Fastest growing sub-region of Auckland needs to be unlocked

In 2013 I wrote a piece on how South Auckland was the rising jewel in Auckland’s Crown (South Auckland – The Rising Jewel in Auckland’s Crown). Fast forward to 2015 and it still is that rising jewel as well as the fastest growing area in Auckland. Some 50,000 homes and 35,000 commercial and industrial jobs are on the way to the South and that has certainly not escaped Auckland Council. However, it might have escaped the Government insofar as the transport investment needed to unlock that potential from those incoming homes and jobs.

This piece from PwC in their comments on Budget 2015 hits the nail on the head in relation to the need to unlock South Auckland.

NZ Budget 2015: Auckland housing – more land for development

[21 May 2015]

“We welcome the Government’s announcement that 450 hectares of Crown land will be brought into play for development of housing,” says Richard Forgan, PwC Budget 2015 Leader and Partner.

This is adding to the toolkit to address the issues of the Auckland housing market, but the underlying issue is population growth. Auckland’s population is surging on the back of movement from the regions and as the preferred destination of immigrants and returning Kiwis.

LVRs, Speculator’s tax

The Reserve Bank’s LVR approach – targeting loans made in Auckland and to investors rather than owner-occupiers – can be expected to contribute to restraining demand although it does so by making property ownership more expensive. Some of the speculation in the current market will also be damped a bit by the new ‘bright line’ tax on properties sold within two years, along with the requirements for foreigners to register with tax authorities. These can act in the short term, but do not address the key population growth which is driving demand.

SHAs, Crown land

On the supply side, Government is continuing to push Special Housing Areas hard and now bringing some of its own land into the frame making it available for developers. This follows models being trialled in Christchurch for accelerating affordable housing developments. It will be useful, but it is not large in terms of the imbalance between demand and supply.

What else could be done?

• Urban regeneration: Significant investment has been signalled via Tamaki Redevelopment Corporation, with the transfer and potential redevelopment of over 2,500 Housing New Zealand properties. Other parts of Auckland would benefit from similar approaches.
• Do density better: Restrictive rules around height and density in popular areas limit land supply, push too much responsibility onto greenfields developments to address the problem and actually financially penalise landowners in ‘protected’ suburbs in the long run.
• Open up the building supplies market: We are a small market for building products with an NZ-specific regulatory regime for product certification. As such, the costs of market entry limit variety for products and reduce price competition. The food we eat and the medicines that cure us are subject to a joint NZ/Australian standard so why aren’t building products?
• Align infrastructure investment with targeted housing areas: The Auckland Council is right. Housing without supporting investment reduces the attractiveness of greenfields sites to developers, which reduces supply. The success of the greenfields areas in the south of Auckland will be utterly dependent of the ability for the transport network to connect people’s homes to their places of work. The capacity driven by the City Rail Link, as well as the Southern Motorway projects are critical to the commercial attractiveness of these developments, yet the CRL is being delivered 5 years later than the Southern Initiative if the Government’s timeline for the project is accepted.

—-ends—-

Source: http://www.pwc.co.nz/media-centre/news-releases/auckland-housing-more-land-for-development/

I did see the bit about doing density better and basically how Auckland 2040’s want of NIMBY character protection in existing suburbs will actually harm them in the long run via larger than what should have been Council Rates increases. Increases either from increased costs of Greenfield (Sprawl) infrastructure or valuations rising faster than normal owing to an acute supply situation.

But the main point was PwC’s last bullet point on infrastructure investment especially in the South. Southern Auckland houses five of the ten Council’s Spatial Priorities areas under the Long Term Plan for residential and commercial growth. The South also contains the largest amount of Future Urban Zone for future urban development, the largest Special Housing Area to date at Wesley College with 2,000-4,500 homes due to be built there over 30 years, and the Drury South Heavy Industrial complex at 340 hectares ready to go for development. Southern Auckland also currently houses four of the five existing heavy industrial complexes, and the Manukau City Centre servicing the entire southern sub-region.

While the Southern Motorway starts getting upgraded between Manukau and Papakura in October (they should really push it to Drury and be done with it) that is only one half of the solution needed to unlock the South.

Thus I will show this graphic again:

Without the investment into rail (so paying The Iron Price (Message to Auckland Council on Transport Accord: NO!)) that includes the City Rail Link we are missing the second half of the transport solution needed to unlock the South. Yes the City Rail Link (should be called the Auckland Transit Link to emphasise it links transit right across Auckland) is in the City Centre but it gives the capacity boost across both the rail and bus networks and remember every person on a train or bus is one less car on the Southern Motorway. The CRL (ATL) also opens up the allowance for new transit links like the: Airport, Botany, and North Shore Lines to give us an expanded and more robust transit network to more people.

And again the more people able to use an expanded transit network means again fewer cars on that Southern Motorway so it is able to move those who need it (thinking freight here) can use it rather than sit and “park on it.”

Rail not only provides that second half of the transport solution (the Southern Motorway being the first half) for passengers but also for freight as well. Government needs to pay that Iron Price to make sure the rail network is also robust enough to handle the increasing amount of freight trains. More freight trains on the Southern Line means fewer trucks on the Southern Motorway. And so to assist here Government not only do we need the Auckland Transit Link but also the Third Main between Westfield and Pukekohe on the Southern Line. Industry is growing fast as is our population in the South. A robust rail system (which is the most efficient form of land transport for people and freight over longer distances (and sometimes shuttling) would encourage heavier industry to establish close to the line to allow sidings for freight loading as we see in Wiri and Penrose (Owens and Mainfreight).

But it all comes back down to Government investing properly in an integrated transport solution. Yes the Southern Motorway upgrade is going to be great (thank you Judith Collins) but the upgrade won’t be of full use if the rail upgrades do not happen at the same time. Both the Auckland Transit Link (CRL) and the Third Main on the Southern Line need to happen very quickly very soon. Otherwise we will never realise the full potential unlocked with the incoming 50,000 homes and 35,000 jobs to Southern Auckland.

Reference:

Rail patronage continues to go up allowing the subsidy to drop. Further emphasis that Government needs to invest in Rail NOW rather than this 2020 aversion.