A Government-commissioned report has found that land use regulations add about 56% to the cost of houses in Auckland; 'prices far outweigh costs in most major NZ cities'

By David Hargreaves

A Government-commissioned report has found that a staggering 56% of the cost of Auckland houses may be due to land use regulations.

The report, which looked at housing in seven major cities in the country, says that land use regulation is hampering the flexibility of housing supply. The report and summary are available here.

"Relative to a world with no land use regulation, regulation could be responsible for 15% to 56% of the cost of an average dwelling across a range of New Zealand cities," the report says.

"In Auckland, land use regulation could be responsible for 56%, or $530,000 of the cost of an average home."

The report was commissioned by the Minister of Finance in September last year and was done by Sense Partners for government agency Superu (full name the Social Policy Evaluation and Research Unit).

"Most of our cities cannot build quickly enough to respond to increasing demand for housing, so land prices have gone up, as have housing prices across our cities," the report says.

"Local geography is likely to play a role, but even in New Zealand cities with plenty of flat land, prices are higher than might be expected in a well-functioning market.

"There could be benefits from land use regulation, but these would need to be large and increasing over time to justify the status quo," the report says.

Finance Minister Steven Joyce said the construction sector tended to be singled out for raising costs "but house prices in many areas are far in excess of construction costs. We must keep a strong focus on land supply so that section prices become much more reasonable."

The report was commissioned by the Minister of Finance in September last year and was done by Sense Partners for government agency Superu (full name the Social Policy Evaluation and Research Unit).

The report says that New Zealand’s housing market "defies gravity".

"The price of housing in New Zealand has soared in recent years. Since 2010, relative to income, New Zealand’s house prices have increased more than any other OECD country.

"While the US experience has been a slow grind to recover the pre-GFC price peak, figure 2 shows house prices in New Zealand have risen dramatically over the same period. Since the Productivity Commission’s inquiry into housing affordability five years ago, house prices have risen 56%," the report says.

 

"Most of our cities cannot build quickly enough to respond to increasing demand for housing, so land prices have gone up, as have housing prices across our cities," the report says.

"Local geography is likely to play a role, but even in New Zealand cities with plenty of flat land, prices are higher than might be expected in a well-functioning market.

"There could be benefits from land use regulation, but these would need to be large and increasing over time to justify the status quo," the report says.

Construction sector blamed

The report says that often the construction sector is blamed for rising costs.

"...But home prices are outstripping construction costs and rising. This could be a sign that the type of land market which underpins many New Zealand cities is not as effective as it could be in promoting a supply response."

The report's authors also tested the market for apartments and found prices "are substantially higher than costs and the ratio of prices to costs is increasing over time".

There are many potential welfare costs arising from such high house prices, including labour market distortions, poor resource allocation and low productivity, the report says.

"In some cases, easing land use regulation is not straightforward and could require change to the urban planning system, including, for example, infrastructure financing." 

'Far in excess'

Finance Minister Steven Joyce, in releasing the report, concurred that the construction sector tended to be singled out for raising costs "but house prices in many areas are far in excess of construction costs".

"We must keep a strong focus on land supply so that section prices become much more reasonable."

Joyce said the new Auckland Unitary Plan, the latest RMA reforms, the National Policy Statement on Urban Development Capacity, the Crown Building Project, the Housing Infrastructure Fund, SHAs and increasing the availability of Crown land for housing, "are all helping to increase land supply for housing".

"The Government will continue to work hard to ensure councils in rapidly growing urban areas are able to provide enough land for new housing and business development.

“New Zealand’s strong economy and high job growth means more Kiwis are choosing to work and bring up their families here. As our population grows we need to keep investing to support that growth and provide capacity to grow further.” 

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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125 Comments

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27

If only Joyce had had the power to do something about it in the last nine years. That would've been great.

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15

But Double Dipton English is even more guilty.
And as for Shonkey, all the neglect got him was a knighthood.

Neither Joyce, nor English, nor Key has had "the power to do something about it in the last nine years".

They have the power only to seek Parliament's agreement to do something about it.

The government has tried and tried, but couldn't get the necessary Parliamentary agreement to the major reforms to the Resource Management Act that are needed. You can thank Peter Dunne, the Maori Party and the voters of Northland for that.

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14

So they didn't get the changes to Section 5 that they wanted - but they wouldn't have made one iota of difference to land prices anyway.

The key is in this statement:

"Most of our cities cannot build quickly enough to respond to increasing demand for housing, so land prices have gone up, as have housing prices across our cities," the report says.

All the while National were telling us it was a supply side problem - nothing to do with government-generated demand by way of rampant immigration and tax settings favouring shelter as a shelter for capital, earning tax free gains.

They're a bunch of turkeys - admit it.

The number of dwellings being built now is nowhere near what we were building in 2006/2007. Why is that Kate? Why can't AKL cope with demand? Demand is a good thing. It's what drives the economy.

The price of land has skyrocketed. I should know I help fund it. Look at local government. RMA. Developer margins. Council making up rules on the fly. Delay, delay, delay...all adds cost, and uncertainty. Funders pull back, supply is further constrained. Consequently prices rise. Economics 101.

Are you a banker?

I am not a banker -I am a Canterbury based psychiatric nurse and it seems to me Kane02 is telling it like it is.

If you're a psychiatric nurse you're perhaps suitably qualified to tell us whats going wrong with the National government!

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14

Cognitive dissonance. They are trying to hold two mutually exclusive thoughts in their head at the same time. National want to believe they promote equal opportunities, individual freedom and choice, personal responsibility.... blah, blah, blah -see Our Values -NZ National Party https://www.national.org.nz/our-values while also believing that it is ok to protect through excessive regulation the property wealth of their older voters.

It will be interesting to see how National resolve the discomfort these conflicting beliefs cause.

Best comment on this site for awhile Brendon... and to be fair, there are some pretty good comments quite often. A very astute observation and succinctly put too!

You think excessive regulation driving up costs in Auckland was carried out by the National Party. Cognitive dissonance indeed.

So you're saying they're not that great at politics after all. Neato.

And it might have worked if they hadn't tried to sneak in some other unnecessary bits and perhaps had singled out Pukekohe growing lands for protection from being concreted over

Of course National always had the power to do something about housing supply and infrastructure provision. These problems were known about 10 years ago. The NBR reported on a study showing the effect of Auckland's Urban Limit in 2007, in an article titled -'Debate over Auckland's urban limit rages on 'https://www.nbr.co.nz/article/debate-over-aucklands-urban-limit-rages which was based on a economic report by Dr Arthur Grimes and Yun Liang from the Motu economic and public policy research centre. At any point once in power the National Government could have eliminated urban growth boundaries by making a National Policy Statement amendment to the RMA -stating this -this would not have required Parliament's approval -the Minister concerned could just announce it. Infrastructure funding is harder -but could also have been achieved.

That is a nuclear-type option, that could easily result in willy-nilly sprawl and non-existent development planning with terrible results. Instead National instructed Auckland Council to open up more land. Thus allowing the planning to be properly thought out and structured.

Unfortunately Auckland Council planning is utterly useless and known to take bribes. The end result has been worse than willy-nilly, it has been atrocious. Auckland City builds suburbs miles away from the city and calls it environmentally responsible to enforce long commutes. Auckland Council added 50% more land than the city would ever have required.

Toronto House Prices Crash 192k since April.
https://www.youtube.com/watch?v=hGL0ysImPCo

Auckland Albany House Prices Dive 13.5%
https://www.stuff.co.nz/business/property/94154549/house-prices-dive-in-...

The Crash Is Coming.

@john wheeler: Vancouver is also starting to feel the price falls pain too. Apparently they've had a average detached sale price declines of 4.7% in June.

Vancouver Homeowners Should Be Cheering A Crash, Not A Correction
https://betterdwelling.com/city/vancouver/vancouver-homeowners-should-be...

CJ099,

I have just had an email from a relative in Vancouver. He tells me that the 15% tax has not,so far anyway,had as big an impact as had been hoped. I will be there in Sept. so will get more information then.

In which case, implementing it is a no-brainer and everyone should be clamouring for us to do so. This could help alleviate the rates burden.

Parliament doesn't have the power, we are a democracy and this particular power is held by councils.

Auckland City Council decided to make house prices go up and screw over poor people.

Protect an incompetent govt at all costs, eh UC?

Demonstrating the incompetent performance of Len Brown (LAB) and Phil Goff (LAB) does not protect the government, it merely enhances our knowledge of the Labour Party.

And you are welcome.

There are other parties to choose from.

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30

what a load of bullshit.. just before election to divert responsibility ... sat for 9 years while house prices were rising and rising while the average kiwi looked in astonishment...

Really?
Have you read/understood the report?
I think it is actually pretty spot on in terms of highlighting implicit taxation in housing supply.

Do I think that it is an excuse for National? Definitely not.
If they wanted to, they could have influenced supply drastically. The Supercity transition comes to mind as a perfect time to have had some input.

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14

Your first paragraph has no relevance to my comment...

Your second paragraph is spot on to what i was inferring to....

You might want to think before you reply

Auckland region is currently using 50% more land than it needs.

However we have one ginormous bubble, because Len Brown and Phil Goff have made sure even with such a massive over supply of land being developed - no land is made available to Auckland.

The Labour Party run Auckland Council, loves spending money and that is all it does.

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16

Perhaps if the report was titled "Impact of Excess Credit on New Zealands Housing Market" it might clarify what a load of horse shit the report really is.

Haha. I was trying to thing how to point in that direction, no need , you nailed it.
Perhaps, " How to make escessively massive profits by fuelling naked greed"?

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13

Or: "How to blow up bubbles, screw the economy and smile and wave all at the same time".

Brilliant comment scarfie!

That's the problem, "the average kiwi looked in astonishment..." instead of getting off their butt and buying. Now they are all moaning that it's the Governments fault and want a hand out.

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12

JohnfromtheTron - so you're telling me that more greed is the solution to greed? And that more debt is the solution to a credit bubble?

And what about those who are now joining the workforce and who, at the beginning of this housing boom/frenzy weren't in a situation to buy? Just a case of bad timing in terms of when they were born - but that's their fault?

Wow independent observer, you seem to have read a lot into my comment, buying a house=greed???
People who are now joining the workforce will be able to buy a house if they save hard enough. The problem is this generation wants it all now and with as little effort as possible.

Do you own rental properties?

Nice try...have a pleasant evening

Off to check on the tenants?

That's right mate, they want it all now and don't want to work for it... median house price in Auckland 900k (its slipped a bit)... student loan 50k... job pays 65k, rent 25k a year... what's wrong with them? Slackers the lot of them... yeah right!
Your self entitled comments make me feel just a little bit queezy jonfromthetron!

Average value in Auckland is $1,045,059 in June 2017.
https://www.qv.co.nz/property-trends/residential-house-values

You know that house "value" is not the same as house price... eg what they actually sold. Dont be so selectively corrective. Yes, thats a thing ;)

I am just quoting "average value" as per the QV website. There's no need for you to explain unless you are QV.

Who said you have to live in Auckland? Are all houses in Auckland 900k? Who said you had to go to Uni and get a 50k loan?... to work a job that pays 65k? We all have choices in live...just got to make the right ones from a young age. Oh, and sometimes you have to go without.

Everyone keep a good lookout. An equine posterior seems to have escaped the Waikato.

Love your work Dick...oh sorry is that Rick, I'd better go to Spec Savers.

You are obviously living in John key land, ie, la la land... haven't you read the recent rbnz article stating their concern about many fhb when rates start to rise?

He is right. You need to get off your butt and start working. No hand-out for lazy people.

Ok DGZ - we'll cut off all welfare payments for lazy people....how do these people then pay rent? Oh, yeah the Darklords actually rely on those handouts so the tenants can keep paying for mortgage on the rental...jeez who'd have thought?

Only have professionals or medium to high income earners as tenants. Something I instructed my PM at B&T.

People like you wouldn't have such standards

Stop bad-mouthing other people. Houses are not overpriced!
Just be content and be happy always.

Everyone has the right to voice their opinion...

You're proving my point that you're dumb.. 13 times the median income is not over priced?

You should count yourself lucky that it is not 31 times. Stop calling people dumb.

And the award for most consistently douchey commenter goes to...

double dz, proves you're quite dumb.. just talk... wont be surprised if you are on dole...

"You need to get off your butt and start working. No hand-out for lazy people." great quote Double GZ. You remain an arse madam!

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17

Rubbish, we have owned land for a number years in the Auckland region the cost of building is the problem, due to competing with the demand of excessive off shore buyers, the duopoly of Fletchers /Carters, builders charging exorbitant fees and incompetent architects designing houses that cannot be built. The government, it seems to me is unwilling to acknowledge this as the building industry is the only thing keeping the country going, we do not have a rock star economy it is an economy based on asset redistribution. (Is this what is meant by privatising the profits and socialising the losses?)

No I think the cost of land plays the most significant part in the equation that can be cut drastically, I mean its pure landing banking skipping a huge % off the top.

Comments on infrastructure costs I assume mean what the council puts in as a cost to provide roads, sewage and water etc (just what is the charge for?) Lets say they are in-efficient (and that's debatable) Even if the costs can be dropped 20% its still not making as big a difference as land banking is to the overall cost. I know one thing if I was council I'd be perfectly happy to see "special areas" setup where a private company puts in and looks after all the services and charges the householder accordingly, I bet that would work well, or maybe not.

We are in an established residential area, so therefore there are no additional costs in relation to development or associated costs related to any additional services regarding infrastructure

I was thinking the timing was perfect for minimizing Fletcher's "issues" thus deflecting the Govt contracts handed to them on a silver plate. Other thing that is obvious is the number of Building Companies getting first dibs on vacant land and tying them up with house and land packages. That has to affect the market prices for those builds.

No wonder Hamilton and tga are so popular and there's plenty of land for years, owell the hole of Auckland can't leave so that's promising, more and more apartments I guess for affordability

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12

..well Hamilton and Tauranga are as badly prepared as Aucks was for the popn influx. Apart from big clunky buses, nether have decent public transport and the congestion grows worse by the day. Council debt is escalating, infrastrucure is underufnded, pressure on rates increases is huge. Housing aint so bad, but the rediculous immigration settings are well on the way to degrading two more cites.

What are the subdivision, surveyors cost etc to create one section in Auckland, Tauranga 3 years ago were $57000, yes there's land to be found around Auckland but how much to get it to a buying point and just as important how long, papamoa,s council seem to get from bare land to sections for sale in no time

The trick about Auckland is the perversity of that relationship.

The land next to Auckland, where Phil Goff forbids development, will not cost much to develop.

The land miles away around little towns in the countryside, where Phil Goff allows development, will cost a lot to develop.

Allowing development next to Auckland, would save ratepayers about 30%.

Phil Goff is a...

Pass the dutchie to the left hand side...

Geography was shown to be one of the most important de-
terminants of housing supply inelasticity: directly, via reductions
in the amount of land availability, and indirectly, via increased
land values and higher incentives for antigrowth regulations.
The results in the paper demonstrate that geography is a key
factor in the contemporaneous urban development of the United
States, and help us understand why robust national demographic
growth and increased urbanization has translated mostly into
higher housing prices in San Diego, New York, Boston, and Los
Angeles, but into rapidly growing populations in Atlanta, Phoenix,
Houston, and Charlotte.

https://mitcre.mit.edu/wp-content/uploads/2014/03/The-Quarterly-Journal-...

Auckland is on an isthmus and as the city gets bigger the cost of land decreases.

This government just wants to hide the truth other wise the Productivity Commission would look at the benefits of immigration and find what the Australians found (little or no benefit to Australians)
http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed...

Surely a big chunk of what speru (Not sure where their "u" comes from), calls land use regulation costs would be profit margin? Property values are elastic: they increases to what people are willing to pay. So in my view this house purchasing euphoria which has occurred will be more related to competition, (demand) and the lowering of the mortgage rates.

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13

I do wish they wouldn't publish this kind of thing. Somebody with power might notice and do something and then my unearned accidental million dollars in property wealth will just disappear and I'll return to minimal savings. But at least I will still have a place to live.

There's an old saying on land prices, "they aren't making any more of it ". I would say that is the major difference between Auckland and the rest of the country . Good old supply and demand.

..no making no more of it and there aint nothing good about burning up top quaity waikato pasture to put tarseal and houses on. Where is the plan Mr Joyce...when will you be satsified we have had enough popn growth?

They haven't made more land in the US or Ireland or Japan and yet prices of their housing reduced substantially following their housing bubbles....but yeah, good old supply and demand must be the cause, not rampant greed and loose credit policies...

Wellington isn't much better than Auckland. So who is making all the money from this? What real benefit comes from this?

Does this mean that the real cost of a house in Auckland is around 50% of the current RV, if you deduct all the unproductive paper work?

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13

Ummm - the Australian owned banks....and guess who just received Australia's highest honour?

For services to the Australian economy I presume?

That is the conclusion I arrived at after reading the graphs. I really feel for my fellow Auckland family and friends. It is insane how much they have been ripped off over the past few years, by our cardigan wearing latte sipping and self serving bureaucrats.

I am not surprised by this finding at all the sheer number of hurdles and hoops to get consent and then the costs such as the cost of a water meter ($ 15,000.00 ) is an outrage

$15000 for a water meter so the council can charge you again for every drop that you use, while we give away our water rights to offshore companies for a couple of thousand dollars. New Zealanders deserve to become tenants in their own country! Insane!!

For some strange reason it often seems to be the taxpayer getting the shaft while the companies (and occasionally farmers and movie studios) get the subsidies or exemptions.

Wellington also has a shameful 48% of the costs. Perhaps if both Councils tried working for the regions instead of against their region the result would be very different. Instead processing of any consent is a hostile process designed to cripple any project. The delays alone have substantial financing costs, and the Councils won't even apologise even when they sack the staff involved.

Convenient - nice timing

quote:- "A Government-commissioned report, (released in time for the election) has (suddenly) found that a staggering 56% of the cost of Auckland houses may be due to land use regulations (golly-gosh)"

Setting aside that it was commissioned by the Minister of Finance to arrive at the outcome the Government is paying for; these regulations are the current Government's fault. They have not acted, and are not acting to resolve the issues. When I think you're on point is that they have only conveniently discovered this issue on the run up to the election.

And those of us who have water tanks are then basically terrorised into having to connect to the water mains,

What do you mean by terrorised? I've got no experience of this myself, but I was vaguely wondering whether water tanks could become economical if water mains installation costs rose too high.

Maybe my use of "terrorise" was overly dramatic, however the majority of the population of Rodney District Council had water tanks, and they were pressurized into adopting mains water connections, the Council argued that these property owners were not paying their fair share of waste water management (fair enough) though what eventuated was an argument that how the Council allocated the distribution of charges was unfair. A lot of people with water tanks were paying a disproportionate amount of the waster water charges. So essentially if you want to save costs by not connecting to the water supply I think you are stuffed, I am still looking into this.

If you have water tanks AND you have a septic tank system your totally independent so there must be no pressure to connect to town water. Like everything though your own system requires maintenance with things like pumps, filters and the tanks and gutters to keep clean. Am not hearing about any "Pressure" going on Puhoi residences to connect.

Probably because the Council had to back down.

The Mangawhai sewage scheme is an Interesting argument

If I recall they had a pollution problem from all the septic tank effluent polluting the water table and the inlet and estuary

Difficult to have 2 waters running past your place and hooking up to the waste water but not the potable water system and not paying something towards it

Yep. I think in many areas if there is a town water supply or wastewater system you must connect to it. There is no choice even if you're on tank water and septic system first.

Terrorise seems to be apt to me.

There is currently a water tank on the property I have, I think it is unfair to have to pay $15,000 for a water connection when I don't need to. Currently if you are on a water tank you have to pay the equivalent of the lowest rate (1 person) as a payment towards the waster water. Paying towards waste water is not the issue but to be forced to pay for a connection and then water rates on top when you can collect water for free is daylight robbery. I think all new homes should come with water tanks and solar power (though the development of batteries needs a bit of a hurry up)

Sigh, no one is accountable and everyone is so competent at blaming others in NZ.

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14

As Ronald Reagan put it - government isn't the solution to our problem, government is the problem.

Yet they will pass blame to anyone else and avoid responsibility at all cost. Leaders these days have lost their class and dignity (and moral conscience).

Its not right for the average kiwi to not to be able to afford the average house - so lets ease up on immigration for a while - oh but we can't because politics is not longer about whats best for the average kiwi, its what's best for the politician and anyone who's willing to vote for them for financial gain. We've become very very shallow in NZ - it's such a shame. We're not the people we tell the world we are.

RING RING ---- RING RING ---

" Hello ? "

" Mr Xingmowang ? "

.... " yes " ...

" Phil Twyford here ... Labour's spokesman on housing .... ahhhh .... I may owe you an apology , Mr X .... " ..

No, it's more like this:

Ring ring -- ring ring --

"Hello?"

" Mr Xingmowang ? "

.... " yes " ...

"Steven Joyce here... National's finance minister... we have an election coming up... can you and your pals just keep buying for another few months? You've massively bid up our property market here, especially in Auckland and we just need to keep the party going until after September..."

How do you answer something like this, like I've said before new houses in Auckland are only for booms , the rest of nz are just about the same, so for Auckland to have affordable houses , land development costs need to be slashed, never happen, materials or labour needs to be slashed, maybe a little, Looks like FHB,s 3 choices , appartments, secondhand housing if prices come down to a affordable level (2007 high ?) or leave Auckland, the future is great for nz, many countries nz, s size have over 65 million people and still have plenty of space, housing in nz should be stable and cheap, benefits everyone, we just need a government with half a brain, or no SJK

Dont you just love the way figures get in the way of reality.
If you buy an old house for 1 point 5 million, pull it down and build 3 new ones, the cost before any other expenses starts at half a mill per house. Then add on demolition, council expenses, subdivisions, legal and building and then suddenly you have 3 houses with a price tag of 1.5 million each. And if there are $560K of costs associated with each house then add the cost of land and development, what will you get before the developer makes a profit? I think the figures are a bit suspect, but great election year stories

Maybe Auckland needs to build like england has been forever , but if Aucklands housing prices were controlled better at affordable prices , FHB,s with access to appartments, secondhand housing, and housing from there up would fall in line to people who can afford it, the boom is Aucklands only problem

In terms of land use regulation some of the issue has to do with:
- planners using a rules based approach in the district plans rather than purely effects based (whihc the RMA is meant to be), and more importantly;
- the benefits and costs of every rule (eg why should a building have to be set back from the property frontage boundary except some planners done like the look of it) in district plans do not go through a rigorous cost benefit analysis (& one cant even consider the overall cost and benefit report (s32) robust as it is a subjective rather than economically objective assessment.)

- the government should
1) set up a national land zoning system (may even be purely effects rather than zone based) rather than 60+ district schemes across the country
2) require every rule which is in the zoning system be subject to a full cost benefit analysis before it is included.
This should reduce the voluminous district plans to something everyone can interpret rather than just the planners.
I'd add to that to get rid of regional and district councils and have unitary authorities as well. This would allow all the plans to be rolled into one national plan with different sections for land use, water, air etc.

Points 1 and 2 are why the RMA exists: it's effects-based from the ground up. And Sec 32 assessments should be able to deliver cost/benefits where that matters, but in practice are carried out under instruction from the same Council incompetents who write the Plans and Zonerations.

The RMA has zero mention of spatial zoning - try a word-search on the Act (at legislation.govt.nz) and the only Zones there are the marine/economic zones out to sea.

Spatial planning and zoneration are the baleful legacy of Brit-style Town and Country Planning Act. The old joke about Brit Plannerz was that their motto must have been 'We Finish what the Luftwaffe Started'. And separation of uses (business from residential, industrial from everything etc) causes, amongst other things, the need to Commute, the destruction of mixed use Jane Jacobs type enclaves and their replacement by use monocultures, and what Kunstler ('Geography of Nowhere') terms 'anyplaces'.

But short term, we are stuck with what these bozos style 'Planning'......you cannot Unelect Staff....

Why are we buying a house for 5 million

Wow-weeeee .... that report is surely gonna upset Phil Twyford ... 'cos we all thought that he was onto something when he blamed Auckland's sky-high house prices on people whose surnames sounded Chinese ...

Well no they weren't Chinese "sounding" names, they were Chinese names (they are very distinctive due to Chinese people not having mingled much with other cultures and there is not a great number of Chinese surnames) and what he did was run a ruler over the number of Chinese people living here against the number of Chinese who purchased houses, and the number was completely out of whack. It was a fair enough method, given the govt refused point blank to keep a proper record.
This report looks to me like a complete load of hogwash. Should have been sorted long before allowing mass immigration and the business of foreigners buying should have been sorted as well.
It is head in the sand to try and say they have not had an effect, seeing as now the non resident Chinese purchaser seems to have vanished into the night, prices have magically begun to ease, I fully expect land costs falling are not the cause of that.
The govt cannot just fudge the causes of house price ridiculous inflation away, I am afraid.

Of course, it's a rough-order estimate. But it's not hard to figure that the core logic is sound:

  • Productivity Commish found rural-urban land price differentials (literally across a MUL or zone boundary) were up to 10x. SuperU estimates 4-9 times (Summary, P2). Right ball-park
  • Raw land prices at $50K/ha if 1/3rd is lost to roads reserves and utilities, are $4,600 for a 600 squares plot. See here http://waymad.blogspot.co.nz/2014/08/why-does-urban-section-cost-200k-pl... for how that gets to the (now nostalgic) figure of $200K plus.
  • Note, on the graph, the rapid rise from 2002-03 and then ponder This: Welcome Home Loans as a Universal Price Signal...http://waymad.blogspot.co.nz/2017/06/why-house-prices-took-off-2002-3.html and http://waymad.blogspot.co.nz/2017/06/welcome-home-loans-as-universal-pri...
  • TLA's, in the decade following the loosening of their mandate by the stoopid Labour Gubmint, went hog-wild on soft spend - 'Social and Cultural Well-beings'. That sorta spend is hard to dial back without getting tipped outta office, so the result is cash-strapped Councils ('we have our Heads against the Debt Ceiling'), and a rush to get $$$ by non-rates revenue streams. Which means - Fees and Charges for 'Services'. Which means that you now need a paid-for pre-consult for a Brown Cardie to help you navigate the Plan they helped write.
  • Which advice, passed across in the in-tray of another BC, months later, may well prove to have been faulty, requiring, mirable dictu, More Modest Fees and Charges to fix.
  • Which progression is not too dis-similar to the Financial Transactions scams: generating ever-more-arcane chains of transactions, so that more effort goes into lengthening them Chains and each with another ticket to clip, than into Serving Customers.

Other common taters may chime in, but for my munny, the much-missed Hugh P had it bang on:
"If the land price is wrong, everything on top is too".

... nailed it , Mr W .... and yes , I miss Hugh Pavletich around here too ...

The house costs begin from the ground up ...

... and the legislation screwing up the whole house building industry begins from the top , down ...

Not sure if I agree with everything there Waymad. But you are bang on with;
"If the land price is wrong, everything on top is too".
I miss Hugh too -he was annoying but right on most things.

NO ONE can buy 1 ha of bare land for $50K. In Akl try $350K. In Queenstown try $750K.

Farmers do all the time -in fact down here in Canterbury $50k is prime dairy land..... 99% of NZ could be bought for less than $50k a hectare (not counting the Conservation Estate which presumably cannot be bought for any price).

48,754
https://www.interest.co.nz/rural/resources/farm-sales
But you don't buy one ha you buy a whole farm
$11+m/ dairy farm plus roads and utilities

Because everybody wants to extract maximum profit so 1 ha is marketed as a "lifestyle" block and not it's predominant use.

Up here in Northland there is plenty of bare land priced/valued anywhere between $15k to $400k p/ha. In one case a 7 ha block currently used for grazing and valued at $13k p/ha but an asking price of $100k p/ha. How about 3 ha of bare land at $440k p/ha?

If the land price is wrong when do we question the valuation model itself? Note my comment above about land values in Northland. Assume an avg of $50k p/ha (overpriced?) for bare land an existing residential property of 3000 sqm is valued at $750k p/ha. Where is the sense in that?

It all comes back to the "wealth" model we have created and operate under. We hear it often enough from govt. and central banks. We have to create the illusion of wealth so that people will borrow and spend. Whose interests are being served? Not the sheeple. It's called debt enslavement and it was complete when the banks were bailed out. Nevermind though, create enough fear in the masses and they can be controlled so they won't see the ultimate agenda.

If the concept of wealth is wrong, everything below it is too.

Aucklands already in trouble, take this perfect opportunity in a year after Auckland has gone down 30% or 2008 highs, naturally this will happen or you're blind , start nocking down older cheaper houses all over Auckland, $400k houses of which there'll be plenty, chuck up nice smart appartments by the thousands, control immigration and overseas investment more intelligently (peters could help here) , keep all business investment at 40% deposit, move interest rates at the right time , up when prices go up and down when prices go down, when a city has it's top 20 regions at close to 2 million dollars and prices going from half a million to 2 and a half million in 9 years u can't see the sense

Two problems. 1 house prices are never going back to 2008 levels. 2. Kiwis don't want to live in apartments. We are not Asia, they are used to living in apartments and they are also used to catching public transport. Kiwi's don't want to err.....lower themselves to that level.

Don't assume everybody makes the same choice Carlos. Plenty want to live in separate houses. Plenty want to live in apartments.

How convenient! Pass the parcel just in time for the election.

How is this even measurable and why have Auckland prices sky-rocketed over the last 8 years - what regulations have changed?

Sure "regulation" has it's part to play but debt fueled "speculation" is the main culprit here, aided and abetted by a complicit government.

Smoke and mirrors.

Ok so what is the government going to do. It will mean loosening density limits in places like St. Mary's Bay etc. Maybe what Arthur Grimes said a little while ago actually was the answer.

I keep looking at the chart (Figure 2) in the article and can't help but conclude that we're in serious trouble.

This government party and all the rest are fully aware houses are miles over prices, they know now there is no future without locals housing affordability, except SJK , but luckily for nz he sore the light and ran, I am surprised tho he didn't take his party into a 4 term,

Very happy with the graphs. The higher the better!

Trioll!

Stop being a sour grape blue meanie. We're all entitled to our own opinion. Be happy!

That graph has almost exponential house price growth. I think we can all agree that it simply cannot continue in this direction. If the Auckland house prices attempt to double again in 5 to 10 years its all going to end in tears. Those people who think that it will be great are not thinking about the possible complete and utter breakdown of society as we currently know it. How long do you think you can sit in your ivory tower before the masses try and push it over ?

The first graph shows Auckland to be high cost and low value. It that means if capital gains stop, they will stay stopped forever.

This is a government which lacks objectivity due to:

a broad consensus among the main political parties as well as many of the minor ones that this is not something to be feared or resisted at all costs. In this regard, there appears to be some consensus of party view (excluding the position adopted by New Zealand First) that continued immigration at or above present levels will produce positive outcomes for the country's economy and society.

New Zealand: The Politicization of Immigration
January 1, 2003
By Richard Bedford

Today that leaves labour (who started the ball rolling) applying the brakes for speed bumps (Speed bumps mind you - no about face).
Meanwhile National is in too deep in doo-doo.

Corrin Dann
Let's move on to immigration. Kerry McDonald wrote on his website and I quote “a high rate of immigration is a national disaster he says it is lowering the living standards of New Zealanders with seroius economic social and environmental consequences “ Now this isn't Winston peters saying this it is a respected economist and businessman. He's worried about immigration, not because he's but because he's worried about the numbers.

John Key
“We'll o.k. I don't think the evidence bears that out. To start off if you look at the average wages in NZ they are up .

Corrin Dann
you don't want to get immigration down , to fall though, do you. I just got to say something. I saw you in a speech after the budget and you were in a big room of business people, now some of those were the biggest business minds of the country and you stood up and said: “don't worry about treasuries figure the estimation that it will go back to 12000, you were confident the figure was going to be a lot higher than that.

JK
I just think it is likely to be higher than that

Corrin Dann
But it's like telling them you wanted immigration to be up. You were telling them “ don't worry the demand will be there, the economies going to stay there, that's what's keeping New Zealand affloat

http://tvnz.co.nz/q-and-a-news/pm-s-reaction-aussie-election-results-vid...

My feeling is that this is bollocks - half truth. For one thing as joyce [Mr Posi-Power] just said "you can see that around Christchurch. Christchurch isn't Auckland and as Albert Saiz (link above) pointed out geography plays a vital part. The other thing is average incomes. Imagine our economy is based on high tech manufactured goods - versus woolen slippers (plus tourism and sexual services). Unfortunately average incomes don't matter while we compete with Harcourts Shanghai with a government [Mr Posi-Power] which doesn't want to know what affects a globalised market might have (disconnected from the local wollen slippers factory). Mr Posi-Power is keeping his high-tech factories well hidden although he does mention ICT [internet communications technology].. Even a scrap metal dealer and corner dairy is "on the internet", however a drive through an industrial area shows up Countdown warehouses, window manufacturers, truck servicing etc, etc.

This is where National screwed us.

The Super City made it possible for a dodgy as Labour council to take land away from Auckland then double it's size around any small village or town. Today Auckland is a city that sprawls for a 100 km building 50% more land supply than it needs AND YET the city doesn't have enough land because none of the land is near the city.

Bi-partisanship in action.

In my experience, the biggest issue is the subjectivity of urban design.
On many projects the back and forth on this matter eats up huge time and cost.
It's a tricky one. On the one hand urban design is really important, but on the other it is very subjective and to be honest open to the abuse of the personal whims of an urban designer.
Personally, I think the answer should be that Council should have a list of pre-approved urban designers. Provided an applicant obtains a supportive report from one of them, the application should be rubberstamped.
It's not flawless, but neither is any notion of 'design by commitee'