Rodney Dickens says the real problem inhibiting affordable housing is the cost of sections, and that is the one key thing the Government can do to solve the affordability problem

By Rodney Dickens*

KiwiBuild is experiencing some teething problems. Some people aren't happy that it isn't delivering new housing affordable to low income earners while the extension of the ballot for the first 10 of the 211 KiwiBuild dwellings planned for Wanaka over two years may be a sign it will face indigestion problems in towns.

More teething problems will no doubt arise.

But the real criticism should be aimed at the government's housing initiatives more generally because they aren't aimed enough at fixing the largest obstacle to more affordable new housing: high section prices.

This Raving puts the spotlight on the role rising section prices have played in driving up new and existing house prices in Auckland; with a similar story in all major urban centres except Christchurch where the earthquakes set it on a different path.

Ironically, the Housing Accord and Special Housing Areas the National Government put in place in Auckland may be belatedly starting to drive a hint of downside in sections prices. But it is far too little. Much more needs to be done to get down the cost of developing sections; it would deliver a real solution to the housing affordability problem.

The role section prices have played in making housing unaffordable

Obviously the cost of sections feeds directly into the cost of new dwellings but section prices are also an implicit part of existing dwelling prices. A link between Auckland section and existing dwelling prices as evident in the chart below that uses the REINZ median prices.

The difference between the existing dwelling price and the section price is the effective market value of the improvements that is linked to a moderate extent to building costs.

Between January 1993 and October 2018 the median section price increased 903% while the median dwelling price increased 514%. In the 12 months ended January 1993 the median Auckland section price was 41% of the median dwelling price while for the 12 months ended October 2018 the median section prices was 67% of the median dwelling price. In a country with an extremely low population density it is madness that it costs more on average for a section than for the house built on it even in the largest region.

These increases and especially the increase in section prices look horrific when compared to the 68% increase in prices in general over the same period based on the Consumers Price Index, the 111% increase in hourly earnings over the average employees and the 89% increase in the national average rent based on the CPI rent component.

The causes of sky-rocking section prices have been discussed elsewhere including by the Productivity Commission. Relevant factors include massive increases in development contributions, council policies that effectively gave oligopolistic pricingpower landowners, and a drawn-out and expensive process for getting new subdivisions approved. It is not the objective of this Raving to attribute blame for the horrendous increase in section prices but rather to put it in context of the contribution it has made to the housing affordability problem.

The next chart shows what is happening to the median section price reported by REINZ for Auckland versus the average cost of building per square metre based on the new dwelling consent data. While the median section price increased 903% between January 1993 and October 2018 the average cost per square metre for new dwellings in Auckland increased 212%. Building costs have increased much more than prices in general and average hourly earnings - this is in the context of average hourly earnings most likely understating overall income growth for a range of regions not discussed here. But the increase in building costs is dwarfed by the increase in section prices.

The increase in section prices is even worse than it looks because since 1993 the average section size has fallen significantly. The average price per square metre for Auckland sections will have increased much more than suggested by the median prices reported by REINZ. Unfortunately, data are not available on section prices per square metre but the increase will be well over 1000%.

If Auckland section prices had increased in line with building costs the blue line in the chart below suggests what existing dwelling prices will have done relative to what they actually did.

If Auckland section prices had increased since 1993 in line with the average cost per square metre of building new dwellings in Auckland the median section price would be around $180,000 now rather than $575,000. By implication the median existing dwelling price would be around $460,000 rather than $854,000 (i.e. $394,000 or 54% lower).

So why isn't the government (and the Auckland Council and councils in all major urban areas) doing more to get down section prices? If the problem of high section prices was fixed the market would fix the new housing affordability problem without the need for the contentious and bureaucratic KiwiBuild "solution". Maybe the problem lies partly with the other parties that Labour relies on for support? But the problem runs deeper than this. National had every opportunity to fix this problem when it was in government but didn't.

Ironically, the minor fall in the weighted average Auckland median section price since early-2017 may be a response to the boost in supply from the 154 Special Housing Areas approved following National introducing Special Housing Area (SHA) legislation in 2013. The 154 SHAs were expected to add over 60,000 new dwelling sites in Auckland. But if it is, it is far too little and way too late. The SHAs didn’t stop a massive increase in section prices since the legislation was passed in 2013 (i.e. 69% based on the weighted average median price for the Auckland region)

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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65 Comments

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Bring in the Paris empty house tax 60%; pay for its self in no time, help solve the shortage and cost of living crises causing all these strikes. Stop PC-ing around and protecting the rich, people need homes now.
https://betterdwelling.com/vacant-homes-global-epidemic-paris-fighting-6...

Has that resulted in housing affordability in Paris?

http://www.newgeography.com/content/004906-the-french-housing-bubble-als...

Yes, we should give it go.

When I lived in NZ my neighbour was feverishly buying up Auckland land for himself & his family back home
Why ?
Obviously because they could make a nice fat capital gains tax free & there was no land transfer tax to pay either combined with a low ( compared to other cities like Boston, Halifax, NY ) property tax ( your “rates” in NZ ). https://www.sslawoffices.com/estate-planning/assets/capital-gains-tax-se...
When I lived in Auckland land was a tax free capital gains land bank requiring 0 maintenance & big upside
Buying a house you must maintain it even if you leave it empty hence land is favoured & land has lower rates taxation for your “parked money”
So foreign investors & new arrivals have simply exacerbated a issue with the existing NZ status quo of no land transfer tax no capital gains tax & extremely low property taxation on very expensive housing in Auckland
Why in Auckland should a $1.5Mill house pay only a third or even a quarter of the property tax a year I pay in Boston ? Go figure ( but I’m sure nobody here will wish their property taxes to rise to pay the multi billion$$ Auckland City owes in debt already )
Auckland wealthy have been subsidized forever by working class Auckland rate payer suburbs

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On the other hand I assume these sections all sold – no matter what the charts indicate price-wise or relative to historical income / building cost increases etc.

Chart wise things went ballistic around 2013 – around that time hordes of a new breed of buyer arrived into the country, Auckland in particular, and purchased with little concern or interest as to previous pricing norms – they simply paid what it took – demand was insatiable.

If you were developing or providing sections / developments you would price them at the maximum at which you believed they would sell – obviously once having covered the various costs involved.

Thus, up until only recently – would section and development prices have been that different in Auckland even with the various issues raised having been addressed?

Moving forward may well be a different matter.

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This analysis is simplistic and avoids discussing some of the bigger issues:
1) Even if Auckland Council rezoned another 100,000 acres to urban right now, and section prices fell 30-40%, so what? Rates would have to more than double in short order to pay for the infrastructure. This alone would see a mass exodus/selling of houses which would bring prices down and more pressure on other councils to increase rates, etc.
2) What happens when interest rates go up? Low interest rates have added a large part of the fuel to this party, so the opposite will occur when they go up, and all of the analyses regarding shortages will become null and void.
3) We still have one of the highest immigration rates in the world, which is unsustainable. This requires infrastructure which needs to be paid for NOW. The last election proved that most Kiwis want immigration lowered significantly . Sadly, all of our lying politicians simply pay lip service to this will and they do the opposite. Until this is addressed, the problems will just keep getting worse. No surprise there...

Already happening, look at the new Milldale development North of Auckland you are getting slapped another $1000 a year on your rates for the next 35 years to pay for the infrastructure.

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12159099

If the entire system was changed to operate that way, and new section prices were cheaper accordingly, all housing would also be cheaper. This is in fact how it works in the affordable US cities. It might be "swings and roundabouts" for the buyers in the new developments, where they are paying targeted rates instead of a higher mortgage, but it is the house prices and mortgage burdens for all the other housing stock where the massive difference is made and median multiples are kept low.

There is a major difference in the effect on the existing housing stock prices, which are more than 90% of housing transactions, between having elastic supply with low prices and targeted "rates" for NEW greenfields houses, versus running a racket in land supply and making the new houses two to three times the price they should be. It is the price of new houses that determines the price of existing houses.

Under the status quo, every first home buyer is paying more than the targeted rate anyway in house price / mortgage costs, regardless of what they buy and where. Paying off the greenfields infrastructure in "targeted" rates is the socially just thing to do, for the reason that it eliminates this unfair burden on all first home buyers of older houses, Not to mention the opportunity of becoming a home owner at all.

There are other hidden reasons that councils and other vested interests are so anxious not to do it this way, like the American affordable cities do it. In fact massive numbers of people choose to escape the incumbent Council's jurisdiction even when there are "targeted rates" in the new greenfields development. Ultimately the painful truth is revealed that the incumbent Council is not providing value for money for existing rates anyway. It is just a matter of time. This is concealed under our status quo where the incumbent Council gets to just pour all the revenue and expenditure through one single "pot" and no-one has a clue what is going on, where. Subsidiarity is an excellent principle regardless, and local government is a classic real-life case.

Auckland Council and other Councils are scared witless by the idea of households escaping their grand fiefdom en mass.

Yes and that is on top of the upcoming development contribution price increase. (Which the council didn't publish the allocation to the various suburbs, but overall goes from something like 22 grand to 26 grand excl GST)
https://www.aucklandcouncil.govt.nz/plans-projects-policies-reports-byla...
Under normal circumstances development contributions should be enough to pay for the infrastructure. But in this case, Milldale is not close to anything, so it all needs to be created from scratch.

Pretty much all new developments need to start from scratch. Its not like its miles from anywhere, the motorway is already there.Its between MILLwater and silverDALE and hence the name so really its just an overall cost increase passed on from the council to you. The sections will not be cheaper, every year you pay MORE for a section not less.

The Milldale development is an example where perhaps rather than add a future $91m for infrastructure, the actual price paid to the original seller should have been that much less to enable costs to be equalised.
Some will say that is not practicable but if it applied to all similar pricing it would have been the result but only if the land use (urban boundaries)had been expanded earlier.

Ludwig
Of course Auckland rates must increase especially in the higher end housing
Sadly even the lower middle class Aucklanders must reside in expensive overpriced housing
The whole problem has been the tax treatment of property has been like a protected sacred cow
Nothings going to change with all the vested interests
I paid a fraction in property taxes in Auckland of what I now pay in a American city suburb as well as a land transfer tax Auckland doesn’t have & there’s a capital gains tax to pay too on a lot of property here
You wonder why Auckland has no money & must borrow for infrastructure of new subdivisions ?
The whole paradigm is built to fail financially in Auckland ( except for the property / land speculators )

Ludwig,
1) Rates would fall if Auckland were to suddenly rezone 100,000 more homes, because Auckland currently has insane urban planning where land is provided 10 km away from the suburbs. If land were freed up around Auckland infrastructure costs would fall, because the new land would be 1 km from the suburbs. Roads, sewage pipes, bus routes that are 1 km long cost 90% less.
2) When interest rates rise, Auckland will be screwed.

Rezoning is the easy bit
Who does the land-development and funds the cost of it is the question
Solve that

If it's like the development in Huapai, for example, the developer (and thus the home buyer) pays for it. This is part of what drives the cost of new housing up. Whereas the cost of replacing existing old infrastructure in existing suburbs with new infrastructure is spread across all ratepayers. An unfortunate side-effect with the obsession with not paying rates at levels more typical overseas.

The Auckland rate payers do pay for the upgrades of the country roads to connect Huapai to Riverhead to Whenuapai. All these interspersed "rural" areas between our city and new remotely placed suburbs.

The point he's making is that the first-home buyers purchasing houses in Whenuapai are also paying for the re-profiling of roads for Ponsonby cyclists, on top of the development contribution and profit component on the house they're buying. I would wager those inner city suburbs required nowhere near such a development contribution; yet do the bulk of the complaining every time someone suggests intesnifying character suburbs.

Rezoning 100,000 plots of land won't make one bit of difference to this

https://www.bayleys.co.nz/1671011?utm_source=STUFF

$1,180,000 for a 344 square metre bare land section in Point Chevalier
Infill subdivision at the rear of the old house

It would likely get pricing down to Brisbane type levels, meaning a drop to $800,000

https://www.domain.com.au/sale/brisbane-city-qld-4000/?ptype=development...

"Shortage will become null and void"

There are tens of thousands of people currently frozen out of the market. And we're still adding tens of thousands of people a year in net migration. People are already putting their lives on hold; they aren't going to disappear if interest rates start going up. We just simply do not have enough houses.

I'm currently in Penang, Malaysia and have been looking at the price of property here, also looking at income. By comparison a $600k section is cheap.

Penang (including the mainland part as well) is roughly the same size as Auckland region and has a similar population. A new 3 bed apartment of 90m2 will cost $400k - $500k Malaysian Ringgit (RM) which is about $150k - $200k NZD. The average income in Penang is $40k RM ($15k NZD) per annum. A registered nurse makes approx $11k NZD as an example.

If you want a 600m2 section you can pick one up for about $3mil NZD, or perhaps you want 25 acres of steep bush clad land on the remote side of the island that's $7mil NZD thanks.

Interesting to note that Malaysia is only one of 3 countries in Asia that allows foreigners with no residency to by freehold land (Singapore and HK are the others).

I should add that you can rent one of those apartments for about $1200RM per month ($460NZD) furnished.

There is an absolutely amazing paper in process from Shlomo Angel and colleagues that attempts to construct a median multiple database for a far more global range of cities than what Demographia does. Preliminary comments from these authors certainly suggests that some developing nations have succeeded in greatly decreasing the cost barriers to home ownership; and they happen to be doing it the same way we did. Their cities footprints are exploding as much as 10-fold in 14 years. It is not all automobile-based, motor scooters are far more ubiquitous. See Angel et al, "The New Urban Peripheries: Findings for a Global Sample of Cities, 1990-2014"

I'll take a look. It's hard to know what the answer is as I'm not a fan of unchecked urban expansion, but also myself, and a lot of other Kiwi's, treasure the kiwi backyard. Having said that, we have been living in apartments here and it has been quite enjoyable... provided the complex has a pool, gym etc. One advantage is that every apartment has a view. In an urban setting electric scooters (the motorbike type not lime type) would be great on a many levels - noise, pollution, congestion.

Dearest Korki
I love Malaysia one of my dearest friends was a Malay
Are you involved in Malay Real Estate ?
I’ve lived in Malaysia
Why don’t you tell the full story of life there though
Completely different from Auckland NZ entirely

The government should just give free houses to anyone who wants one, there you go homelessness fixed

You truly failed to understand how state homes work. They are not gifts they are rent controlled assets the government owns and would otherwise see mass amounts of retiree and disabled residents die without basic housing access. You might not need one now but if you invested in a poorly regulated financial avenue and the value suddenly dropped like a stone losing your retirement savings at a bad time while you also have a deteriorating body unable to work you too might be grateful to have a home at all, even one you rent off either a government dept or a private partnership org that offers basic living conditions, stability and rent control.

Hook, line and sinker.

the way we run state homes is wrong wrong wrong, yes they should be there and yes the needy or low paid should be housed, but they should be leased at terms of 5 years with one right of renewal, so you can bring kids up in a certain area, after that you need to be assessed to see what kind of house if any you need to fit your needs, we have age people still living in a 3 bedroom house because they have always been there.
even worse are stories of kids expecting the state house to be passed onto them
this is a classic case
https://www.radionz.co.nz/news/national/323026/protesters-camp-out-to-st...

The quality of your comments are degrading by the day

Yvil
Maybe if NZ hadn’t sold off so much of its own forestry to foreign corporations you just may have been able to build extremely cheap robust Lockwood homes that could take a 9 earthquake
Sadly there’s been no vision or strategy from NZ governments
Today I was at a friends apartment that was the size of a kiwi house square footage for a mere $1450 month.
In Auckland it would cost $1450 week to rent without air conditioning.
You have fundamental problems in NZ no government is willing to address so expect more of the same

Very interesting analysis. The opposite of earlier decades when the government was a great contributor to housing affordability.

Mostly by way of enabling sufficient supply of land. By far the most homes were private-sector developed and sold to private buyers. Direct government involvement in housing supply always has side-effects that lump any supply problems like we now have, onto the majority segment of the market that is not "public housing Lotto". By the mid 1970's in Britain, fully 1/3 of the population was in public housing, and yet there were continual pressures for more. Some 20% of the population who were trying to pay their own way, were always worse off than the bottom cohort who actually qualified for public housing. This created a perverse incentive of a "race to the bottom" to qualify for public housing; because it wasn't worth trying to pay your own way.

https://www.tvnz.co.nz/one-news/new-zealand/pm-says-she-wont-travelling-...

Labour is not working......but is so easily led. ...But I am not...But I do have a vote.

Whilst I applaud not enriching Maserati with her endorsements in PNG.....Jacinda and all the other attendees should try living on a PNG pension fora year, before attending these make-shift meetings, to Liner someone elses pockets.....and ignore the patently obvious. New Zealand First......Not Leadership First.

Junketing around the World, is so last Century, try SKPE....and stay at home....and talk rubbish and whatnot remotely, ......and stop all collusion dead in its tracks....as some of us see where the money is wasted.....even if the Press and the Electorate Worldwide...cannot.
Governing is not just being scene to be done....it is practising and being seen to be less of a Wastrel and more of a Saviour of us poor Savers, who are eternally in your Debt... and others leveraged to the Hilt get Subsidised.. Pray tell what does one have to do to erase Bubble, entitlement fanatics, Banks and their screwing their Customers willy nilly, with Humungous Leveraged Funny Munny, with Drop dead Interest Rates......forever and a Day....since 2008...etc. I know that National was even worse....but come on.........Debt is debt.....end it...or be wiped out in the process. Millions will thank you, Trillions may may not Save you....at all.

How accessible is a home and electricity in PNG again? And why are there still witch burnings in a country that should by now be civilised? Oh here is another one, which direction are the PNG migrants heading? (I say this knowing full well the benefits NZ engineering and tech companies see from PNG business, yet also some of the additional volunteer work some do so that things like clean water are available).

Real problem at the moment is RV / CV that evey year since last two times is going up by 40% to 60 % and agents were using it to raise price.

Are they not the culprit

Good article. Hopefully there is an initiative by government to overhall planning regulation and incentivise local councils to consent dwellings. Unfortunately that may be only after KiwiBuild fails to deliver gains in affordability. We seem determined to do the least possible and when we have to take action take the lowest impact action.

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Hugh Pavletich has been right all along. Politicians either didn't sincerely want to solve the problem (Nick Smith, John Key) or they appear to want to try everything other than what Hugh has been pointing to all along (Labour). Mind you, I still think Phil Twyford understands this better than he appears to by his actions so far, I think the latest joint project initiative with targeted rates, is a promising sign, this is the policy direction where the real solutions lie. "Doing everything" is not a bad idea as long as you include the most important one, the land-supply enabling infrastructure funding mechanisms. I don't think Twyford's colleagues understand this like he does.

My disappointment in National's bad faith will be total if they attack Twyford for "crashing your house value" one day. Assett price bubbles are not "wealth creation" at all, never were, and never will be. Aggregate wealth is actually the productive capital accumulated by the providers of goods and services created from resources, in competitive markets. If someone's "wealth" doesn't fall into that category, it is zero-sum transfers (a significant proportion of which is intergenerational) gouged out of the aggregate real wealth to which they did not contribute, and / or bubble "value" that will evaporate one day.

Michael Reddell nailed it here two years ago:

https://croakingcassandra.com/2016/07/28/a-couple-of-cartoons/

"...There are no totally easy or fail-safe ways to unwind the disaster that the New Zealand – especially Auckland – housing market has become. But this is a clear example where the sooner it happens the better..."

The Electricity infrastructure, generation, transmission etc took generations to build with taxation of the general population used to fund what is a community asset. You can not rebuild the generation infrastructure using the free market model, it doesn't work like that as the amortisation period is in the order of 30-40 years. NZers built the infrastructure when they were one of the wealthiest countries in the world in per capita terms. This infrastructure belongs to NZers not immigrants flooding in from the third world, and there is not enough infrastructure to share. NZers are now facing future electricity shortages.If the people of NZ want to return to a first world living standard, immigration has to be reduced and the population has to be reduced to a population that is balanced with its infrastructure resources. Only when we increase the infrastructure resources can we increase the population. I'm not in favour of sharing the electricity if it means my kids don't have electricity some days. I'm also not in favour of sharing the housing stock with immigrants if it means some kiwis don't have a house because there are now not enough houses to go around and I'm not in favour of the present scheme to share kiwi build with new resident migrants either. Someone has to go without - I think it should be the new resident migrants - either that or send them home.

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The obvious thing to do is stop mass immigration in NZ. The country and standard of living for the occupants has been wrecked by large scale immigration. NZ now has the highest rates of homelessness in the OECD.

It is a combination of two bad-faith policies coming from global elites. One is the mass immigration; the other is urban planning that constrains sprawl but always gooses urban land prices. Many of the median-multiple-3 cities in the USA cope with growth as high or greater than Auckland. They just accept that if they are adding people at that rate, their footprint will also grow at a commensurate rate.

It is also possible to have a shrinking population and not particularly good housing affordability, if you have an urban planning system as draconian as Britain's. I don't believe any of their cities have ever had a median multiple below 5 even when their population was shrinking. And this is in spite of the fact that their density is around five times that of US median-multiple-3 cities, and the average housing unit size much smaller.

Urban land economics is a very unique, often counter-intuitive subject, and far too much pontification on the subject of housing affordability is not based on analysis of the evidence. Almost every assumption that underlies contemporary urban planning fads wrt "housing affordability", is most definitely not based on observation of evidence and outcomes. In fact many of the other intended outcomes are illusory too, because of the invisible hand of the distorted market.

The fertility rate of NZers is at or slightly below replacement level, population growth and housing shortages is purely because of immigration policy settings. We don't have land borders and we don't have to send the military out to stop people caravans. Our problems have been caused by stupid policies. NZers have been utterly crapped on by the politicians of the last 20 years. If they didn't undertake the mass immigration there would be no NZers bringing their families up in sheds, living in cramped accommodation. I know young families whose parents have degrees with first class honors at UOA bringing their children up in cramped rented accommodation because they can't afford housing, some people can't even find a house and live in station wagons. They have to end immigration to fix the problem. NZ can not generate the resources from its population to replicate its housing stock and water supply and electricity infrastructure to accommodate the population explosion (in a single generation time frame) that NZ is experiencing. Immigration levels have wrecked the standard of living of NZers.

Auckland does not constrain sprawl. It cuts land supply of Auckland City by about 30%, but increases the sprawl of every other town in the region by about 150%. Net effect is that sprawl in Auckland is happening 50% faster than ever before.

Auckland has unaffordable due to building too much sprawl.

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If you double the population then you need to double the electricity supply and the water supply. NZ doesn't have the money for the additional infrastructure required to accommodate the hordes of migrants coming in from the third world. NZ is becoming a third world country.
I drove down Lincoln Road in Auckland today there was a garage bordering the footpath, inside the garage was a family. People live in garages in NZ, welcome to the third world.
The immigrant population coming in from the third world didn't bring a new Fisher and Paykel with them to pay for the infrastructure with high earning export jobs - they brought the problems of the third world with them!

"......versus the average cost of building per square metre based on the new dwelling consent data."
When I have applied for consents, I have not put much thought into the price of the building project at all. In one case I got the quote from the builder more than a year after I got the consent. So when I applied for the consent I had very little idea what the cost would be.
I suggest that if this is where building costs come from, it may be understating building costs by a wide margin.

Surely the solution can’t be endless car dependent sprawl can it? Let’s say they add another 500k people to Drury etc - what will happen to the southern motorway? I can’t see any way of increasing its capacity.

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New Zealand would be better than it is now with a population of one or two million. And richer.
We could choose what we developed, and where.
Not hard to do, just choke the incoming non citizen group down to say 3000 -5000 pa. The absolute essential only. Population will drift down.
New Zealanders have been conned. Growth has no tbeen in their interest. How did they fall for that.

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It has not been in the collective interest, but certainly has been in some peoples' interest.

That is a matter of opinion- I wouldn’t want to live in a city smaller than Auckland. It would be difficult to support many industries other than farming. And I imagine the population would be much older and ageing. Personally I think we need more people (particularly in Auckland) not less.

Fine, ring fence Auckland, boundaries around the most central of it, build as high as you like to cram in more and more, for no other reason than more, passport in and out, and let the rest of the country enjoy some peace and quiet. As you say, matter of opinion, many much prefer the open spaces.and are getting sick of getting more and more squeezed and unable to enjoy the things that were just a matter of course when young as they didn't cost much or anything, now those things are the preserve of the rich - buggar that.

Jimbo - interesting fact for you. More New Zealanders choose to shift out of Auckland than move into it. Population growth in Auckland is due to people coming in over the border. If you want to live in New Zealand, move there. If you want to live in a big town, plenty of offshore cities to move to. eg. Istanbul, 20 million

Don't want to move so far from the airport that the taxi fare back there makes next years holiday in Beijing too costly!

Regulation has restricted the supply of sections and, consequently, the price increases. This is basic economics but everyone acts like it is a big mystery. Remove character overlays and view-shafts and other such things and let people be free.

Speaking of basic economics and big mysteries – why so little action on the demand side?

Restrictive zoning limiting supply (making supply inelastic) definitely has an effect. The other big issue is infrastructure provision. Infrastructure needs to be provided ahead of the demand curve.
I have written an article about the need to integrate land use planning with rapid transit supply for Greater Christchurch that illustrates this point.
https://medium.com/land-buildings-identity-and-values/greater-christchur...

So not only is excessive land price a big factor which we can arguably address (assuming the demand is real) how do we afford the huge cost of roads, and services reticulation?

There seems to be be a huge cost ($100k?) involved and someone has to pay for it. So its either existing rate payers get screwed for someone else's new services (grossly unfair) . A huge upfront surcharge by the council (queue screaming libertarians), a huge upfront cost by the developer (queue screaming developer/new buyer) , or some sort of extra rates charge over say 25years which would impact the value of the home and maybe a mortgage?

Strikes me that there is no easy path to solving these substantial costs excluding the price of land.

Milton Friedman drops the solution here: https://youtu.be/yS7Jb58hcsc?t=64

He drops his libertarian / ACT opinion there on a flat rate, where the vast majority of ppl accept a progressive tax system is more fair / necessary.

My thoughts on making affordable low income housing. Set up a sub market that circumvents open market with strict covenants. Government uses the power of RBNZ and Public Works Act as First Labour Government did
https://unframednz.wordpress.com/2018/11/06/a-radical-idea-for-low-incom...

Some other cost additions have come about in those same years.
Council charges must have included their attempt to reclaim some costs on leaky buildings.
Higher building specs like double glazing, insulation, strengthening for climate and earthquake loadings and even the need to certify materials that was never contemplated those years back.

The target is what was the middle income bulk of our young policemen, teachers, nurses, butchers, and candlestick makers..all the trades people that make up the bulk of the spending of an economy.
All the juggling of section prices, council costs subsidies etc (and that is all it will be) will not fix the core issue.. That the mid 50% of our population no longer earns 50% of the nations total wage and salaries.
We have worked around this problem of economic growth by importing more people to continue to stimulate economic growth..
We are seeing a lack of critical so called middle income professions, and fail to attract people into those professions, and in some have them leaving... mid wives , teachers, justice dept workers, and the list will grow.
It is this continuous reduction in the national proportion middle income incomes over the last 30 or 40 yrs we are now seeing those who kiwibuild is intended for demanding the income ...and therefore the income to purchase these homes.
The issue has now come to a head.. kiwi build homes are 'unaffordable' A growing section of what should be middle income earners.. the economic power for growth behind a healthy economy (or at least what is left of them) digging their heels in.
Yet we still have 'bean counters' trying to fiddle the numbers between section costs , build costs, council costs trying to keep heads above water..very much like incompetent directors of a sinking company.

Heresy! You're not allowed to build out! You have to build up! Punish those dirty selfish car owners!

(No one ever mentions the fact that building up is waaaaay more expensive. AND lots of extra infrastructure still needed).

Auckland is building out. Very fast.

Auckland is building $250K sections on $600k sections that are 200sqm 20km from the CBD. This is not sustainble.

So why isn't the government (and the Auckland Council and councils in all major urban areas) doing more to get down section prices?

Because pollies (and bankers) like high house prices - the bubble must be inflated.