Is it an urban boundary 30-40km away that has pushed the price of very average houses in the Auckland isthmus’s eastern suburbs and the western fringe of the cbd over $1 million, and rising?
Apparently so. Politicians from all quarters want to remove it, although Housing Minister Nick Smith cautioned last week about boundary removal without ensuring appropriate infrastructure is developed.
Failure to get adequate infrastructure in place has been an important factor limiting greenfield projects, suburban development & city-centre intensification. The issue in all cases has been funding, it’s been an issue for decades and nobody has rushed to resolve it.
It could have been solved through bonds, which used to be part of local body financing, and a new finance structure established by councils through Local Government NZ should enable it.
In Auckland, infrastructure demands are enormous, both for new development and to expand capacity of existing networks, but ratepayers are loathe to increase their payments to the council for infrastructure that doesn’t directly affect them.
The debate is long overdue on how to fund infrastructure. Priorities for underground infrastructure, however, are in place through the Auckland Plan, approved in 2012 with updates from Watercare and the council’s internal stormwater department.
The metropolitan urban limit for the whole Auckland region has been in place for 23 years, and cemented in place in 1999 as part of a long-term regional growth strategy. The need to provide for growth was recognised, but the political structure meant the regional council’s primary concern was to prevent damage rather than to enable construction.
Expansion was provided for, but not to the extent required to meet sudden influxes of migrants, as happened in 2003-04 and is happening now. In the last 3 years New Zealand has been host a net inflow of 160,000 migrants, 74,000 of those settling in Auckland.
Such influxes suit economic priorities for consumer demand, not for steady, programmed expansion.
Another factor occurring internationally is investors’ acquisition of assets for their capital value potential, ignoring traditional measures such as income & yields.
In those circumstances, it’s not surprising that provision for steady growth hasn’t been working. First, because the provision was too inflexible; second, because population surges can’t be accommodated; third, because asset investors have turned investment logic on its head.
Now, because asset prices have risen exponentially, it’s not practical to impose a previously cheap pricing regime on development. To do so would throw local borrowers, and their lenders, into debt positions which they couldn’t escape. The answer to that is to raise the bottom pricing layer as well, which means everything else also has to rise, including fixed incomes.
In other words, inflation takes care of it, with some help.
The calls to abandon the urban boundaries are premature by a few weeks. Auckland Council has spent just under 6 years putting new, consistent planning structures in place for the whole region. The last piece of the jigsaw, the unitary plan, combines the old regional council’s land use regional plan and the 7 old territorial councils’ zone-based district plans into one, theoretically co-ordinated plan.
Auckland Council brought this plan into the public eye in June 2012, after city centre & waterfront masterplans were approved. The council finalised its recommendations in September 2013 and sent the package off to an independent panel headed by resource management lawyer David Kirkpatrick, who was made an Environment Court judge in the process.
That panel finished its hearings 10 days ago, but long before it got to the end it made it clear that it was thinking differently from the council about how the new rural:urban boundary system should work. What the panel proposes will be revealed in its recommendations back to the council, due to be delivered on 22 July. The council will decide by 19 August whether to accept the panel’s recommendations.
For over 2 decades, the power of decision on moving the old metropolitan urban limits was primarily with the regional council and is now with the unitary Auckland Council. The new council has been planning for change, and only now is beginning to push changes to urban land use, principally through its development-facilitating arm, Panuku Development Auckland; through the start of a fundamentally different transport system centred on the city rail link; and through prioritised underground infrastructure provision around the region.
As the unitary plan process began, Housing Minister Smith decided to fill in the 3 years before the unitary plan was to come into effect with the creation of special housing areas. He’s been ridiculed for the slow pace of housing development in those areas, and the number of approved development areas which have then been marketed for sale – without any development starting.
But in a place where fast-tracking is unusual, switching into top gear doesn’t happen overnight. Dr Smith’s ploy had an immediate intent of getting construction underway, but more impotently a longer-term intent of dismantling the cautious structures of the old councils.
In a release last week, he said: “I was given the housing portfolio in January 2013 and immediately identified Auckland Council’s metropolitan urban limits, set in 1993 when the population was half a million less than today, as a huge barrier to meeting housing needs both now and in the future.
“The Government’s housing programme has involved the systematic dismantling of Auckland’s metropolitan urban limit. I have used special housing areas to override the limits in the short-term while fast-tracking with the independent hearings panel a new plan for Auckland with adequate housing supply.”
The new unitary plan is only 6 weeks away from going to the council, and I’m confident it will provide a far more permissive approach to new housing because of the depth of analysis that has gone into the new plan.
“It would be counter-productive to ditch this work at this time with a simplistic approach of just abolishing city limits. We still need some rules to ensure new urban areas have appropriate infrastructure & services and that we make separate provision for industry from housing.”
On the way through that statement Dr Smith disparaged Labour & its housing spokesman, Phil Twyford, for not supporting Government thinking earlier, and Mr Twyford for insisting having no boundaries ‘will mean uncontrolled sprawl from Pukekohe to Warkworth’. Dr Smith welcomed Labour’s change in thinking.
In the unitary plan, Auckland Council has proposed urban boundaries around existing major urban areas, right down to some of the smaller settlements in the region, and has agreed to future urban zones being topped up through rezoning to ensure 7 years’ supply is available.
Opponents of having any boundary attribute escalating land prices in many fringe areas to the longstanding metropolitan limit and the ability of speculators to take advantage of that through landbanking. That position will remain so long as inadequate alternative supply is available, or perhaps through regulation.
But freeing up fringe land also comes at a price: Recent US research indicates that land well away from employment, which looks comparatively cheap, is no longer cheap when transport costs are included. Providing piping & services to sprinkled settlements is also not as cheap or efficient as moving suburbia outward in large chunks.
Work on growing employment alternatives needs to resume. Before the advent of the super-city, the region’s outer councils were working on ways to grow the business base they lacked, for both employment that would cut commuting and as a stronger rates base for council income.
Alongside the spread of business zones – which has been sorely needed for longer than there’s been any residential crisis – localised, suburban intensification should be provided for. It’s part of the unitary plan as proposed by Auckland Council, and likely to be accepted.
Intensification in outer suburbs is a useful way of offering residents more options without needing to be wholesale street-upon-street apartment blocks.
Whatever form new housing takes, infrastructure provision still needs to be prioritised, even if the strict boundary line goes.
12 May 2016: Whenuapai structure plan will be first under new land strategy
11 December 2015: Planning system is next Productivity Commission target
5 October 2015: Commission sends land for housing report to Government
10 August 2015: Council has forthright message for Government on land for housing
19 June 2015: Key points from land for housing report
19 June 2015: Commission looks behind high land prices
7 October 2013: From strawberry fields to urban zones
6 April 2011:
Transformation projects get council endorsement, but only in principle
8 March 2010: Council says 435ha MUL shift will create 30,000 jobs
22 May 2009: Waitakere councillor takes swipe at ARC over procrastination
6 March 2009: Council approves design guidelines for Massey North & Hobsonville industrial areas
3 September 2006: Draft business land strategy endorsed, final version out soon
27 March 2005: Waitakere wants 3 MUL expansions in growth plan
2 March 2004: Residential land supply falls below minimum threshold
2 March 2004: Vacant business land capacity falls 26% in 5 years
Attribution: Political releases, planning documents.