Planning rules the cause of housing crisis

Auckland Council’s compact city plans are slowly being screwed by good evidence that proves that it can’t be achieved and that it is having a massive effect on the cost of housing.

Now even Labour are saying it’s Auckland Council’s fault. Phil Twyford has written a missive, in conjunction with Oliver Hartwich, which clearly fingers the lunatic brigade at Auckland Council for high land and house prices.

With Labour getting this, you know that the Council is going to be punished if it doesn’t call it quits soon because now their friends are sick to the death of them.

A big part of the problem in Auckland is escalating land costs. Linked to this, too few houses are being built. The houses that are being built are too expensive.

To quote Bill English: “It costs too much and takes too long to build a house in New Zealand. Land has been made artificially scarce by regulation that locks up land for development. This regulation has made land supply unresponsive to demand.”

We agree with the Minister.

Our own research leaves no doubt that planning rules are a root cause of the housing crisis, particularly in Auckland but not only there.

The situation is made worse by the way new infrastructure is financed. Councils, which regularly cop a lot of the blame, are operating under planning and finance rules that are simply not conducive to residential development. They have no financial incentive to promote it – quite the reverse is true.

We believe this view is more widely shared across the political spectrum than first meets the eye. But although politicians have been blaming planning rules for the high cost of housing for a decade now we are still waiting for genuine policy changes that are needed to restore New Zealand’s housing affordability.

Because this is a national housing crisis that has grown over decades and under governments of different hues, playing political blame games is pointless. You cannot solve problems in retrospect. We need to face the facts and work together for real reform.

Those are interesting statements from Twyford, since he is opposing a housing development in his own electorate, as well as opposing RMA reform.

What is refreshing though is to hear a Labour MP call for the market to be in control rather rather than bureaucrats.

In our view, there are three issues to be addressed.

First, urban growth boundaries driving up section costs. Second, anti-density restrictions stopping affordable housing. Third, the expensive and inefficient way we fund infrastructure.

Let’s go through these one by one.

When you consider that land inside Auckland’s urban boundary now costs around 10 times more than land outside, it is hard to dispute that the city’s urban growth boundary has driven up land prices.

In essence, the boundary around the city has created an artificial scarcity of land. It is an open invitation to land bankers to speculate on rising prices.

It is also discouraging developers from building affordable homes. It makes no business sense to build affordable homes on expensive land.

The boundary rules need to go, immediately.

Now for the revelation that a Labour MP recognises the market can do more than bureaucrats.

The final problem that needs to be addressed is the way we fund infrastructure. It is expensive and inefficient, adding huge dollars to the cost of new housing.

Currently the cost of drainage, roads and power in a new subdivision are financed by the developer. Likewise, the developer pays a portion of the cost of connecting the new development to roading, water and power networks via development contributions levied by the council.

Even though developers nominally pay for all these costs, they are immediately passed on to the new home-buyer.

This front-loads tens of thousands of dollars onto the price tag of new homes and means that long-term infrastructure is effectively paid off via their mortgages.

We propose three modest ideas:

•Instead of using urban growth boundaries, empower communities to protect places that are of special character and value to them.

•Free up density and height controls and rely more on high urban design standards including requirements for open and green space, to allow more affordable housing in the city. Let the market discover where and how people want to live.

•Take developers out of the business of financing new infrastructure. Instead, spread the cost over the assets’ lifetime, either by issuing local government bonds or establishing Community Development Districts.


All fine ideals and make for good reading in a newspaper but will Phil Twyford promote these changes through the parliament, or just follow the party line?

I’m sure there are plenty in Labour who will horrified that one of their stars is prepared to let the market decide where and how people live.


– NZ Herald

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