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The 'stranglehold' of Auckland's existing metropolitan urban limit must be 'smashed' for housing to be made affordable, Nick Smith says

The 'stranglehold' of Auckland's existing metropolitan urban limit must be 'smashed' for housing to be made affordable, Nick Smith says
Auckland's current MUL ("Metropolitan Urban Limit"). The city is proposing to change it to a RUB ("Rural Urban Boundary").

Housing Minister Nick Smith says Auckland's metropolitan urban limit is a stranglehold that needs to be broken if houses are to be made affordable for families in the city.

Speaking on Radio New Zealand Smith said it was very clear the metropolitan urban limit imposed by the previous Auckland Regional Council, which still has real effect, has had a "pretty horrendous effect" on section prices over the last decade.

"The existing metropolitan urban limit is a stranglehold and will need to be broken if we are going to make houses more affordable for families in Auckland," Smith said.

"We've seen section prices growing in Auckland between 10% and 15% per year and the reason why house prices in Auckland are so much more expensive than other parts of the country is not because it costs more for the labour or more for the building materials. The principal reason is that land has become so expensive in Auckland and out of reach for most kiwi families," added Smith.

He cited the Productivity Commission's report on housing affordability, which was released last year, and work by public policy research institute Motu.

"The section price has had a very negative impact on housing affordability in Auckland."

Auckland Council wants to move boundary out over 30 years

In response Auckland Mayor Len Brown told Radio NZ that over the past two and a half years the Auckland Council had been bringing together the Auckland Plan, which reflects what its calls the rural-urban boundary, or RUB.

"And the RUB is what we will extend to over the next 30 years," Brown said.

"The concept of smashing the metropolitan urban limit is an over focus on what is seen as the constraints to enable the release of land, (and) I think it's not helpful. What is helpful is the discussion around our offices (Brown's and Smith's) working together well, government and our council working together well," added Brown.

He said the council's Auckland Plan backs up a vision for the city and talks about the need for a quality compact, urban footprint incorporating greenfield growth, brownfields development and giving people real choice in housing, - be it standalone housing, apartment housing, terraced housing, or flats. The council wants to contain 60% to 70% of new housing within existing urban limits and will issue its draft Unitary Plan on March 15.

"And that quality compact footprint is something that has been strongly backed by the very best of urban, civic city advisers and experts in the world," Brown said. "It's about balance and that's what we're trying to achieve."

Brown said the Auckland Council was rolling out a philosophy behind its Auckland Plan that Aucklanders "overwhelming support" and time was needed to work together.

"We are as focused on affordable housing in our city as anyone is. This is my city. This is our community and our background," Brown said.

'Tools needed'

 However, Smith said his concern was that it would be some years before the council's new RUB would move out.

"And in the meantime we have a stranglehold on land and that is why we need to find some tools to be able to free up land supply," Smith said.

"That metropolitan urban limit, sitting in its current form for another three or four years while the council moves to its new Unitary Plan, I think poses real risks for housing affordability."

He acknowledged that land supply wasn't the only issue, albeit it was the most important one.

 "The government is also doing work on infrastructure costs, on the costs in terms of the productivity of the housing sector, the materials and the compliance costs."

Furthermore Environment Minister Amy Adams had recently issued a "very significant discussion paper" on the Resource Management Act that opened up a number of new tools.

"We will work through those and which of them we need to bring in and at what time to make sure that we do make these houses more affordable," Smith added.

'Auckland's future doesn't have to be LA or Hong Kong'

Smith also said Auckland's future didn't have to follow the "extreme examples" of either Los Angeles or Hong Kong, and he didn't except it would.

"It is going to be a mix of both greenfields and brownfields development that enables us to accommodate the sort of growth that Auckland is likely to get over the next 30 or 40 years."

Although there had been "pretty constructive dialogue" between the Auckland Council and the central government about the development of the Auckland Plan, and about the process of trying to get new sections into supply, there was a "healthy tension" between the two.

"The reality is central government has a bigger responsibility for housing affordability and our councils control the planning and land supply policy," said Smith.

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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Well expressed by Nick S, and the usual 'move along, nothing to see here' from some guy called Len.
But the deeper question also needs to be tackled:
Why should a planner's squiggle on a map cause a 10x price differential on the urban side of said squiggle?
As Len might say - aye, there's the RUB....
If some Evil Tax Wizard was to come up with a Scheme to tax away every red cent of the amount of price appreciation for unimproved land thus squiggled into the urban side of the RUB,
AND if this tax was tagged for re-distribution to first home owners (who are the worst off when considering the economic effects of MUL Multiples),
AND the path from RUB-apprecation to first home owner's pocket was relatively free of the usual deadweights (i.e. not filtered through multiple layers of ineptocrats)
THEN I might just swallow my instinctive dislike of predatory taxation and say
Just Do It!

Smash the foreign investor rort would be more helpful.
At the same time tell the ones already here to either reside here full time or sell up,
Go on. Nick
Just do it!

I think it was very brave of Nick Smith to point the finger at the rural urban boundary as the primary cause of unaffordable housing in Auckland. I wish he would do the same in Christchurch. But the final call on whether the National party is brave will be if they actually smash the boundary, rather than just talk about it. We all know their will be serious opposition from landbankers, house owners (especially highly leveraged ones), nimbies etc.
I was thinking about the six o'clock swill and how long monopolistic practices last this morning and how in the end they are usually broken up. I hope I am not delusionally optimistic.

Brendon - I agree, Chch needs to open up dramatically. The RMA changes need to be done under urgency.  The amenity value clauses under the RMA are being abused by submitters opposed to applications. Then there are the people who form Societies like the one in the link provided. Who use the Amentiy Value to enormously increase the costs to the applicants.
(I dont think my link is working) The Society is called "The Currie Road Friends and Residents Society Incorporated - post it in the online search of the link above.
Take the above Society that was formed to protect the Amenity value of a public road which is Gravel and in a busy rural area. Why on earth would the Dean of the Faculty of Law at the Otago University and his Executive  Assistant be members of this Society?
The Dean of Law ( listed as member No 8) does not live on this road as he has put another address in Dunedin which is probably about 1/2 and hours drive from the Currie Road location.
Would it not be considered in breach of the Code of Conduct that University staff must maintain at all times?

Notane - horsepoo.
Amenity value is just one of a list of things which the ignorant ignore, in their trumpets-blaring charge to oblivion.
The worse example whoud be Harlene Hayne - who did a study into 'Child Poverty' in cahoots with the CSA. As with the development-forever tout who splurges hereabouts, she failed entireky to ascertain what underwrites wealth, what the likely future of incomes is, and if I recall correctly, didn't address population either.
Yet she has been appointed to the Treasury Board. Go figure - in my opinion (and I'm happy to be disproved) she doesn't, yet the knowledge is right there in her edifice - it's where I learn about it.  :)

PDK - Amenity value is abused. When a road stays exactly the same when there are absolutely no visible intrustions to the landscape and people use amenity value as their reason for not wanting a Consents to go through then who the heck is ignorant.
I have seen people oppose applications because a roof of a house is going to be seen from from a road higher up - what a load of bollocks!!!!!  
You can prattle on with what underwrites wealth until the cows come home. The fact is we live in the here and now.  You can choose to live in the past or the future it's up to you but seriously you should consider living in the now, solving the problems that occur now.

Nick Smith if you are advocating Auckland spreading even further with the idea that even more commuters try to crush into the city each week day, then I'm afraid you are utterly bananas.
You would do far better to go back to the drawing board and figure out how to de-centralise business in this country than that

So what is wrong if I want to stay 20 miles away from Auckland and drive an hour to work everyday ??? If I am willing to tolerate the traffic and the cost, it is my business and mine alone....
The Council has no business telling me how and where I should live my life....
Business wil decentralise as and when they have a reason to. Goverment cannot make them decentralise whatever way they will.  Look at all the "Made up Capital of the world".....
They only exist when mandated by goverments and no other reason.....and they are all a failure. Wellington is only a base for goverments and beaurocrats and hanger-on. It has no other organic reason to grow...that's why it didn't. 

Not so. It is not just your business as you are driving on public roads 50% paid for by council rates, which makes your commute everyone else's business as well.
As for Wellington, it sounds like you haven't actually been there. The reason why the city is small is because it is surrounded by sea and mountains, not because it is a failure. In many ways, I'd rate it as NZ's most successful city.

yes and no, what happens when you (or more to the point many ppl can no longer carry the cost of that?  ie what if petrol is $2.50 or $3 a litre? I use a tank a month, thats $80 at about $2 a litre, at $3 my petrol bill is $120 a month, no biggee.  On the other hand I know ppl who use 1 to 1.5 tanks a week.  Thier already steep bill of $400+ a month goes to $700, pretty hefty. What does that do to the economy? spending in shops is now cut to pay fuel bills...etc etc. If you want to see the effects of that you can look to the USA and the 30 to 40% property losses and empty suburbia. or plots with services put in paid for with MUDs that will never be built on so offering no return, so costing existing rate payers $s.
Thats just the problem you see, you and I live in a society and an economy that consists of all of us working together. Now if your (in-)actions in no way impacting others lives then yes no problem, but that isnt the case.

You are putting the cart before the horse. I am paying $800 per month for my petrol bill right now to go to work's my choice. If it increases to $1000 per month it is still my choice whether to continue to drive to work or choose a closer place to live or to stop working entirely....what has it got to do with anybody else??
If that leaves me with less money to spend on other things, again it is my choice and mine what if I don't have a 53inch LED TV, or drink coffee everyday and dinner out ??
Yes, lower overall consumption leads to lower economic activities, but so does expensive housing !!. If mortgage repayment is possible (by bring down house prices) would that not also increase expenditure and consumption in the economy ???
If allowing more houses to be built at lower cost by extending the artificial Metropolitian Limits (reducing land cost) cause a reduction in housing cost, would this not also increase consumption and lead to higher economic activities ?
If you have to choose between higher petrol cost which we have no control over (except reduce consumption ) and higher housing cost, (we have control over by just increasing productivity and reducing land and building costs) which would you choose ??
Your example of US houses and property losses and empty MUD lots is an irrelevant argument.......US property prices fell because of oerbuilding and excessive credit creation. Nothing to do with MUD or RUB......As for empty lots with infrastructure...WHERE ??

Kin, however lets say you are in the better off income $800 is OK for you, it wouldnt be for me, or more importantly for those on low incomes or very high mortgages. What it has to do with others is when the ppl who cant afford to pay more get into financial difficulty and ppl such as you and I have to bail their banks out via the Govn guarantee scheme aka Ireland or even the USA as examples.
"Empty lots" lots of nice shots via google earth...its there and its documented.
MUDs are not irrelevent when they are being promoted here as a great can kicker and passer on of debt and risk to inocent parties here.
"costs" you assume those are the 2 choices.  take "just increasing productivity" thats based on using more energy and more resources or make believe GDP via churn or services...but anyway look at the evidence that productivity is increasing and that that is shown up in wage increases...The former is dubious and its virtually all gone to the top 1%. So in effect the ppl with lower incomes and high overheads are not seeing the benefits even if they are real and thats questionable.
Petrol v housing costs (lets ignore the bubble for a moment) Historically we have had very low energy costs so moving out to a cheaper piece of land was the economic option, however when energy becomes a significant cost then being closer with a bigger mortgage may well make the best sense, it certainly should be a more stable situation to be in.  So the balance point has and still is changing, we can look at the USa for the outcome of that effect.
Do I see a solution, not really I think its a case of expotential demand growth. So OK ppl are complaining it costs too much, but really if that is what it costs, well tahts the cost.
Land prices could actually be slashed to a negligable cost if the Govn / Councils had the balls...simply compulsory purchase agircultural zoned land at the agri price and rezone and sell en-mass cheap.  Doesnt change the energy economics mind...not for long.
Lets get back to the bubble, if you go back to say 2000 and look at how prices have risen I thinkwe are in a x2 bubble, I jst wonder where prices will go when that pops, and pop it will.

"Land prices could actually be slashed to a negligable cost if the Govn / Councils had the balls...simply compulsory purchase agircultural zoned land at the agri price and rezone and sell en-mass cheap.  Doesnt change the energy economics mind...not for long."
There's a lot more to land development than rezoning it and selling it. There's stuff like roads and infrastructure and doing suitability work like geotech etc. (simply rezoning swamp land for housing isn't cheap - Bexley).
This is a major reason agricultural land is not the same price as residentially zoned land.

Partially true, but the infrastructure cost is real and not much can be done about it.  Land banking however causes an effective monopoly and monopoly rents at many levels.  So lets say utility reticulation is $20k, so Ok privitise its delivery, so maybe its $18k...Land on the other hand has a massive price differential between agri-ucultural and residential zoned...and its zero cost to remove or change it.
So for me until we flood the market with re-zoned cheap plots we wont ever see building cost reductions.

It's not $20k - It's more like $80k-$100k to turn a bit of rural land into a saleable section (wastewater, roading, berms, footpaths, Resource Consents to assess flood risk, geotech and yes - some profit for time/risk etc.).
So one would expect that even in an oversupplied section market they would never sell for much less than 100k-200k - and that's exactly the case in places like Mangawhai (real sections - not a share in a camping ground).
In fact you can still buy fringe sections in Auckland for under $200K - not much more than rural land cost plus development cost. Hardly a "massive price differential between agri-ucultural and residential zoned..."  

" is still my choice whether to continue to drive to work or choose a closer place to live or to stop working entirely....what has it got to do with anybody else??"
1.  Burning fossil fuels destroys the environment that we all rely on to live.
2.  Your driving causes traffic congestion so wastes other peoples time, money.
3. Roads for you to drive on cost everyone else - cars are subsidized - petrol tax and licensing are a drop in bucket - $1B a year is spent just on maintaining our existing roads.
Everyone pays for your choice to drive.

As long as you don't expect billions to be spent on the motorway when your commute is two hours because another hundred thousand houses have sprawled out. Aren't north shore people expecting another harbour crossing even though they chose to live there knowing traffic was a problem?

Well said Nick. Now do something about it.
It is now obvious who Len Brown is interested in helping and it certainly is not the low socio econmic renters at the bottom and even middle of the heap who struggle from one pay day to the next to pay the rent, just survive and will never save a deposit.  His act as a left wing man supporting the workers and down trodden is now exposed for what it is.

Len Brown's ideological idiocy has been called out by Nick Smith, and Brown is mighty angry.....He's telling Nick to "get off my garden"....
Yes South Aucklanders his main supporters should look clearly at what Len Brown's idiocy is doing to their in containers because housing cost not to mention rentals going through the roof ....soon they won't even be able to afford containers....
In the Herald today "
Asked if he saw Wynyard Quarter as an exclusive enclave for the rich given the high value of the waterfront land, Mr Brown said: "In due course we will get through the appropriate configuration of housing choices and options."
In political speak :" If you can't afford it don't stay here " This is the real attitute of Len Brown towards affordable housing in Auckland !!!
Let's hope Nick Smith makes him eat dirt !!!

Nick Smith has had the opportunity to know better.
Which classifies him as the same kind of failure as our "sustainable economic growth" Finance Minister.
Stephen Franks got close to it on The Panel today, before descending into the usual mire. Opined that most Pollies actually are aware of the real issues, but that democracy requires them to pander to the lowest percentile denominator. That in turn requires education of the populace, and that starts with the media.
Who not only drop the ball, they studiously leave the field before the question can be answered. Look at the current Listener - that investment article is (a) interestingly timed - who works where, who once worked where? - and (b) fails to ascertain what wealth is, what it's a proxy for, and whether the projected growth is capable of continuum. In my book, a journalistic failure - and by reflection, editorial failure of monumental proportions.
Mind you, our universities fail too. More than half of them are expert in a small field, and as far as growth/limits go, wouldn't have a clue.
While the ignorance continues, Nick Smith can get away with horsepoo whether he knows it is so, or not.

i have always viewed brown as
a superficial phoney.

I wonder how many farmers there are in todays world who have 200 acres or less and can't make a go of it. Yet aren't able to subdivide to a level that people demand. Too small to farm yet to big for a lifestyle block......

How are we supposed to know that relaxing the MUL's won't only lead to more McMansions or otherwise further Los Angelisation? There's a whiff of classism about the whole thing where anything taller than a few storeys belongs in the Bronx. Vancouver shows how tall doesn't have to mean cheap & nasty. LIfestyle blocks and quarter-acre sections are all well and good, but the whole model falls to pieces when every man and his dog wants in - it's called tragedy of the commons.
On the other hand, the shoeboxes that sprung up in central Auckland were built strictly for investors, who then lost a bet on the foreign student bubble.
Much as I'd like to see a popping of the property speculation bubble, it's our equivalent of Euroland farm subsidies - both are in dire need of reform, but wealthy & powerful vested interests are too strong to let it happen.
The CEO of FedFarm, of all people, opposes further sprawl of Auckland on the grounds that it would guzzle up productive farmland.

Define productive farmland. Under a certain acreage no matter whether farming or cropping, I don't think you can make a living. In the past you probably could. Now the cost of the land and borrowing costs have far exceeded the income you can generate from the land.

It's not just a tragedy of the commons, it's human race meet the limits to growth.
Time we had the debate.

Sprawl housing is the answer to all our problems - yay.
You get to spend thousandsof extra dollars burning planet killing fossil fuels plus hours of extra time in your car to get slightly smaller mortgage repayments. 

Which is of course the old calculation.
Worse when petrol rationing/shortages occur you wont be able to get to work to earn $s for petrol/mortgage/food.
That's sure going to go down well...
I wonder how the backlash against the Govn of the day will go.
Their excuse(s) will be,
1) No one told us.
2) Its just a temp blip.
3) There is/was no concrete data/date for this we could trust
4) it was supposed to be well into the future.
5) It was the other lot.

This is not about housing affordability - it's about public transport affordability. 
Nick and co. don't want to build PT infrastructure - so they don't want the cost/benefit numbers to improve through intensification. Len wants to build it (and wants Nick and co. to pitch in to do so) - and so he wants intensification to take off.
Nick also benefits by framing this public transport issue as a housing affordability one because they really have no intention of doing the things they could be doing about house prices in the inner city - such as the Aus Govt is doing.
MUL smashing is a smoke and mirrors tactic.  Best thing Len could do is play the game because I suspect what will happen is a flurry of subdivision activities but little building - and a whole new crop of land developers going broke.  Problem in taking that option is that we will never get around to the proper debate on the need or not for that inner city rail loop and other PT initiatives.

Kate that is a biased point of view. It is about both transport and housing affordability.
Len Brown and the Auckland Council responsibility is to provide city infrastructure and not deal with the consequences of housing unaffordability. So they of course want a compact city where they get maximum bang for there infrastructure spend and are unconcerned about housing costs.
While Nick Smith and Central government responsibility is to deal with the consequences of housing affordability not deal with Auckland's infrastructure needs. So they want minimal expenditure on house poverty issues -accommodation supplement etc. and minimal expenditure on city infrastructure etc.
Given that Auckland Council urban plans are the key to solving the supply issues related to housing. And central government is the key to providing Auckland Council with the $ needed to solving city infrastructure issues then this little cat fight between Len and Nick can be seen as part of a negotiation process.

Given that we neither have affordable housing or good city infrastructure you would have to say the negotiation process is going badly...

The point is we dont have the option not to do PT and that means a housing plan that does work with PT is needed.  
Its not optional, the empty suburbia in the US should be telling us quite clearly what happens when energy costs become more if not the significant factor.
Not so much the land developers as the less well off or high mortgaged ppl who buy....I couldnt give a rats ass about developers if hugh P is a typical example, and the ones ive met point to it being correct.
I dont agree with rail because it means another "road" when in fact we have enough roads (and they will become more empty as petrol forces exits from car ownership) that just need overhead power cables and trolley buses, way cheaper and quicker than $4500 per metre light rail is costed at.

It is not my job to defend Hugh, but sterotyping people and groups is not very helpful Steven.

When ppl or groups have a political mantra so deeply inbuilt and extreme/marginal into their outlook that flies in the face of maths, science, engineering, data and logic, I think its worth making the general point that its something to be wary of, other ppl can take that onboard and decide if its relevent and to what degree.
Lets not forget how Hugh has labels outlooks for many months he doesnt agree with as luddite and malthusian or the shoot the messenger attacks over the last few weeks for a case of the pot calling the kettle black.
So sure lets see some quality discusion debate on the points before us.

Affordability is more than just the raw cost of land. Transportation costs are part of it too and that makes "smashing MUL's" for sprawl housing = expensive housing:
Let alone the infrastructure/maintenance costs of sprawl whic Nick Smith completely ignores.

Did anyone catch Massey University's Paul Spoonley on TVNZ's Breakfast earlier this week? What do people think of his suggestion as a way to try and slow Auckland's growth?
"A sociologist has called for the Government to give immigrants more incentives to live outside of the nation's main centres.
Massey University's Paul Spoonley says the population is forecast to reach five million by 2026, with around 40% of those people expected to reside in Auckland.
"We don't seem to be very enthusiastic about encouraging dispersal of immigrants in New Zealand, it's a big challenge," he told TV ONE's Breakfast this morning."

Thats where the jobs are, easier simply block most.

Auckland not only is the biggest job market it also has the highest pay. Auckland's average wage is something like 20% higher than Christchurch's for example. I would like to know why that is. What should Christchurch and other centres be doing to catch up? Maybe if we solved that problem then Auckland would not grow so fast.

Unitary Plan draft comes out next Friday - best real chance for affordable housing.
Council kind of want affordable housing 'cos they are getting a lot of (deserved) flak. However in practice what they require is expensive housing that's cheap - then they are suprised when no one wants to build it.
I suspect that the Unitary Plan will continue to ban affordable housing, but provide for some peudo-affordable housing, being expensive housing that is subsidised by making all other housing even more expensive. 

I'm not expecting much Bob, from what I've heard. Maybe I will be pleasantly surprised

I want to emphasize steven's point about empty lots right now which anyone can confirm by google maps search and a survey of trademe property north of Auckland. Lifestyle blocks have been carved up and are for sale just south of the Auckland Region's border for about $300k. You can also find lovely villas on the same acreage for 300k. Basically, they really want to sell you some property up there, either with or without a house. No one is buying them because the tide on long distance commuting lifestyles is turning. Lack of population in rural areas results in fewer amenities and activities. Isolation and lack of services have led increasing numbers of people to want to live more densely. Even leaving aside the ever rising costs of petrol, the quality of life issues are less satisfactory in the long run.
DO you think perhaps Nick Smith is engaged in a distraction exercise? Trying to pick a fight with the mayor in order to bolster his own image? Someone else raised the possibility he is distracting from Key and Co. He has raised a specious issue intended to foster divisiveness instead of sincerely working toward feasible solutions.

Why should a planner's squiggle on a map cause a 10x price differential on the urban side of said squiggle?
The consequences of making that squiggle are two CG and one interest-compounding effects: 

  • the erstwhile-rural land is cashed in by the seller, for a completely unearned (and very probably lightly taxed) CG
  • the now 10x inflated land price becomes an input cost to the eventual subdivision, which of course adds real value via utilities and roading.  If one assumes a 10% WACC, and a 7-year time from bare land to sold section, that 10x multiple has become, by the magic of compounding, 20x
  • baseline unit price for any equivalent section is now the sum of the rural land cost, the 10x multiple, the value-add of utilities, and interest on the whole shebang.  This confers an unearned (and very probably lightly taxed) CG on every Existing landholder.

See?  Economics in action.
Now, common taters, tell me two things.

  • Am I right, or am I right?
  • Is Any of this desirable?

Hi Millie,
I actually meant in the US, but interesting anadote re: NZ 300k blocks.  Certianly in the US similar developments with long expensive commutes are just bye bye. $4US a gallon / $2NZ a litre is here to stay and more...
This looks pretty typical of what Ive seen before....what a huge waste someone has spent money on.

Just. Build a high speed train route between downtown and south. This will result in a hub supporting 10,000 to 30000 homes. Much simpler to do this than reinvent akl. This has been successfully implemented all over the world. And would be the least cost. It could potentially within a decade soak up any pent up demand with minimum fuss. The government should do a PPP to get things moving. Ie central government build and lay the infrasturure, local government or private enterprise should run trains and pay rent back to the crown. The rest will take caremof itself.

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