Tag Archives: Productivity Commission

Housing, Housing, Housing

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Is The Housing Situation in Auckland That Hard to “Solve?”

 

I see the Main Stream Media and Central Government have  got on the bandwagon about Auckland’s housing affordability situation. Much as I hate to say it, the MSM I am having no issues with reporting the news (when they do) but I am having issues with Central Government interfering in what is a debate between Council and its ratepayers.

I say that as two particular articles have cropped up from the NZH in regards to housing affordability:

First article

Govt to open up more land for houses

By Adam Bennett , Kate Shuttleworth

Prime Minister John Key says fast-tracking the supply of land will help solve the housing affordability crisis.

The Government is to work with councils to open up more land for development as it seeks to rein in New Zealand‘s high house prices.

Finance Minister Bill English will unveil the Government’s response to theProductivity Commission’s inquiry into home affordability after the Cabinet meets today.

He said it would act to address one of the main issues identified by the commission – a lack of land for building new homes – but the package was a broad programme.

“There isn’t really one simple initiative that changes the way the housing market works.

“It’s a very complicated beast so I wouldn’t get expectations too high about changing the trajectory of house prices next week.”

The commission focused on the need to free more land on city fringes for home-building, but Mr English said some of the best opportunities for development, particularly for low-priced housing, were within cities.

 

And the second article – actually an opinion piece

National’s affordable housing package lacks any substantial detail

By John Armstrong

Package? What package? No wonder National avoided over-selling the contents of their plan to make housing more affordable. The plan looks more like a rough first draft.

As Annette King, Labour’s housing spokeswoman noted, the Government’s long-awaited announcement was a combination of “considering new ways”, “undertaking more inquiries”, “doing more work” and “undertaking evaluations”.

The lack of detail serves to illustrate one thing: when it comes to increasing the housing stock, there is not a lot central government can do unless it is willing to spend big bikkies.

 

The two parts I am going to raise were both in bold in the first article:

“Prime Minister John Key says fast-tracking the supply of land will help solve the housing affordability crisis.”

Opening up supply of the land will help and was mentioned in the Auckland Plan, Long Term Plan and the Civic Forum (that I attended) for the Unitary Plan. What it needs is Council to follow through with the plans and get opening up that land now rather than later. So no need to worry John, already ahead of you there mate.

 

And from the Minister of Finance:

“The commission focused on the need to free more land on city fringes for home-building, but Mr English said some of the best opportunities for development, particularly for low-priced housing, were within cities.”

Well that seems to be more hitting the point on the head there. And the easiest way to accommodate what the Minister is saying is to:

  1. Zone appropriately
  2. Lower the cost of construction
  3. Lower the regulation hurdles to build

Get on top of those three points via adopting the Keeping It Simple Stupid philosophy and you might find the above points going some distance (but not all) into helping get on top of our housing affordability and supply situation.

 

I was pondering over my coffee this morning a few things. First of all acknowledging that a house is deemed affordable when the price of purchasing your house is not more than three times above the total gross income of the people going to be paying the mortgage for that house. Four times above the income is indicating stress but still okay, but anything above five times the income (Auckland is at 5.3-6.0 times) is deemed unaffordable and the situation needs to be addressed FAST!

The second thing I was pondering over was; who is actually getting in the way of solving the housing affordability situation here in Auckland. Traditionally I would stick my boot into our planners, however after the Civic Forum on the Unitary Plan last Saturday I concluded that actually our Planners can and are redeeming themselves here are actually not the ones in the way for the most part. I told our planners at the Civic Forum that the biggest hinderance to urban development were our planners and they simply need to get out of the road. That point still stands in my eyes but to a lesser degree now after talking to them at length on Saturday. Planners have their shot at redemption if they can work with the Local Boards and ratepayers in a multi-way partnership as urban development occurs. Saturday showed the potential there from our planners in working with that partnership with the Local Boards and the ratepayer and I am hoping that potential can develop and flourish (rather than go backwards and me having to stick the boot back into them again – which I don’t honestly want to do as I do that enough with our beyond hopeless CCOs).

Now I know there are planners reading this who I talked too  on Saturday and my message is this: Lets work together (planner, ratepayer and Local Boards) in developing an outcome forward for Auckland and its development through to 2040. The foundations were laid on Saturday and a lot of good faith and will was set at that Civic Forum. I extend my hand as a ratepayer to you – our planners as I don’t want to stick the boot in no more to you guys. I have ideas, you have ideas, we all have the same outcome as the Civic Forum showed, lets work together rather than apart. And that I make as a serious genuine offer. As for the ideas I have, you can read my rather extensive submission to The Auckland Plan which I will translate over to submissions for the Unitary Plan in due time. Oh and even though I am advocating the decentralisation of the urban development processes, Planners will be still flat-out if not even more flat-out as they buddy up with the Local Boards in delivering and providing advocacy during urban development phases ;) !

 

So then if Planners are not getting in the road, then who is?

Sorry hate to say it but it is our Councillors and Central Government Politicians and in my next post, I am dedicating my boot to you both and how YOU are causing the housing affordability situation…

 

For Auckland Council Planners Consumption – My Submission to the Auckland Plan, and due to be translated to the Unitary Plan submissions

 

 

Housing Affordability Debate

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Debate rages on both sides of the Tasman

 

Literally and metaphorically too!

Two particular pieces are attracting a lively Sunday debate on both sides of the Tasman today.

 

From The Age:

Housing glut hits suburbs

MELBOURNE‘S urban fringe has been swamped with 35,000 unsold homes, prompting warnings the glut could trigger a further slump in property values, and fuelling criticism of the Baillieu government’s ”crazy” decision to expand the city’s boundary.

The stockpile of unwanted housing in many of Melbourne’s newest suburbs has led to warnings by some planning experts that ”suburban ghettos” could emerge on the city’s fringe, creating a social divide.

Of the record 55,290 unsold homes in Melbourne in June – the highest number of any capital city in Australia – most were concentrated in about 50 suburbs on Melbourne’s periphery, where more than 60 per cent of all unsold homes in Victoria are located, according to data from SQM Research.

As demand has fallen over the past year, the number of outer suburban homes with ”For Sale” signs has jumped by almost 40 per cent.

Factors thought to be driving the surge in home listings include mortgage stress, poor infrastructure and transport services in outer-lying areas and limited local job opportunities.

”We are now building suburbs that are destined to fail and ensnaring people in an economic trap,” RMIT planning expert Professor Michael Buxton said.

Read more: http://www.theage.com.au/victoria/housing-glut-hits-suburbs-20120707-21o6k.html#ixzz20fOQWsZG

 

And from TVNZ‘s Q&A this morning:

Govt, councils told to do more on housing affordability

There is a warning that worsening housing affordability could lead to social strife if central Government and councils do not act now to bring costs down.

House prices have hit an all-time high around the country, particularly in Auckland, where the median price is around $500,000.

Speaking on TV ONE‘s Q A this morning, business commentator Bernard Hickey and Productivity Commission chair Murray Sherwin said councils and central Government need to take urgent action to bring costs down, whether that be introducing land taxes or opening up more land for development.

 

Ideas, solutions and criticism from usual corners are cropping up over this debate. Many (not all) miss the mark, others are spot on the money. I ran my own idea and alternative solutions using various external materials that were in my opinion on the money in addressing our housing affordability situation. You can read my submission to The Auckland Plan in the embed below:

 

I will be commenting on the second part of my comprehensive package in restoring housing affordability when I write my submission to for the Unitary Plan either late this year or early next year.

My catch line: “(Planning) Less is More)”

 

I will run full commentary back on this housing affordability debate when writing my Unitary Plan submission – as for now there is no point with The Auckland and Long Term Plans already adopted, and Local Government Elections next year. Oh and I know Central Government won’t be doing anything any time soon either…

So for now, the hamster wheel to continue squeaking on this one…

Cities Matter: POAL Commentary

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Phil McDermott Comments on the POAL Question

 

Phil McDermott, a Consultant in urban, economic and community development; has raised his own Port of Auckland Question in his blog. Well he rose a few questions actually:

  1. Critical Infrastructure at a critical location
  2. Rob Campbell’s concerns
  3. The Productivity Commission’s focus: governance issues
  4. Revolutionary change – saving sectors
  5. The Ports of Auckland Plan: back to the future?
  6. This is anything but conservative
  7. So why such a conservative response?
  8. Time for a rethink


I highly recommend reading Phil’s blog post [in the title above] as it is also full of hyperlinks to supporting websites that he used for his own post.

However, Points Five through to Eight caught my attention the most yesterday while having a read.
The Ports of Auckland Plan: back to the future?
The port industry in New Zealand may need a similar revolution.   I  looked for signs of revolutionary thinking in the POAL 2009 Development Plan.  All I could see is a commitment to more of the same.
The  analysis of future demand is central to any understanding of what the port expects to be doing, and how it might be doing it in the future. But there is no such analysis.  Instead, there is an extrapolation of TEU (20 foot container equivalent units) throughput and a conversion of this projection into capacity requirement.  A compounding 8% growth rate in TEUs handled from 1989 to 2007 was adjusted down to 5% as “a slightly more conservative long term growth rate” and used to project demand from 2008 to 2040.
[The POAL Development Plan is hyperlinked directly to the actual document]
“All I could see is a commitment to more of the same.” Rather depressing comment from Phil McDermott but sadly true even from my perspective (and that is even before I read the document I already knew status quo was prevalent).  Port of Auckland, its holding company Auckland Council Investment Limited, and Auckland Council itself seem either unable or unwilling to go beyond the status quo here. The POAL 2009 Development Plan while created before the Super City, is still there and being used by the three aforementioned organisations to push the current lame agenda of POAL expansion into the Waitemata Harbour.
So why such a conservative response?

POAL does acknowledge uncertainty around the projections which inform its assessment of expansion options.  But none of the options canvassed (see pages 11 -13 in the Plan) envisage relocation of component trades or operations, although inland ports will no doubt play a significant role in the streamlining envisaged.  Instead a combination of progressive reclamation and new stacking operations is proposed.  The need to deal with larger vessels is also acknowledged in new berth design parameters and a channel deepening programme.  

No doubt efficiencies can be imposed at the margins through investment in new equipment and changing working conditions.  But what will this achieve in the long-term?  And how relevant will it be to New Zealand’s – and Auckland’s – economy in 2030 or 2040?
POAL is proposing to cement in a development plan  which imposes a singular and historical view of its place in New Zealand trade, and in the central Auckland cityscape.  If we are to go with Rob Campbell’s analysis, productivity will be diminished because a relatively low cost activity will be expanded over high cost (reclaimed) land.
Its  hard to understand  how such a conservative approach to development can be founded on such a bullish vision of the future. Unless we actually suspend our belief in the projection, which seems like a sensible idea
Oh dear, missing the boat much Port of Auckland? As I said earlier it seems Council, ACIL and POAL are not thinking outside the square here and are contempt with the Status Quo option. Never mind, VOAKL is running full commentary on relocation options and will most likely revisit that subject in the near future.
Time for a rethink
I’m not sure that this path is one that the country or the city can afford, at least not on such an apparently thin analysis of future demand.
So it’s a wise move by the Council to omit the planned reclamation from Auckland’s Spatial Plan.  This is something that we need to think long and hard about.  We need to expand our thinking about the physical options facing trade in the northern North Island, for a start, rethink the role of the port in downtown Auckland, and perhaps heed the Productivity Commission’s advice regarding ownership and governance of the port industry.
My comment to Phil’s Blog sum’s up my feelings there:
It was a very wise move for Council to omit the planned reclamation from The Auckland Plan as we do need a long hard think and dialogue about the future of POAL.

On Monday just gone I was at the LTP Forums where I raised the POAL question similar to you Phil. I was reassured by the Deputy Mayor that an encompassing review was underway to the POAL question that I raised and you have raised in this post here Phil. I was also told that community feed back would be sorted after as well when the time arises in the review. Something I wait patiently for as I will file a rather extensive submission when Community Feedback on POAL is asked for.

Just say I have a close eye on POAL and have run exhaustive commentary on this POAL debate at my own blog site VOAKL including commentary on issues such as relocating POAL and the ownership model of the Port.

In a nutshell as you said, we need to have a good hard look at POAL and how it operates in the future. Do we bumble along the conservative line as highlighted above or try something just that little bit radical and visionary.
Our Port-Our Call?

So Our-Port, Our Call? While Main Stream Media might have lost interest and the issue simmer away under the radar of most, VOAKL keeps up the POAL commentary and work for those who are interested. I am quietly working away on renderings for the relocation site and new Cruise Ship Terminal down at the proposed Auckland Water-Frontier. However have to juggle work, family and home as well – so its slow going – but it is getting there.
So Phil McDermott raised his own Port of Auckland Question and provided some insightful analysis. We now are basically waiting for that Port of Auckland Review, Deputy Mayor Penny Hulse alluded to me at the LTP Forum last week. Once it is out, expect thorough commentary on it here at VOAKL – because:

MY PORT – MY CALL — YOUR PORT – YOUR CALL — OUR PORT – OUR CALL.

C- Grade Plan Blurs Vision of The City

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Herald on Sunday editorial: Compact city a blurred vision – Opinion – NZ Herald News.

 

The Herald on Sunday ran a tabloid version of what the NBR covered more “in-depth” in regards to Housing Affordability and the Compact City in Auckland. Titled (from NBR): ‘Housing crisis needs action not tinkering – commission‘, and a guest piece titled ‘How housing can be more affordable;’ the contributions look at why housing affordability is out if reach, why the Compact City is a joke, and to their credit – ideas on how to get on top of this problem.

I commend the Productivity Commission and their Chairman to step up and contribute their ideas to the public realm. Their ideas in a nutshell were:

Productivty Commission key findings

  • Home ownership peaked at 75% in the early 1990s but has declined to 65%
  • An immediate release of land for residential development would reduce pressure on prices
  • Tax policy had little to do with the recent housing boom
  • Auckland’s metropolitan urban limit is driving up land costs to 60% of the cost of a new home compared with 40% in other urban centres
  • Council height controls, boundary setbacks and minimum lot sizes are frustrating high-density housing developments
  • High section prices explain why new housing is concentrated at the top end – who is going to put a $150,000 home on a $300,000 section?The quality of rental housing is generally low but becoming increasingly expensive
  • Social housing policies lack cohesion and have shifted from addressing income issues, to complex social issues
  • Safe, comfortable and stable housing is important for social cohesion, family stability and individual wellbeing

I will have the full report embedded below – heads up its 342 pages long!

As for the Herald itself, lightweight but it expected. I will let you read it for yourself – should take a few minutes at most (time for the kettle to boil). As for why I call The Auckland Plan “C-” grade, you can read that HERE.

Now I do have ideas/policy platform suggestions of my own.

The main one can be found in my submission to The Draft Auckland Plan (now finalised and adopted) in regards to land use and supplemented with transport follow ups. Others can be found through coverage of Port of Auckland and The Auckland Water-Frontier (to which I will re-do (including links) the Port of Auckland Index over the coming week), my submission to the Draft Long Term Plan, and my logic and vision posts done just recently.

Just remember, ideas and solutions are fluid as the environment challenges changes are constant – so I do change my ideas to adapt to the environment challenges. 

The Productivity Commission Findings into Housing Affordability

Deputy Mayor as a Moment

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Productivity Commission’s report ‘ideological rubbish’ – deputy mayor | The National Business Review.

 

It seems the Deputy Mayor – Penny Hulse had a “moment” with her piece in the NBR about the Productivity Commission’s final report into Housing Affordability.

Quoting:

She says the commission ignored advice given to it by the council and it is clear the commission had not read the Auckland plan, which is why its findings are “ideological nonsense”.

Oh my – bit of a stern response there from our Deputy Mayor; to which actual Mayor Len Brown (who is on a Council Trip to China) said on Facebook that his Deputy Mayor was fighting the good fight. But indicative of pre-determination from our leaders without consideration, discussion and evaluation of the entire situation at hand.

Quoting again:

“There is ample room to redevelop land that gives people the chance to live near to employment, educational or lifestyle opportunities. ”It is that demand, along with population growth, that is driving the market, not the cost of land at the boundaries,” she says. 

Simply put no there is not for two reasons: first being the market is intervened quite harshly so it can’t balance through the demand and supply rules; second being our highly restrictive rules. A post was done on it by Josh Arbury and was used in my submission (referenced of course) and can be read HERE.

There is a way to get some costs down and that is to liberalise the planning rules (not the Building Code) so compliance costs are not so darn high. Opening land up and allowing the market to determine better residential and employment sectors would also go along way to getting costs down.

Getting costs down is just not about land release purely; it is also about keeping compliance costs through the planning rules (and development fees) at a reasonable level, allowing the market to act more freely in determining residential and business supply/centre locations, and good governance that works in keeping costs down (not up).

With our Deputy Mayor said though has pretty much put Auckland into damnation with the current thinking in Council unable or unwilling to:

To accommodate employment and economic activity in supporting a healthy social and physical environment for over two million residents by 2040. In doing so The Plan has to follow the objective of being: Simple, Efficient, Thrifty, and restoring Affordability to residents and businesses while still making Auckland ‘The Most Liveable City.’

 

I leave you with my section of my submission that covered how we can do our part in restoring housing affordability (links to external articles included)