Infrastructure Commission report points finger at changes in local council development policies for housing crisis

Property / news

Town planning moved away from facilitating growth to maintaining character of existing suburbs leading to a reduction in housing supply, says Infrastructure Commission report

4th Apr 22, 11:11am by Greg Ninness

Much of the blame for the housing crisis has been sheeted back to development policies adopted by local councils more than 50 years ago, according to a new report by the New Zealand Infrastructure Commission - Te Waihanga.

The Commission's report, The Decline of Housing Supply in New Zealand: Why it happened and How to Reverse It, says house prices have surged since 1980 because our cities stopped expanding and didn't develop enough infill housing.

"New Zealand was building at a rapid rate in the 1950s, 60s and 70s but this has declined continuously since then," Te Waihanga Economics Director Peter Nunns said.

"Until the 1970s, city councils actively encouraged population growth both at the fringe of the cities and in established suburbs," he said.

"Cars became more affordable and urban roads were paved and improved, allowing people to travel further, faster, and boosting development of new suburbs.

"Council plans facilitated infill housing prior to the 1970s but started to limit if after that point.

"Planning began to focus less on facilitating growth and planning infrastructure and more on maintaining the character of existing neighbourhoods by stopping the construction of blocks of flats and apartments."

"Between 2010 and 2018 we built new homes at a slower rate than population growth, and prices accelerated."

The research suggests that now, when housing demand increases, we build a quarter to a third less homes than we used to.

"Changes to urban planning and transport that started in the 1970s have raised barriers to housing development," Nunns said.

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44 Comments

by Pa1nter | 4th Apr 22, 11:23am 1649028211

There's a fundamental flaw with urban sprawl in that councils make a nice tidy initial windfall from new development, but often lack funding longer term for boring stuff like maintaining infrastructure. Expanding the geographic size of the city only amplifies the issue.

As Yazz once said, the only way is up.

by Brock Landers | 4th Apr 22, 12:34pm 1649032477

Thriving cities need to expand both up and out.

One dimensional thinking doesn't achieve good outcomes in the real world.

by JimboJones | 4th Apr 22, 12:49pm 1649033357

True, but we have already done a lot of the out, maybe now is a good time to concentrate on the up Think how many suburbs in Auckland for example that didn't exist 20 years ago!

by Brock Landers | 4th Apr 22, 1:30pm 1649035854

It is better to concentrate on both at the same time. With the up occurring closer to the city center and the out occurring on the fringes.

Auckland seems to be now taking the approach of building high density slums of the future at the fringes at central city prices.

It's quite bizzare.

by Dale Smith | 5th Apr 22, 7:46pm 1649144767

Yes, it's a basic tenet that many on this site refuse to understand, in spite of all the evidence, both in theory and practice.

To make housing affordable, the market has to be free to build both up and out.

Auckland, and by default the rest of NZ to follow, are getting exactly what they have planned for.

by RickStrauss | 5th Apr 22, 8:23pm 1649146994

If you free them both up, much more building up will happen anyway.

However...there's also food security to plan for. Probably doesn't make sense to concrete over the Bombay Hills or Kumeu / Waimauku areas.

by Dale Smith | 5th Apr 22, 11:24pm 1649157856

If you free them both up, then whatever gets built is more affordable.

And if it's food security you are worried about, then just ring-fence that land out, and the remaining land is still more than adequate to not allow any restriction to supply. This is exactly what they do in jurisdictions that allow building up and out at the same time.

The irony of course is that the present restrictions to supply, do use highly productive food land when they are allowed to expand because they are forced to expand onto the last infrastructure connection, regardless of soil quality.

If you want to have affordable housing of any density type and save good quality soils then we need to encourage both an up and out policy.

by RickStrauss | 6th Apr 22, 5:03pm 1649221430

Agree. Melbourne's city architect also points out that for every million in population they add along existing arterial infrastructure they save an estimated $110 billion. So...good reason to allow up and out along routes that suit, while protecting food security in some areas.

by powerupkiwi | 5th Apr 22, 8:35am 1649104525

<1% of NZ is built up. Those are rookie numbers. There’s lot more out to go.

by RickStrauss | 4th Apr 22, 11:22pm 1649071340

Yeah...NIMBY entitlement is incredibly expensive, in multiple dimensions.

by HouseMouse | 4th Apr 22, 11:30am 1649028656

Looks like an interesting read. Auckland Council will very soon be consulting on it's massive proposed changes to the Auckland Unitary Plan, these will be addressing much of what this report focusses on in terms of barriers to higher density infill.

Going to be an uproar in the leafy suburbs!!!!

I'm sure the timing of publishing this report is not coincidental.

by JimboJones | 4th Apr 22, 12:14pm 1649031245

"Going to be an uproar in the leafy suburbs" - about time that uproar got ignored IMO.

by Yvil | 4th Apr 22, 3:57pm 1649044656

Bitter and envious of people with more money

by JimboJones | 4th Apr 22, 4:40pm 1649047255

Yes that's right, I wish I had more money so I can tell the council to tell my neighbours what they can or can't do.

by Yvil | 4th Apr 22, 5:33pm 1649050396

That's not how it works JJ

by RickStrauss | 4th Apr 22, 11:24pm 1649071492

Come on, Yvil, really? You're a good sort who can do better than that.

Did you read the report? NIMBY authoritarianism is incredibly expensive in multiple ways, and looks like completely unsustainable entitlement.

by JimboJones | 4th Apr 22, 12:17pm 1649031442

Also I always wondered, if leafy is so desired, why don't the council plant more trees? I live on an avenue yet there are almost no trees in the council berms. $1000 worth of tree planting in our street could make it a much more desirable place, why is this not being done?

by theoutlawtorn | 4th Apr 22, 1:15pm 1649034950

Funny you should say that. It also happens to be a big part of their Climate Plan. I've consistently been disappointed with Aucklands lack of trees.

by Brock Landers | 4th Apr 22, 1:18pm 1649035110

It's harder to plant good trees when native trees are fetishised at all costs over foreign ones.

by JustAnOpinion | 4th Apr 22, 2:01pm 1649037707

Pohutukawa tree roots will stuff any concrete paths or roads they encounter, but the kiwiana is strong.

by theoutlawtorn | 4th Apr 22, 3:35pm 1649043351

I live near a brand new subdivision and all they planted were the same variety of cherry trees spaced (on average) approximately 20m apart (yes I counted and measured).

There are more than enough suitable natives that could have also been planted. Pohutukawa's don't make great street trees but Puriri, Rewarewa, Kahikitea, Totara etc would work nicely. If you intersperse native and exotic you can create seasonal colour and texture with natives supporting native birds etc.

by singautim | 4th Apr 22, 3:50pm 1649044232

Native trees (I love them) did not evolve to grow for the convenience of human beings. For city streets a deciduous tree is better - good light in winter and cool shade in summer. Also many species of slow growing small trees with beautiful blossom. If the council can't afford to plant them at least they should permit home owners to agree and pay for them - improving the look of the street adds value to the properties.

Meanwhile we need many more native trees. I deliberately bought my house because it backs onto the regeneration busk on Eskdale Reserve. Mainly natives (I love the self-sown Nikau and Rimu) but with irritating non-natives that the council just ignores: privets, tobacco plants, pines, etc.

by HouseMouse | 4th Apr 22, 1:20pm 1649035203

Totally agree. Look at the miserable provision of trees in places like the public square next to Britomart.

Funnily enough, both people and the environment really like trees!!!!

by Timmyboy | 4th Apr 22, 12:33pm 1649032391

If we stopped growing, there wouldn't be an issue.

by ozzzy2 | 4th Apr 22, 12:54pm 1649033673

And breeding too. 😄

by Inthecentre | 4th Apr 22, 1:05pm 1649034355

With a fertility rate of 1.64 in 2021 (2.1 is replacement), I don't think breeding is an issue in NZ. Maybe in Niger (6.9), but not NZ.

Without immigration our natural population has a declining projection and has done for the past 10 years.

by Fluffybunny | 4th Apr 22, 1:58pm 1649037483

This really should get more attention.

If we cant balance our society so that those existing in it want (or can) replenish the population, then building more density and inviting in new migrants is not the solution. All this will do is ad more squalor and pressure on existing social systems that are already not producing the results needed...

Growth for growths sake..

by JustAnOpinion | 4th Apr 22, 2:06pm 1649037966

It does not get any attention as it is a mute point when we consider the outsized increase in our population due to migration. The missing .5 of a person is drowned in the 2%+ added each year.

One and a half Eden Parks per years of net new people.

by singautim | 4th Apr 22, 3:53pm 1649044384

It doesn't get any attention because without population growth what would our councillors and bureaucrats do? No new roads and bridges and no growth in the numbers of their subordinate staff.

by RickStrauss | 4th Apr 22, 11:26pm 1649071619

Treasury's economic models don't work with a declining population.

by blobbles | 4th Apr 22, 12:35pm 1649032543

"...says house prices have surged since 1980 because our cities stopped expanding and didn't develop enough infill housing. "

Well duh. I mean, anyone who has travelled properly and flown back into Auckland or any airport in NZ is amazed at the absolute sprawl of our cities and the absolute lack of high rises around the centre of the city. Auckland - both Ponsonby and Parnell should be earmarked for high rise living, Wellington it should be all of Mt Victoria, our other cities are similar. Then satellite towns with backbone infrastructure leading from the main centre.

by GV 27 | 4th Apr 22, 1:00pm 1649034055

Those in St Heliers, Howick and Pt Chev might find that their suburbs may not need to be so infilled if Ponsonby, Parnell, Mt Eden etc took some of the strain. Time to tell the town centres in the central bits of Auckland with the trains and frequent bus routes that the public transit goodies come at a price. If you don't want to intensify, then take them away and give them to someone else. Once the central outer realises that the central inner bits are foisting the development onto them without the networks and support to cope, they will turn on them and demand they take up their fair share of the development. People need to realise that the outer suburbs aren't your enemy when it comes to intensification - they're your best allies against the NIMBYs in the central bits. If you work together, everyone wins.

by Fluffybunny | 4th Apr 22, 1:52pm 1649037151

House prices have surged since the 80s due to the global supply of money increasing at exponential rates.

by Fairlyfrank | 4th Apr 22, 2:20pm 1649038810

Another report (yawn) for the government to point to and shift blame to local governments. The government can change the rules if they wanted to to increase land for development and build housing if they wanted to but they don't want to . Most of the population just want them to bloody fix it , stop stuffing around.

by TommyYank-old | 5th Apr 22, 10:10am 1649110201

The Government is we the people. The question is why do people keep voting for parliamentarians and city council members who bring no solutions to the problem?I think the average voter needs to look in the mirror. As the report stated for 30 years building out created Median Housing at 3x's Median Household Income. Unless there is bountiful cheap land House prices skyrocket as has been the case. Over on Waiheke as our supply of bare sections evaporated over the past 10 years the price of bare land has increased by 3 to 4 times. If we still had 250 bare sites to choose from as in 2010 no way would a $160k section now be selling at $560,000 only 12 years later. Supply & Demand is what the Council has failed on, and the result is a catastrophic fall in home ownership amongst 30 to 40 year old working class families. With bare land at $200k an affordable home can be constructed--at bare land price in the $550k range impossible. Simple as that. Like in Auckland's overall Region most of the land is zoned rural. Only Council controls stock of bare land simply by Expanding Residential Land zones (as in the 50's through the 80's), or not. Council to blame-simple as that, but no one throws them out. Instead the Chief Executive and his substantial staff of bureaucrats lay down the plan and prevent solutions.

by kiwiana02 | 5th Apr 22, 10:23am 1649111039

The government did just fix it (working with the opposition) and have just passed legislation to enable development as of right across our bigger cities. Amazingly, both major parties supported it, so it is unlikely to be undone, at least in medium term.

by Gummy Bear Hero | 4th Apr 22, 2:44pm 1649040247

Heard on the news , that Orc Land lost 11000 people in calendar year 2020 , and another 13000 in 2021 .... seems careless ... wonder where they got to ...

by HouseMouse | 4th Apr 22, 2:52pm 1649040723

I expect the intensification plan change will be the final straw for quite a few more.

The demand / supply equation for the rental market is going to get really interesting with so much townhouse supply coming to the market. And even more so if there is a mass exodus to Aus in the next 6 months.

by singautim | 4th Apr 22, 4:09pm 1649045352

I own one apartment in the CBD. In a typical average apartment block (there are better and there are many worse). Tenant moved out a week ago. My agent tells me many apartments have been empty for 3 months. BTW I cut my rent by over 20% two years ago.

Some people like high rise apartment living and some don't. The market will tend to get that balance right if the council doesn't do what London did 50 years ago: push the poor into tower blocks when no architect, senior council employee or councillor lived in them. Now being torn down.

by RickStrauss | 4th Apr 22, 11:29pm 1649071741

I lived in Auckland apartments for a few years. They tend to be quite expensive to rent, for the size and quality (compared to places overseas).

by Wrong John | 4th Apr 22, 4:04pm 1649045054

Lots of big cities lost population over the last couple of years. Covid is the main culprit. However, security & law & order have been the other factors, especially in the Democrat states in America. New Zealand is a Democrat state, like Victoria across the ditch. Neither have fared that well economically during that time, especially at the SME end of town. I think the big towns have a lot of soul searching to do if they wish to continue to lead the pack. It was always a given that they would, until WFH became very popular. Things move quickly these days. Perhaps things have already changed but the planners haven't got the email.

by sparrow | 5th Apr 22, 1:18pm 1649121529

Auckland has been losing native born New Zealanders for years, since 2016 the population growth has been entirely from overseas migration.

by Russell_Jones | 5th Apr 22, 8:52am 1649105567

Buried in one of the Climate Change Commission's reports is a table which shows that each extra person in NZ results in extra greenhouse gas emissions. Population growth and therefore increased demand for housing is probably incompatible with cutting greenhouse gas emissions.

Auckland Council's Unitary Plan zoned for about 30 years supply of development capacity which was a big increase on what was previously zoned. Yet house prices kept rising after it became operative. I suspect Council zoning policies are only one factor which affects house prices.

by kiwiana02 | 5th Apr 22, 10:45am 1649112310

I think you are right RJ. Increased supply of credit by banks is a major factor, together with very low interest rates, which enable buyers to just pay more, Prices are falling now interest rates are increasing and banks are tightening credit availability.

In Auckland, where I now live, the supply of houses is also increasing rapidly, and the population is declining (down by 24,000 people over the last two years). According to Tony Alexander, house prices will fall, but won’t crash because of factors like good economic conditions and high employment / job security. But I think it could get really nasty here if there is an economic downturn and high unemployment. Nevertheless I just bought a home - prices had dropped a bit, the place was perfect for us, and life is too short. But if I was younger, or didn't need to buy, I would just wait.