Michael Bassett and Luke Malpass argue rich and old greenies have stopped housing developments in big cities, causing housing affordability crisis

Michael Bassett and Luke Malpass argue rich and old greenies have stopped housing developments in big cities, causing housing affordability crisis

Former Cabinet Minister Michael Bassett and New Zealand Initiative researcher Luke Malpass have released a report into New Zealand's housing affordability crisis arguing that richer and older property owners with green agendas are responsible for an anti-growth atttitude that has suppressed house building and caused a housing affordability crisis.

The report -- Priced Out – How New Zealand Lost Its Housing Affordability -- looks at long-term trends in housing regulation and social situations, as well as the changing roles of local and central governments.

Bassett and Malpass said anti-development attitudes, tighter building regulations and artificial restrictions on land supply are responsible for New Zealand's new house building lagging household formation by at least 10,000 houses a year. They points out the number of new houses built dropped from a record 34,400 in 1974 to a little over 15,000 last year, despite the economy and population growing over that period.

Fear of ‘urban sprawl’ had resulted in urban limits and restrictive and prescriptive zoning, which had conferred a virtual monopoly market power on landowners near the city fringes, they said.

"Some of these attitudes reflect the rising discipline of urban planning: a discipline pregnant with questionable assumptions, some of which have proved to be self-defeating," they said.

"As New Zealand has become more prosperous, green agendas of more affluent New Zealanders have trumped traditional egalitarian social aspirations, such as suburban homeownership," they said.

“Although a slim majority of New Zealanders now think rising house prices are undesirable, the current policy quagmire has created a situation where the interests of those who are lucky enough to own property are often opposed to the interests of non-owners or younger people.”

NZ Initiative’s Executive Director Dr Oliver Hartwich said it was scandalous that ordinary New Zealanders were increasingly priced out of the housing market and housing affordability had to be restored to to improve social mobility.

Less than 1% of New Zealand is built upon even after including landfill and roads, Bassett and Malpass said. "Fears of ‘using up all our farmland’ are grossly exaggerated," they said in the report. 

"Changing the face of the housing market will require political will and perseverance as well as overcoming a central part of New Zealand’s economy that sees investment in housing as a way, or indeed the best way, to make individual wealth," Bassett and Malpass said.

"We should remember that individuals can get wealthy off housing, but the country cannot."

The report would be the first of three from NZ Initiative on housing.

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Good on them - the 'rich old greenies' that is. The mentality that eveything should just be based on providing the cheapest regardless of any environmental or social costs is so last century. 

Could the main reason simply be that too many people without skin in the game are making decisions for others?
Could it be that regulators selling the benefits to the environment, preservation of agricultural land etc are then ‘mining’ the Resource Management Act to maintain their employment, power, status, income at the expense of others?
Can you imagine the process if the Planners, and the Regulators, and the Councils were on minimum wages of $13.75 per hour?
Perhaps then those on minimum wages would be able to afford and purchase homes?
Ponder these points. Auckland sections are some $200,000 dearer each than in provincial towns. 1 ha of farmland nets around $1,000 to $10,000 (grazing-intensive dairying-horticulture) and could yield 10 sections saving $2,000,000 in capital outlay.
If that capital was retained in say our Power Companies, then Government (at 7% yield) could distribute $14,000 pa per family to those shifting from the City to Provincial Towns.
If these people were unemployed, or beneficiaries, or retirees, can the hard working people afford to subsidise each City section/beneficiary/family/state house tenant at an annual cost or loss to the Country of $14,000 pa per section/family?
Would this then help increase the supply of homes to those needing to live and work in the Cities?
Please Minister of Housing and or others show me where any of this is wrong.

Why does noboby mention the financial inability of the working population to build new houses? Read more
Annual growth in the labour cost index (LCI) salary and wage rates eased for the third consecutive quarter, Statistics New Zealand said today. In the year to the March 2013 quarter, salary and wage rates (including overtime) increased 1.7 percent. This includes a 0.4 percent rise in the March 2013 quarter.  
Private sector salary and ordinary time wage rates increased 1.8 percent in the year to the March 2013 quarter. Public sector salary and ordinary time wage rates rose 1.5 percent in the same period. This rise in the public sector came from increases in central government (up 1.5 percent) and local government (up 2.1 percent).

Bernard , you, Mike and Lucas  are quite correct , but there are simple ways to encourage development and discourage specualtive land buying, through a mix of incetives and rates charges .
Owners of large land tracts that could be subdivided could  be given  incentives to do so , such as fixed fee development contributions and levies and no rates on the subdivisions  for say the 2 years following subdivision .
The "window" to subdivide could be say 1 year from 1 January 2014 .
Thereafter the costs of development levies would go up  , so it will encourage  the immediate release of land .
To prevent specualtion , the rates on newly subdivided vacant should be rates free for 24 months , and therafter undeveloped land that has not had a house built on it , should have a clawback of the rates incentive and  500% rates surcharge until building has been completed .
In other words much of the incentive to speculate would go , as the  "profit " would be diminshed in rates charges

To prevent specualtion , the rates on newly subdivided vacant should be rates free for 24 months , and therafter undeveloped land that has not had a house built on it , should have a clawback of the rates incentive and  500% rates surcharge until building has been completed .
In other words much of the incentive to speculate would go , as the  "profit " would be diminshed in rates charges

Good luck with that ?
Recent government actions and the consequences suggest little traction will be gained in respect of your plans.

Rates setting is solely a TLA prerogative.
So, setting a swingeing differential on buildable but un-built-on land is one way of socialising the CG inherent in the infamous MUL land-valkue multiple, AS LONG AS the proceeds are then used to defray the cost of housing.  A Virtuous Re-distribution, one might say.
Of course, having the MUL there in the first place, causing said CG, is also a TLA action, but let's ignore that.....
Two reasons that 'good luck with that' is very likely to be the outcome (as it has been these past 20+ years):

  • TLA's are notoriously lacking in the spine/cojones to actually implement these sorts of economic incentives.   They are lacking in most sorts of economic awareness - such as the time value of money - that's a prime reason for the housing clusterf..k anyway.
  • More Munny, in the revenue lines for most urban TLA's, unless ruthlessly ring-fenced in an Annual Plan or similar, tends to be spent on the old Four Well-beings.  Here, an endless supply of Events, Community Developments, and similar 'investments' is needed to keep - um - the Populace Quiescent?  Buskers Employed? Houses Affordable?


Surely density and height limits are also limiting the supply of dwellings? If you remove urban limits without removing height or density limits you are effectively encouraging the market to build out even though the real demand, especially from young people, is in the centre?
Why not remove both the urban limits and the height and density limits (keeping a sensible height to boundary limit) and let the market decide whether people want to live in central apartments or sprawling suburbs? Alternatively let the council decide where it is best for new houses to be built based on the cost of infrastructure and effects on traffic (i.e. the unitary plan).  
As for the NIMBYs, if they are really so scared of progress and growth, why did they choose to live in the only city in NZ that has growth?  

Absolutely. The reason Basset, Hugh etc. (rich old non-greenies) want sprawl so badly is to make sure no affordable housing will be built near where they live - in better located central areas. 

Excellent point.  And abolishing urban limits will make it cheaper for people to live in those inner-city apartments.  For instance, the cost of demolishing a building and replacing it with terraced houses or apartments would be much cheaper if the land price wasn't so high.

Seems reasonable to assume that more houses= lower prices but I reckon this is absolutely unproven in practice.
If you build them they will come, but disproportionately more will come.
Nothing wrong with being older and greener incidentally.

While it doesn't clearly attribute the background, this article is sponsored by the "New Zealand Initiative"
Interesting article. Reads like a preliminary draft of a collaborative script of a TV show for season 3 by the writers of "Revenge" and "Arrow"
Revenge has a powerful right wing shadowy business cabal called "The Initiative" who will stop at nothing to achieve their objectives
Arrow has a powerful right wing shadowy business cabal called "The Undertaking" who will stop at nothing to achieve their objectives. Headed up by Malcolm Merlyn of Merlyn Global they buy up all the land in "The Glades" a run down area of Starling City with the intention of razing it to the ground with an "earthquake machine", rebuild and make a fortune. In the final episode of season one, they achieve their goal of destruction
Bringing out the bigs guns now - http://nzinitiative.org.nz/
What is the NZ Initiative (could have picked a better name) Looks to be a break-away from the Business Roundtable. NZ Initiative’s CEO Dr Oliver Hartwich said it was scandalous that ordinary New Zealanders were increasingly priced out of the housing market and housing affordability had to be restored to to improve social mobility
Who is Dr Oliver Marc Hartwich?

Article in NBR by Oliver Hartwich
Examine the graphic carefully
See comment #9
Oliver Mark Hartwich is a foreign blow-in .. been in country 12 months
The subliminal message - and there is always a subtext - is this - here is a blow-in, who has only been in new zealand for 12 months, telling us (by way of a graph) that maori and pacific islanders are criminals of the excessive kind .. not nice oliver

>Who is Dr Oliver Marc Hartwich?
(note, after moving to "the more afforable Australia" he began publishing how Australia was unafforadable to live in).

Call me simplistic, but aren't most of the suburbs in Auckland that people want to live in, those with the $1m price tag, the ones that are closest to the CBD? So how does opening up more land on the extremities (sp?) help folk live somewhere they want to and again in something less than 4 bedrooms, 2 bathrooms etc etc that a lot of new housing seems to be?  Perhaps the desire to live centrally, near ones work and places of recreation is driven by the greater transport options available, rather than the cost of having to travel by car as is often the case in new suburbs.  Maybe that Unitary Plan is on to something after all...

The Basset-Malpass article has the hallmarks of a press-release which has been circulated to various media outlets to do with what they will

There is a more complete version of the same report in the NBR
One notable excision from the expanded press-release published here is as follows
Young homeowners these days tend to buy a completed product. Their expectations are higher. In 1977, an average-sized house was about 90 sq/m to 100 sq/m compared to today’s 250sq m, which includes features like garages that buyers in an earlier era might have added as household budgets allowed.
Using the (apparently) accepted yard-stick of 3:1 ratio now being 6:1 housing is not less-affordable it is the size requirement that has changed. The cost hasnt. If one was willing to accept a 100 sq/m house today the ratio would come back toward 3:1 and be more afforable

Good spotting.
I guess that's what you get in a consumer/capital system. Swamped with advertising, not taught to think for themselves (examples: who comes out better off after spending money? who 'deserves' anything? ), all their peers, the media, all of society geared to bigger/more.
And - the growth system would have collapsed earlier, without all those extra square metres, toilets, fittings. Globally, housing is the most of what most people do. Without it, there is no receptical for the 'productive economy' - again, nobody thinks it through, or if someone with a vested-interest does, they keep quiet.

Ya know .. when I was a little nipper .. we had an outside dunny .. 20 metres from the back door .. if we needed to take a leak in the middle of the night, in the middle of winter, we were allowed to stand on the back step and pee out over the bushes to the side .. no en-toot-suites for us .. don't recall it being too much of a hardship .. when ya gotta go ya gotta go

I used to be fascinated with the pan collector guy that had it spilling down over his shoulder canvas...but always the half smoked rolly was there to accompany the toothless grin.....shifting other peoples s%#t, n happy to do it.....
I knew then what it was I never wanted to be.