Housing affordability is a frequent topic on the news these days. The New Zealand Productivity Commission has produced an indepth report on the topic, which is available at http://www.productivity.govt.nz/sites/default/files/using-land-draft-report.pdf
Ten themes covered in the report:
Theme 1 – consultation with the wider community on district plans, and the need for clearer communication on planning issues
Community consultation can and should influence the outcome of planning decisions, but how this is done needs to be carefully considered to ensure that the needs of the entire community, including the needs of future generations, are being met.
Existing homeowners are more active politically and have a disproportionate influence on local political processes, including local body elections and consultation processes. These existing residents may not wish to bear the costs of growth (such as congestion and increased Council spending on infrastructure).
One option to address the disproportionate influence of existing homeowners is the promotion of more sophisticated consultation and engagement processes that work hard to gain feedback beyond existing property owners and interest groups. The report states that while some councils go to considerable lengths to garner public interest and involvement in the development of city plans, this approach is not widespread.
In addition, the Commission heard that the public can find it hard to access current planning processes, with complex planning documents identified as a major barrier to engagement.
Theme 2 – household sizes/housing types
The number of dwellings required to house the population of New Zealand’s growing cities will increase more quickly than the population rate because of demographic trends towards smaller households. For this reason, making sure a choice of housing types is available at different prices, to cater for a range of income levels, is critically important.
However, in New Zealand, the average size of new dwellings has increased by more than 50% since 1989, and more than half of the new builds in New Zealand in 2014 were valued in the upper quartile of all housing stock, driven by the high price of land.
Theme 3 – efficiency of larger scale developments
Larger building firms are able to generate scale efficiency from building large numbers of houses on adjacent sites and by purchasing infrastructure and construction materials at a greater scale.
Currently the building industry in New Zealand is characterised by small firms that build just one or two houses a year. And the greenfield and brownfield land holdings are very fragmented, inhibiting large scale developments.
The Commission considers that there is a place for an urban development authority (UDA), or multiple UDAs, in New Zealand to lead and coordinate residential development at scale in both greenfield and brownfield settings.
Theme 4 – spatial plans
Many of the local authorities within the scope of the Commission’s inquiry into housing affordability have tried to overcome problems with the legislative system by developing non-statutory spatial plans. These spatial plans act as linchpins for other statutory plans and local authority strategies.
Spatial plans as they currently operate lack regulatory force and need to be translated into district plans and other regulatory instruments. A number of local authorities have expressed frustration at the statutory consultation and analytical requirements involved in translating spatial plans into RMA regulatory plans.
Speeding up the translation of spatial planning processes into land use regulation, without compromising analytical rigour or consultation, is likely to require the development of a new legislative avenue for larger or faster-growing cities. This could combine infrastructure strategies, longer-term transport planning and longer-term thinking about the growth of the city with the development of land use rules.
Theme 5 – recommended changes to district plans
The Commission has identified a number of regulations where the costs of district plan rules appear to outweigh the likely benefits. These have the effect of reducing the density of urban land use and increasing the cost of housing. The Commission recommends that urban territorial authorities:
Theme 6 – managing ageing infrastructure assets
Effectively managing ageing assets and funding the renewal of infrastructure are likely to be major challenges for councils in the coming years. The potential gains from unlocking spare capacity within existing infrastructure networks and using infrastructure more efficiently can be substantial. The Commission noted that Wellington City Council’s approach to asset management is a good example of this.
Theme 7 – staged provision of infrastructure
Staged construction techniques that lower the upfront costs and allow services to be scaled up as demand increases can help to overcome the difficulties of investing in infrastructure to support future growth. The Commission noted that the staged construction approach that Selwyn District Council uses is a good example of this.
Theme 8 – councils’ approach to debt
Debt is an important source of finance for urban infrastructure in high-growth areas. However, recent legislative changes have introduced a debt-servicing benchmark. The effect of this benchmark may deter a council’s appetite to take on prudent levels of debt.
Theme 9 – role of central government
Compared to other countries, central government has relatively little involvement in planning matters (including a lack of national guidance). The Commission is seeking views on the merits of the following potential measures:
Theme 10 – rating system
Two options to incentivise landowners to release and develop land: