Hayden Duncan, the head of New Zealand’s largest real estate company, Harcourts, has provided an interview to Interest.co.nz, in which he expressed alarm at Auckland’s expensive home prices and urged the city to build up instead of out in order to cope with population growth and improve housing affordability:

The average price of homes sold in Auckland by Harcourts last month was $721,553…

“There’s no doubt that’s a frightening number,” Duncan said.

“It’s not being driven by cheap money, it’s not being driven by reckless borrowing, it’s not speculation,” he said.

The main driver was the region’s population growth, coming both from within New Zealand and overseas, which was putting pressure on an “under invested property market,” he said.

He saw the solution as more intensive residential development rather than building more houses further out into the countryside.

We have to go up, we can’t keep going out, he said.

How exactly would restrict Auckland’s urban footprint and forcing more and more citizens to cram into the existing urban area achieve a more liveable city and more affordable housing?

Constraints on land supply were slammed by the New Zealand Productivity Commission, whose 2012 reportinto housing affordability cited a body of evidence showing that strict policies of urban containment and slow development approval times had adversely affected the rate of new home construction in Auckland, as well as significantly inflated land and housing costs. The Commission later followed-up with further research showing that Auckland’s urban growth boundary (called the “Metropolitan Urban Limit” or MUL) has significantly increased urban land prices in general, with land prices in the lower part of the distribution worst affected.