Property Council of New Zealand calls on the new Government to work alongside local Councils and the property sector to together address the issues that have created the current development bottleneck

Property Council of New Zealand calls on the new Government to work alongside local Councils and the property sector to together address the issues that have created the current development bottleneck

Our cities are facing 'systemic roadblocks' to urban development that need fixing, the Property Council of New Zealand says - and it is calling on the new Government to work alongside local councils and the property sector to address solutions.

"If the incoming Government does not address three key factors blocking effective development of our cities, the country’s current growing housing crisis will be the least of our issues," Property Council chief executive Connal Townsend says.

He identifies the three issues as:

  • Currently our planning system is ineffective and those within it are working at cross-purposes;
  • Councils are struggling with outdated funding tools which has led to ongoing underinvestment in public infrastructure, and
  • The construction industry is facing rising input costs, poor procurement practices and skills shortages.

"All those factors together mean that getting development projects to completion is expensive, difficult and increasingly lengthy," Townsend says.

"The result is we’re not building enough homes, schools, transport and social spaces in our cities to cater for those who need them.

"We’re seeing that manifesting in rising housing unaffordability in our main centres that will increasingly spread to the regions, we’re seeing Councils struggling to fund vital public infrastructure because the current system of charging residents via rates or developers via levies just isn’t keeping up with the need for new infrastructure.

"And we’re seeing decisions that affect the liveability of our future cities being made by Councils and government departments with often opposing desired outcomes resulting in lengthy tugs of war within the system.

"Every year the effects on those living and working in our cities are getting a little worse."

The Property Council has made 10 recommendations, in a manifesto it recently published, to address the issues and calls on the incoming government to take their part in addressing the growing problem.

"There’s been a lot of tinkering over the years – new legislation tacked on, new working groups and organisations. All it’s done is add to the complexity and lack of coordination. If we want modern, well-functioning cities with safe and attractive places to live, work and socialise in the future, then we need to make some changes right now," Townsend says.

"We’re asking the new government to work alongside local Councils and the property sector to together address the issues that have created the current development bottleneck which will allow the property sector get on with the job of designing and building the 21st century cities that New Zealanders expect and deserve."

This is the Property Council's 10-point plan:

  1. Replace one-size fits all district planning system with a flexible, dynamic system that enables home and infrastructure affordability and is an effective response to growth and a changing future.
  2. Integrate the urban planning system to ensure alignment with economic development, environmental protection and infrastructure investment by making the Resource Management, Building, Land Transport Management and Local Government Acts work together rather than at cross-purposes.
  3. Replace traditional funding mechanisms such as rates with a suite of funding tools that can be used on their own or combined to reignite investment in public infrastructure.
  4. Review the commercial property tax system to ensure alignment with other capital-intensive sectors. 
  5. Amend the overseas investment screening regime to level the playing field for investment in commercial property so funding is available for quality buildings in New Zealand cities.
  6. Simplify the building consent process so that it focuses on risk rather than detailed box ticking so building better buildings (and upgrading existing ones) is more efficient and affordable.
  7. Improve construction industry productivity by building quality housing at scale near job hubs and multi-modal transport connections to increase liveability and affordability of cities.
  8. Champion the role of technology and use of alternative products and innovative building construction methods.
  9. Liberalise the approved building products regime, especially for quality international products from reputable businesses and countries.
  10. Support upskilling and education within the construction industry to address lack of skilled labour and ensure employees are equipped with the skills they need into the future.

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7 Comments

The Property Council left out all the road blocks created while trying to obtain building consents. While some roadblocks may have been removed it's only been by way of repeatedly putting the boot into Council to make them respect the Law.

We have some shares in a company that has an active history in land development in Auckland. Currently they are selling a large number of sections there at a fairly hefty price. At a superficial level they are making a killing.
However there are a number of points that need to be considered that are very relevant to this discussion.
1 I seem to remember that they bought the land at least 15 years ago and it has taken this long to work through the nightmare of council bureaucracy to get this far. If you spread the margin out over this period it doesn't look as attractive. The lesson is that decent forward town planing and streamlined processes should be able to slash this time, reduce costs for everyone involved and allow a plentiful supply of sections to be developed in an efficient competitive market. As things stand all this council crap is limiting competition and adding a whole heap of cost.
2 The land development market that operates in Auckland is so far from a free and fair market that at times like this it can command a huge premium for the scarcity of land. This is a large risk for a developer because it is volatile and can evaporate just as quickly. One only has to look at the number of developers who have gotten overexcited and overextended at times like now, only to go bankrupt at a downturn. Accordingly developers need to build in a healthy margin to cover this very real risk. The council and government should be responsible for ensuring that there is a more than adequate supply of undeveloped land so that it does not command any scarcity premium and it is priced to compete with any other use that it has, i.e. agriculture. This way the market will always be stable and not present the risks to developers that the present set up does. And most importantly promote an open and freely competitive market that will deliver housing sections at the lowest possible price.

Chris-M - the ol' Rule of 72 applies.

The opportunity cost of that land purchase cost alone will amount to 157% of cost at an earnings rate of 7% over those 15 years.

Truly, Time = Munny....but try telling Councils that.

I don't know Chris, this does not fit the current story line at all.

* To be a developer is to automatically be a "fat-cat" and ipso facto evil.

* A lack of housing is called a "market failure" and is unrelated to regulations, red tape or council rules on land availability.

* In any event, foreigners are to blame. If not foreigners, then definitely bankers. Or "fat-cats".

As you say, a story line. Try to imagine what would happen without land developers. No developed land, no sections, - our present problems would be far worse, impossibly worse. So whether you like it or not land developers are very necessary and given the huge problems that we face we need more of them, and far more freely available land for them to develop as efficiently as possible. Our problem is that the way that the Auckland council and government plans and regulates this activity is wrong at so many levels that it facilitates the land banking and market manipulation that are making matters worse, giving oxygen to the sorts of people that you are complaining about. Not all the people in this sector fit the stereotype that you are painting. Some are jolly decent people who have a wish to contribute to the best possible communities. The environment that they work in forces costs and inefficiencies on them, and the artificial land shortage makes large windfall profits unavoidable. If the planning and control processes were sorted out so that plenty of land is available and it's development facilitated by the authorities, then there would be no scope for land banking, the fat cat rat-bags would not survive and only the competent efficient operators would be left to compete in an open and fair market that would deliver properties at the lowest price; as free and fair markets always do.

Trouble with developers is they are perfectly happy to concrete over good horticultural land. I believe with a combination of the planned city out there and self interest that we are in grave danger of losing the unique growing soils to housing. To my mind that is a perfect illustration of the absolute stupidity of mankind.
Urgent action is needed to stop this from happening. Why was Takanini scratched for much further development for this. Densify close to the city, not this.

1) Yes (Replace one-size fits all district planning system with a flexible, dynamic system that enables home and infrastructure affordability and is an effective response to growth and a changing future.) The RMA was meant to be effects based not zoning based like the town and country planning act. NZ has 60+ councils for a population of 4.5m & each district plan is massive. There should be one set of NZ effects based rules. Any on the way amalgamate most of the councils into unitary authorities and at least halve the number.

2) Yes (Integrate the urban planning system to ensure alignment with economic development, environmental protection and infrastructure investment by making the Resource Management, Building, Land Transport Management and Local Government Acts work together rather than at cross-purposes.)

3) Yes & No (Replace traditional funding mechanisms such as rates with a suite of funding tools that can be used on their own or combined to reignite investment in public infrastructure.) Rates should be kept as they are user pays but should be revised so that they are land value based only. Add targeted rates and infrastructure bonds to the mix. Reign in local government spending to the essentials ensuring they can fund those before everything else & keep rate rises to rate of inflation.

4) Cut the immigration rate as the government is proposing. We have one of the highest in the world and it simply leads to infrastructure deficits we cant fund and higher real interest rates.