By Michael Reddell 19/04/2016 2

In the seemingly-endless housing supply debate, there is often a divide between those favouring greater intensification, and those favouring a larger physical footprint for growing cities. 

My own policy view is squarely in the “it should be a matter of individual choice, provided the infrastructure etc costs of development are appropriately internalized, and the rights of existing property owners are protected” camp (and yes, I recognize that the definition of almost every word in that statement could be extensively debated).

My practical prediction is that New Zealand is a society where most people will prefer to have a decent backyard (they don’t flock to high rise apartment buildings or town houses with tiny sections in Hastings or Timaru), so long as regulatory restrictions don’t make that infeasible.  It was quite possible 50 years ago, when New Zealand incomes were much lower.  There is simply no reason, in a country with this much land, why it shouldn’t be now.

Overseas comparisons

Apologists for the current disgraceful situation constantly cite Sydney, or Vancouver, or San Francisco or London, as if absurd regulatory restrictions in other places make it okay for us to mess up our housing/land supply market this badly. Others look to the experience across the huge range of US cities.

Someone drew my attention to the chart below, drawn from the Wall Street Journal’s economics blog, and on a day when the house is over-run with builders (and holidaying children), it seemed worth reproducing.


Cities with rapidly growing populations (those big blue circles in the bottom right) have seen little or no increase in real house prices over the period 1980 to 2010.  They made it possible to build, relatively easily, and in turn made themselves attractive places for people to live.

I don’t know how large the increase in Auckland’s “developed residential area” has been over 1980 to 2010, or even how to go about trying to measure it, but I’d be astonished if it was anything close to even 100 per cent.

Political failure

It is quite possible to accommodate rapid population growth without anything like the scandalous increases in real house prices we’ve seen in Auckland (or even, to a much lesser extent in many other urban areas in New Zealand).   Political leaders, of both main parties, who have failed to make it possible, posing a near-impossible burden on younger people in Auckland who don’t come from advantaged backgrounds, should really be held to account.

High house prices aren’t something to celebrate (NB Prime Minister)  –  and not even most existing home owners are better off, as they aren’t going anywhere –  but should really be a source of shame to those who rigged the market (or let the market stay rigged) and made it happen.

2 Responses to “Housing: what can be done”

  • Auckland has a specific geographic problem you fail to recognise – its split in half by a significantly large body of water. It is in fact two cities. This places very real limitations on the development of infrastructure and especially transport that in turn limits real mobility across the city. This in turn limits the realistic area growth for residential purposes – unless you accept that you will live and work on one side of the harbour you are faced with economically (and socially) crippling travel costs.

    The economic reality is that servicing a geographically flat, wide residential population is more expensive than servicing a high narrow one. This is both at a community and individual level – wide cities cost more to run and live in.

    Auckland already has increased significantly in the last 30 years. Vast tracts of development have occurred north of the old North Shore City, the entire south-eastern Manukau region was farmland until very recently, West Auckland has spread further west and has linked up with the old North Shore, land previously zoned and used industrially has become residential eg the Mt Wellington quarry. Like you I am unsure of the exact percentage, but you need to be willfully blind not to recognise the huge areas that these developments cover.

    The graph you reproduce is interesting, but more interesting would be a graph of total living cost vs population density – this is the real issue. Aucklanders who want to expand the city use historical ideals of density as the reasoning. They expect to have as close to the 1/4 acre paradise as they can get. This is unrealistic.

    Great discussion point though – thanks for the piece.

    • Useful comments thanks. I certainly recognize how much development there has been – but it clearly hasn’t been enough. It would be interesting to know the percentage.

      I’m somewhat skeptical of the importance of the geography. After all, there are flat cities abroad – eg Paris – with ridiculous prices, and actually price to income ratios even in NZ’s flatter cities look pretty bad by global standards

      My bigger issue re Auckland is that population growth is being supercharged by policy, even though there is little evidence of great long-term economic opportunities there. So my first best would be to cut back non-citizen immigration, but if we are going to have it, it needs to be easier to build (with appropriate road charging etc).