Govt says Auckland would have to double available land to meet its own target of 13,000 extra homes a year for 30 years

By Bernard Hickey

Housing Minister Nick Smith has released an official report from the Ministry of Business, Innovation and Employment that he said showed it was essential that more land was made available to improve housing supply and affordability in Auckland.

Smith said the report showed reduced land availability and soaring section prices in Auckland over the last decade.

"It highlights that with projected population growth, Auckland will need about 13,000 additional homes per year over the next three decades and that with changing household make-ups, the biggest growth in demand will be for smaller households,” Smith said.

The report is part of the Government's response to the Productivity Commission’s housing affordability report. It was also commissioned after Smith met with Auckland Mayor Len Brown last month and agreed officials jointly work on gathering information on land supply. 

Officials studied the availability of greenfields land at the three stages of development – sections ready to be built on, land ready to be subdivided and land in the pipeline for future subdivisions, Smith said.

It found the number of new sections available to be built on in Auckland today was 1,900, significantly less than the 15,000 previously claimed by Brown.

The land ready to be subdivided had a capacity of 14,500 sections, compared to the Council’s development strategy target of 7 years supply of 32,550 sections.

Land in the pipeline for subdivision has a capacity of 54,500 sections, with the Council’s development strategy target being 20 years supply of 103,500 sections.

“This report shows Auckland needs double the supply of land to meet the Council’s own targets," Smith said.

“These targets for land supply are conservative in that they also rely on ambitious targets being met through additional housing from intensification. The Government’s further concern, detailed in this report, is that Auckland’s plan will require the building of 4,000 high-density dwellings every year for the next decade and 10,000 per year after that," he said.

"This compares to 830 higher density dwellings consented last year and an average of 2,674 per year over the past decade."

Smith said officials were cautious that this could be achieved, particularly when previous intensification targets set by Auckland planners a decade ago were not met.

“This report is progress in that we now have Government and Council officials in broad agreement on the actual availability of land in Auckland. We also agree that a mix of new greenfield land release and urban intensification is needed. I look forward to discussions with the Council on their draft unitary plan to ensure these issues are addressed and that the supply of land and housing is increased.”

Reaction and elaboration

Smith later told reporters that a request for the government to give early approval for the Auckland Council's Unitary plan was with Environment Minister Amy Adams.  A draft version of the plan is due out on Friday. Adams has rejected the request given the Government is reviewing the Resource Management Act and a proposal for a  independent body appointed by the central government to rule on the plan. 

Labour Housing spokesman Phil Twyford has criticised the government's response as a power grab from Wellington.

Smith described the Metropolitan Urban Limit (MUL) pursued by Auckland councils over the last decade as a failure and more land was needed to be opened up. 

He said this would put pressure on land bankers to sell their sections, rather than waiting for 'easy' profits of capital gains. He said they were just responding to commercial incentives to make a profit.

Smith said he wanted to remove that incentive by insuring land prices did not rise in the way that had over the last decade.

He also rejected suggestions he favoured more urban sprawl, saying the central government supported the Auckland Council's desire for more intensive brownfields developments closer to the centre of Auckland. He said the government wanted a combination of greenfields and brownfields developments.

Twyford said the government's instincts were to deregulate, which risked creating "massive uncontrollable" urban sprawl.

10 key details from report

1. There are just 1,900 greenfield sections in Auckland that are currently ready to build on. There is greenfield land that is ready to be sub-divided and can handle 14,500 dwellings. Most of that land (560 ha) is yet to be subdivided. The biggest chunk is owned by the government at Hobsonville or in 27 blocks of more than 5 ha.

2. The Council's development strategy requires 20 years worth of land supply, but the 14,500 dwellings makes up just 10 years worth of supply.

3. The report says it's not clear that just increasing greenfields land supply on the fringes of Auckland would increase housing volumes because most of the fringe sections are for expensive and largely stand-alone houses. Their sales have fallen from their 2003 peaks. 

4. The July 2012 Auckland District valuation roll found 11,675 vacant residential sections in Auckland, down from 24,100 in 2002. Over that time nominal section prices have doubled from around NZ$100,000 to NZ$125,000 in 2002 to NZ$250,000 to NZ$275,000 in 2012.

5. Vacant section prices within existing suburbs that are within a 20/25 kms radius around Queen St have tripled to NZ$300,000 to NZ$325,000 in that period. 

6. The average number of multi-unit high density dwellings needed to hit the Council's targets need to be triple the number actually consented over the last decade. Tripling that number of consents would require major changes in zoning and planning processes.

7. Statistics NZ is projecting there will be 200,000 more households in the wider Auckland area by 2031, with 120,000 in the old Auckland and Manukau council areas.

8. The number of new dwellings in Auckland with floor area of less than 200 m2 that have received building consent each year has fallen by 80% from 2003. These are the ones needed to cope with smaller household sizes. By 2031, there are projected to be 80,000 more couples without children (+55%) and 72,000 more single-person households (+67%) than in 2011.

9. There are only 150 vacant sections being advertised for sale in the former Auckland, Waitakere and North Shore cities.

10. Auckland Council plans for 400,000 new dwellings to be built over the next 30 years, with 50-60% coming from in-fill or re-development. 60-70% of those would be built inside the 2010 existing urban limit, while 30-40% would be built outside the limit, which is to be called the Rural Urban boundary.

(Updated with detail from report, more comments from Smith, reaction from Labour's Twyford)

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Time for a sub-head competition, p'raps?
Mine will read 'Data Trumps Opinions - even the Mayor's' 

How about:
"report shows how affordability will only be acheived with major upzoning in existing urban areas, however as this will enrage NIMBY's powers that be pretend that Hugh Sprawlavitch is correct and sprawl is the answer - even though report clearly shows this is nonsense"

Bob, there is no evidence that upzoning will reduce land prices when the price escalation is caused by strangling the fringe land supply.  However, there is plenty of evidence (if you can put your anti-sprawl ideology to the side) that freeing up the fringe land supply will reduce prices. 
Rather than viewing the issue as a question of upzoning or releasing fringe land, why not do both?  In fact, how about getting rid of zoning altogether?  Why should some council overlords be able to decide how we use our land or what type of building we build?

"there is no evidence that upzoning will reduce land prices...". Never said it would - said it would reduce dwelling prices which is what the report says also. "...when the price escalation is caused by strangling the fringe land supply." any evidence for that??
My 20+ years experience with well over 2000 Auckland dwellings (from the cheapest to most expensive apartments and houses on fringes, CBD and everywhere between) is that the findings of this report are correct. More sprawl will not provide affordable housing. More density could. Of course there will be both, however the sprawl won't be the affordable stuff. the upzoning will be the hardest and most contentious so need to be fought for.

There is a mountain of evidence that restricting fringe land supply increases house prices.  Just look at the Demographia survey and compare the lightly regulated land markets versus the heavily regulated ones.  

Or how about something closer to home: research by economist and Reserve Bank chairman Arthur Grimes found land prices just inside Auckland's urban limit were ten times those literally across the road, outside it.  I'd love to hear your explanation for that.
Your comment about reducing "dwelling prices" is disingenuous.  Sure, you can probably reduce dwelling prices somewhat by building 60sqm homes on 120sqm sections, but I don't think the people of Auckland are stupid enough to fall for this charade.  They will know that they are getting ripped off and that housing isn't affordable. 

More like time for a new Mayor !!!
From 15,000 to 2000, even now that has been exposed as only 1,600 sections.
Len Brown is a failure .

Kin - well one thing that stands out is Len Browns poor math skills. Wonder what other areas he has made poor calculations in. 
In fact he was quite vigorous in his previous statements that there were 15000 sections available. How the heck can a person get it so wrong? Who was advising him on available section numbers? Sounds like a few incompetents need sacking.

Greenfields sprawl subdivision is not affordable housing.

Yep, I saw nothing to show that those plots will actually be built on even if more were that there will be a demand to drive the building rate....the price will simply be too high and hence lack of demand.


The report states that...


"Greenfields development over 20km from the Auckland CBD is 

predominantly larger stand-alone dwellings at high price 



and claims that what is needed is higher density affordable housing closer to centres:


"Declining building activity in Auckland has resulted in fewer 

more centrally located, higher density and lower cost 

dwellings. Yet these are the dwellings that align with the profile 

of forecast demographic growth (i.e. predominantly couple 

only and single-person households, with strong growth in the 

lower socio-economic areas of south and west Auckland)."


Did Nick Smith even read the report?

They even have large font bullet points pointing out that high density housing in existing urban areas is needed for affordable housing - arguments about number of greenfields sprawl sites is not relevant:
"Higher density dwelling types cost less.
In 2012, 80% of new apartments, town houses, flats and studios cost less than $250,000 to build, compared to 19% of new stand-alone houses"


"Fewer apartments = fewer medium-cost dwellings


Higher density types deliver half of medium-cost new dwellings. Their 

declining numbers partly explain the decline in medium-cost dwellings."


Surely a cabinet minister should be able to understand big font bullet points?

Wherever there is chaos - there is $$$$ to be made.
And there is chaos for Africa on this issue.

Perhaps Nick should start first with his plans for infrastructure (roads, services, etc.) to support his new plans before presenting his silver bullet solution.
I'm personally more interested in seeing the AKL unitary plan rather than some crowd winning statements. A little short sited IMO

Complete disarray.
Zero ideas.
Zero agreement.
Nothing but buck-passing.
Meanwhile hundreds of new property millionaires are created every month!

Here is the answer. No need to free up more land and think of the fishing.

Think of the Resource Consents required - would cost more than the dwelling.

The Beehive drones should be careful what they wish for...look what happened in chch....a doubling of the available Jaffa land wish, just may trigger one or all of those vents to wake up and spew forth a few dozen square miles of new 'lava land'

I'd like to hear your case as to how affordable housing can be delivered largely through intensification.
Note, I am talking 3 bedroom, 100 sq m plus townhouses / low rise apartments, not 30 sq m studios. 
It's extremely difficult to make work. Given the difficult developement economics,  I believe achieving 40% of Auckland's future housing through intensification would be difficult, let alone 60%    

The problems is right there - you want a nice big dwelling all waterproof and overinsulated with all the gear and a nice view and masses of natural light etc etc. And you want it to be affordable.  This is also councils problem - they want developers to provide a $600,000 dwelling and sell it for $300,000 or they won't consent it. Then they get suprised when no one builds and prices rocket up.
Put (low)Cost, Quality and Size at each point of a triangle. They relate - you can have 2, but never all 3.

Look at the report - it clearly shows that higher intensity has provided the affordable housing. Not the biggest flashest housing, but the most affordable.

100sqm isnt exactly big.
Id also suggest waterproof is pretty much 100% needed.  Over-insulation, not sure what you mean here but 100mm is the economic minimum in a new build and 150mm on a wind swept south facing wall not un-reasonable IMHO. Given good insulation you wouldnt need much energy to keep it warm, makes TCO afffordable if not first cost.
Views, well yes and thats more of the rub really, in some aspects ppls expectations are un-realistic.  Not sure where you get developers and 600k from for 300k...certainly due to limited supply there are huge profit takes at various price points in the land bankers etc...that have to be removed for a 300k house to be possible.

Not the point - the point is if you want a big well spec'd house you can't expect it to also be affordable. You can't sell a house that costs $600K to develop for $300,000.
Council want affordable housing, but won't consent it until it has so much amenity that it is no longer affordable.
You can always buy a big, nice house. But you can't also expect it to be affordable.
You don't walk into a Ferrari showroom with a Fiat budget and drive off in a new Ferrari.

While ago, I read that a Wellington based company was looking at importing NZ designed home, factory built from China (touchy subject I know).  It was priced below the $1000/sqm benchmark and that with double glazing and top notch insulation?  May be $300K house is do-able.

CM - well hopefully something comes of it, I hear that building materials in NZ are set to go up by 15% this year, so housing is just going to get a whole lot more expensive.

All up sub $300K dwellings fully compliant with building code are already doable - in Ponsonby/Freemans bay even. It's just that they are not 100sqm and don't sit in the middle of a 600sqm site on the urban fringes. 

Bob, yes and council developer charges and council approval costs are too high.
What do you make of build costs per sqm?
Our view is current construction/build prices charged are 20% plus too high, for no good reason we can see - other than because I saw you coming...

Well, in Melbourne and Sydney  the minimum section size is 200ish sq meters - why can't Auckland does the same?  Nobody goes nut in their city with tiny sections!
Also, our builder in Brisbane is building new houses and his cost is approx $900/sqm.  Considering his labour cost, timber prices are higher than NZ.. someone is making the dosh back home.. The councils I suspected.

Smaller sections, think of how the councils would charge for addtional/extra capaity services to the new "blocks" they'd say of med density.
The price of housing is rocketing along, because people at an individual level are willing to gear up. Locals and O/S see a market on the move and look to join in. While people think, feel, are told, advertised to with a message that you buy, gear and make money the run will continue.
Sure the banks don't help, with advertising, apps (they do it for credit growth.)
Sure the real estate lobby effectively quash any analysis showing property going down.
Eg. If property was as good as the insiders say, then most of the debenture lending coys would have not gone down.....
People feel they can make more speculating than producing/building business assets. think how well things would be if with the current house price action local buyers could routinely put 2/3's is as cash equity (rather that 80% norm loans) - so much for the trustee margin of 2/3s.
Sure there is an issue that build costs are shocking, so the false economy of buying a fix-er -upper presents.
What we are getting to is that these are macro economic issues at cause.
So where is a competition regulator flattening building costs, where is govt policy flattening council charges and bringing meaningful long term land planning skills. Where is the banking regulator getting the Oz banks to cool their jets. Where is govt supporting a long term bond market to enable 30 year fixed mnortgages.
We think its the big issues of how to frame the picture, are more important that rifle shot interventions. And that an LVR probably would not work in the face of the wall of people that want to throw themselves on the gear-up wagon...

Saving 20% of say $2500/sqm construction cost on 73sqm unit (minimum size) will save you $36,500. Deleting the minimum size requirement and allowing you to build a 65sqm if you so choose (NOTE: you are still allowed to build the bigger one if you want) will save more like $7500/sqm retail cost of unit x 8sqm = $60,000 saving.
Changing rules is easy and gives a much bigger saving. Sure work on cheapening supply chain but why do we have to have these rules? The people who wrote them were well meaning - but had no idea of the implications (and then moved to Aus). NY and San Francisco are deleting this rule as it prevents affordable housing.

I keep coming across new greenfield developments that have restrictive covenants put on them that specify a minimum house size normally around 145m2 plus.  I think this is the main reason why there has been the big shift to big building types ... the developer's put these restrictive covenants on the sections in order to keep the neighbourhood 'high priced' - and that includes the land, of course.  So such covenants (in my view) are a major contributor to the affordability problem.  Effectively it's difficult to find a section where as a FHB you can build a 100m2 home.  Similarly, most of the greenfields subdivisions have covenants restricting the building of two units on a single plot of land.  Developers seem to be making up their own zoning rules - a sort of own-your-own-zone sort of situation.
Want affrodable hosing in Auck - remove the MULs and at the same time write a subdivision rule in the plan that restricts the use of covenants.  Let people build low cost homes. 

Fancy people wanting more than plastic sheeting, a mud hut or corrugated iron held up by sticks?
What is the world coming to.

Bob you are in la la land.
a 3 bedroom 100 sq m dwelling is far from well sized, its pretty tight really, bare minimum.
You try delivering such a dwelling in even the cheaper suburbs for anything less than 450K - good luck! And in medium priced suburbs for anything less than 600K. And then, why would you buy  a very compact 3 bedorom townhouse or apartment in one of those suburbs where you can buy a house on a full section for the same or less money?
It just doesn't stack up.
And the problem to a large extent is attributable to the silly costs of building in NZ. Thats one of the reasons why its a bit easier to get medium denisty housing to work in Australia.

Our first house was designed and built (they built it, not a builder - you could do that in those days!) by a couple of architects just recently graduated.  It was one of two dwellings (detached but identical structurally from the outside - some very minor differences in layout inside) built on a cross-leased section. The house was 90m2 - about 2 years old when we bought it. Three beds, one bath, open plan kitchen/dining, separate lounge and a separate study/architectural drawing type workspace, a carport and a nicely fenced off back garden. To this day that was the most heat efficient and space efficient home we have ever lived in. I wouldn't regard it as bare minimum at all. When our second child was on the way we sold it - not necessarily because it (the house) was going to be too small, but rather because we wanted a bigger (i.e. full sized) section given we had acquired a second car as well as a boat and felt we were crowding out the shared space at the front of the two dwellings. It also did not have any space to put a separate freezer - something else that comes in handy with a family.
Anyway, point I make is that was a first home back in our time. That's what I don't see us building a lot of new these days.  And because the smallest of the new builds are typically 3 bed, 2 bath, 140m2+, the FHBs are typically taking on too much debt.  So much that a two-income family is needed.  Again, we never needed that - it might have been nice, but it wasn't needed.

Same. Never lived in a house bigger than 130m2 and that had 5 bedrooms and was on 200m2 section. Heaps of room for family of 4 and two off street parks (no garage) High ceilings make a big difference to smaller floor areas. House on street and all the section was usable out the back. 300m2 section is plenty for a stand alone home if well designed.
In a 140m2 3brm, 2 bthrm now including a 36m2 garage. Again feels like heaps of room with a high sarked ceiling and open plan

And... Same again. I personally agree that 100m2 is more than enough for a family. We have lived in much smaller (in England). 
Interestingly there seems to be several trends favouring higher density living and the shift away from McMansions for a more environmental focus. 
I find it really interesting reading people's comments about the kiwi dream becoming a right of passage. The world's a different place, embrace it! :)

As I mentioned in another thread - I think the new greenfield subdivision developers are largely responsible for pushing up the dwelling size by placing restrictive covenants on sections such that you have to build a minimum of 145m2 and upwards.  Many require that the bigger the section - the bigger the home must be.
One of Ngai Tahu's subdivisions down south provides an example;
See neighbourhood design guidelines for the house size by section size requirements.

Agreed. So it's not a Urban Limit problem like Smith says, but issues not limited to developer's monopoly. 

Well, and this is only an anecdotal assumption, but I wonder whether developer's use covenants to keep the price of a section at or above a minimum price point. The idea being that if as a buyer you are going to over-pay for a piece of land - then you might think it a sound investment provided the neighbourhood is guaranteed to be of a certain standard of housing. 
So if government both open up the urban boundary and at the same time make a condition of subdivision consent that there will be no covenants with respect to minimum floor areas (or any other clever means to upsize/upmarket the dwelling type) it could be section prices will come down accordingly.  Point is, none of these greenfield developments are in the centre - they are all on the periphery - the section prices just should not be that high in these areas within the current MUL .. especially in Auckland given the lack of good public transport and the traffic conditions.  Sure developer contributions add to that section price but (assuming that is charged back at cost in the section price) there is still very, very good margin in subdivision .. and unlike other development (say of a medium/high density building) there is not the same level of risk in subdividing.
If you open up the urban boundary without getting rid of these restrictive covenants - it's likely the sections on the boundary will just contain the same house size minimum restrictions for new subdivisions - which does nothing to solve the affordability problem - if that is what you are trying to solve.
But I don't think Nick Smith however is trying to solve the affordability problem - more the number of dwellings problem.  He just wants new development .. if it's all 145m2 plus detached homes, I'm sure that would be okay by him.

Good point Kate. Christchurch has a long history of minimum size developments. I think Heaton street, 100+? years ago had this sort covenant for the purpose of creating an exclusive area thus increasing demand for those sections.

we lived in a 90 sq m 2.5 bedroom house when our two kids were small and it was OK. We now live in a 120 sq m townhouse with our 14 year old and 5 year old. To be frank, 120 sq m is getting pretty tight now that our lad is a a big six footer like me, and likes to have mates over etc. 

Matt - when living in Auckland did you ever consider a build in a new subdivision?

This is the crux of the problem getting affordable housing MIA.
You have an opinion about what is a minimum standard that you would be happy to live in. You then want to make that the miniumum standard for everyone - and then wonder why nothing is affordable. It's exactly what Council do.
If you want to live in a big 3/4 bed house go for it - just pay the money.
Don't let your opinion of what a minimum size is restict other people from choosing to live somewhere smaller/cheaper. 

MIA, $600K won't get you much in the old Auckland City confines these days...

Housing NZ sold an original state duplex in Cox's Bay today for more than $1m!

I was talking mid range suburb eg Mt Roskill

I assume that affordable housing is not mid-range housing. It's bottom range housing.

Great news indeed!
More land will be developed into sections for new build homes.
Wake me up in 10 years time when these might be ready to come onto the market.

Could we not just stop population growth by allowing no new development
What are another million people going to do to the environment?
Where is the water?
Where is the infrastrucure?
Where is the improved quality of life?

Consecutive ego maniac mayors in our major centres, especially Auckland and Christchurch, obsessed with competing with Melbourne and Sydney. They should grow up and cherish, promote and accentuate the positive points of differentiation than trying to become half arsed copies of bigger cities. Quality not quantity.

Yep, said same in another thread - we (that being the country) needs to do regional planning - and not the kind done by regional councils.  We need to look at NZ overall and plan toward the consolidaton of certain industries in a limited number of areas,  Take ports and universities as an example - too many of them spread around all competing with one another.   

What would you like New Zealand’s population to be by 2060?
13450–13500 votes
5 million 24%
10 million 24%
15 million 9%
As many as possible. 7%
No more – we’ve got enough. 36%
what we are seeing is the power of elites to ignore all but their own interests. It is a given that in 30 years Aucklands population will increase by one million.
I can't recall any balance from Radio NZ where immigration is concerned. Their attitude is much like the Guardian.
Here's hoping Old Labour (Shearer), Greener Greens and Winston will help Kiwis out.

So 64% wanting increased growth in AKL?

So you don't feel at home without your 50 million bretheren here?

Lol :)
I'm sure to your annoyance I feel very at home! ;)

Yes but I wonder what sort of New Zealander feels the need for a population increase (other than a rent seeker).

Hopefully an innovative NZer.
With growth comes innovation and in the current economic climate innovation is about gaining efficiencies - progressing society without cannibalising the environment (cough 100% pure)!

Cancer comes with growth also. Ashburton has the same retail spending as Napier yet has one thrid the population. Space, sunlight less traffic and a garden don't need a lot of innovation.. we had that here.

I'm a nz born nzer and I'd like population growth especially in Auckland, would make it a bit more exciting. 

How about we trade people like you for Chinese who want a quiet spacious place to live. That way we get our diversity dividend and get rid of our realestate ratbags.

What makes you think I'm a real estate ratbag? I just like a bit of density, lots of local bars and cafes, that sort of thing. Can't see why we can't have that in Auckland, there are plenty of other cities in nz with lots of space that aren't growing if that's what you're into.

In that case we need new urbanism?

Are you claiming that construction of buildings causes pregnancy?

Friends just went to an auction for a 3 bed complete do up in mt roskill it went for 680k cv was 480k. I'm not sure removing urban limits will bring down prices much, looks like people are prepared to pay big money to live as central as possible.

I think that house is in lynfield college zone not mrgs

Follow the money:
Creating wealth, security and financial freedom is often an investor’s ultimate goal. 90% of millionaires get there by investing in real-estate”
New Zealand has strong population growth due to its progressive immigration policy and birth rates. Many parts of the country are experiencing housing shortages translating into strong tenant demand and price growth. This trend is expected to continue with recent population projections by the New Zealand Department of Statistics forecasting up to 64% growth over the next 17 years. Auckland city is predicted to almost double its population in the next 40 years. For property investors, this represents outstanding potential growth in demand and return on investment. New Zealand’s property prices are also relatively undervalued compared to its closest neighbour Australia.

I wonder if the people behind nzps loose any sleep at night knowing that they are literally ripping the dream of home ownership out of the hands of their fellow kiwi's?
Fair go mate? Guess not, probably too busy counting their thousands.

Doesn't answer the question as to where the mandate for population increase comes from?

So no longer 1 million more over the next thirty years... it's all off?  Nothing to see here?

Unitary plan flawed - currently Res 5 Zone requires land area of 1,000m2 in order to subdivide  into two lots due to minimum lot size of 500m2. Res 6a zone requires 750m2 in order to be able to subdivide into two lots. It would appear however that the unitary plan will make both zones 500m2 minimum therefore removing thousands of potentially subdivisible Res 6a size properties from having subdivision capability.
There are far more Res 6a properties than Res 5 properties. 
Lot sizes of 300m2 will be permitted under the unitary plan only if four homes are being built at the same time however very few lots have 1,200m2 in the first place and it costs too much to acquire multiple sites that give a total land area of 1,200m2.
So it appears the unitary plan will create few sections - the Res 6a Zone and Res 5 zone should have been changed to one lot per 250m2 or 300m2  - that would have had potential to create thousands of sites.
So looks like density is not a feature of the unitary plan!
If you have a Res 6a site with less than 1,000m2 protect your value by obtaining consent to subdivide ASAP!
House prices can only continue to rise rapidly under the Unitary plan!

Tomorrow we find out. While they are reducing density in Res 5 and 6 they will probably make most existing Res 6 into a new apartment/townhouse zoning thus theoretically increasing density.
Then they'll probably also make development in these zones Discretionary or similar status so that it's too hard to ever develop.
It's a win win for Council - they get to say they've increased density while also retaining the power to prevent it increasing.

Who constitutes Cantabrians Unite Hugh? What is this group which hates Constables England  or prosperous beautiful uncrowded Christchurch (prior HC)? Bunch of developers who are locked out?
What are your views on population Hugh (apart from Christchurch needs more people)?

By 'financing infrastructure properly' you mean 'subsidise urban sprawl', right? I think it is OK to remove the MULs as long as developers pay the true cost of adding houses to the fringes, including required upgrades to transport networks (which I imagine, in Auckland at least, would be significant).  Otherwise we are subsidising urban sprawl and discouraging densification.

Municipal Utility districts are created of the provision of infrastructure and financed by the sale of tax exempt bonds. Great for the wealthy Chinese or Russian suburb, the poor old (disenfranchised) Kiwis of course will need a little (ahem..) help as bonds need a reliable cash flow.

People on the fringes can still strangle the supply of land by creating their own urban limits (four groups own all the land around Wellington ..apparently), so you aren't home and hosed: there is still the issue of population growth and it's effect on percapita incomes.. (looking after the general population versus realestate sector) and quality of life issues (effect on the general population).


What is your thought, Hugh, on these restrictive covenants that specify a minimum dwelling size?  Example being Wigram Skies (Ngai Tahu development) down your way.  It's fringe in the distance from Chch centre - but still the sections are $200K plus and you have a minimum dwelling size of 145m2 (min house sizes even bigger for the larger sections).  Just seems to me to be a mechanism for keeping the section prices high by 'forced upmarketing' of the neighbourhood. 

I think that these sort of covenants being so prevalant is another sign that developers have a local monopoly on residential land. At the moment they only cater for the top end of the market. This is what monopolies do.
If more land was free to be developed and therefor more competition between developers, then some developers would undercut the others with less restrictive covenants as they would with price.  Developers would compete to cater for the whole market, including those needing smaller more affordable housing.

And of course the 'top end' of the market is often young NZers starting out and mortgaging themselves to the hilt on a 95% LVR - a recipe for disaster, not only for the individuals but for the country in terms of the current account.  

Just read on CNBC that US lenders are offering 100% finance again, and that even in Germany, where real estate speculation has no tradition, banks chase people with 100% deals. Obviously the same feeding frenzy in NZ now.
So sub-prime 2.0 in the making, courtesy of irresponsible governments and their politically dependent central bank money printers.
It will end up in major grief, and everyone knew it. Seems like the system of Western money printing economics cannot be reformed unless there is a major melt-down.
Having said that, from an individual perspective what should anyone do confronted with money printing, ultra cheap loans, nearly zero return on savings etc? Join the stampede of course.
What a sad picture.

#4 Over that time nominal section prices have doubled from around NZ$100,000 to NZ$125,000 in 2002 to NZ$250,000 to NZ$275,000 in 2012.
And yet Len Brown insist that Property price rise is not related to rise in land prices..but to "other reasons"

Land Supply or People Supply ?:

"Based solely on the fertility and migration choices of New Zealanders (each presumably behaving fairly rationally), our population growth would have been growing only quite slowly since the mid 1970s. As it is, our population growth since 1990 has been second or third fastest in the OECD. What changed? Migration policy did in the early 1990s.
And 80% of our population growth in the last couple of decades has been the net inflow of non NZ citizens - thus almost purely a matter of discretionary policy choice. Government policy interventions can act to stymie successful adjustment - and I believe this to have been the case in NZ over the last two decades. Our negative NIIP position is larger, our real exchange rate is higher, our real interest rates are higher, and our capital stock per worker (and associated perceived business opportunities) are lower than they would have been if we had simply let the self-stabilising behavior take its course. As John McDermott’s slides showed earlier, that adjustment was working prior to the mid 1980s.
Among policy and analytical circles in New Zealand there is a pretty high degree of enthusiasm for high levels of immigration. Some of that stems from the insights of literature on increasing returns to scale. Whatever the general global story, the actual
productivity track record here in the wake of very strong inward migration is poor.
In an Australian context, the Productivity Commission – hardly a hot-bed of xenophobia or populism - concluded that any benefits from migration to Australia were captured by migrants and there were few or no discernible economic benefits to Australians. And that was in a country already rich and successful and with materially higher national saving and domestic investment rates than those in NZ.
But very little of the global discussion of migration has factored in the sort of specific circumstances New Zealand has found itself in. With relatively low national savings rates, and with a relatively well-educated and skilled domestic workforce, it isn’t obvious that applying a lot more labour to the situation was the route to success in trying to reverse decades of relative economic decline (a very different situation say from Singapore with lots of savings, bringing in people to utilize that domestic resource)

Labour typically needs capital – houses, roads, factories, shops, offices – and it haslong been recognized that the demand effects of new labour outweigh the supply effects for the initial period. But we have had not just one wave of new labour, but repeated waves of new labour, with the numbers if anything generally tending to trend
upwards. Real non-tradables labour and resources need to be used to build the new capital stock. That will have required the OCR (and the domestic interest rate) to be higher than otherwise throughout the last two decades.



I don’t have time for an extended discussion of the competing hypotheses of why NZ interest rates have been so high. For that I refer the reader to the Vowles and Labuschagne Treasury working paper that I had some involvement with. Suffice to say that widening current account deficits and increasing voluntary private leverage
are not usually phenomena that follow when the world markets impose a risk premium on the domestic cost of credit. We do these interest rates to ourselves.
Those high real interest rates will have helped contribute to the sustained relatively high exchange rate - and in particular, the failure since the mid 1980s of the real exchange rate to adjust into line with the deterioration in New Zealand’s relative productivity performance (even allowing for the terms of trade). Those high real interest rates and high real exchange rate will have choked off investment projects, especially in the tradables sector, which would otherwise have been profitable. The Savings Working Group report quoted some rough estimates I was involved in putting together, which suggested that if net immigration had been kept to 1980s levels, the NIIP position might be 20 percentage points smaller than it actually is (and real house prices would almost certainly have been lower).


People have to live somewhere, and so when we look at the last decade, the surge in investment (for it is the investment share that rose markedly not the savings rate that fell) is seen in residential investment (and public investment, much of it related to the
underlying public infrastructure a new population demands). At an OECD level, there has been a strong long-term cross-country relationship between the residential investment share of GDP and the rate of population growth - as one would expect.
There isn’t much sign of excess housing stock (Peter’s point) or excess public infrastructure – the rapid population growth rates successive governments chose to pursue, look to have crowded out realbusiness investment.


You will notice that business investment as a share of GDP has pretty consistently been around or below the OECD median since the late 1980s. But over that period we have had among the fastest rates of population growth - so we needed more investment as a % of GDP than the median OECD country just to maintain capital stock per worker. Peter’s team sent me the national data underlying this chart: when I
plotted it there was basically no relationship between the business investment share of GDP and the rate of population growth, suggesting that all else equal rapid population growth crowds out capital deepening. At very least that seems to have been the case here.

so workers earn less  while a realestate agent joins Richard Branson's space shoot...!

Really interesting analysis.

$1,850,000 for a house in Grey Lynn yesterday on about 375 sqm.
About half the size of a full site so much more affordable.

New Zealand is a strange colony in that Canada, Australia, US and even South Africa developed into countries with multiple large cities while New Zealand has only one.
I think the problem is we abolished the provinces and those other colonies did not. I think if we had more powerful regional government then some places would rise up and challenge Auckland, maybe not in city size but in city quality and growth figures. Christchurch could become the de facto capital of the South Island for example.

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Our immigration in New Zealand is fairly well managed,
Not according to the Savings Working Group:
“The big adverse gap in productivity between New Zealand and other countries opened up from the 1970s to the early 1990s. The policy choice that increased immigration – given the number of employers increasingly unable to pay First-World wages to the existing population and all the capital requirements that increasing populations involve – looks likely to have worked almost directly against the adjustment New Zealand needed to make and it might have been better off with a lower rate of net immigration. This adjustment would have involved a lower real interest rate (and cost of capital) and a lower real exchange rate, meaning a more favourable environment for raising the low level of productive capital per worker and labour productivity. The low level of capital per worker is a striking symptom of New Zealand’s economic challenge.

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- Serious consideration of the impact of the level and variability of immigration on national saving, and the impact that this might have on the living standards of New Zealanders. There are indications that our high immigration rate has pushed up government spending, house prices and business borrowing.

@SK | 14 Mar 13, 10:36am New
"1,850,000 for a house in Grey Lynn"
Wow what number/street is that?



whoa, love to know who would pay that. 
My parents are looking to offload our family home in central Auckland.  Would be interesting to see how much it can fetch!

There was a disgruntled old Planner
who, seeding the foo-bar, threw Spanner
right into the Guts
of the MUL-outing Nuts
and blew bubbles to house, land and Manor.

Pray for me, Pope Frank, for I have been stricken with the Limerick Bug. 
Ah, well, better Out than In...
Our Len said: come hell or high water
You know, guys, I reckon we oughta
just rename this MUL thing
and give it a RUB-bing
then still take new buyers to slaughter....

How will it benefit the wider community to free up hundreds of hectares of land in areas that are too remote to be economically or socially beneficial? If you are concerned about section prices in Mt Eden then what on earth do you think releasing land in Rodney or Franklin is going to do about them, honestly?
Go and have a drive around the north-west reaches of Sydney next time you are over. Lots of big lovely new developments with detached housing selling for seemingly reasonable prices to first-home buyers who then have to sit in their cars for 25 hours a week and pay $150 a week in toll charges just to get to work and back (obviously the government cannot afford to build endless public highways to suburbia, just like in NZ). This is, of course, on top of all of the infrastructure levies the developer had to pay to the local council in order to provide the various services and amenities.
Paving the areas beyond the MUL with quarter-acre sections will not touch section prices anywhere else other than the immediate other side of the MUL, and certainly not anywhere close to central Auckland. Not only that, but all of the council fees you we'll just assume you managed to scrap before expanding the MUL will be back with one hell of a vengeance when the insane requirements for new infrastructure, just to keep alive the unrealistic kiwi dream, need to be paid for.
How, specifically, will expanding the MUL improve the housing affordability situation, net of all of the undesirable side effects that it would cause?

Not to mention $150 a week in lets mention it, plus $50 a week in parking....
The council fees get rolled (hidden) into municipal bonds so no one notices that there is yet more un-payable debt being dumped on the shoulders of ever poorer middle and working class rate payers.
but thats OK, the land bankers, developers and other parasites will make yet more money and retire rich and happy elsewhere.