By Bernard Hickey
Is there any more powerful phrase in the minds and spreadsheets of Auckland's real estate chatterati than 'Double Grammar Zone.'?
Just the thought of those three worlds plastered across a real estate billboard is enough to make any red blooded agent salivate. It's also enough to make any property developer in the Grammar Zones see stars and dollar signs. That's why there are as many as 1,800 apartments are expected to be built in the Auckland Grammar zone over the next three years.
But those three words and the thought of all those apartments springing up is also enough to make the admissions officers and headmasters and headmistresses of EGS and AGS go green at the gills.
They are packed to the gunwales with students already and aren't in a position to easily expand, given a lack of available land and restrictions on building heights. They are also close to the point where even if they could accept extra students, it would destroy their ability to operate cohesively. School assemblies would have to be held in Mt Eden stadium.
It is also a problem common across the ages. It is Auckland's own real estate version of the 'Tragedy of the Commons'.
An ostensibly free property right worth up to NZ$500,000 per property is now bundled to any property in the Grammar Zone. The perfectly rational thing for any developer to do is to assemble as many bundles of these 'free' property rights and attach them to property to make a killing. Even better if a piece of land with one of those rights can be turned into a set of townhouses or apartments with dozens of those rights.
It's the Auckland version of grazing the commons. Just buy a house in the Grammar Zones and turn it into an apartment block stacked full of new students. It's the biggest free kick in the history of real estate.
This tragedy of the commons is now playing out in apartment development advertisements in a variety of languages being displayed across the world, and it's making a few of the old-timers in the Grammar Zones and in the Ministry of Education a little nervous.
So what is to be done? It is a tricky and of course politically explosive problem.
The obvious options would cause more than a residents in the leafy zones to splutter into their flat whites. The boundaries of the zones could be contracted to ensure the increasingly dense populations of Mt Eden, Epsom, Remuera and Parnell did not overwhelm the two Newmarket schools. That is the riot option. Understandably, those on the fringes who paid top dollar for those three words would feel robbed.
The second would be to restrict out-of-zone admissions or to implement some kind of admission restrictions based on academic or some other kind of meritocratic criteria. That would break the ethos of state-funded schools and pose a significant challenge to the cultures of both EGS and AGS. That's the demi-riot option as it would create a type of two tiered Grammar Zone.
A third option has been floated by Epsom MP and ACT leader David Seymour. That is to somehow change the Education Act to allow the boards of schools such as EGS and AGS to restrict entrance based on the age of a house or residence. Essentially, the residents of any apartments built after a certain date -- say 2020 -- would not be eligible for the two schools. They would perhaps be eligible for a new third school, which has yet to be built or even planned. This is the land rush option. It would be one way to accelerate the apartment building boom. It would also mean apartments built after 2020 would be much cheaper and available for those without secondary age kids, which is an increasing proportion.
The fourth option is to make the developers and the owners of the new residences pay for entry to the schools, which would at least make the process transparent, given a good portion of those students could be argued are overseas students anyway -- and they are supposed to pay fees.
The final option is to simply turn the schools into fee paying schools. There is certainly plenty of demand for such assets. Private equity group Pacific Equity Partners is reported to be in talks to buy Academic Colleges Group, which includes schools in Auckland, for NZ$500 million. Perhaps the free market ACT party could get behind such a public asset sale? That would be a double riot option with a sideshow lynching of the local MP.
All the options are ugly, but are the inevitable result of creating a resource with public money that is highly desirable and virtually free to all those able to buy into the zones.
Free money can't last forever.
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A version of this article first appeared in the Herald on Sunday. It is here with permission.
33 Comments
Bernard - I have long thought that rateable values should have there components. Land / Improvements / School zone. It has a real value lets rate it as such...it wouldn't change values its already there....
At least it would officially recognise true drivers of the Real Estate market price. There are lots of other areas where people pay good money to buy access to primary and high schools. Where real estate values drop 3-400k as you walk across the road to the side thats out of zone.
Your 2020 build by date would create a HUGE supply surge, as a land banker in this zone it would be use it or lose it.
The ACT outfit surely have a bit of a dilemma, they want the resource management act watered down, in effect kneecapping their Epsom nimby constituents rights to prevent the hoi polloi from moving in on their patch. They are the arch hypocrites so, of course, they will be incapable of seeing how conflicted they really are. The party of small government that pushed the creation of the Auckland amalgamation monstrosity or railed against perks abuse yet ended up being exposed as the biggest sucker of the public teat.
Kind of ironic that the Epsom voters support for these spivs could well and truly bite them on the backside.
With the schools, why not franchise the thing - call them all Auckland Grammar School or whatever with various campuses like the universities do now.
If the schools are full and they want to increase the housing density in the area then clearly they are going to have to build more schools. Shuffling boundaries only moves the problem. How about a high rise school in down town Auckland and or pinch a bit of land from the wharf. Eventually they are going to have to relocate a lot of their wharf activities to Whangarei anyway. Schools in this area would move the double grammar zone to the inner city fringe and keep all those "nasty" apartment dwellers out of our "nice" schools.
The tragedy of the commons is that free riding leads to privatisation of the public good (or probably more strictly in this case the mixed good). One of your solutions is exactly the privatisation (school fees) that the tragedy of the commons refers to.
The best solution would be the first - gradually reduce the school zones in line with their capacity. People who have bought into the original zones could be grandfathered in so that they can send their kids to EGGS and AGS but the right would not run with the land. The other solutions would leave neighbours having different levels of access to the top state schools in the country, which is hardly cohesive to any sense of community.
Or get rid of zoning completely and do it completely by lot (random draw for new enrolments from people interested). It will leave Epsonites horrified at the loss of their exclusive access to a public resource, but other than hypocritically sucking up to Epsom voters it is the logical market solution for a public resource as it takes geography out of the picture (if they want a non-public resource solution residents can set up a private school). If you want to preserve the "special academic character" do it by entrance exam pass then lot. If you want to preserve "special elite cliques character" then pay for a school yourself.
Yes, people who "invested" on the basis of being inside some imaginary lines are going to lose money, but there are a lot of things (immigration, tax changes, international events) that could cause houses to loose value, and the government shouldn't be pumping up the value of a selected few. If people were worried about losing value it could even create a hypothetical market in "changes in Grammar zone insurance"
School Rolls
Auckland Grammar 2499 (includes Boarding - out of zone?)
Epsom Girls Grammar 2216 (includes Boarding - out of zone?)
Mt Albert Grammar 2701
Mt Roskill Grammar 2140
Rangitoto College 3056 **************
Takapuna Grammar 1666
Auckland Girls Grammar 1378
https://en.wikipedia.org/wiki/List_of_schools_in_the_Auckland_Region
Just what is happening now, dysfunction in Auckland. Auckland just has to suck it up for NZ Inc. No imports then no GDP growth, even a Bank chief economist indicated he believed we are heading to no growth without migrants on Friday at a conference I attended. If we go negative or no growth then we may look at a credit event..can't chance it, so the 80000 quota will continue regardless of the government in power.
Realistically what is our per capita growth?
Haven't we been in relative stagnation for years? Look at wage growth. Headline growth is of no benefit to the individual if it is due mainly to population growth.
We can't even afford to deal with our full schools, let alone our full motorways or full hospitals.
Only David Chaston and John Key's company think that Auckland isn't full.
The changing face of Grammar schools
Mount Roskill Grammar School, Auckland
Background
Mount Roskill Grammar School (MRGS) is a decile 4, co-educational secondary school with a roll of 2200. The school has a culturally diverse student population, over 50 percent of whom are Asian, (mostly Indian and Chinese) and almost a quarter are Pacific students. Less than 25% are Caucasian. No Maori
http://www.ero.govt.nz/National-Reports/Towards-equitable-outcomes-in-s…
How about a rule that if you have lived in New Zealand for less than 5 years you are ineligible to go to the Grammar Schools? Why should those who have only been just arrived take the place of those who are citizens who have paid taxes and been part of the community.
Just set up another school. The property is owned by the Ministry of Education, the facilities are all in place, and the current school zone can remain unaltered. The solution is at the bottom of this article:
http://dailymediareview.weebly.com/the-act-party---all-students-are-equ…
Nobody loses - landlords, property owners, property developers, apartment owners, students/parents have more choice, the stress on current school rolls is eliminated, increased competition between schools, and there is no need for the implementation of intrusive regulations.
It would be near impossible to set up a new single-sex, traditional, academically-focussed school in New Zealand under the MOE. The last public boys high school was in the 1960s.
That is another reason why these schools are so sought after. Once they are gone or lose their special character, there will only be PC, middle of the road, coed, NCEA-diluted, schools left.
..nice to see the cheerleaders of unbridled immigration, john key, growth forever etc experiencing the rationing of resources that joe public has been experiencing in the rest of our fair land. Ill shed no tears over this dilemma...welcome to the new New Zealand you have created.....
The whole discussion is based on a false premise - you buy no "right" or "entitlement" or whatever you want to call it when you buy a house - other than that which is written on your property title and registered with LINZ.
It was a debate that David Seymour probably should have stayed out of.
Property (even the family home) is an investment, and like any investment it is subject to external social and environmental changes which carry risks to the capital invested. Regardless of this single factor (school zones) these properties are desirable for many other reasons. If the zones change, children already enrolled/attending won't be turfed out. If you bought and paid a premium based on being in-zone in a few years or a decades time, well it just didn't pan out that way and you need to advance an investment in home and/or education plan B.
Bernard should be congratulated for this article - this is the underbelly of uncontrolled migration and never-ending growth and densification - this is just another aspect of it - no-one else is discussing it - in the end it kills itself
Diseconomies of scale
DEFINITION of 'Diseconomies Of Scale' An economic concept referring to a situation in which economies of scale no longer function. Rather than experiencing continued increases in output together with decreasing costs per increase in output, a saturation-point is reached where output begins to decrease in spite of increased input
read:- it reaches a point where as more is added, the quality of the education goes down
Bernard should go and investigate Point Chevalier Primary School where the school roll has continued to increase, class rooms have been added by cannibalising the playgrounds and the children have no playground space
Gareth Vaughan touched on it here 2 years ago
http://www.interest.co.nz/opinion/63689/opinion-are-we-jafas-prepared-l…
More on Pt Chevalier Primary - now being charged to use public parks
Schools furious at charges for using Auckland's public parks
9:08 AM. Inner city Auckland schools are furious at new charges for using public parks for recreational events. Under the Trading and Events in Public Places Bylaw brought in on 1 July, schools have to apply for an event permit, costing $90-00 to use public parks. The principal of Point Chevalier School, Sandra Aitken was shocked to receive the charge; Carolyn Marino is the President of the Auckland Inner City Schools Association and also the Principal of Westmere School and Christine Fletcher, who is the Chair of the Auckland Council's Parks Committee.
No idea, just stumbled on that in Nine-to-Noon Radio National
You might like to listen to the podcast
http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201770518…
I just had another read through your 2013 article and all the comments
Frightening how pertinent information gets lost within a day or two
You should do a resurrection of that article and re-publish it - it's more relevant today than ever in the light of Bernard's article
I will try again,
Build More Auckland Grammar schools, Auckland Grammar is a Brand that people are willing to pay for , so give them what they want. Sell the rights to developers - get built into the price of new real estate, Auckland could have 3-4 Auckland Grammar Schools. UK public schools are building replicas around Asia, but we seem to be a bit behind. Why not Auckland Grammars around SEA as well.
Chris_J
There are exactly 6 Grammar Schools in Auckland
Last one established was MRGS in 1953
They were independent of the Education Department and answered to no one
Operating under a board of Governors of the Grammar Schools board
Don't know if they still have a lock on it
Ministry of Ed probably can't establish any more Grammar Schools
Since when did real estate become a risk free investment? Shrink the zone but grandfather all those who bought for their own kids. 40 years ago my parents were rezoned out of the grammar zone - not like it hasn't happened before! Sure some speculators will lose money but a home should be somewhere to live! By the way, there's space on the U of A Epsom campus (that they're selling) for a new school.
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