The Government has ordered councils not to allow greenfields housing developments to sprawl out into highly productive farmlands, but also wants councils to open up more land for housing. Its default position is that the burden of increasing available land for houses should be taken up by densification of 'brownfields' land, rather than 'greenfields' land.
That would make sense if Governments of both flavours supported that order with funding streams and debt headroom to help councils afford the extra infrastructure and to build up the public transport networks necessary to make densification work. But that is not happening.
Instead, the Government is simply ordering councils to allow more densification, without adequately funding the public transport or allowing for the NIMBY-fueled political backlash that is now consuming councils from the political ground up. It is magical thinking of the highest order and is now playing out as councils reject or subvert the order earlier this year to allow three three-storey townhouses as of right on any suburban section.
This creates an awful Catch 22. Not allowing councils to build ‘out’ or helping them much to build ‘up’ is a recipe for yet more land price appreciation captured by today’s land owners. This comes at the expense of future renters locked out of the home ownership they need to build stable families and finances, and keeps them paying the world’s most expensive rents.
This worsening of the ‘not much up’ and ‘not much more out’ doctrine is all because median-voting and home-occupying multiple home-owners refuse to allow their capital gains to be taxed, and refuse to allow their governments to borrow to fund the sufficient building of new homes. They know the higher debt means slightly higher interest rates, which would depress the values of their land in any future surge needed to capture tax-free gains for themselves and their children.
The NIMBY-flavoured voters, who also vote in council elections at much higher rates than young renters, are also able to amplify the naturally passive-aggressive ‘quiet quitting’ approach of councils on these Government orders in favour of densification. They also oppose the rate increases and higher local debt needed to fund the infrastructure.
The end result is yet more of the same widening of inequality and the creation of a two caste society: the families of home owners and the rest, who can only hope for stable and prosperous futures in New Zealand if they marry into that top caste.
Here's the NPS-HPL to go with the NPS-UD
This has been in the policy wonk works for over two years and now the definite statement is out. The Government formally issued its National Policy Statement for Highly Productive Land (NPS-HPL) yesterday, which will force councils to “map and manage highly productive land to ensure it’s available for growing vegetables, fruit and other primary production, now and into the future.”
It is designed to encourage intensification of housing and block sprawl, especially with the development of lifestyle blocks. The problem for housing supply with this policy is it stops the easiest and most in-demand form of housing development, which is greenfields.
Home buyers and developers prefer to buy house-and-land packages because they know they’re a potentially much more profitable investment, given the much larger, leveraged, tax-free gains on land value escalation in recent decades than any other assets. For example, section prices in Hamilton rose 656% between 2001 to 2019, a recent Treasury study found.
Councils will be in two minds about this one. This policy supports their reluctance to zone for greenfields, given the extra infrastructure costs councils often have to bear in lengthening water and roading networks and building new parks and public facilities. They’d prefer brown fields development, but the problems there are intense too, given strong political opposition to intensification from the NIMBYs who vote at much higher rates in council elections than young renters.
‘You must do this, but we won’t help much’
This policy emphasises just how hemmed in councils feel by Government edicts to enable more land supply for housing, but also force the infrastructure costs and political risks down to them. This is also being done without Government sharing any of the GST and income tax revenue benefits of population growth, or allowing councils to borrow beyond the current limits set by the Treasury-run Local Government Funding Agency (LGFA), which are designed to retain the AA+ sovereign credit rating.
Councils feel they can’t grow out and the can’t grow up, but they are being ordered to by a ‘boss’ who also makes them pay the political and financial costs, without sharing the benefits or taking the pain of having more debt, higher interest rates and (therefore) lower asset prices. For councils, this is another ‘lose-lose’ policy edict that underlines the magical thinking around housing supply throughout Government at all levels. That thinking is that housing supply can grow through densification mostly, and without increasing debt much.
Neither is either true or possible with the current political dominance of low-debt and low-rates NIMBYs at council level and low-debt and low-rates politics at national level.
The magical thinking that’s supposed to reassure and distract
The end result is the impression the Government wants to do something about increasing land supply for housing, but the reality is councils are not allowed to growth either ‘up’ or ‘out’ enough to increase housing supply to improve housing affordability. This continued shortage is then weaponised by the current tax settings that reward owner-occupiers with massively leveraged and tax-free profits on land price appreciation.
In the end though, this disguised policy of enabling median-voting homeowners to get richer through land price appreciation is rewarded in central and local elections by re-elections of those supporting the status quo, or at least those promising to block densification, higher debt and higher rates.
The losers in this scenario of a defacto refusal to acknowledge the reality of what’s necessary to massively increase brownfields housing supply are young renters locked out of home ownership (unless their parents already own property) and any climate emissions reduction hopes.
In effect, median voters and the politicians that court them are choosing continued low debt, low interest rates and more tax-free gains on land price appreciation over affordable and healthy housing for the half of our children growing up in expensive and often unhealthy private rentals.
Those poor children and their parents won’t be able to afford to buy the fresh vegetables produced on that land.
71 Comments
NZ firms are reluctant to invest to reduce the need for labour (eg machinery to pick, sort & pack produce). They appear to prefer to hire (exploit) cheap labour from overseas. That is one reason why our productivity is so low in NZ. Productivity gains won’t happen if firms don’t invest capital to increase the productivity of our labour.
Repeating the 90s all over again....Auckland city councils went up against the Akld Regional Council which was trying to stop outward spread. Meanwhile auckland councils wouldn't allow much development inside the city. City and regional councils both having green party pollies doing their stupid best and fighting each other. Similar things happened at Wellington city council and now you have young greens openly disagreeing with the previous young but now old greens
Green Party rank and file criticise Wellington city councillor over her housing votes | Stuff.co.nz
https://i.stuff.co.nz/national/125579400/green-party-rank-and-file-crit…
Wellington councillor Tamatha Paul seeks Green nomination after colleague dumped | Stuff.co.nz
https://i.stuff.co.nz/dominion-post/news/wellington/128690474/wellingto…
Problem they have, they are trying to put a blanket policy over areas and suburbs that did not get the infrastructure built for intensive housing. They don't have the parks, parking facilities, access roads, schools, medical centers etc etc...sure if they do it in new Planned subdivision which take into account all of these things then the social outcomes will be a lot different. Doing it in these existing suburbs is just asking for trouble on the social front. Although it will make great TV on neighbours at war..bound to get a few episodes out of it.
Agreed. People in Wellington are doing the only thing they can currently, chopping out the land on their hill sections and building in granny flats or even another house if they have the space for it. With the way the infrastructure is crumbling now (pipes bursting all the time), I am not sticking around to pay for it. Farewell Wellington. While you've been a great time, I shall enjoy lower house prices and less wind elsewhere, and pop back from time to time
It's by no means impossible to retrofit infrastructure into existing urban areas. A lot of the costs of fringe greenfields developments are hidden. You mention roads and carparks for example. Greenfields developments add more car-based trips that can't be catered for any other way, and stress the overall network such that upgrades are required elsewhere. Whereas urban brownfields development creates more public transport viability, and in fact density gives you economies of scale in terms of usage etc.
The problem is that while brownfields adds PT viability, there's little to no appetite or capability to go back and retrofit. See: West Auckland (Light Rail? Busway? Oh, painted bus lanes on the motorway! Also, here's 10,000 houses, which will already be finished before you get proper stations) and the Central LR corridor which will suck in almost all of the transport spending for the Auckland region, along with duplicating the Harbour Bridge with tunnels that cost 10x as much as a secondary Light Rail bridge.
So you just end up with the same mess but asking prices through the roof in the central areas and the fringes mopping up most of the new building because the land is marginally cheaper, but it comes with a two hour commute at peak.
Other countries seem to be perfectly capable of growing. The only real alternative IMO is to become a country of pensioners with all the young leaving to places that have a population that supports skilled jobs, nightlife, and a life that is more than just watching Shortland street and going to bed. Auckland is about 1mil short of being an interesting city. All that needs to happen is council stop preventing development, government to fully pay for major public transport projects like they do highways and motorways, and government to take over the 3 waters because councils just use them as a cash cow.
Europe and the USA are full of interesting small cities. Try York or Toulouse or Frankfurt. Auckland is too big - a decline of about 200,000 would make Auckland a liveable city. It would ruin my wealth (3 Auckland properties) but would be good for young families buying or renting.
I think factors way beyond population affect a city’s vibrancy and cultural life.
Think forces such as globalisation, and rentier economics, in particular.
Auckland used to have many interesting galleries and specialist shops in the CBD back in the day. We also had warehouses (demolished) near the waterfront that housed some great concerts and events.
Now, the CBD offering is quite generic and bland. Or grotty.
York is wonderful to visit but it's a bit too small to be an interesting city to live in. It feels busy because all cars are pretty much banned from the city centre so it's great to walk around. It's also very very white and doesn't offer as much cultural interest as many other bigger cities.
My sister lives in York and grumbles it is white and middle class. It depends on your cultural interests. York may have fewer art works than say Auckland but it has a wonderful railway museum, a worthy gothic cathedral, viking and roman history and York races are a major social event attracting visitors that Auckland races could only dream about. York has less modern art and more decent pubs - that matches my preferences.
York is not totally white - probably less so than South Island - does it really matter? Who complains about Lagos or Nairobi being very very black?
You don’t need 2.5 million people but you do need density. Most NZ cities look like ghost towns after 5pm because going out requires a trip in the car and no booze and hard to convince friends to come who all live miles away. Trust me I have lived in denser cities and Auckland is so much more boring it is ridiculous and the rest of NZ is another big step down from there.
I agree with you. Auckland after 5pm becomes a collection of small villages - some dead (Glenfield, Beachhaven) some alive but closing early (Northcote, Birkenhead). My daughter has spent the last year living where Queen st meets K'rd - it ought to be the very centre of Auckland's buzz and action but now she is thinking of moving back to the shore despite the appalling commute .
All private sector money is created by banks as debt and when the debt is repaid the money ceases to exist. The governments debt is different from private debt though as it simply borrowing back its own currency to help maintain the Reserve Banks interest rate target and not to finance itself and also government budget deficits are the only way in which households can increase their net savings. (sectoral balances).
Both major political parties have signed a pact for turning Auckland into ghetto houses.
Using supply as a cover but in reality...........earlier a 3 bedroom house on 600 sqmt plus was for $800000 to 100000 though old house but strong and open and today find tiny matchbox houses on 150sqmt though new but cramped and are still selling at $900000 to 1.2 million.....so how does it helped and whom. What was more value for living - old houses with sections or new matchbox houses.
Went to Howick to meet a friend and in tiny lanes which were already congested with 100 houses on that narrow street, now have 150 houses with potential to go uptill 400 townhouses in that lane.
This supply issue has been used to push vested biased speculative interest. House values have not fallen if earlier one litre Pepsi was for $3 and if today 200ml is for $2, it may be cheap as per Robertson's and Jacinda but is it.
That's all well and good, but the alternative is the city expands out forever and doesn't service new areas with rapid transit - so two hours each way commutes with no alternatives to driving become the norm - and justified on the basis that 'people spend hours on the train each way every day in London' or other such garbage. All because a bunch of rapidly ageing geriatrics in prime central suburbs with access to gold-plated transit don't want to share.
I agree, but the comment I was replying to didn't think so.
I don't see why we can't have five level terraces with double garage/workshop space at ground level and then family living for three levels + rooftop, but it's not someone wants to offer here so I can't buy it.
I'm not interested in a pokey two level three bedroom one with bedrooms that are too small to actually be considered proper bedrooms with one carpark at best, but that's the only real option the markets are offering. Supposedly pre-fabbing terraces works up to five levels. It's the bare minimum that we should be building along the Light Rail corridors.
5 levels in one house, no way. We need smaller homes not bigger as the occupants per household is decreasing in most suburbs except the benefit suburbs. Also we are a car dominated society so the more bedrooms and bigger the home, the more parking is required. Planners are stupidly trying to change that by restricting carparks.
No shit, if you make it super expensive to own bigger houses, people have fewer kids. The solution isn't to then double-down and only provide pokey three bedrooms at exorbitant prices. The cure to a disease generally isn't more disease... unless we're talking hepatitis.
But I really think people who argue that we should be build smaller homes because people are having less kids are purposefully ignoring whether people would have bigger families if it was more affordable to do so responsibly, or else you risk putting the planning cart ahead of the demographic horse.
Both major political parties have signed a pact for turning Auckland into ghetto houses.
Pure histrionics. Auckland is not the first city in the world to have to liberalise zoning and enable intensification. It makes sense to allow intensification closer in to the city and closer to public transport. Endless sprawl is far too expensive to maintain, in comparison.
This is not new. Flaxmere is located where it is because protection of elite soils was the policy in the 1960s. Located on the former riverbed of the Ngaruroro River.
In my opinion the capacity to feed our population from within our borders is a major component of national resilience. The availability of resilient soils of volcanic derivation that are capable of the intensive production practices to sustainably deliver this are limited. They are a finite resource.
The characteristics of these soils mean they are resistant to soil compaction, have good water holding capacity and good soil drainage. Clay faction alluvial soils do not share these characteristics. CEDENCO painfully discovered this on the Poverty Bay flats in the 1990s. And maize growers in the Manawatu discovered the same in the 1980s.
If New Zealand consumers want to buy NZ grown fresh vegetables then they must recognise this.
As Bernard points out, there are costs that come with this policy. Infrastructure and public transport issues exist irrespective of whether green fields or brown fields is applied.
The political issues smack to me of urbanites wanting their cake and eating it too. As a nation we really do need to face up to some costly decisions to ensure food security for our future generations.
“The problem for housing supply with this policy is it stops the easiest and most in-demand form of housing development, which is greenfields”
This is lazy journalism IMO. I’m not expert in this area but it is clear that NPS- HPL does not require Councils’ to restrict all greenfields development, just on our most highly productive food producing land.
Interestingly, the current densification policies, and incentivising new builds, appear to be reducing the housing shortage, in Auckland at least. I’m still seeing a lot of homes being built around Auckland. And increasingly, ‘for rent’ signs going up.
Overpriced sardine boxes in the middle of nowhere with no outdoor space or proper parks, claustrophobic roads, lousy public transport and only some big box stores and a Westfield 10-15 minutes drive away as a "town center".
Anybody that's experienced living in Europe would laugh and weep at the urban disaster they are so intent on building in Auckland.
Yep, that experiment has been done. Once massive sprawl ages, it turns into a slum.
https://www.newsmax.com/newsfront/apnewsalert/2020/01/22/id/928925/
I think the changes the present Govt. is making are so bad that they are great.
The system needs to be rebuilt and anything that can bring about its collapse sooner, which these rules and their implementation will be far better for the country long term
I'm beyond being surprised how at both the Central and Local levels the Govt. cannot execute simple housing affordability plans. We are managed and led by incompetents, or if they are doing this knowingly, then it's because of their own vested interests.
The main issue now is not the rules, but the execution/implementation of them,
So for comparison, one of the most affordable housing jurisdictions, Houston Texas, ALSO puts aside land for non-development which can be elite soils, environmentally sensitive lands, future transport corridors etc. They actually plan ahead in a macro way (Adam Smith's invisible hand) and then allow the market total micro freedom (you think you have total freedom but still are just operating under the macro rules).
Part of these rules then says any other land is potentially available to be developed at any time as the market dictates. IE both up and out. And then leave it to the market via the developer to put covenants on individual developments to how that looks like.
This simple presumptive right-to-build rule prevents land bankers from being able to speculate on land and makes ALL housing from the fringe to the CBD far more affordable. So Houston has both lower density and far higher density than say Auckland, and everything in between, as the market dictates, and it is only at 3 to 4x median income multiple.
Yes, this causes the city to initially grow in a more nodal form, a 'ragged' way with more space between developments as the city leapfrogs around these no-go areas, but some of these areas were also owners who did not want to sell (say a farmer on the edge of the city).
What this means, as the market changes over time, then there is the space to build into between the growth to cater for these needs, ie infill higher density, with the extra schools and commercial that is needed and as this article points out is causing problems with NZ higher density development.
This irony is now Houston, which the non-sprawl compact city ideologists hate, is going through a reversal where it has the greatest growth in the USA of the inner city and suburb infill housing, with it designed to meet the market in terms of amenities AND all at very low median multiples. IE the growth is driven because of changing lifestyles, NOT because that is all they can afford.
We liveon a 1/4 acre section in central New Plymouth. We could subdivide below the minimum 250m2 section size stated in the District Plan according to a surveyor I know. The council would have to approve it he says. I suppose this would allow for tiny homes. The govt sounds serious about this.
We need to get rid of all the councilors & planners, and let the slime tell us what to do.
https://www.nature.com/articles/s41598-022-05439-w
You could solve Aucklands planning & transport woes with a cup of sugar.
Magical thinking is a very good term for policy work like this: saying something is so, without action, just doesn’t make it happen.
If I were of a Machiavellian turn of mind, I’d be wondering if councils were being set up to fail in the tasks they are being set, so planning and other functions get scooped up by central government ‘sweeping in to save the day’.
That said: “Never attribute to malice that which is adequately explained by Incompetence.”
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