Auckland is adding new jobs fast, and consenting much more housing. But housing isn't being built near where the jobs are. David Norman explores the reasons for the mismatch

Auckland is adding new jobs fast, and consenting much more housing. But housing isn't being built near where the jobs are. David Norman explores the reasons for the mismatch

By David Norman*

• In the five years to 2017, Auckland added at least 120,000 jobs as the population grew by 180,000.

• Over 40,000 new dwellings were consented.

• But not all the housing has been developed near where people work, meaning longer than desirable commutes in a city working to overcome its congestion challenges.

• The empirical evidence shows that plenty of land has been zoned for housing in work catchments.

• Commercial infeasibility, land fragmentation and access to finance are three inter-related factors that are probably stopping faster redevelopment near where we are adding new jobs.

Boom town

Over the five years to February 2017, approximately 112,000 new employees were added to the Auckland economy, according to Statistics New Zealand. Adding new employers or “bosses”, not included in the employee count, this figure is likely to be over 120,000, or at least an extra 24,000 workers a year on average.

This strong growth in employment is on the back of a burgeoning permanent population, up about 180,000 in five years to June 2017. A surging population has stimulated construction, house prices and retail trade. In addition, strong tourism growth has generated several thousand hospitality jobs.

Jobs have been added across the city although it’s worth noting that one in four jobs (28,000) has been added in the Waitemata Local Board area, more than twice as many as in the next largest catchment, MaungakiekieTamaki (12,000, or one in 10 jobs).

The industries that have added the most jobs include high end business services and construction, with each contributing around one in six new employees. Tourismoriented employment is next, with one in eight employees, followed by retail with one in nine.

How are we getting to work?

The results of the 2018 census will provide a far more up-to-date idea of how people are getting to work, and from where. In the meantime, we do have other data we can use. For instance, we know that over the five years to mid-2017, public transport ridership in Auckland, increased 25% even as the population increased 12% implying an increase in average ridership per person of about 11%.

Contribution to Auckland job growth by industry and Local Board, five years from 2011-13 to 2016-18

And as we pointed out in this paper, 10 times more new dwellings are being consented in rapid transit catchments than the physical share of Auckland’s land space occupied by those catchments. People value being close to transport that can get them to jobs and other activities, and the market is responding to deliver housing there.

So public transport is certainly playing a role. But in a city that’s already congested, and where infrastructure has not been able to keep up with the rapid population growth over the last five years, what we want is the shortest possible travel distances and times between where people work and where they live. Is the market delivering this?

A mixed bag of handy housing

We know that Auckland has only recently begun to consent new dwellings at a rate that broadly matches population growth – a remarkable achievement considering that in the year to June 2012, the city consented just one-third of what its consenting today. It also means there is an existing housing shortfall we estimate at around 46,000 dwellings.

But where are dwellings being consented, and how do these locations match up to where the new jobs are?

The maps below show what share of new jobs and share of dwellings consented have been added across Auckland’s statistical areas as defined by Statistics New Zealand. The red circles show a 4km radius around the main centres of job growth. These circles represent a travelling distance of about 5km to jobs, and is where housing would need to be located to maximise the number of people walking, running or cycling to work, or hopping on the bus or train. This would have the benefit of minimising commuting pain for themselves and others on the transport network by decongesting the roads.

The first thing we notice is that the bulk of jobs have been added in just a few statistical areas, while new housing is far more spread out across the city. Just 5% of the city’s statistical areas accounted for 58% of job growth. In contrast, the 5% of statistical areas with the most new dwellings consented accounted for a much lower 36% of new dwellings. There is almost no overlap between statistical areas where lots of jobs have been added, and where lots of housing has been consented.

Second, some areas have seen a similar rate of employment and housing growth, while others are decidedly mismatched. The area around Albany’s centre is an example of a well-matched area – lots of new jobs, and lots of new dwellings being consented.

In many parts of the isthmus, the pattern is more mixed.

Share of new jobs and dwellings added by Auckland statistical area, 2012 to 2017

Lots of jobs have been added in the CBD, and areas like Victoria Park, Hobson Street, K-Road and Symonds Street have seen a sizeable number of dwellings consented. But surprisingly little housing has been added near the industrial areas of East Tamaki and even Penrose.

In contrast, areas like Millwater, Hobsonville Point and Beachlands, where huge numbers of dwellings have been consented (nearly 1,700 in Hobsonville alone in five years), few jobs have been added. For Millwater or Hobsonville residents, this likely means a drive to Albany, or possibly a ferry to the CBD for work; alternatively, the bus trip from Hobsonville to Albany will involve a transfer and a 50-minute trip. The growth pattern certainly implies a drive toward the airport or a ferry to the city for Beachlands residents.

While some people will have chosen these locations for lifestyle reasons – proximity to the water, a more rural lifestyle, or bigger sections perhaps – many will have chosen them simply because in a supply-constrained environment, this is where they could afford to buy or rent a house. The longer commute is a by-product of the limited housing options being delivered affordably.

So why isn’t Auckland building more houses closer to jobs, oversupplying some areas far from jobs, and undersupplying some close to jobs?

Is it the fault of zoning restrictions?

No. Auckland has zoned for more than enough housing in all these high-employment growth areas. Even within the red circle covering the airport, where a lot of land is set aside for industrial uses, physical capacity exists to build 22,400 new dwellings over what is already there inside, only including potential in existing residential zones. Those 22,400 dwellings would accommodate seven times as many workers as have been added to the Airport statistical area in the last five years.

And across all the areas covered by the red outline, there is capacity for a further 377,600 dwellings or more than 600,000 workers to be accommodated.1

So what?

Zoning for even more potential dwellings within these areas is not necessarily a bad thing – economics is all about choice, when correctly priced – but the empirical evidence suggests that there are other factors preventing dwellings from being consented closer to jobs.

The usual suspects include commercial feasibility, access to finance, and fragmented land ownership. Most of the land that was upzoned in areas near the airport, for example, is already occupied by lower-density residential uses. This means fragmented ownership in the hands of many owners, a much tougher challenge for delivering larger-scale apartments and townhouses that often require developers to aggregate sections from willing sellers. And even when someone is willing to sell, part of the sale price will be the value of the existing dwelling to the vendor, which is probably a fair bit more than the developer wants to pay for the dwelling on the land, if their intention is to bulldoze it. In other words, commercially feasible opportunities to turn brownfield land into largescale apartment complexes may be quite limited in many brownfield locations.

On the other hand, a preponderance of upzoned properties may be suitable for smaller-scale redevelopment, such as replacing a single dwelling with four to five townhouses, where a willing vendor is a far more likely find. This scale of work would be too small for what a larger housebuilding firm would want to do (which is why they often prefer greenfield development), but could be an opportunity for many of Auckland’s predominantly small to mid-size construction firms. One or two properties like this would keep most of these firms going for the year.

But again there are challenges – primarily in getting funding for the work. This could be a huge opportunity for Kiwibuild to work with smaller builders with a solid track record, to back intensification near jobs. These individual projects wouldn’t have the glamour of a new large-scale Kiwibuild project with hundreds of homes, but would quietly provide housing closer to jobs, perhaps using a handful of multi-proofed designs (i.e. designs that have government approval for rolling out across New Zealand) that could be affordably repeated. The added bonus would be reducing congestion, which would undoubtedly yield investment savings for central and local government.

In summary, Auckland is a fast-growing city working to overcome an infrastructure backlog. This means every extra kilometre someone has to travel on the transport network has a big impact on others. Most days of the week, those kilometres are travelled to get to work. This means the city needs to minimise the distances people cover to get to work by building houses as close as possible to where businesses are locating.

The Unitary Plan has been in place for just over two years now, and there will of course be a lag between the huge change in zoning and the delivery of houses. But Auckland’s mixed success in lining up jobs and housing in the last five years suggests more work is needed to get more houses delivered closer to jobs.

How we did it

Our preference was to use data for the five years to 2018, but the more detailed Statistics New Zealand data on employee counts (Business Demography data) across the 555 Statistics New Zealand Auckland statistical areas is less robust at disaggregated levels. To remove some of the noise in employment changes across statistical areas, we used three-year averages for employee counts, for the periods 2011-13 and 2016-18.

This approach allowed us to estimate the number of employees added (but not employers) in Auckland by statistical area over the five years, and the share of total employee count growth contributed by each statistical area. Business Demography data suggested 112,000 new employees were added between early 2012 and early 2017, compared to 150,000 in the Household Labour Force Survey, but the latter does not provide detailed locational data, and is just a survey.

We used the total number of building consents issued over the five years to June 2017, also recorded by statistical area, and once again calculated the share of total new dwellings consented by statistical area. This data was mapped spatially and a 4km radius drawn around major employment growth centres to represent an approximate 5 km travel distance from jobs. This provided an indication of where we might desire homes to be relative to jobs.

1. There are around 1.6 workers per dwelling in Auckland.

A special thanks to Chad Hu of Auckland Council’s Research and Evaluation Unit (RIMU) for his assistance in mapping the data used in this paper.

*David Norman is chief economist at the Auckland Council. This article was first published here.

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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Auckland may have zoned for housing within those areas, but at what price will they be delivered? If people can't or won't buy, people won't build.

Also, it seems a bit of a paradox; "where people work" is fine if you can stack offices on top of one another, e.g. white collar professions. Space-intensive operations like warehousing are a different issue if the supply of land is being used for housing; or schools for that matter. Let's not pretend jamming houses in everywhere doesn't have an opportunity cost.

Let's also not pretend that we already have areas with great transport links, but can't build there due to character overlays or whatever the fancy word for well off boomers keeping poor young people out of Ponsonby/Grey Lynn is.

The smart answer, the one the Govt campaigned on and has so far done nothing on, is to release more land for development and connect it to rapid transport systems. Funny how these things matter so much when you're in opposition.

"The smart answer, the one the Govt campaigned on and has so far done nothing on, is to release more land for development and connect it to rapid transport systems."

A short answer, or a stupid answer.
Releasing the RUB is a terrible idea now for Auckland because the infrastructure to support that will never be built. With the exception of Takanini and Papakura there are very few areas of land which can easily be connected by rapid transit and still be within 1 hour of the CBD.

I agree in principle with what you say, but pragmatically Auckland hasn't got a show of managing something like that, with the end result being huge car induced sprawl resulting in more transport congestion.

Well, again, if it was a case of delivering on what was campaigned, Kumeu and the North West would have a concrete time frame for Light Rail. They still don't have that.They do, however, have thousands of houses going into the area over the next five years. That's definitely happening, regardless of if/when the rapid transit bit does.

The problem is they campaigned on this, and if they can't deliver this, they should resign. But let's keep pretending $250K Hobsonville Pt houses on 130sqm $600k parcels of land are the future of affordable housing and just ignoring the impact it's having on young people's lives. If they lack the courage to take on the trendy inner city NIMBYs or making good on their immigration reform (another broken promise) then releasing land is the only option.

Er that was the SHA developments and unitary plan decisions made by both a previous National coalition govt and a previous council. It was a bad decision from the outset, the infrastructure issues were raised even by the public several times but all those in the decision process ignored engineering and there own advice, (plan somewhere with more than 1 road in 1 road out and that being a dodgy state highway). Once the dragons brought in nothing would stop the ball moving. I remember directly seeing tourist buses of foreign residents and the agents reviewing those new areas... it was curious because for all the issues, including the base, wood treatment plant, and infrastructure that broke down, they were still gunning for over 1 mil on many of the ugly, hard to maintain new builds.

And I'm pointing out the current Govt campaigned on opening up land for Auckland and rolling out infrastructure...Well...where is it?

Instead we have people running interference on here about how 'immigration is suddenly good, somehow' and not the things they were happy to attack National for a few years.

Any post-RUB resulting "huge car induced sprawl" sprawl will be 20-30% smaller than the super massive sprawl Phil Goff is currently building.

Removing the RUB would mean we would merely build a big sprawl. Keeping the RUB means more sprawl than almost anyone has tried before.

People's choice of living location is not strongly correlated with their job location. The trip length distribution of home to work trips & average home to work trip length is longer than other trip purposes.
i.e. Even if you build housing near an employment centre a significant proportion will still work elsewhere.

Exactly. This restriction (shortest commute) applies only to absolutely physical jobs where warm bodies are needed at fixed locations. It certainly doesn't apply to:

  • self-employed e.g. tradies
  • Employees with a work vehicle or company car
  • Children - where location and decile of school certainly matters to parents - ask DGZ
  • Tele-workers - an Interwebs pipe and some technical wizardry enable some jobs to be remoted out. Check your telco call centre for a working example
  • Consultants, RE agents and all short-term-project-based staff: where the 'commute' is to a client site, as often as to a 'workplace'
  • Portfolio jobs - where two, three or more disparate employment or work situations are needed to glean the income needed.

Rather blows a hole in the 'everyone commutes to fixed workplaces' meme: I'd be surprised if even a bare majority of 'workers' however defined, fit That mould....

Also agriculture, horticulture & construction related industries, aka a large proportion of roles in NZ. Although that being said I remember a funny AgriQuality safety video when damage from animals to vehicles was more worrisome than getting to the destination.

Sprawl planning Auckland is the direct result of the Unitary Plan. Our "commercial feasibility" is poor because our horrible council has made Auckland City land too expensive to build on. They do this by banning housing on land that is closer to Auckland - the only area where suburban housing is banned. Suburbs become more spread out. Sprawl is king.

It is all due to the Unitary Plan forcing a lack of choice. People can either live in the City or drive from miles away. Under any sort of standard planning people would have a 3rd choice to live in a new suburb proximate to the city - the type of suburb our extraordinarily awful planners ban. So people either value urban property more or suck it up and commute. There is no other middle ground possible.

Planning & Auckland are incomprehensible
You had a chief town planner who thought shutting down CBD streets for bicycles & pedestrians would be best
Get on yer bike

Well it would be. Cars get way too much space for their mode share. Walk down queen street and there are hundreds of pedestrians jammed into less space than a handful of cars.

Would be nice for those who can walk, yet they already have wide footpaths, safe crossings and still critically rely on vehicle access for those businesses they visit. For those who cannot it is banning access for disabled and vulnerable residents which is already fraught and limited solely to vehicle transport to cultural, public, work and medical sites. Particularly along Queen street when no disabled public transport is available. Literally ignorant and discriminatory councillors who would seek to seriously harm those who cannot even use an unpowered wheelchair independently in Auckland streets because of the mass discrimination and harm from AT changes. Closing down high street would also close down critical access to sites and venues that are core to cultural inclusion. You are literally kicking the disabled out of CBD access and expect them not to have a spike in depression and suicide. Even the minor closures now mean the CBD is practically impossible to access during events and so the disabled are often excluded altogether. When Auckland Council took over their CBD site they stripped more available parking away from the disabled so even visiting the council or inclusion in public meetings is denied. You might as well hand them a gun, and get it over with.

I can tell you those “Tourism hospitality jobs” are low paying and the contracts can be onerous
Multinational tourism operators bring their own practices & I don’t see local authorities stepping in to support workers. It’s not the number of new jobs it’s what the jobs are paying & the cost of living

Productivity has not been increased in NZ and hence its a low wage economy.
This country is a modern day slavery. Work life balance is only lip service. Drill down to the blue collar low wage workers rights are virtually non existent. Big multinationals well , its profit driven. The government is too focussed on housing , letting the workers and its people down..

"But not all the housing has been developed near where people work, meaning longer than desirable commutes in a city working to overcome its congestion challenges" says it all. The Council has failed to provide the capacity for employment where it is most needed - close to where the houses are. Apart from a few retail centers and long-standing light industrial land, little provision has been made north of the bridge and 15 years of planning for employment capacity on the Hibiscus Coast has come to nothing while housing capacity explodes and the motorway clogs up with cars and buses. Even getting the desparately needed industrial land at Mangere approved meant battling the ARC. Preoccupation with remaking the CBD does little for the majority of Auckland commuters, most of whom need to travel across the region to get to work, meaning public transport is not an option for the majority.

This means the city needs to minimise the distances people cover to get to work by building houses as close as possible to where businesses are locating.

My rough calculations place the Unitary Plan's cumulative additional commuting distance at 2.5 million kilometres per day above normal suburban growth.

My rough calculations place the Unitary Plan's cumulative additional commuting distance at 2.5 million kilometres per day above normal suburban growth.

That sounds like little more than hyperbole, to me.
How you could possibly calculate anything near accurate for that in the case of Auckland with the limited data available to the average person?

The new exurbs are a known distance further away from the city (than the land where suburbs are now banned) and those exurbs have a known planned size. Multiply the additional distance by the number of people making the commute.

Okay. Like I said. An extremely inaccurate estimate.
Given that Auckland constitutes several distinct labour market areas, that's not at all a reliable method.

Oh wow, yes that is a big error. I was assuming people would only be commuting in from the external areas. I should have added in the new jobs Auckland is subsidising in those exurban "distinct labour markets" and all the additional distances people will have from the metro area outwards to the newly created jobs. I concede that the estimate is wrong and quite likely badly underestimates the actual figure.

Here have a look at a mapping of multi-nodal SF Bay area, look at all the cross traffic:

Not quite likely an underestimate, at all. You frankly have no idea which way the variance is.
Like I said, hyperbole. Comparing Auckland to SF is, again, the same thing.

So your only counter argument is to point out my methodology was structurally flawed by under-counting commuters. And you think, because I under-counted the the distances, the result is "hyperbole".