must consider how much more housing we need over the next three decades, and plan for it appropriately.

Most Councils would argue that they have already done this, but I’d argue they’re incorrect. Demand estimations have indeed been done, but are usually done poorly. For example, Councils have:

• relied on projections that have consistently underestimated population growth
• not measured what is actually likely to be built by the market
• not considered how wage growth and demographic change will affect housing demand
• not considered the need for renewal of the existing housing stock
• not considered the historic under-supply of housing

The new policy is signalling good things in turning this around: the Minister has talked about requiring Councils to consider what can feasibly be built, and to use generous assumptions around population growth. But to be really committed to housing affordability, the needs to consider all of the above.

There is a deeper problem here: the Resource Management system is deeply deferential to clear national direction, but becomes extremely legalistic and bureaucratic when Councils are given discretion. Replacing something as specific as the MDRS with something as vague as “30 years of land” is likely to result in a few years of lots of legalistic wrangling and not much house building.

Intensification in the right places

Fighting back against the predatory delay by Councils and Independent Hearing Panels, the Minister announced a suite of changes to the NPS-UD. In contrast to the vagueness around the housing targets, the NPS-UD changes are very specific — and very good.

Specifically, the Minister has announced that the NPS-UD changes will include:

• Closing off what he rightly called the “interminable and frankly boring” debate around what counts as “rapid transit” by having the government simply publish a list of the routes that qualify.
• Introducing a new class of “strategic routes”: these are high-quality bus routes that are ready to support more intensification. but are not captured by the definition of “rapid transit”
• Directing Councils to generally plan with regard to demand and access to different services

These are critical changes for filling in the housing donut. The lack of integration with transport infrastructure has been one of the biggest gaps of the Unitary Plan – and is one of the greatest threats to its political sustainability.

Qualifying Matters & Special Character Protections

The NPS-UD allows for exemptions to the intensification rules if a “qualifying matter” is present. This is fundamentally because there are some parts of the city that we just don’t want to intensify — like places with cultural value, or areas that are at risk of flooding.

But Councils have been abusing the open-ended nature of qualifying matters to delay and avoid intensification – and the Minister has noticed:

However, some councils have misused these exemptions, relying on unlisted exemptions without sufficiently justifying why they actually make intensification inappropriate, and not properly undertaking any site-specific analysis.

Most notably, Auckland Council has been avoiding filling the donut by introducing bizarre “special character” controls over whole neighbourhoods, and applying them in incoherent ways.

To date, these special treatments have been a major source of delays in the Independent Hearing Panel process. That’s because you’re asking a small, under-resourced group of people to simultaneously assess a) whether a qualifying matter is valid, and b) whether the Council’s application of the qualifying matter is valid.

These are inherently value-laden judgements, not just evidence-driven, and probably should be a political decision. It would create better outcomes and move the process along faster if Councils were required to submit qualifying matters and their methodologies to the Minister for approval, and the IHP simply assessed whether the Council’s application of the qualifying matter was valid.

Balconies and floor area requirements

If we’re on the cusp of an apartment boom, it’s important that apartments cover a range of different sizes, incomes,and lifestyles — not just luxury penthouses for the wealthy few. To support a variety of options, the Minister has announced that the NPS-UD changes will remove the requirement for balconies and minimum floor areas in apartments.

In an ideal world, everyone would have enough money to afford plenty of floor space, some of which would be al fresco – but that’s not the world we live in. The real world consequence of banning small apartments is not that every person gets to live in spacious accommodation, but that people wind up sharing normal-sized houses with a large number of other people.

This might be fine for student dorms, but when people start to get into their 30s it’s just called overcrowding. This kind of housing situation is a large reason why respiratory diseases like COVID-19 spread so much more readily in the poorest parts of Auckland. It’s not good for any of us.

Mixed Use

Intensification is a massive opportunity to inject vibrancy and life into the places we live – and enabling mixed-use, that is, allowing people to live, work, and play in the same area, is the key to making intensification work really well.

The Minister has signalled that the NPS-UD changes will include the ability for people to open small shops like cafes and dairies anywhere in the city, and to allow for more expansive commercial uses, like metro supermarkets, restaurants and offices in the core NPS-UD catchments.

This is good, smart, and vital to making intensification a politically-sustainable endeavour. We’re embarking on a 30-year project to redesign our city for the 21st century – and, if the construction of apartments brings with it the construction of vibrant, mixed-use neighbourhoods that provide what people need to live a good life on the local level, then it will be a project that otherwise disinterested or disgruntled neighbours can get behind.

Density and mixed-use are not the same thing, but they are closely related, and form a virtuous circle. Mixed-use is a key part of making density work, and density is a key part of making mixed-use work. The more people in a neighbourhood, the more customers for local businesses and participants in local activity; and more businesses and local activity means more jobs, more things to do, more fun and interesting places to be.

Greenfields growth

Planning policy in the latter half of the 20th century was essentially an experiment of deeply distorting the housing market by broadly prohibiting redevelopment in urban areas, while lavishly subsidising the many costs (transport, utilities, water) of greenfields development — an ideology that Auckland bought heavily into, sprawling out across its green edges and agricultural “food baskets”, and subjecting people to ever longer journeys and more time spent sitting in traffic, just to be able to have a roof over their heads at each end of the day.

We’ve now largely exhausted the places where it’s possible to cheaply build new houses on the city fringe – which in turn means that the best and biggest opportunities lie in filling the housing donut. And, the high costs of infrastructure have increasingly been reflected in our planning policies: Auckland Council’s appetite for endlessly expanding the city has been curtailed thanks to planning instruments like the Rural-Urban Boundary.

In a fervour for developing both “up and out”, the Minister wants to replace the RUB with a new policy that allows greenfields developers to build housing as long as they are willing to pony up the costs for the necessary new infrastructure. Although the Minister sees this as a liberalisation of the rules, and it might look good on paper, it’s hard to imagine that any developers will be interested in this. They’ve already baulked at being asked to pay just 20% of the costs of infrastructure, so they’re unlikely to warm to the Minister’s ask that they cover 100%!

In conclusion (for now)

Greater Auckland, as a member of Coalition for More Homes, has recently been involved in advocating for better outcomes in the Plan Change 78 process. We’ve experienced the blunt end of how the resource management system is working through filling the donut — and it’s not pretty.

So it’s laudable how quickly and how far the Minister plans on going to rectify this situation.

Put together, this is a mostly coherent package of reforms, that will probably go a long way in filling the housing donut. Whether the package will be a success now depends on the playoff between technocratic delays to implementation, and the political will of the Minister to enforce it.

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