NZ moves to unblock land supply

ScreenHunter_22 Mar. 06 18.40

By Leith van Onselen

Yesterday, New Zealand’s parliament passed new laws to free-up land supply and remove planning bottlenecks in a move aimed squarely at improving housing affordability:

The Housing Accords and Special Housing Areas Bill passed its third reading in Parliament today 63 votes to 56 and will come into effect Monday 16 September.

“This new law will deliver tens of thousands of new homes. The increased land supply will help take the pressure off the over-heated Auckland housing market and help the economic recovery. It will enable tens of thousands of kiwi families to realise the dream of owning their own home,” Housing Minister Dr Nick Smith says.

“The game changer in this new law is the unblocking of the constipated planning system. It will enable plan changes and resource consents to be processed simultaneously. It will over-ride Auckland’s Metropolitan Urban Limit. It will enable low-rise greenfield developments to be consented in six months, when they previously took three years, and low-rise brownfield developments to be consented in three months, when they previously took a year.

“The Auckland Housing Accord will be the first to be recognised under this new Act. It will enable the Auckland Council to get on and consent the least contentious 39,000 homes of the 400,000 identified in its draft Unitary Plan, rather than waiting three years for it to become operative. The Government is also having discussions with other councils in high cost housing areas on how the tools in this law can assist in addressing the housing supply and affordability issues in their communities…

“The new initiatives in this law are just part of the Government’s substantive programme on housing affordability. We also have work underway to reduce infrastructure costs on sections, address the costs of building materials, improve productivity in the building industry, and reduce compliance costs. Our next phase of RMA reforms will require councils to plan for 10 years of land supply for housing…

“Parliament’s passage of this new housing law today is a vital step to getting momentum and pace into residential housing development. Next Tuesday I expect the Auckland Council to adopt their Housing Accord and to notify their draft Unitary Plan. This new law takes effect the following Monday enabling the first Special Housing Areas to be considered. My ambition is to have sufficient Special Housing Areas approved by Christmas for at least an additional 5,000 homes.”

While New Zealand’s National Government and Reserve Bank are taking concrete action to improve the functioning of the housing system, Australia’s authorities refuse to even acknowledge that there are problems.

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Leith van Onselen

Comments

  1. If only Australian politians would follow New Zealands lead instead of just completely ignoring the issue.

  2. Perhaps the HIA will find a lot of its members moving across the ditch to find work as NZ heads in the right direction and the HIA’s own lobbying efforts prove so fruitless!

    Having said that, who knows what is possible once the election square dance is out of the way and those amendments have a chance to take effect.

    The LNP might find that economic circumstance requires closer attention being paid to the policy experiments of our Tasman Cousins.

    • Pfh007 … Don’t get me started on the HIA !

      There has been a very long history of lobbying failure on housing issues by this organisation, as I noted within “The Need for Clarity” back late 2007…

      http://www.demographia.com/p-hia.pdf

      Weep as you read the latest rambling “loser confuser” shotgun approach to the issue with “HIA’s 50 Policies for Action” …

      http://australianeedsbuilding.com.au/wp-content/uploads/2013/04/Election-document-2013-FINAL.pdf

      The key problems are land supply and infrastructure financing … as I made clear back here in New Zealand some time ago with “Focus on restoring housing affordability” …

      http://www.scoop.co.nz/stories/PO1305/S00325/focus-on-restoring-housing-affordability.htm

      The reality is the industry bodies are under the control of the industry protectionists, more interested in holding hands to control the market and shutting out the competition.

      There is a long history to this. Check out the United States National Association of Homebuilders 1959 Video, pressing for planning controls …

      http://www.youtube.com/watch?v=c1W3onge7BY

      The NAHB detested the founders of the modern housing production industry, Bill and Alfred Levitt. The above sugar-coated marketing, was nothing more than a covert (overt to me as an industry guy … it’s just so blatant) way of endeavouring to shut the Levitt type builders from local markets. In other words, deliberately politicising house building …

      http://tigger.uic.edu/~pbhales/Levittown.html

      Do read very carefully what the great Adam Smith (1723 – 1790) said over 200 years ago. It sure is remarkable that many still haven’t learnt how the REAL world works …

      http://en.wikipedia.org/wiki/Adam_Smith

      “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices…. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.”

      http://www.adamsmith.org/quotes

      http://www.brainyquote.com/quotes/authors/a/adam_smith.html

      The only real role of industry associations is for what is diplomatically referred to as “networking” … getting business … making sure you belong (mainly for the weak and incompetent) … getting to know rival firms well in case you get fired or wish to leave your current employment … that sort of thing.

      Their political lobbying antics are generally nothing more than public relations … or to put it more appropriately as Adam Smith did … a “contrivance” (thank you Adam … talk about a canny Scot … his wonderful powers of observation … in contrast to todays blind economists !), to create the illusion with the wider public, media and prospective members, they are “doing something”

      . Generally the gullible (particularly in the heritage media … where there is an abundance of them) fall for it. It is much easier for lazy journalists to feed us the media releases these organisations generate, so they can fill in the spaces between the advertisements.

      The industry and professional organisations have had no role to play in the policcy developments here in New Zealand. They are an irrelevancy. Just great for booze-ups though !

      Hugh Pavletich

  3. finally a bit of supply side, if the Auckland council act as well.There s so much useless “leisure farm land” around Auckland it s currently a pretty ridiculous situation.

    • Spot on Dam. The amount of land used in Auckland’s “lifestyle blocks” (essentially super low density housing) dwarfs that within the urban growth boundary. Funny also that Len Brown, mayor of Auckland City Council, lives in one of those “lifestyle blocks” but vigorously opposes sprawl and expects his fellow Aucklanders to live in expensive shoe boxes. He’s a hypocrite of the highest order.

      • GunnamattaMEMBER

        any thoughts on how long before this starts to show some impact on NZ real estate?

        I reckon its a really good move

      • he certainly is a hyprocrite of the highest order, but when you are feathering your own nest thats par for course. Auckland is surrounded by MASSIVE tracts of farm land crying out to be made available for residential land. Not just south either. North around Albany to Coatesville is crying out for further intensification.

      • Len Brown’s hypocrisy is even worse than you think. The recent Auckland Super City Plan rezonings for higher intensity conveniently miss his location by a few hundred meters both to the North and the South and the West.

        PLUS, the only two road investments in the entire region that he has ever endorsed rather than fighting tooth and claw, would connect his location with the main road South a lot quicker; and connect his location with the Auckland CBD a lot quicker.

      • Leith … as always the rules do not apply to the elites.

        Just the peasants are suppose to abide by planners rules and live in rat-holes.

        The British are of course “experts” in this regard.

        Hugh Pavletich

      • So are you still ‘impressed’, Hugh, ( your word from a post or two ago) with the way the John Key led Government is handling the situation, in light of your above comment? Nothing meaningful is going to happen to the New Zealand property market that will allow a price correction sorely needed to match the population’s capacity to pay for it without crushing debt. Surely, you of all people, after all these years of advocating change, and all your years of posting on sites like this, must have realised that by now? If you haven’t, then you too have been beaten down by politics and by time, and see what ‘changes’ that are occurring as better than none. When advocates for change, like you, accept miniscule tinkering as ‘good’ then what hope is there for meaningful change? None…..

  4. I had been calling a few land agents in NZ, but now I am just going to sit back and see what full out happens. Land bankers may start ditching land as supply gets unlocked, and home investors may start ditching investment.

  5. “This new law will deliver tens of thousands of new homes. . . My ambition is to have sufficient Special Housing Areas approved by Christmas for at least an additional 5,000 homes.”
    Some quick maths:
    NZ pop = 4M, growth rate about 0.8%, 4 months to Xmas.
    Therefore, NZ will have extra 9600 people dodging sheep come NYE.
    I cannot see extra 5000 homes making a lot of difference although it sounds good in principal.
    If such a thing happened here, how would FHB outbid investors?
    Given current tax regime, investors are always going to outbid home buyers.

    • It’s better than doing nothing, lets just see how it works out. It’s not perfect but at least a move in the right direction. We don’t dodge sheep by the way, we either eat them or go out with them 🙂

      • Well I should hope you take them out first before you get to third base, no?

        In all seriousness – good on your government – they’ve got more political balls than any politician I’ve seen in a very long while.

    • Agree fully, Jon, I am hugely skeptical about whether the government has in fact defied the vested interests with whom PM Key could be expected to have quite a sympathetic relationship. This talk of “targets” in numbers of houses sickens me. The only thing that keeps any market “competitive” is the continual freedom of entry into it by new players, no matter how much “cornering of supply” is done, there has to still be an opening. This is what guarantees that no-one even bothers to try and corner the supply.

      There is always the potential for a visionary capitalist to build a whole “new city” somewhere, attracting employers to it with very low land costs. As long as it is legal to do this on legally bought land anywhere. One irony is that “eco villages” that are springing up all over the USA, literally cannot be done in NZ. Basically a large lifestyle block with a small village on it. NZ’s zoning system means “one house, and that’s it, outside the UGB”.

  6. I am still skeptical. This is like acknowledging that import quotas are responsible for some consumer good being too expensive, and increasing the amount of quota being auctioned annually.

    The real solution is to abolish the quota system. NZ was brave enough to do this with most imported goods in the 1980’s. But meanwhile, it has introduced an absurd quota system for urban growth and now is far too reticent to even simply restore the pre-UGB, pre-impact-fee conditions.

    Ireland and Spain illustrated the possibility that large supplies of land, because they will still subject to supply chain quotas, can still be “gamed” to keep prices high even as “oversupply” of houses is occurring.

    My worst fear is that this “courageous” experiment will fail, and the conclusion will be the same as in Ireland – “our restrictions weren’t tight enough”…..!!

  7. Ino … Hon Dr Nick Smith is a very experienced and able politician. we are extremely fortunate in having him as Housing Minister.

    You may like to check out the Governments earlier clear statements last October … access via … http://www.PerformanceUrbanPlanning.org .

    With the Government and Reserve Bank determined to deal with this bubble fiasco … we have turned the corner in New Zealand.

    Hugh Pavletich

    Hugh

  8. MB readers might like to read this important article at Interest Co NZ “Auckland Housing Hothouse” …

    http://www.interest.co.nz/property/66252/auckland-council-lays-out-strategy-ramping-house-building-activity-region

    … and my extensive comment “The Housing Hell of Christchurch” well down the comments thread.

    The material needs to be read closely.

    There are major constructive and workable changes underway on housing / local government reform issues in New Zealand. Indeed … it is the world leader in this regard.

    Hugh Pavletich
    Co-author Annual Demographia International Housing Affordability Survey
    http://www.PerformanceUrbanPlanning.org
    Christchurch
    New Zealand

  9. NZ is fortunate to have Nick Smith as Housing Minister simply because he is a vast improvement of Phil Heatley; that’s it! Nick Smith isn’t a Hugh Pavletich or a PhilBest. That’s what’s needed if we are to make meaningful headway. Nick Smith will be as lacklustre as Graeme Wheeler is at the RBNZ. After long periods of indecision, token gestures are made to address a problem that is so glaring obvious that Blind Freddy can see them, and has done….for YEARS! More procrastination and tinkering around the edges isn’t going to fix the problem, Hugh. You know that. I do. Leith v O does. Supporting tokenism ( although I have no doubt you don’t see it that way, which is a shame) will get us exactly…nowhere new. It protects the status quo.

    • Janet … with the greatest of respect I think you are being unfair to the New Zealand Government and Reserve Bank.

      As you and others will be aware, politicians and others who get in the road of progressing these issues, certainly get it straight down the line from me.

      I can only speak as a former commercial property development practitioner, former industry leader and as the co-author of the Annual Demographia Survey ( http://www.demographia.com )and lead independent advocate on these issues.

      If it’s perfection you want, you will have to wait until you get to Heaven. Here on Planet Earth we do of necessity have to settle for progress … muddled progress when it comes to politics.

      The major things to look for are pressure and momentum. In my considered view, we have an abundance of both on these issues in New Zealand. Indeed New Zealand is the world leader in progressing these issues.

      Do go to the hyperlink on this thread through to the Interest Co NZ article “Auckland’s Housing Hothouse” and down the thread of that to my (really another article) comment “The housing hell of Christchurch”.

      Please do consider carefully the matters raised and the enormity of the task ahead.

      My considered view is that both the New Zealand Government and the Reserve Bank are very much on the right track.

      It is very rare indeed for me to be impressed with the establishment !

      Hugh Pavletich

  10. Exactly one year ago I was in NZ looking at an RE development proposal.

    I didn’t proceed with the investment because I couldn’t believe the quoted building construction costs in NZ. I was comparing these costs with another project (that I did proceed with)in Texas. I could not see any real differences in the ‘value’ of the final product (buildings) that would explain construction costs being more than double our Texas quotes. So I dug deep into the costing differences (very concerned that the Texas costs were underestimated)

    In the end it really came down to EVERY step of the process costing twice as much as Texas. There were particular stand out items, especially worth mentioning are the plumbing and electrical’s differences, But equally significant was the construction financing costs, these financing differences were in large part due to the unbelievably Long NZ construction schedules (6 months vs 2 years) for similar scale projects.

    Freeing up the Land supply is definitely a step in the right direction but there is a heck of a lot more that can and should be done.

    If I were an NZ politician I’d consider the following ideas
    – Abandon all requirements for Australian standards compliance, instead adopt a suitable mixture of US/European/Asian compliance
    – promote the concept of large sections of NZ residential housing being manufactured in factories and simply assembled on site (master this and there awaits a huge Pacific rim export opportunity)
    – Focus NZ tradies on being the most efficient in the world. This does not mean lower wages rather it really comes down to developing high throughput methodologies.

  11. I have copied China-Bobs important comments above, across to the Interest Co NZ article “Auckland Housing Hothouse” comments thread.

    In addition, I have a rather extensive comment on the Interest Co NZ thread with respect to the Housing Industry Association of Australia (HIA). To say Im “unimpressed” with this organisations lobbying on housing, would be an understatement.

    Because of the length of the comment it has gone in to the “Moderation Box” here at MB. Until it appears here, it can be read on the Interest Co NZ thread below … with China-Bobs copied comment and other stuff as well …

    http://www.interest.co.nz/property/66252/auckland-council-lays-out-strategy-ramping-house-building-activity-region

    Hugh Pavletich