Government proposes new policies to specifically require local councils to leapfrog the NIMBYs and enable more urban intensification

Government proposes new policies to specifically require local councils to leapfrog the NIMBYs and enable more urban intensification
Urban Development Minister Phil Twyford.

The Government wants to direct local councils to prioritise intensification through a new National Policy Statement (NPS) on Urban Development.

It has released a document for consultation that proposes what the new NPS, set to replace the existing 2016 one, should look like.

The Ministry for the Environment (MfE) and Ministry of Housing and Urban Development (MHUD) suggest the NPS includes new policies to specifically direct councils to provide for intensification by:

  • enabling high-density development in areas close to employment, amenity, infrastructure and demand;
  • providing for further greenfield development by allowing consideration of urban development where land has not yet been released or not identified for urban development;
  • removing requirements for new developments to have a set number of carparks to make it easier for housing developments in inner-city areas to get off the ground for example;
  • using evidence about the market in planning decisions, and assessing demand for housing and business space, and supply of development capacity to meet demand;
  • more directly intervening to promote quality urban development by replacing rules in district plans for example.

All these directives would need to be carried out under the Resource Management Act.

The MfE and MHUD admitted in the regulatory impact statement for the NPS that while the change was expected to provide more affordable housing in cities, it could result in “some existing home owners perceiving a loss of amenity due to a new development occurring in their neighbourhood”.

Yet Urban Development Minister Phil Twyford said development could be done well to satisfy even “the most sceptical NIMBY”.

“Our cities are failing. Poor quality planning is stopping our cities from growing, driving up the price of land and housing, and is one of the big drivers of the housing crisis,” he said.

“We need a new approach to planning that allows our cities to grow up, especially in city centres and around transport connections. We also have to allow cities to expand in a way that protects our special heritage areas, the natural environment and highly productive land.

“When overly restrictive planning creates an artificial scarcity of land, or floor space in the case of density limits, you simply drive up the price of housing and deny people housing options.”

The regulatory impact statement for the proposed NPS said it would “intentionally constrain the decision-making autonomy of local authorities”. It also “intentionally requires local authority planning to be more responsive to changes in markets that are not necessarily predictable or consistent over time and place”.

Councils in high growth centres – Auckland, Hamilton, Tauranga, Wellington, Christchurch and Queenstown – would be most affected by the new NPS.

Auckland Mayor Phil Goff supported the Government’s move to address urban development, but cautioned against planning for growth without having the funding to go with it.

“At the moment, about 93% of public revenue goes to Government, yet cities shoulder most of the cost for accommodating growing populations. We need some degree of revenue sharing if Government wants Auckland to take more of a role in urban development,” Goff said.

The public has until October 10 to make submissions on the MfE and MHUD’s proposals. A new NPS is likely to take effect during the first half of next year.

The NPS for Urban Development sits alongside a new Highly Productive Land NPS announced last week. This statement, which is being consulted on, proposes directing councils to protect highly productive land that can be used for horticulture.

Together, the two proposed NPSs clearly direct councils to prioritise urban intensification over sprawl.

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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10
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Finally some good policy.

True. Such an overhaul would go a long way relieving development pressure and pave the way for a better NZ.

Agreed
And it is not just about urban sprawl and loss of valuable farm land - our sprawling cities and low population densities have a negative effect on viability of public transport and a dependency on the car.
New Zealand has been slow in adapting to the realities of need for more densely populated urban centres.
However, the quarter acre section - which has long been part of our psyche and culture of the 1930 to 1990 - is no longer the aspiration of most with social change and greater variety of weekend activities. With social change, the short-term NZ UK-expat visitor Austin Mitchell's 1972 summation of New Zealand culture as "The Half-Gallon Quarter-Acre Pavlova Paradise" no longer holds on three accounts - but hopefully still a paradise.
This policy will reinforce the much needed shift.

Have to agree here.

Land developers have ring fields growth cities, and holding them to ransom.

Encouraging density will ensure more efficient use of existing resources, and breathe life back in CBD's, who have suffered as a consequence of poor planning, suburban sprawl and malls. Ironcially, land covenants and build costs are likely to be encouraging increased density and smaller homes anyway. If my family of 5 can grow up in 125 square metres of home, others can to. Bring it on.

Local Government has been corrupted by large scale developers, and its time Central Government constrain these monopolistic practises.

There is no more complex a business than running towns & cities. Councils use to be lead by retired respected business people, who knew what was good for their community, and prepared to make hard calls. Now they are hijacked by egos, with no or limited business experience, who run down Councils balance sheet to keep themselves in business. And the Council executive is a big part of the problem.

I wonder what effect this and the new restrictions on developing high quality lands may have on the land bankers (masquerading as life styler's)?

A flight out of Auck or even more evident, Hamilton, shows hundreds of acres of mac mansions with pool, tennis court and acres of mowed lawn. Many just waiting to subdivide. Nutty planning.

Hi rastus deciding whether to buy a l-s block is an easy decision. Wide open space, virtually the same dollars as an urban home and get to play at farming. Although I know others who are selling up and moving back within the Hamilton rub. Housing development is not part of our plan. I heard mike Hosking also raving about how much he loves his country house and land.

...playing at farming is a good thing. Lifestyle properties can be very productive. BUT from what see out there, most are just big spreads with manicured lawns. The owners never seem to be home, let alone in the garden..if there is one. Rural Mac Mansions gobbling up good land.

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... any story with a pic of Phil Twyford plastered above it immediately goes into the looney tunes file ..

And , as this goes to air , another high profile Kiwi Build executive has quit the job ...

... goofy is as goofy does ... Phil Goof . . Goofy Phil Twyford ...

Nah.
Definitely won't be like the "remove the RUB" or "100k homes in 10 years" ideas.

Phil will definitely come through.
Surely. He will.
He's a politician.

... my prediction . . After a stellar career in failing at meeting any targets in government . . . Phil Twyford runs to become the next mayor of Taihape . .

He would be well qualified for a role in central government, running on that experience.

Don't you mean local government?

He is Labour's Smiling Assassin, only thing is he is killing Labour and NZ cities.

I wonder if Mr. Twyford has finally figured out that supply and demand applies to housing? Restrictions on supply is the number one reason for house prices increases. It's not "greedy landlords" or "foreigners". NIMBYs need to be confronted and we need to stop listening to their false alarms. We also need to allow land owners to do with their land as they see fit rather than the Auckland Council making decisions.

Restrictions on supply is the number one reason for house prices increases.

Rubbish. The primary driver of ALL property bubbles in modern economic history is credit availability. Regulatory inteference is a market distortion.

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Wrong. Price appreciation is a symptom of credit expansion in a constrained market.
Fundamentally price is primarily a function of housing supply elasticity (surprise, surprise). The research is pretty clear on this.

Sort the elasticity, sort the core problem.

Exactly

Wrong. Price appreciation is a symptom of credit expansion in a constrained market.

Not sure if your "wrong" was directed at me. Regardless, I'm not sure your argument necessarily holds. The most constrained property markets in the world are not immune to price depreciation. Both quantitatively and qualitatively, this would suggest that credit expansion (or easy credit) is the primary driver.

Now let's assume you're correct. That would mean that house price bubbles could be maintained forever and a day. NZ and Australia seem to accept this to some extent, but only time will tell. I wouldn't be surprised if this thinking is wrong-headed.

It was directed at you, sorry. (without sounding blunt)
Nope. Price inflation is a a symptom of credit expansion in a inelastic market.

The most constrained markets in the world are not immune to price depreciation.
That's more because houses don't normally disappear.

Read carefully what I am saying.
Simplistically:
Credit expansion (or price growth - they are endogenous) shifts the demand curve. The supply curve is fixed in the short to medium term.

Just mulling, not attacking – what about equity market booms and credit expansion.

Shortage of shares?

Or is the conversation housing specific?

That's exactly the same effect, right?

If the supply of shares was infinitely elastic, prices would be fixed in time.

Still mulling.

In some respects perhaps there is little that is infinitely elastic in supply – but if you increase infinite demand (via available / loose credit) - although perhaps that’s also not possible - then prices will rise?

Prior to the credit explosion did everyone chase a share portfolio?

What I’m suggesting is that there might not be a “real shortage” of shares – it’s now simply a matter of overheated (infinite?) demand chasing them – creating bubble / credit driven demand – yes, it’s a shortage – it’s the underlying reason for the apparent shortage that could be questioned.

Cut off easy credit and who now wants all these (questionable) shares?

What has caused what?

It was directed at you, sorry. (without sounding blunt)
Nope. Price inflation is a a symptom of credit expansion in a inelastic market.

OK, Your argument suggests the following:

1. If credit is continuously expanding in an ineleastic housing market, then prices will continue to rise. I accept that to some degree.

2. In an inelastic market, without credit growth, there is strong evidence that prices will stall or even fall. Central Tokyo is a case in point. Therefore, my point being that credit is the primary driver of house price appreciation with or without supply response is strong . Furthermore, there is no historical evidence that house prices can me protected by market distortions in the absence of credit growth. Feel free to challenge.

There are many jurisdictions, eg Texas, where low and lowering interest rates have not caused house prices to increase relative to income. Further the model for development which they use, which is what P twyford is trying to emulate (but he misses the point) allows supply to almost meet demand in developer real time. This is not only good when demand is high but eg if the market demand is suddenly lower, the developers can easily enough reduce supply without incurring any holding costs.

This gives stability to prices, making houses affordable irrespective of what other inputs like immigration and interest rates are doing.

Then housing types people choose is based more on what they truly want/need, not just only on what they can afford.

Sorry. Why do prices always have to increase in an inelastic market?
No one is implying asymmetry here.

So no, prices don't always have to increase in an inelastic market – but with with cheap, easy money – it’s a tempting place to start – and does desirability even matter.

In the end you just need a bigger fool to dump on.

But I understand your point.

Sorry. Why do prices always have to increase in an inelastic market?

Was never the argument. Property bubbles are primarily driven by credit. The premise is solid. What we do know is that inelastic suppy does not necessarily prevent property crashes. That adds greater emphasis to credit as the main driver of house prices.

Property bubbles are primarily driven by credit. The premise is solid. What we do know is that inelastic suppy does not necessarily prevent property crashes.
No. The premise is only solid with the clause about elasticity.
So. Again. Price inflation is a symptom of credit growth in an inelastic market. A credit impulse in an infinitely elastic market will not increase prices.

What we do know is that inelastic supply does not necessarily prevent property crashes.
But why would it? No one is arguing that low supply elasticity only results in positive growth... As I said - the effect is symmetric..
Perhaps time to refresh your memory on elasticities?

We can argue about this all day, or you could just read the urban economics literature.

A credit impulse in an infinitely elastic market will not increase prices.

There is no such thing as an infinitely elastic property market. Just because the supply of houses don't respond to demand compared to say water is irrelevant.

What?
Are you really saying elasticity is irrelevant to price growth?

Are you really saying elasticity is irrelevant to price growth?

Nope. I'm saying that credit has been the primary driver of property price growth (and property bubbles in modern economic history). However, I concede that I cannot prove that beyond a doubt.

Explain Houston. Explain Atlanta.
Explain Perth. Explain Brisbane.
The fact of the matter is you cannot without referencing the respective supply elasticities. So, what comes first - the incumbent supply conditions or the shock?

Interesting discussion.
I don't think it's either /or.
I think both credit availability and elasticity of housing supply are both relevant and important. As are other factors (eg tax settings).

I think in a land-constrained urban area such as Auckland more permissive planning rules in the existing urban areas have an important role to play, to enhance elasticity. Auckland does not have the luxury of a place such as Houston, which has a lot of flattish land around it, often in large landholdings. By comparison, the rural hinterland around Auckland is highly fragmented, often flood prone, and often hilly. So even if zoning restrictions were removed, there would still be large physical barriers.

Definitely.
The point being though that primarily we need to increase elasticity in order to minimise the effects of demand impulses (positive or negative). That makes the shock secondary to the prevailing conditions.

If it was about having flattish land as a prerequisite for making land affordable, then Australia would have some of the cheapest housing in the world.

When you have unconstrained urban land, any negativity you mention, eg flood prone, hilly etc. would be weighted against a model flat section and that negativity would be discounted of the model price to give a value that is relatively equal to that model flat section.

Remove the zoning restrictions allows for the physical barriers to be valued down accordingly.

So maybe removing growth boundaries in Aus would be more effective than Auckland.
The authorities on the impact of planning regulation on housing supply - Glaeser and Gyourko - acknowledged the impacts of topography and environment (natural constraints) on housing supply, as well as artificial constraints (eg. planning rules)

They would be just as effective in both countries.

You don't have to be experts to understand that natural environment and human rules are constraints, but if the human rules allow for unconstrained/less restrictive development then the topographical constraints can be weighted and discounted in value accordingly. If the weighted value is then less than their next best use, then they won't be developed on.

The economic literature is very divided on the impact of credit availability and costs versus land use regulations etc.This is complex stuff.
Glaeser and Gyourko favour a strong role for land use regulations in inflating bubbles, but a number of economists (Himmerlberg, Mayer, Sinai, Khandai, Lo etc) favour credit as the main reason.
Schiller favours psychology.
I think all these things play a part.

just having a light read over lunch. 'Assessing High House Prices: Bubbles, Fundamentals and Misperceptions' (Himmelberg et al).
One of their key conclusions is 'the sensitivity of house prices to changes in fundamentals is higher at times when real, long-term interest rates are low and in cities where expected price growth is high'
According to this theory, with a big-ish supply response underway in Auckland and effective demand lower, prices may dip. According to this theory, a large OR small supply response in 2005 (high interest rates) would not have made as much difference to prices.

Interestingly, Glaeser's views on the impacts of regulation have moderated a bit. In 2013, in the preface to 'Housing and the Financial Crisis', he and Sinai state 'the great housing convulsion (USA housing boom and bust) destroyed the view that housing prices would always remain close to construction costs in unregulated markets'

In among all of this we may have omitted the prime mover – the human condition, the human frailty.

Money is cheap and plentiful, they’re blinded by greed, the herd, there’s easy money to be made.

Be in to win – and what the hell is elasticity anyway?

I'm not arguing against you or rejecting what you say. And you could also add Miami and Las Vegas to your list. Perth is a great example by the way.

And I admit that I don't know the extent to which Auckland property prices could fall should credit availability disappear tomorrow.

And I admit that I don't know the extent to which Auckland property prices could fall should credit availability disappear tomorrow.
Well, we do know one thing though - it will be a function of the existing supply elasticity.

“Well, we do know one thing though - it will be a function of the existing supply elasticity.”

Or confidence – and as such perhaps “elasticity”or it's apparent lack thereof, is related.

Interesting discussion today – thanks.

it's chicken and egg to some extent right?
Where supply is constrained (naturally, artificially or both) all things being equal that will incentivise speculation and therefore credit demand (and growth).
Where supply is more elastic, all things being equal prices should not rise as much, hence less speculative behaviour and less demand for credit.

Correct. If anything, I will argue that house price increases have been primarily driven by credit and is the key driver of the price level. Furthermore, I'm more influenced by behavioral economics. I will disagree with you about "where supply is more elastic" and will point to Miami and Las Vegas as examples of locations where speculative behavior was rampant regardless of relatively unrestricted supply.

I tend to agree. For me, on balance, the demand side of the equation is more important than the supply side.
Not only the cost and availability of credit, but the presence (or otherwise) of external demand (foreign, or from other regions).

There's a limit to how elastic housing supply can be. Housing will always take time to build, even with more efficient planning processes and construction methods.

Faced with a flood of cheap and available credit, and massive external demand (eg. from China and beyond), there's no way some highly desirable markets will ever be able to match supply to demand. It all comes down to math.

Having said that - housing supply is still important, and be a supply denialist at one's peril!!!!

@J.C. and Nymad. Here's some analysis on the drivers of house prices: https://www.youtube.com/watch?v=UpWoqWZUBbI

Overall I'm with J.C. on this issue as while constrained supply does help cause upward pressure on prices, it's credit availability which has the greatest effect.

I'm sorry. Where in that video does he establish causality? This guy is good at hypothesizing correlation on many things but that's a fools errand.

I'm not saying a credit impulse doesn't result in price inflation. I'm saying the magnitude of effect is the respective supply elasticity if you want to minimise this, mitigating exogenous shocks is not the way to go about it (they are exogenous, after all).

I'm saying the magnitude of effect is the respective supply elasticity if you want to minimise this

Which is no different saying that property prices can be controlled through restricting supply. Makes sense, but it doesn't explain why property and land prices collapsed in central Tokyo where supply is arguably tight.

Again. Yes it does.
Elasticity has symmetric effects. Prices collapsed because the market was inelastic - a small change in demand had a large effect on prices.

We are getting a bit far from the point here due to conflating flows and stocks, but the point still stands.
You are effectively arguing against the foundations of economics here, J.C.

Yes. Demand collapsed because credit wasn't available. I'm not arguing against you. And you're inadvertently supporting what I'm saying.

Demand collapsed.
So. In other words: the demand curve slid along the supply curve. Had that curve been flatter, the 'collapse' wouldn't have been so severe.
Again. The magnitude of effects are primarily driven by supply conditions. The price growth is a function of the respective elasticity.

In a simple supply-demand model, you are correct.

@Nymad. As he said in the video, they rolled all the possible factors into their scenario models then examined the relative influence of each on house prices. His results are based off DFA's scenario models.
Taking a common sense approach, since 1977, our M3 money supply has increased from $6726 million to $316000 million dollars. A 4,598% increase. Now imagine that didn't happen. What would prices look like now? Without that increase in credit/money prices wouldn't have a chance of being anywhere near where they are now.

"Scenario model"
Got any details on that?
DFA does not have the expertise to do anything more than some basic comparative statics.

No I don’t have any details on the specifics of their scenario models however as they are a research, analysis and consulting firm maybe they might not be too unqualified.

Anyway, as per your initial contention - “Fundamentally price is primarily a function of housing supply elasticity (surprise, surprise). The research is pretty clear on this.” It’s just not right. Again, look at the M3 data, take 97% of our money supply away and then tell me that house prices are a predominantly a function of supply elasticity.

Nah. There's no way they have the capital to invest in models based on anything more complex that some spurious correlations.

As for your second point - simply having a gut feeling on something (which is what that is) isnt really research.
If you are contesting that price growth isnt a function of supply elasticity, I recommend any basic microeconomics textbook as bedtime reading.

Your right, you clearly have intimate knowledge of DFA's accounts and capabilities...
To my second point, it's not a gut feeling, just deduction through data. To clarify what the point was all along as you have clearly missed it - Credit creation is the biggest driver of house prices. This does not discredit supply elasticity at all. It only asserts that it is not the predominant cause as you have stated.
Literally, everything you have replied with is a strawman. Try to read and understand before attributing views to others that they don't have as it makes it really hard to have a debate if I have to clarify every point each time.

http://digitalfinanceanalytics.com/blog/about-digital-finance-analytics-...
Yep - just as I suspected; rubbish in, rubbish out.

Your 'deduction' isn't really recognised as 'research'.
Fine to have an opinion, but don't conflate that with an empirical relationship.

And you have shared your empirical evidence where exactly? Also, what was your link meant to prove?

Can you cite something relevant to the recent NZ or Australian housing markets?

I think the NZ housing under normal conditions operates in a somewhat constrained market with developers selling of one stage before releasing another. Only with a massive unanticipated drop off in demand, such as Perth, would the market not be supply contained.

Unconstraining land supply is what P Twyford is trying to do (but failing). Even if we had a Perth event, which is possible, because the underlying land value is based on someone having paid too much for it already, many of the owners can or will try to sit and hold, and ride the event out. This can still limit supply relative to 'affordable' demand, and hence you can still get over supply and unaffordable housing.

So, unconstrained supply under normal demand growth is only a hypothetical situation in NZ?

Yes, housing corrections can last multiple years. I think anyone who has bought in the last few years will think they overpaid if the housing supply does become unconstrained.

Yes it is a hypothetical situation in NZ, as evidenced by P Twyford issuing a NPS to 'open up' supply.

The reason we get boom and then busts is because we have constrained supply, but it is rare that the downside drops as far as the upside goes up, for the reasons I gave in the post above.

With an unconstrained market, there is no boom or bust, just a steady housing price increase that matches the rate of inflation, and thus is always constant to the historical median house price to income ratio which is approx 3x income. This use to be NZ's historical average up until the late 80's.

And I would say that anyone who has bought in the last few years already thinks they have overpaid, even though it is still a constrained market.

My interpretation of the original question is are we practically (not hypothetically) able to control house prices by controlling land availability though zoning or does credit availability have the main causal effect on supply and demand. From someone who lives in Tauranga its most defiantly the latter. Sure, temporary lack of supply can create small bubbles and require corrections but the overall trend over the last 30 years has been controlled by credit availability. (There is third factor of confidence or expected capital gains which if is decreases from the long term expectation of 7 percent gains. If this decreases it will have an impact on the effect of the other two.)

I don't know what Twyfords goal is but, given NZs current situation, the idea that government should be trying to control house prices with supply and completely ignoring demand is absurd.For example, if you were to ever start succeeding in increasing supply above current demand then demand would then drop as capital gains turned negative and then developers would either stop building until it returned or go bust. The difference between what we have now and unconstrained supply is so large that the transition would be too painful for anyone to want to try it.

I do support giving more people the choice to live in the city centre and avoid commuting.

You have touched on a number of important points but you are conflating the importance of each.

It basically starts with the cost of the first input, which is land. As the saying goes, 'get the land wrong, then everything is wrong.' We have got the price of land wrong in NZ. So what should the price of land be? Prior to being residential land, it is usually rural land, which has a value around $50,000 per ha in NZ. So when an owner goes to sell this land he is expecting to get much for it as rural land, but a developer could entice him to sell it to him instead by offering more. In an unconstrained market, a developer in theory has an almost unlimited amount of rural land to choose, and while there are many factors which dictate which land is the best for his purpose, he has multiple choices, as do all the other developers as well. The point is, he never has to pay much more than the rural land price to secure the development land.

Compare that to NZ where rural land owners get over $1,000,000 per ha? This is because the land has been constrained by the council only zoning limited amounts of land, and this is further constrained because not all landowners with that zoning are interested in selling, irrespective of developers wanting to by it.

The Govt. is already controlling house prices will supply (lack of) and that is why we have high unaffordable house prices. When we talk about supply, we are not talking about developed sections, we are talking about the ability to develop land in developer real time as per the market demand signals, ie supply matches demand.

Paradoxically, to my statement that the first input is land, this is true as a physical input but in an unconstrained market, the real first input is demand. And the demand /buyer says they want it at the most affordable price. And since the minimum value of something is the minimum cost of producing it (otherwise it wouldn't get produced), if you work back from what the buyer will pay, deduct all costs including developer profit what is left over is the value of the land, and if this value is higher than the rural value, then developers can buy land. If it is not, then land does not get developed, demand is greater than supply, existing houses rise, buyers have to pay more, which now means working backward again, the $ leftover bit is now more than the rural land value and the developer can buy it.

In summary, in an unconstrained supply (ie the ability to develop at demand), then rural land can be purchased for residential land at little more than its rural land value, and house values settle around 3x median income. And income from from being a landlord is earnt from a higher yield but on a lower starting value, and capital growth is limited to the rate of inflation. Developers still make a good % margin by putting the development together (value added), but cannot just earn an increase by doing nothing (speculating) and expecting monopolistic gain (non value added).

Your reference to any change being too painful for anyone, is not 100% correct, it would be only painful to those that have already paid too much, but for all those that have yet to buy then it would be great.

I have only grown up seeing Tauranga housing development but I think Auckland's challenges of expanding would be similar but possibly less constrained in expansion direction. While you can remove all zoning, it does not magically make all land available you at the same price as there are infrastructure costs for high density housing that still need to be paid. By the time you have widened the road, upgraded the intersections and run (waste) water for high density housing every km from the city costs, added to that is undesirability of living further away.

In Tauranga we have ocean to the north hills to the south, and patchy land quality to east and west. While you can skip a few farms and go further out, there are limited directions and I'm sure all the farmers know how to find a valuer and all flat useful housing land can be planted in high density horticulture if they decide to walk away. There ends up being obvious places to develop next and the farmers that hold on see their land go up in value. Commuting has become a issue in Tauranga and you don't want to start too far out. Yes the council controls the development zones but if they instead passed on the infrastructure costs upfront I think we would have seen a similar development order. The farmer's valuer works back from his guess at the final section price which is determined by credit availability. Credit availability determines land price for the developer.

Reducing house values to match 3 times the populations salary curve would wipe out so much wealth that it would crash the economy and send every residential developer and construction firm broke. Sure someone would find the money to carry on from the liquidated developers after all the negative equity home owners, with no hope of price recovery, had gone bankrupt and had their houses sold only after the banks had got their new owners but I would think very few would think it would be worth it at the end. This price reduction could happen in an economic crash but this is no going to happen voluntarily. Even the greens don't want prices to crash.
https://www.greens.org.nz/home-for-life

Lived at the Mount/Tauranga so know it well enough. It is no different to any other place in NZ in its 'problems'.

Topography always has an effect but can be discounted back(to a certain extent) in an unconstrained rules environment.

Infrastructure is mainly an issue only because the development of it is constrained by councils.

The obvious places to develop next are still far more numerous under an unconstrained environment that the land would be a lot cheaper than present, and the less obvious are the more topographically or location challenged and can be discounted back in price to reflect this, so even more land is available.

Even though more land is available, it will only get developed at the rate of demand. Your generalisations about credit availability determining price are correct in the sense if there is 'no money' then you can't buy anything, but in a live economy, credit availability is only one small factor in determining price.

Your last paragraph is 100% correct, and there's the rub. Houses are unaffordable and the only way they can become more affordable is for the price of them to go down or wages to go up, or a combination of the two.

The changes that PhilT is trying to put through is aimed at bringing prices down. The dilemma they have is how to bring them down without crashing the economy, and in a crashed economy you also have other factors like job losses which then really affect people's ability to pay mortgages, rent etc.

What they would like to do is make changes that hold price increases to the rate of inflation ie allow wage increase to catch up and bring the median multiple closer and closer to 3x, but even if they do this then this means that capital growth is neutral and then investors need a higher return on yield, which would push rents up. etc. etc.

Take in all the outside factors that the Govt. have no control over, then I would say we are close to the top of the cycle, if not already past it but don't realise, and a crash of some type is going to happen.

And while the Greens may not want prices to crash, their policies guarantee unaffordable high house prices, as do (to date) all the other political parties policies.

This is getting too hypothetical.
If we eliminate zoning, how does infrastructure get funded? If someone buys up farm land 3+km further out than the last subdivision who pays and how are cost recouped? I don't think you can distribute this around existing rate payer and do we end up multiple pipes for each new subdivision that goes in.
Were is this low value farmland around Tauranga that can be carved up in quarter acure or less sections? There's none to west or south that's not hills, swamp, lifestyle blocks or HD Hort (kiwfruit or avos). There's only Papamoa and that will be priced accordingly.
Do you suggest that we allow 300 to 1000 house subdivisions without factoring in road capacity for commuting all the way to city?

There is nothing hypothetical about it, it is done in other jurisdictions, and the changes that the Govt. are making are trying to head in the direction I am describing, but their execution of it is flawed.

The lack of zoning has nothing to do with how infrastructure is funded. Most wastewater treatment is now more environmentally friendly and less costly if ring fenced within the development.

External Roading capacity is still financed as it is, ie fuel taxes and rates (from the new residents), and there could still be a surcharge (development levy) in the price of the sections that is payable for roading.

I see Tauranga area grass lifestyle blocks are approx. $77,000 ha ($6,416 per section raw land price), land with avocados is $168,000 per ha ($14,000 per section raw land price). When you start of with development prices this low, it leaves a lot left over to provide other monies for services, amenities and lower section prices.

Better late then never. Urban sprawl makes everything worse.

There are heaps of big sites in Takapuna and Devonport with single storey units that could become apartments, maisonettes, etc. Millennials aren’t having big families and want apartments near transport hubs, as in other big cities. Great piece of policy for once, Phil. This might just save you. The urban sprawl between Albany and Warkworth is hideous, and a waste of good land.

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heres an idea, honor your pre election statements from all three government partners and lower immigration levels to something more accomodating to what our infrastucture can handle
i see hamilton has done away with their height limits, it will change the character of that town over time

... damn fine idea . . Scrap the height limits on immigrants ... the national basketball team need a few more 7 footers . . Well done Hamilton City Council ... leading the way in dribbling ..

Hamilton is growing uglier by the day, seas of black roofs with nothing but perma-shade between them. Black and white houses as far as the eye can see, sections so tiny it will not be possible to break up this ugliness with trees. And I am picking these houses will have seen their best days before 15 years is up.

"nothing but perma-shade between them."
Have you been to ponsonby or grey Lynn pocketaces. Similar small sections with houses closeish together. And yes they have trees but obviously not "seen their best days" because the suburbs are growing in value and popularity. So I dont think I agree with your assertions sorry

I have reason to be many of these new houses and I am telling you right now, they are as shoddy as all get out.

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Agreed - no matter which way Labour tries to spin this, it has basically broken a core election commitment to cut immigration.

Wow, Hamilton City Council is waaaaaay ahead of Auckland in fact. Article about the height limit removal: https://www.stuff.co.nz/national/114602350/red-tape-review-opens-door-fo...

That is my main disappointment point as well.

Are you ever happy pocketaces you are always moaning about something. If you dont like ham and milk town because its growing too big and "ugly" just move away. Lots of smaller towns like Hamilton used to be. It is only a suggestion.

Why should I pushed out of my home by the ugliness of modern building?

Oh and my main beef is with the outright failure, not just here, but all over the world, to accept that the human race's population has grown too large for this planet and we need to be looking beyond growth now, not more of it. I will not move or shut about that until it is addressed.

If you were in charge where would you start

Contraceptives for all, women in complete control of their own fertility

Yep stop farming babies for money for them to later be abused and worse.

Whatever

Removing minimum sizes on apartments - that will end well.

What's the problem if someone wants a small apartment? You don't have to live in it.

Is the infrastructure in the urban centres even remotely up to the task of supporting intensification? Or is this just another instance of kicking the can down the road? Infrastructure upgrade (water, power, roads) is almost unaffordable these days.

. . we don't kick the can down the road here in Canterbury ... no sirrreeee Jim-Bob. .

Too many frigging pot holes ... the cans disappear lickety splick ...

My good sir, it will be Entirely Possible to make one simple return trip on your rented Lime Scooter, carrying the brimming full Thetford Toilet Cassette and an empty 20 litre potable water jerrycan, to the local dump station. Fill up with potable water and return, refreshed, exercised to your 17 sq metre abode (up four stair flights, good for the heart), and thus be ready for another day-and-a-half with toilet and water supply nicely taken care of, for two.

It won't be roads that need upgrading, it'll be mass transit systems that work. And yes, they need to get on with it now, before it become even more expensive. And I don't mean the pissy tram line down dominion road, we need a proper heavy rail backbone in Auckland, extended to cover the majority of the city. Then fill the gaps with light rail. Do it once, and do it right.

Welcome to mostly-there sometimes PT, zero garaging or storage, the joys of Bodies Corporate, and no pets. 'Up not Out' means all a them things and more. Get used to it, wage slaves....

With respect Mr Twyford, you really should not have anything to do with housing!
You have achieved nothing of any benefit to the country since you have been in government.
To suggest that new builds should not have any car parking with them is just blatantly stupid.
In Christchurch the CCC approved many apartments and townhouses without car parks and they are going to be lemons for the owners of them.
No city in NZ has got adequate public transport for its citizens nowadays.

tm2 - not for long they aren't.

The car-centric urban model was a temporary affair, underwritten by fossil energy. The renewable scenario has less tonnage owned privately. Has to

Yes tm2 no carparks will be a disaster if out beyond central city. My mouth dropped open when Twyford said "let the consumer decide". The free-market approach

Prisoners get a minimum of 10m2 if there are two cellmates. I assume most prisoners don't share a bed so there's a saving there. If they can do it why should property occupiers say no?

Exactly, and there is a parallel universe that they create with the increase in commercial storage companies for the overflow of peoples stuff that they can't squeeze into their smaller homes, the m2 of which never shows up in the stats.

A lot of that extra "stuff" isn't needed, most people hoard crapola and refuse to throw out old tat, the partners parents place gives me the heebee-jeebies, every square inch of flat surface has some trinket on it. I dread the day they pass and she inherits this stuff, pretty much guarantee there will be a large falling out when I tell her that she's gonna have to sell/bin 95% of it and select a few pieces to keep to remember them by.

Another example would be selling a development without a car park to someone who needs a car. The point is that there is a lot of hidden off site storage that hides the fact that people downsizing are not downsizing as much as they think.

While your in-laws example is a good one, I bet there are just as many parents that lament the fact they are storing there kids stuff, due to them on their overseas travels, or living in small houses that can't take all their stuff.

And again, how much of that stuff is actually needed? If they are living elsewhere, and not using it, then its obviously not needed. Just keeping crap for craps sake in most cases. Sure, keeping the kids stuff in the now spare room while the kids are on their Big OE is different.. but its the spare room, it has no marginal cost to the parents to keep it there while Sally is travelling, unless they decide they want to downsize while shes away.

Why would you buy in a development that doesn't have car parks when you NEED a car.. are you a bit slow?

Irrespective of whether you thing or they think they did need this extra stuff, they are using extra storage space.

My point was that the m2 of storage space that is rented off site does not show up in the living space stats of apartment owners giving a false measure of the actual space they use. This is the same with their basement carparks as they are separate from the unit and are not included in the m2 space, whereas in a suburban house with an attached garage it is.

And you need to get out a bit more, developers are always selling units without car parks to people that have cars. The owners either have to rent a space nearby, or just park the cars on the street, berms etc. and when enough people do that and block the use for everyone else and they complain, then council come along and put time limits or no parking signs up.

The developers job is to inform the purchasing there is no parking, not to stop them from purchasing if they do have a car. And while it maybe illogical for some people to buy like this, this is what happens when you create an unaffordable housing environment, ie scarcity that causes an emotional response to buy at any cost FOMO.

In some countries, a purchaser has to show they have a permitted car parking spot for their car before they are allowed to buy a property that does not have an offsite car park. Which would make sense in NZ as well, but you have to remember that the plan is to discourage cars in higher density. not make allowance for them, even off site.

wtf? seriously...

People will simply adapt.. all that crap in storage they will eventually realise they don't need and get rid of.. probably about the time they get the umpteenth bill for the storage unit.
And you will also discover most people don't need a car, and certainly wont if we develop decent public transport infrastructure as we intensify. For the average 9-5 office worker a car is rarely actually needed, and that need can be filled by the hourly hire cars you see every km or so along the road in cities with decent sized apartment blocks, for an example take a look at Berlin, with Flinkster and Cambio being the two I remember seeing. You wont get the services becoming common until the intensification starts, but they will happen. And then there is always Uber or taxis, the $1000 in fixed costs (rego, wof, insurance) you save will pay for a resonable number of Uber trips.

Your entire premise is BS imo.

?? I'm not stating a premise, I'm stating fact.

Name one thing I had said that is not factually correct.

I see no data to back up your "facts" like the supposed increase in off-site storage.

Is setting an additional impediment to councils likely to expedite consenting? I think the minister is right about the poor livability of cities but I cannot see this legislation having a positive impact on housing affordability.

Hopefully this will stop high profile NIMBYs like Peter Jackson from stopping housing being built in Wellington.

Oh for #( ) ck sakes , does this man even have a clue how much it costs to build up beyond 2 floors in NZ ?

And the next issue is Kiwi's dont want to live in apartments if they can avoid it .

And then the costs associated with owning an apartment are just a nightmare , levies, Body Corp fees , communal costs over which you have no control AND :

noisy neighbours

parking constraints

Strange food smells wafting around

Forget it !

"And the next issue is Kiwi's dont want to live in apartments if they can avoid it ."

That'll change, nothing wrong with apartment living if we do it right. We stayed in various apartments in Europe recently, and all of them were livable (except the heritage zoned one in Barcelonas Gothic Quarter.. it was a pokey little hole of a thing. But we aren't even close to that yet, except maybe a few central city locations.

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To all the comments (on this article and elsewhere) saying 'Kiwis need to get used to living in apartments, and give up on the 1/4 acre dream; Why the f*** should that be the case?

Its pretty bloody clear that the majority of Kiwis would prefer to live in a low population country. If you want to live in London or Sydney, go live there. We don't need to turn NZ into a mini clone of those places.

Why the hell can we not just limit immigration to replacement levels only, and keep trucking along at just under 5 million?

I would be willing to put money on it that a national referendum/question along the following lines would yield a resounding "YES!" ; "Would you prefer the New Zealand population stop growing, even though that will mean our economy grows slower/stops growing?"

First comment that makes sense.

If you don't sort population, all other bets are off.

Basically I have found the fewer neighbors you have the better. People move to the country for a reason, to get away from suburbia with people trying to live on top of one another and because they have enough money to escape. Pretty much nobody would live only in a high rise apartment given a choice.

True that.

An interesting question would be why is there never a referendum on immigration or population sizes. Currently economics sets immigration policy regardless of what government we have in. Do we really live in a democracy, or just a pretend one?

A steady state population. What a great idea!
Sure makes infrastructure planning simple.
Given current rates of childbirth are below replacement and more Kiwis are emigrating than returning then we would still have a healthy rate of immigration: refugees/partners/high-skills. It is just nutty year in and year out having about the highest legal immigration in the world.
And the govt policy would be neither build up nor build out but simple replacement.

You can have the 1/4 acre dream.. just move to the boonies, and leave those of us that want to live in decent cities with amenities to get on with it. Head to Eketahuna and you can have all the 1/4 acre section you want.

Very true. Ask any one who migrated to NZ 10/15/20 years ago and they would confirm that view and that tells you all that needs to be said about the over crowding and stupid housing policies of building high, bad, leaky and congested dwellings. Central city locational advantage is hugely overrated, especially in Auckland. Queen street is dead and scary and Wynyard Quarter is not that accessible. Only Uber is making money out of all this concentration.

@Milkyone, Great comment and I agree completely but I feel the obvious thing here is with out continued population growth it becomes too hard to maintain our current ponzi schemes. Imagine super without an increasing younger population (it's already our biggest tax cost) and ofcourse, we need more people to take on more debt to keep everything from collapsing.
I couldn't agree more with what you said however it's not just population decision but a monetary and political decision as well.

Things will likely continue as they have in European countries in recent times. Any objection to a very high rate of immigration is treated as racism or xenophobia that needs to be cured so that the general population accepts what politicians of every stripe think is best for them in this regard. Because immigration is an easy sugar rush that means not having to address harder questions of economic policy, and one can talk of GDP growth while glossing over productivity.

Arguments against a high rate of immigration will be dismissed in terms such as "that will never happen!", or "if it did happen, well, it wouldn't be such a bad thing anyway!", and "New Zealand doesn't have a culture anyway so it doesn't matter", or even "well, its deserved because of historic colonialism".

Immigration seems almost universally seen by politicians as possessing entirely positive and no negative consequences for the local population.

Locals get zero say in the immigration rate until such point a crisis of some or other type develops and populist leaders begin to gain profile, and regardless of political leaning they will be lambasted as far right. This also sees the devaluing of the term "far right" alongside the devaluing of the racist and xenophobe descriptors. When they're used merely to shut people up they lose all weight.

This is based entirely of reading around the last decades in Europe and the UK.

My position would align more with the ideas that analysis of both positive and negative impacts needs to be taken into account (start with NZ Initiative and Croaking Cassandra, for a simple starter) and the local population should have a say in what they deem an appropriate rate, given politicians are supposed to represent their needs first. But of course...that's just xenophobic.

Again misses the boat.

Price is set at the margins, it needs to be equally up and out.

If this is done, as it becomes cheaper at the fringe, then this will help lower the price relative going in.

But on a $m2 price, apartments on brownfield sites that are already in areas where the infrastructure needs upgrading - won't get any cheaper.

The problem is that cities are consumers of extracted stuff, and excreters of high-entropy waste. It's a one-way trip, and is ending hereabouts, time-wise.

To be future-habitable, there needs to be local food-production (of a sustainable nature) capable of supporting the populace. In that light, the 1/4 acre looks good, the Lifestyle Block looks even better. We are destined for an entirely different set of living arrangements, and I suspect that high-density becomes socially undesirable (as the inner cities of many US cities have become).

There is no coincidence that all the apocalyptic movies show cities in ruins (and the Zombies), with all the people fleeing to the country for food and safety.

... are those movies all shot in Dunedin ? ...

It is easy to confuse zombies with uni students,

Invercargill, Dunedin is where they flee to.

Yes sounds good to me in inner suburbs as well as outer. More vertical living would work for the environment too

No it doesn't. That is a lightweight green-think, which avoids the energy problem. Cities rely on fossil energy to bring and take stuff. Until we tapped into FF, the upper limit for a cuty was a million inhabitants - everything above that is artificially supported by a finite resource.

Work it backwards from 'What is a sustainable regime, without resource depletion? You end up with 'more people per food-producing acre, less people doing discretionary stuff in cities, so they can tap into the energy stream.

Our whole social narrative misses this

Pretty sure the Auckland Plan is for up and out. Up a lot in the middle, up a bit less in the middle, and out at the edges.

You mean the unitary plan?

Developer: Can I build up?
Council: Nope.
Developer: Can I build out?
Council: Nope.
Developer: What?
Council: Well, ok, you sort of can, but it costs a fortune.
Developer: Why?
Council: 1) We hate developers, 2) So we want to stop you if we can and 3) If we can't stop you, we want lots of money instead.

In the last two years we have put 5 good development plans to council and they have thumbs down to each one. I find one rule conflicts with another so you end up with so few options it's not worth doing. The staff stick rigidly to rules and if you want to do a plan change it is soooooo long and fraught with neighbour objections. Neighbours can object for any reason then you're stuffed. Sometimes they don't want new buildings that "crowd" them out. Geez. It's all good the rbnz dropped the ocr to encourage new investment but a lot more needed

All this to support rampant immigration. Nuts.

Ok. Looking at the discussion document, it seems like a lot of wishy washy policies are being promoted.
One of the more impactful suggestions is for the NPS to 'ban' councils imposing minimum carparking rules.
The document also seeks feedback on a range of rules. The abolition of height in relation to boundary rules in high density zones could be quite impactful.
So there is some potential here, but it's going to be reliant at least partly on people submitting.

A stupid one size fits all approach. High rises and mass density in Queenstown ( which will include Wānaka ). Is this really what our most scenic resort towns need. Paved paradise put up a parking lot. Fuming right now!

Twyford will be the death of Labour and NZ Cities. High time JA dumps him. Otherwise she is a goner too.

I am not so sure we can heap all the blame on Twyford. For years now we have been importing people like there is no tomorrow, fully formed adult people, who need housing the second they step foot in the country. You will always be on a hiding to nothing as long as that continues.
If you had a bit of a baby boom for a while then you would have time to plan for them needing their own houses in two or three decades, not right now.
It is nonsensical to continue with all this population growth via immigration. There is nothing wrong with us having a small population. Rampant immigration has just about been a nett negative, to be honest.

Agree.
That is why I have been stating here a few times that it is high time we had a nation wide, binding referendum on Immigration, followed by numerical quotas for different kinds of visas. The damage has accelerated during the period of governance by National, who pursued economic growth, fueled by house price increases. A few of their mates benefited, of course.
Very disappointed with Winston on this front. Mistake to expect better from him ?

In response to the last question - yes, he has form

Lots of overpriced poorly built ticky tacky going up in Queenstown right now. A real shame actually.

I’m picking Queenstown will be the epicentre of the bubble bursting.

Yes, we are out to destroy that beautiful town. It will soon have to be renamed Slumtown ?
Or SlaveTown, in honour of all those engaged in wage slavery/poor working/living conditions there ?

My worry is that in the regions, tinpot ambitious rabidly pro-business councils will seize on this to go open slather on housing development so the district can ‘move ahead’ - blithely destroying areas of natural beauty or artisanal interest in the process.

Snails? Pffft....

Now in Greenhithe , where I live, we recently had the number of vehicles parked in the street explode exponentially , and also noticed that when I left for work they were gone so I got up real early one morning and took the dog for a walk .

Lo and behold ........

Not one or two , but scores of young Asians emerged from a private roadway that leads to half a dozen houses , got into the cars and left .

I went down the roadway and soon identified the messy property which is being run as a hostel for Uni students , and the rooms have Double-bunk beds in them .

I figured there must be at least 20 people living in 3 bed house ...........

So I phoned the Auckland City Council , and guess what ?

Absolutely nothing has happened

Horror much. Hope it is not replicated in other suburbs and other cities. I mean the crowded living and parking (not commenting on the Asian aspect, please note).

Hosking is praising Twyford for this, so that is a plus for PT.
Wondering whether I should buy a rental quickly.