Infrastructure New Zealand's proposal for a new South Auckland satellite city gains support

Infrastructure New Zealand's proposal for a new South Auckland satellite city gains support

A proposal from Infrastructure New Zealand to investigate building a new Auckland satellite city around Paerata, north of Pukekohe, is meeting with strong support.

Property Institute of New Zealand chief executive, Ashley Church, is "applauding" the suggestion, saying it represents "the sort of big picture thinking that will ultimately resolve the Auckland housing crisis".

The proposal is contained in a new Infrastructure NZ report.

New Housing Minister Phil Twyford has already signalled interest in the concept, possibly as part of Labour's new $2 billion Kiwibuild programme to construct 10,000 new homes a year for 10 years.

Church says that the plan ticks most of the boxes required to solve Auckland's housing shortage:

“It envisages getting a very large number of homes built relatively quickly, it focuses on Auckland but proposes developing in an area where land prices are still reasonably priced, and it has a strong focus on providing lower cost housing for first home buyers”.

The report suggests that about 30,000 homes could be built in Paerata, making use of prefab construction, at an average cost of about $450,000 each. This contrasts with median prices around Auckland of about $825,000 at the moment.

"Paerata’s land is still cheap, but rising quickly," the report says.

"If bought at today’s prices, an average section of raw land would cost $17,000. Three years ago, it cost $10,000...If authorities can move before the market in Paerata, land value can be captured and used to offset infrastructure costs."

The report says that Paerata’s proximity to rail and State Highway 1 lowers the substantial risks and uncertainties around future transport needs.

"We estimate regional road and water investment as low as $700 million could be sufficient to add 30,000 dwellings to current Paerata plans. This is less than the estimated $1 billion of development contributions the city would generate. All other locations we examine [in the report] would likely cost more to service than the Auckland Council would receive in funding. Growth can pay for itself, if it is well planned."

The report says that after providing a margin for risk, the wide apparent difference between the cost of delivering a home in Paerata and current prices suggests integrated urban development at scale "is cost effective".

"In addition to enabling land value to be captured, development in Paerata offers a number of strategic advantages. It is close to industrial land at Drury and proximate to key employment centres at Manukau and Auckland airport, as well as the productive Waikato and Bay of Plenty growth regions. Water, power and aggregate supplies come from the south and, most importantly, Paerata is located on the railway line. Scale development in this location provides a unique opportunity to leverage the capacity of rail as the alternative transport mode for Auckland."

Paerata’s strategic location and Auckland’s urgent need for affordable housing close to employment indicates there was "an opportunity to go further".

"The southern rail line between Pukekohe and the Auckland CBD needs investment. Strategic prioritisation of Paerata as a growth city would generate sufficient land value uplift to fund a $2 billion duplication of the North Island Main Trunk Line."

Infrastructure NZ says wholesale changes to Auckland's Unitary Plan would not be required.

"The Rural Urban Boundary has provision for local expansion to make way for growth. Coordinated public investment aligned with planning processes and combined with affordable housing can shape urban form, without dictating it.Auckland must start using growth to catalyse the investments the city wants, not letting growth determine the investments it has to make."

The report, however, stresses that central government must play its part.

"Disproportionately high risk in relation to reward sits with the Auckland Council and developers, while too little remains with central government and the original land owners. A satellite city at Paerata will return $3-4 billion in GST alone, but less than $100 million in rates.

"Planning for growth at scale around rapid transit allows more efficient use of land and is cheaper than retrofitting established urban areas. It will deliver benefits in the form of more affordable housing for the people who live in Paerata and in the form of lower congestion and infrastructure charges for wider residents.

"But it is the ability to identify and isolate land at its raw price which provides the greatest opportunity. Auckland’s existing growth paradigm transfers the value of public investment to land values without a concomitant requirement to deliver housing at pace. More infrastructure investment is required to deliver fewer houses and weak supply reinforces high prices.

"The integrated planning and infrastructure approach of the satellite model enables infrastructure providers to share the benefit they create. Investment can be funded and affordable homes can be delivered."

This is the news release that Infrastructure New Zealand put out on the report:

A satellite city in the south key to funding and meeting growth

“The new Government should target new housing and employment on unzoned land along the rail line through Paerata to meet Auckland’s growth challenge,” says Stephen Selwood CEO of Infrastructure New Zealand.

“Our latest report released last week examines the cost of growth in different greenfield areas around the city where land is accessible and non-sensitive and finds Paerata to be the best on balance for major new development.

“It is cheaper to service with water, energy and transport and strategically located near to employment.

“If the satellite city was supported by a $2 billion upgrade of the rail corridor, we could four-track the southern rail line, allowing non-stop commuter services from the satellite to central Auckland and work places in between.

“That would put the new city within 30 minutes of the CBD and would allow rail freight to be separated from traditional commuter services. KiwiRail could operate with a much greater degree of freedom, helping to get freight off roads.

“Being within 30 minutes of the CBD would also allow much greater densities to be achieved at the satellite than would be possible under a traditional expansive urban development approach.

“Paerata would be a genuine city. It would provide a range of housing choices and with good masterplanning would be much more land efficient and resilient in a changing climate.

“The most exciting aspect is that the city could be designed to deliver all of our aspirations for the future enabling sustainable living and leveraging technology to the fullest extent.

“We can build better, stronger communities, free from the constraints of previous decisions.

“Developing at scale, we can facilitate the shift to more advanced home construction techniques, common throughout the rest of the world. These are critical to lifting productivity and enabling supply to increase.

“Scale will also be attractive to domestic and international developers and investors.

“If the new Government was to prioritise growth in a satellite city near the rail line in the south and tie new zoning to reprioritised transport investment, we could deliver homes at around half the current cost.

“We estimate that an average new home would cost $430,000 to build. That’s including land, development, infrastructure, GST – everything except a return for risk. How the satellite was delivered, including what risks were accepted by the Government, would determine what price homes could be sold for.

“This is the full cost – not a subsidy. It’s what houses should cost if we plan well and break through some of the barriers created by our current planning-funding-governance system.

“Growth can pay for itself if it is well planned.

“The growth model we have in place at the moment not only allows development in areas which cannot affordably be serviced, it is preventing the delivery of housing at its actual, affordable cost. It is enabling sprawl on productive soil and poor quality infill in established suburbs.

"Intensification of extremely expensive brownfield land is not delivering housing at the price or speed which is required.

“Proactively targeting growth around rail is cheaper, consumes less land and will deliver faster housing.

“The satellite city model can be scaled up to take advantage of new investment and provide for Auckland growth over the long term. It can be aligned with much needed investments in education and health to deliver an exemplar city of the future, providing a better urban lifestyle than can be achieved under existing practice.

“The current incremental approach to growth management in Auckland must change. It is too slow, too expensive and is adding to congestion. Integrating urban development and infrastructure “at scale” is the solution,” Selwood says.

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?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


Comment Filter

Highlight new comments in the last hr(s).

"...sufficient land value uplift ..." So. Land Tax IS on the way?!

We already have a partial land tax it is called rates and I would imagine the Infrastructure Council is thinking a targeted rate on their proposed site would be pay for the needed infrastructure upgrades via a infrastructure bond -that being Labour party policy.


Having successfully banned housing at Takanini, Auckland now "needs" to build in Paerata and requires tax payer subsidy? And the reason given for building this monstrosity so far away is that it is "close to" Auckland?

OMFG. Auckland Council planning is freaking awful.

Why do you describe it as a monstrosity ? Did you watch the video ? Can you do better ?

This proposal came from the Infrastructure Council -a private outfit -not from Auckland Council or from Phil Twyford. So why are you criticising Auckland council and why are people upticking this comment?

If the proposed satellite city is too far away and I think it is stretching of the truth to call this location 30 minutes from Auckland -then criticise the Infrastructure Council. Tell them to come up with better ideas or at least multiple options.

Here is Infrastructure NZ website

Paerata is inside the Auckland RUB and land closer to Auckland is outside the RUB. The Infrastructure Council (and everyone else) are forbidden from using lots of land closer to Auckland than Paerata, because that land is outside the RUB. Auckland Council has blocked most all the better options.

I am criticising the council, because I find this absurd. Land close to Auckland is outside the Auckland RUB. Land far away from Auckland is inside the Auckland RUB.

It would be far, far better in Takanini, as there is little in the way of horticultural use of land around there, though there used to be a bit. Lovely black, peaty soil there, but compared to the unique,beautiful, growing soils of Pukekohe, Bombay, Patumahoe etc which now Auckland and mores food basket, not quite as valuable. I suggest that if another half million city pops up there, then the food basket will be a gone burger, and I cannot overstate this, would be the craziest thing we could contemplate doing.

Is this going to involve Coro Street type houses or are they going to be stand alone houses.

What's wrong with 21st century Coro type housing? You can pay $5 million for a 2 or 3 bdrm Coro house in Paddington in Sydney....Sure, the location is 'better' but I doubt the 1880's houses are!

Er, crikey, it sounds like they know what they are talking about.

Posted in another thread but more relevant here, bearing in mind this development is ~4500 homes that would (I assume ) eventually be part of the 30,000 if it went ahead.

Word on the street is the section size for the Wesley College / Paerata Rise development is ~400 sqm with a land price of $400k. 180sqm houses will have an asking price of 800-900k.

Good luck with that

This is just about the best worst solution.

Paerata is a suburb that has been moved 4 km out from Auckland, but that 4 km is the smallest additional distance adder - only 8 km of wasted travel per commuter per day. Paerata with 100,000 people will cumulatively waste a mere 500,000 km or so of travel each day.

Of all the stupidly distant new Auckland suburbs, Paerata is the one to increase as it is the least stupidly distant.

I hope that they are not going to waste high value horticultural land to achieve this.

Of course they are going to waste horticultural land, it is Auckland Council.

The only land in Auckland that is protected from development are the swathes of lifestyle blocks adjacent to Auckland. The lifestyle blocks are close to Auckland, offering short (low pollution) commutes and have land values to match. This area is cost prohibitive for commercial farming.

Commercial farms are only a feature of land miles away from Auckland City. The commercial farms exist in places no one with even a mere scintilla of forward thinking would build a suburb for 30 years.

The morons of Auckland Council planning have decided to build the new suburbs miles away from Auckland.

This raises another question. Are lifestyle blocks the best use of our land, especially if they have large areas of ungrazed thus energy wasting (and polluting) lawns that must be mown.

Is Paerata really horticulture land, though?
It's not currently utilised intensively in that manner. All looks like lifestyle/low intensity farming, to me...

Once the zoning is changed to allow intensive housing the value will rocket up. Doesn't anyone realize this? So the current owners will make a huge profit and the resulting house costs will be nowhere near as low as the govt is hoping. If the govt is aiming for compulsory acquisition then it will still have to pay the true value of the land and we all know now that the zoning is going to be changed. Compulsory acquisition process is one where both parties get their own valuer to estimate the value of the land and further negotiations take place.
This sounds like a windfall gain for the current owners but for houses to be built nowhere near as cheaply as the govt is hoping.

Yes, of course that will be the case. I'm not doubting that.

I was pointing out that the land wasn't really horticultural land, as you were asserting.

Yes it is, and if you establish a half mill city there you can be absolutely sure the rest of the land toward Pukekohe, Patumahoe, Bombay and all the rest will get swallowed pdq. This is one of the stupidest ideas I have heard in a long while

Not necessarily if the council has the sense to firmly zone the horticultural land as such, with some sanction that will ensure that it always will be so. It would also need to surround it with a margin of equally permanent agriculturally or reserve zoned land that will ensure that horticulture can continue unimpeded and without raising questions that the horticultural activities are impinging on residents.

the report says the location avoids the area of 'elite soils'

All of the soils in that area are excellent, Karaka not so much. What happened back in the 80s/90s was a lot of that area was declared water short, estuary water was beginning to be found in underground bores, especially around Karaka. There was in place, a requirement to put some sort of economic use proposal forward for any block of land under, if my memory serves me, 10 acres, so lots of plastic houses sprung up around there, growing all sorts of nutty things from chrysanthemums to leucodendrons, nashi, all sorts, they are all gone now. It is only by chance I'd say that the area between Paerata and Drury and Karaka hasn't gone to horticulture, most of it established in and around Pukekohe, but there are operations near Paerata, Patumahoe is just around the corner and there is heaps of it there. There are already issues with horticultural activities going on beside new housing developments, this will only make it worse. You can be absolutely certain that if this urbanization is allowed to proceed the rest of the land will succumb to it as well.

And even if they did manage to preserve that which is already being used for horticulture, there'd be another half a million mouths to be fed from it. Again, nuts.

The entire area of the Counties Manukau DHB covers 541,080 people (and growing) so let's add into the costing - another Hospital at least the size of Counties Manukau. Schooling - how many schools? Four lanes both way on the Southern Motorway. New motorway from Drury to Waiuku. Bridge(s) from Karaka to Weymouth etc to take traffic off the Southern Motorway. Upgrading (again) the Sewerage disposal currently taking from Pukekohe, Tuakau and Pokeno - treated then discharged to Waikato River. Oh that too - water from the Waikato River. Remove the ring fenced areas that have elite soils to feed NZ fresh food. New rail lines for freight separate from passenger lines. Yep - group in Wellington look at a map and go - look green grass! Someone also needs to tell them that Immigration is being reduced and will continue to do so until the country can afford the desperately upgraded infrastructure required for all of. New Zealand. Shake head!

5 million nzers contributed 76 billion in tax last year, so this extra 500k people would contribute about 7.6 billion in tax per year. That would pay for a lot of infrastructure!

That you wouldn't need if they weren't there.

So lets build on some of our most productive, best soils, low/no frost horticulture land, cos its cheap!!!!

Effing dumb, innit?

So now it becomes clear, Labour intends to build its 100,000 houses where no-one wants to live. Genius

Sentinel. You cannot have any idea if people would live there. Go take a look at Pokeno.

You think that Infrastructure New Zealand have produced this report at the request of the new government, which has been in power a week or so? Seems extremely unlikely, and any conclusions you are drawing are your own.

Is this going to be NZ's own version of the Ponte City?

..and when that fills up ,...lets build another..and another...and another... until what exactly?

Then you can start to repopulate the areas that are empty because everybody moved out to new cities.
It will be like dejavu all over again.

Until, eventually, we all have to face the fact that we can't have more than 2 children per set of parents. Then it will all stop


2 ?! Who can afford 2?
Our 27 y.o. daughter has a $40,000 Student Loan; lives at home (again!); a good job and a Uni Degree and has little chance of being able to afford 2 children - ever! Sure, we can help - but where does that leave adult responsibility? At her age her great-grandmother had 6 children; her grandmother 4, her mother 2.....see the progression?

Sounds like Japan!

At which point the government then needs to import more young people from other countries instead, because the only folk here breeding at a high rate are the honest Catholics and the impoverished, and these aren't making enough money to pay the pension bill.

The housing crisis only benefits those born at the right time to get access to property while it was affected by NZ's 20th century policies aiding affordability, at the right time to get a bunch of tax-free wealth gains through the abandonment of these and any thought of housing outcomes.

It's a pretty colossal failure of governance by those who were supposed to be leading the country forward but could see no further than text-book laissez faire policies being the best solution for everything...Well, everything except their lifestyle when they hit 65. Let's not get too radical!

We're slightly older than your daughter bw, have 2 kids under 5. One OK income, wife stays at home. Almost a foreign concept in todays world, certanly amongst my peers, but normal only one generation ago.

We can borrow $180k from the bank. If we were in Auckland we'd need nearly 400k deposit to buy an 'affortable' house.

....and you and your wife are exactly who New Zealand needs. We need the next generation of 'our own' and I buggered if I know how we do that if young families have to plough every cent into the debt to get a roof over their heads.
Our youngest is 18, and I worry at what she has to face - on many fronts. I didn't appreciate it at the time, but life was a doddle when I hit the employment/home owning market.Jobs everywhere ( they needed boys and girls to sweep the stationary room and type the memos etc. Thousands of them each year that are no longer needed) and we didn't have to fight off the investor/foreign buyer market to get a brand new, 3 bdrm, brick-and-tile home in the new suburbs. I was 24 and No 1 was 21. But I guess it's all easy looking back....

The politicians seemed to forget that a massive amount of effort went into enabling such affordable housing, eh.

And that is why we are importing people

One thing to remember, Auckland Council is already building an even larger city than this Paerata proposal at Orewa/Dairy Flat.

Orewa/Dairy Flat is much further away and will cause people to have more polluting commutes. I reckon this Infrastructure Council proposal would create 1,000,000 LESS cumulative km/day commuted travel than the current plans of Auckland Council.

PS - just recently learned that Auckland Transport has an environmental department. Which I find hilarious. What do they do? When a plan is drawn up, do they sit around and say - is that suburb far enough away from Auckland? Then ask - how can we make it further away? Maybe they have a setting in their global warming calculations that has a mistyped "+" to "-" and that is why we are in this mess. I reckon the AUP will add about 3,000,000 km/day in additional commuting to Auckland, fuelling climate change. And Auckland Transport have an environmental department.

For comparison: Seven years ago when we were living in Auckland. The process of building a double carport took over 4 months and $5400 in fee to get a permit to build, Another six month to get a final sign off from Auckland Council.
Now in Brisbane, we did a 98sqm extension on an old house. From having the final drawing to a build permit took 5 days and total fee was less than $2000. All signed off within two weeks of completion.
Now we know why we have a shortage of new houses in Auckland

Working in the Ak council must be like living in a large metropolis. Where there is a nice comfortable little narrow role to ease into each day (after coffee number one), a career path all set out, a job for life, regular above CPI pay increases, a large comms team, legal team and attack CEO ready to fight off any disruption from the media or outside forces. The mayor already well inducted into the way we do things around here and is now well on the way to becoming a lap dog....

Interesting ! If Auckland Now has a lap dog mayor it’s pretty close to the previous mayor with his personal lap dancer

Nationals Policy was, 'if you do not build it, they will come any way'

Their other policy was, Lie. (We is making a killing on our Rental Portfolio)...why work.

Hope we have some truth in future...or is it just mind games and ease out Kiwis. ...into tents...ready for Summer.

Many including myself have said satellite cities offer the solution for Auckland
It just amazes me they don’t also start a satellite city north of Auckland They could not even get a bridge crossing from the Hibiscus Coast to Silverdale years ago I’m betting that still has not been completed.
Auckland climate is colder as you go south so I’d site the first satellite city north.There was a lot of bare land available between Silverdale & Albany which includes Dairy Flat I have a pal with land on the Albany green belt so I guess nothing has changed zoning wise yet

$450k homes at Paerata nice idea, 100sq boxes new Otara ??

Not sure, I suppose it depends on the owner demographic, assuming most will be owner-occupied. However, I’m struggling to picture an ambitious Millenial wanting to buy a shoebox so far from the CBD.