Just opening up more land for housing won't solve affordability problems, NZ Planning Institute says

Just opening up more land for housing won't solve affordability problems, NZ Planning Institute says

The following is a media release from the New Zealand Planning Institute (NZPI), which is the professional body representing town planners, resource managers, urban designers and environmental practitioners:

The NZPI believes the current focus on land availability is too narrow to solve this country’s housing affordability problem effectively.

The comments come in its submission to the New Zealand Productivity Commission’s ‘Using Land for Housing’ Issues Paper. The Productivity Commission has been asked by the Government to investigate possible improvements to the ways local authorities regulate to make land available for housing.

But NZPI Chair Bryce Julyan says while supporting the ongoing investigation into the best use of land to ensure that New Zealand has enough housing stock, NZPI also believes that housing affordability is a complex issue requiring a range of integrated tools to address the problem effectively.

“We are unconvinced that the immediate availability of more land for development will, on its own, provide a long term, sustainable solution to the problem. Understanding the current and future demand for housing, including type and location is critical to understanding what supply is needed now and in the future.”

Mr Julyan says while tools such as the Special Housing Areas legislation are interim and a longer term approach has been signalled by the Minister for the Environment, Dr Nick Smith, to be part of upcoming RMA reforms, he points out that such measures only allow development but do not actually build the houses.

“Simply releasing land for housing does not mean more affordable houses. Factors that may influence the affordability of or access to appropriate housing include the number of houses on the market. While the land can be zoned and consents approved this doesn’t actually physically get the houses built. Investors may choose to sit on such approvals or choose not to build due to resource availability or the costs of materials,” Mr Julyan says. “Other factors that influence housing affordability include the cost of infrastructure provision (e.g. the cost of extending and expanding capacity of infrastructure into ’greenfield’ land), as well as broader economic issues such as tax and lending policies.”

The NZPI’s submission supports the Productivity Commission looking to more research to understand what the real versus perceived effects of government practices are on developer or land owner behaviour. It refers to previous research in Auckland that has revealed that the reasons for development delays were quite varied. It found that many land parcels had not been developed due to personal, family or business circumstances, the cost of developing the land, as well as land holding and speculation for capital gain.

The NZPI will be keen to be part of the discussion on the RMA reforms as it believes Central Government could do more to help them by providing greater national and regional planning guidance.

“When we look at overseas examples we see that national planning frameworks exist for the likes of England, Wales and Scotland. These planning frameworks provide a clear path towards identifying local and national priorities, and achieving community buy-in, while responding to community concerns,” Mr Julyan says.

“The NZPI agrees that managing land availability is a critical factor in planning for growth and development in New Zealand. However, the factors that contribute to housing cost do not simply equate to releasing more land for development but also need to consider optimal use of land already set aside for development.” The NZPI believe it will take a far more varied research programme and range of solutions to get on top of the country’s housing issues.

“NZPI members recognise planning and managing our resources efficiently and optimising land use is a critical issue but what needs to be acknowledged is that this may involve changing public perceptions. In our growing urban areas, for example, we may need to challenge our expectations about the way we live and offer choices such as higher density housing in attractive, high amenity environments,” says Mr Julyan.

The housing affordability issue featured in an NZPI Briefing to Incoming Ministers late last year, a paper which highlighted seven critical challenges facing the Government. These challenges include responding to demographic change, transport, infrastructure, energy, freshwater and RMA reforms.

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Oh, spiffing.
 
A trade guild, bereft of economic nous, intent on patch protection, sees fit to pronounce upon a Gordian Knot.  
 
And then, to top it all off, points to England (one of the more bubbular markets - see Demographia for the gory statistics) and Wales (a welfare sink where >70% of economic activity is Gubmint-transfers), as Shining Examples to follow.
 
File under 'Comedy'.
 
Or, possibly, Tragedy or Farce. 

“When we look at overseas examples we see that national planning frameworks exist for the likes of England, Wales and Scotland."
So the planning Institute, in looking for examples worldwide, chose the UK as a model. The chose a country that has high housing unaffordability. They go looking for a solution in a country that uses the same failed approach.
Do they not think the reason that the UK has an unaffordability problem and the smallest new house size in Europe might be because of the planning systems they are using?
 AND the planning institute want to copy this.
Did it ever cross their minds to look at countries or states that have affordable housing to see what they could learn from there?

Planners are completely vested in complexity. They train for it, they implement it in district plans then charge normal people an arm and a leg to guide them through the complexities of the plan they probably helped write in the first place.
 
Naturally they can't recognise simple if smacks them over the head..
 
Economist Arthur Grimes has already crunched real data from Auckland and shown that planning causes rural land with planning permission for development to sell for 8-10 times the price of the neighbouring plot of land not so blessed.
 
Crunch the numbers and you find that a serviced lot on the edge of town that sells for $300K comprises between $150 and $180K of windfall profit to the "farmer" who sold the land to the developer. It's money that simply disappears out of the Auckland economy.
 
If NZPI want simple here is simple: take planners and Metropolitan Urban Limits out of the picture and your $500K fringe land/house package turns into $350K. What's hard to understand about that?
 
The only hard thing would be all those planners hunting around for a job where they add value to the economy.

Planning and managing resources efficiently must also recognise the total inputs not some narrow version of cramming heaps of people into some high density personal goal that some stoopid planners want to achieve.
 
The whole of the economy is relying on the resources of exporters!!!! Did you take that into account Bryce when you consider the total resources necessary?? Adding a couple of hundred thousand to the price of a house takes more total resources to fund.......the compounding effect of all resources has to be taken into consideration....the longer the shortage, the higher the prices the bigger the compound effect (which is highly negative as it is sucking up production daily ) on the country......add in all the people who suck at the teet, accountants, lawyers, Government and it's Agencies, RE Agents, Councils, consultancy companies.........
 
Why does the NZ planning intotite think/believe itself to be above and beyond constitutional rights of the people of NZ?

If everyone keeps saying it is only supply and demand (commentators) why does every solution only ever look at supply?
Increase supply / reduce demand.

Mainly because the demand-side options won't have nearly as much effect as the supply-side options.
 
The bottom line is that there are that many people who live in or will live in NZ and most of them want to live in Auckland. Population is a given - you just have to deal with the number and preferably house them. Before you get excited about immigration controls remember two things:

  • our natural increase usually (not last year) dwarfs discretionary immigration
  • there are 1m Kiwis living overseas and 20m Australians who have the absolute right to live in NZ any time they like. Our immigration stats don't usually separate the groups out but at any one time most of the immigration comprises that group of people not the ones who have to apply

 
By comparison the controlled, discretionary part of immigration is a drop in the ocean.
 
Unless you want a return to communism we can't make people live in Turangi rather than Auckland.
 
EAsy money and speculation push prices up a bit. Cheap credit obviously lets people bid prices up higher than they would otherwise; speculation just pushes prices to the same level a bit faster than if we waited for all the genuine buyers to turn up.
 
So you could put the OCR up to discourage price rises then the real economy would tank.
 
Its way easier and quicker just to make more cheap land available 

Rubbish.  People speculate on New Zealand property like nobody's business.  No CGT has every man and his dog out there flipping houses.   Clearly foreigners are doing it as well.  Swathes of houses sit empty all over Auckland - it's a racket and young, ordinary Aucklanders are the butt of the joke.
 
As for a RETURN to communism?  We've never been communist and a smart immigration policy doesn't make a country communist anyway - it makes it smart.  Something New Zealand clearly is not.
 
You make me laugh mate, you don't know what you're on about.

Hi VA
 
We are talking about prices here. People can flip houses and do all they like to property. I don't have a problem with that if that it keeps them off the streets.
 
But unless a speculator does something highly illegal all they can do is take a punt that prices are going to rise one day. Remember that if a speculator is going to make money someone else has to buy the property off them at a higher price than they paid. It's only worth speculating if you are convinced that prices are going up anyway. In the case of the Auckland market it is currently a one-way bet so of course their are speculators in there flipping property. The key thing though is that they didn't make prices go up in the first place.
 
As for communism I was only referring to a popular demand-side proposal that we make people buy houses somewhere other than Auckland. We don't tell people where to live in this country and long may it stay that way.
 
Always happy to brighten up someone's day but I remain convinced that I have a few clues.

The planners are right that it is not just supply. We are need to reduce the amount of planning involved. These people think that they know best how and where we want to live.

The National party seems petrified of these self appointed mandarins....
Perhaps all governments in their third term replace discretion with timidity though.
Let's hope a Labour led government can shake these characters up and move decisively on the absurd situation that has developed in Auckland.
I don't recall anybody saying (except rhetorically) that releasing more land would solve the housing problem there - but it is a necessary condition even if not sufficient.

The NZPA is waffling aroung the edges.  The solution is simple but the Government lacks the leadership to implement it:
- Demand - Manage the 12 month migration rate.  There is a strong correlation between house prices and migration flows. 
- Supply - issue RMA national standards to require council to zone and stage sufficient urban growth areas to cater for 25 years or so population growth.  This is effectively already embedded in the RMA purpose but it seems it needs to be made explicit.
- Investment balance - Introduce Gareth Morgans capital tax.
- Transport externalities - introduce the ability of councils and NZTA to have peak hour road tolls to remove the subsidy to commuters.  This will push more people towards PT & increase the viability of the redevelopment and densification of existing urban areas rather than just having greenfield development.

Yet again another discussion where the imbalance between occupier buyers and investor buyers is ignored.
People  want to own the home they occupy and the opportunity to do so in Auckland further drifts away because neither local body nor Government are prepared to make investment less profitable.
Solve that one and the supply / demand equation will be much less of a hurdle.