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8/19/2019 081 Housing New Zealand - Capacity and Feasibility Modelling _ MBIE - (David Hermans) _ Post Hearing Response
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BEFORE THE AUCKLAND UNITARY PLAN INDEPENDENT HEARINGS PANEL
IN THE MATTER of the Resource Management Act 1991 and the
Local Government (Auckland Transitional
Provisions) Act 2010
AND
IN THE MATTER of Proposed Auckland Unitary Plan Topic 081 –
Rezoning and Precincts (Geographic Areas)
STATEMENT OF EVIDENCE OF THE MINISTRY OF BUSINESS, INNOVATION ANDEMPLOYMENT (SUBMITTER NO. 6319)
15 MARCH 2016
Contact:
David Hermans
Principal Advisor, Auckland Housing
Construction and Housing Markets
Ministry of Business, Innovation and Employment
[email protected] 09 919 9323
mailto:[email protected]:[email protected]:[email protected]
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1. SUMMARY
1.1. This statement of evidence from the Ministry of Business, Innovation and
Employment (MBIE) addresses the matters being considered under Topic 081 -
Rezoning and Precincts (Geographical Areas). It has a specific focus on the outputs
of the residential development capacity modelling undertaken by the Topic 013Urban Growth Expert Conferencing Group (The 013 Group).
1.2. We have reviewed the reports of the 013 Group, and the related evidence provided
by Kyle Balderston and Doug Fairgray for the Auckland Council, Philip Osborne and
Tim Heath for HNZC, and Adam Thompson, Director of Urban Economics Ltd and
member of the 013 Group.
1.3. We are comfortable that the 013 Group’s ACDCv3.7 model results are sufficiently
robust to provide enough information to form a broad view on the development
capacity provided through the PAUP, and how it can be enhanced through
reconsidering the spatial application of zones.
1.4. We have concerns about what the model results reveal, and these fall into three
categories:
The overall quantum of capacity : We consider that feasible development
capacity provided by the PAUP for approximately 240,000 dwellings in existing
urban areas is insufficient to ensure Auckland has a competitive well-functioning
housing market and a competitive urban land market over the longer-term. A
market that has confidence in the sufficiency of future capacity and supply is
less likely to result in speculative activity, and will encourage development to
occur sooner rather than waiting for values to keep appreciating.
The spatial distribution of capacity : With the exception of the city centre and
some other centres, the feasible development capacity is mostly provided in
areas where land prices reveal lower relative housing demand, or which have
lower levels of employment accessibility. Because of this, we do not consider
that the PAUP currently provides a suitable spatial distribution of residential
capacity to best support either a well-functioning housing market or an
effectively-functioning urban economy in Auckland.
The distribution and mix of typologies, sizes and prices: The PAUP only
provides for 20% of feasible development capacity through attached housing
typologies, even though developers are currently building attached dwellings at
more than twice that proportion; a proportion that is projected to be maintained
over the longer term. These are the typologies more likely to result in smaller,
more affordable dwellings. The low capacity for medium-density typologies (an
under-represented typology in Auckland) is particularly concerning. Therefore
we consider the PAUP does not provide sufficient housing choices to deliver a
well-functioning housing market in Auckland.
1.5. Our analysis and views reveal that the PAUP as notified, even with the welcome
changes to residential provisions proposed by the Council in previous evidence,does not give us comfort that the PAUP will enable a well-functioning housing
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market — and by extension, an effective-functioning urban economy. We consider
this position lends weight to the need for further ‘up-zoning’ of geographic areas in
Auckland for more density.
2. INTRODUCTION
2.1. MBIE develops and delivers policy, services, advice and regulation to support
business growth and the prosperity and wellbeing of all New Zealanders. Housing
policy — and in particular, housing supply and affordability in Auckland — is a core
focus of MBIE and of the Government more generally. MBIE is working alongside
other government agencies, local government, the private sector, and non-
government organisations to enhance affordability, social housing and the quality of
the built environment.
2.2. A well-functioning housing market is important for both economic performance and
social wellbeing. High housing costs increase social inequality, reduce labour
mobility, divert investment from more productive economic activities, represent astability risk to the macro-economy, and — through the accommodation supplement
and income-related rent subsidies — have a direct fiscal impact.
2.3. While MBIE broadly has an interest in many aspects of the PAUP, housing is the
central focus of MBIE’s submission and evidence. This reflects the importance that
MBIE and the Government currently place on achieving housing policy outcomes,
and also reflects the nationally important role the Auckland Unitary Plan will play in
delivering housing outcomes.
2.4. MBIE’s interest in Auckland housing outcomes also reflects the important link
between a well-functioning housing market and the performance of Auckland’seconomy more generally. MBIE’s three key objectives are: more competitive
businesses; job opportunities for all; and affordable housing. Constraints on housing
supply and on housing choices can reduce employment accessibility, firm
productivity and performance (by constraining access to a larger labour pool), and
ultimately living standards. Auckland’s importance in the national economy (36.6%
of GDP in year-ended March 2015) therefore makes the performance of the city a
matter of national importance.
3. SCOPE
3.1. This statement of evidence addresses the matters being considered under Topic
081 - Rezoning and Precincts (Geographical Areas), namely the spatial application
of residential zones within the Auckland Unitary Plan, but with specific focus on the
outputs of the residential development capacity modelling undertaken by the Topic
013 Urban Growth Expert Conferencing Group (The 013 Group).
3.2. It builds on the primary submission that MBIE provided in February 2014, and on
the subsequent statements of evidence provided in December 2014 for Topic 013
(RPS Urban Growth), in September 2015 for Topics 059-063 (Residential objectives
policies and controls), and in February 2016 for Topic 080 (Rezoning and Precincts
– General). We revisit some key points from that evidence in this document wherepertinent.
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3.3. MBIE’s submission, this statement of evidence, and our participation in the
Auckland Unitary Plan hearings process have been informed by the whole-of-
Government submission from the Minister for the Environment (No. 318, dated 17
December 2013). Where possible, we have also sought consistency with other
government submitters, particularly Housing New Zealand Corporation (HNZC).
3.4. In preparing this statement of evidence we have specifically reviewed the reports of
the 013 Group, statements of evidence provided by Kyle Balderston and Doug
Fairgray for the Auckland Council, Philip Osborne and Tim Heath for HNZC, and
Adam Thompson, Director of Urban Economics Ltd and member of the 013 Group.
4. OVERVIEW OF PRIMARY SUBMISSION AND PREVIOUS EVIDENCE
4.1. In our primary submission from February 2014 we argued that the PAUP does not
back up its creditable RPS-level objectives with appropriately aligned policies and
rules at the ‘district plan’ level. In particular, the PAUP:
4.1.1. Does not provide sufficient capacity through appropriate zoning and density
provisions to meet Auckland’s forecast growth, particularly in locations of
highest demand; and,
4.1.2. Fails to free residential development from complicated policies and rules that
will create high transaction costs, thereby limiting innovation and
responsiveness of supply to demand.
4.2. We argued that in doing so the PAUP does not provide for the population growth
and changing household demographics and preferences that Auckland will face
over the next thirty years.
4.3. We noted that there was a deliberate ‘down-zoning’ apparent between the
provisions and zones contained in the Draft Unitary Plan (released by the Auckland
Council for public consultation in March 2013) and the version notified in September
that same year. This widened the misalignment between the strategy and the
detailed provisions. It also exacerbated the misalignment between the areas where
demand for housing is highest (as expressed through land prices) and the areas
where the PAUP provided for growth. In addition, we noted that an ostensible
‘design-focused’ approach to consenting medium-density residential development
was instead encumbered by inflexible rules, overlays and controls that would limit
housing supply and housing choices.
4.4. We sought that — where necessary to achieve alignment with the objectives of the
Auckland Plan and RPS sections of the PAUP — the zoning, overlays, development
controls and other provisions in the PAUP should be adjusted and amended such
that they do not constrain provision of sufficient residential development to meet
Auckland’s growth projections, and to proactively enable efficient growth in areas of
high market demand.
4.5. In our evidence for Topic 013 we re-stated our qualified support for the RPS-level
urban growth policies and objectives. We noted that notwithstanding the need for
sufficient peripheral greenfield capacity to increase housing supply and meet
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demand in certain sub-markets, managing towards an intensified urban form is
consistent with urban economic theory, with global patterns of urbanisation, greater
centralisation of employment in the growing service sector, and with the social and
economic choices and trade-offs that households make in a growing city. That is,
intensification is an efficient market response to rising land prices in areas of high
demand. We stated that the locations experiencing the highest land values, and byimplication the highest levels of demand, should be considered primary locations for
intensification, and therefore should be supported by plan provisions and zoning
that reduce development constraints.
4.6. In our evidence for Topics 059-063 we stated our support for the Auckland Council
evidence that sought changes to the PAUP to uplift development capacity across
the residential zones. In particular, we supported the Auckland Council’s proposed
amendments that sought to enable a significant increase in housing capacity in
Auckland by:
4.6.1. Removing restrictions on density and height within areas identified as
appropriate for intensification;
4.6.2. Clarifying and narrowing the purpose and application of the Single House
zone (SHZ); and
4.6.3. Rationalising development controls and assessment criteria to provide more
flexibility to developers while still achieving built character, quality living
environments and residential amenity objectives.
4.7. In that evidence, we also stated that despite the ostensible uplift in total feasible
development capacity generated by the Council’s proposed changes to residentialprovisions, we remained concerned that the modelled feasible capacity still does
not provide enough opportunities for attached, medium-density housing typologies
to meet underlying and projected demand. We stated that while we supported the
Council’s proposed changes to residential provisions, we considered more still
needed to be done, and that the main way in which capacity will be further improved
is through adjustments to the spatial application of zones.
4.8. In a statement provided for Topic 080, in support of HNZC’s evidence, we re-
iterated the Government’s interest in ensuring the Unitary Plan delivers sufficient
market-feasible residential development capacity in Auckland. We also stated that,despite the number of new homes consented in Auckland (9,200 in the 12 months
to December 2015) being already above the long-term average, and characteristic
of a residential construction boom, it is still not nearly enough to meet the new
household formation resulting from current and projected population growth. To
meet this ongoing demand, the Unitary Plan needs to provide for much greater
levels of both intensification and greenfield expansion than has historically been the
case under legacy plans. We also stated that the feasible capacity provided by the
Unitary Plan needs to be much greater than underlying demand, given not all
opportunities will be taken up.
4.9. The following evidence provides more detail about MBIE’s views on the final point above in the context of the 013 Group development capacity modelling exercise.
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5. DISCUSSION OF DEVELOPMENT CAPACITY MODELLING OUTPUTS
5.1. MBIE, alongside the Ministry for the Environment, acted in an observer capacity
during the 013 Group’s development of the Auckland Council Development
Capacity 2015 (ACDC15) model and analysis. We are grateful to the Panel for this
opportunity.
5.2. We consider the ACDC15 model provides a good basis for making a broad
judgement about plan effectiveness, and for estimating the general effects of further
changes to provisions or changes to the spatial application of zones.
5.3. We have reviewed the reports of the 013 Group, and the related evidence provided
by Kyle Balderston and Dr JDM Fairgray for the Auckland Council, Philip Osborne
and Tim Heath for HNZC, and Adam Thompson, Director of Urban Economics Ltd
and member of the 013 Group.
5.4. We note that in his evidence Mr Thompson raises concerns about the recent modelruns, in that they have been undertaken by the Council without the full participation
or peer review of some members of the 013 Group. MBIE has not formed a detailed
view on the specific methodological concerns raised by Mr Thompson.
Nevertheless, our confidence in the model results would be strengthened by the
knowledge that all 013 Group members, and particularly those with property
development and economic expertise, are comfortable with the methodology
applied in each application of the model.
5.5. Despite this, we are comfortable that the model results are sufficiently robust to
provide us with enough information to form a broad view on the development
capacity provided through the PAUP, and how it can be enhanced through thespatial application of zones.
5.6. As with our previous evidence, we consider that the modelling outputs should be
used with appropriate qualification. As the reports of the 013 Group state, the model
is a static analysis, with no feedback mechanisms. It does not factor in matters such
as ‘development chance’ and sub-optimal development occurring on sites (which
could reduce capacity), and the opportunities that can arise from land aggregation
and increased land values (which could increase feasible capacity). Mr Balderston’s
most recent evidence further clarifies the limitations of the model results: he
describes it as providing a starting point for making forecasts, but it does notconstitute a forecast in itself.
5.7. We consider it is useful to use the model outputs to understand the relative change
in market-feasible capacity afforded by changes to planning provisions and zoning,
and also to assess whether the overall modelled capacity is of sufficient quantity
and quality to more likely result in a well-functioning housing market and urban
economy. This suggests we should not place the emphasis on determining whether
there is an absolute match between plan-enabled feasible development capacity
and specific medium- or long-term demand projections and/or supply targets.
5.8. The latest version of the ACDC15 model (ACDC15v3.7) is described in theevidence of Mr Balderston and Dr Fairgray. It shows that the PAUP — with the
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modifications to residential zone controls proposed by Council in its 059-063
evidence — enables a commercially feasible development capacity of between
223,802 and 307,817 dwellings, depending on the scenario chosen (e.g. highest
return, lowest price, most dwellings).
5.9. We agree with the evidence of Mr Osborne and Mr Heath for HNZC that the filter for‘highest return’ represents the most likely market response to development
opportunities afforded by the PAUP. The ‘highest return’ scenario provides a
capacity of 239,682 dwellings, comprising (as outlined in the evidence of Dr
Fairgray) 30,533 apartments, 19,322 terraces or attached townhouses, and 189,827
standalone houses. References from here on in this paper to the ACDCv3.7 model
results are usually a reference to the ‘highest return’ scenario results.
5.10. Mr Balderston’s evidence also provides a spatial rendering of the results by
typology, including useful ‘heat maps’ that demonstrate the relative increase in
development capacity that the PAUP provides over existing densities. We have
found that the presentation that Mr Balderston and Dr Fairgray gave the Panel on 4
March 2016 also contains particularly useful information.
5.11. We recognise that the feasible development capacity described by ACDCv3.7 is a
significant improvement on the 64,000 commercially-feasible dwellings that the
original ACDC results indicated were available to the market. However, despite this
improvement, all of our original concerns remain as to what the modelling results
actually tell us. We note that some of these concerns appear to be similarly
reflected in the evidence provided by Mr Balderston and Dr Fairgray.
5.12. Our concerns about the model results fall into three categories:
The overall quantum of capacity
The spatial distribution of capacity
The distribution and mix of typologies, sizes and prices
The overall quantum of capacity
5.13. In our statement of evidence for Topic 080 we noted that, despite Auckland
currently consenting dwellings at above the long-term average, demand continues
to exceed supply. Our estimate is that the accumulated shortfall of dwellings (in thesense of a latent demand for households that might have otherwise formed had
sufficient housing been available) is likely to climb to over 30,000 by June 2016.
5.14. Statistics New Zealand projects that Auckland’s population will grow by a further
939,600 people by 2043 based on its high-growth scenario, and will have an
average household size of 2.7 persons. Combined with our estimated housing
shortfall, this suggests that the rough Auckland Plan estimate of 400,000 additional
dwellings being required over 30 years — or approximately 13,000 per year —
remains an appropriate yardstick. The Statistics New Zealand medium household
growth projection (736,100 additional people) may be the most likely scenario to
occur. In the context of zoning decisions, we consider there is little cost or risk to
erring on the side of over-capacity, particularly as it can help reduce land
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speculation by reducing perceptions of artificial scarcity. We also note that at the
moment Auckland’s population is growing at a rate greater than the Statistics New
Zealand high projection, with 43,500 people added in the year to June 2015.
5.15. The ACDC15 model focuses on the existing urban area, within which the Auckland
Plan and PAUP RPS-level growth strategy suggests 60-70% of Auckland’s dwellinggrowth will, or should, occur. This suggests a required capacity of 240,000 to
280,000 dwellings in this area, with approximately 120,000 to 160,000 dwellings
occurring in new greenfield areas and satellite towns. We note that despite this
being the agreed urban growth strategy, the ‘70:40’ strategy is broadly consistent
with what urban economics tells us that a relatively unconstrained urban land and
housing market might otherwise deliver.
5.16. We note that the evidence of Dr Fairgray tends to focus on supply and demand
dynamics over the next ten years, out to 2026, rather than the 30-year horizon of
the Auckland Plan and PAUP RPS. We concur that projecting supply and demand
accurately beyond 10 years is difficult, given the uncertainties around market
conditions, land prices, and the nature of demand. The following graph illustrates
the nature of the problem, where the red-dashed line represents projected demand
for housing (based on the medium-growth) scenario and the bars represent known
Crown-led and private-led residential developments. You can see that the growth in
known development plans rapidly falls away after about 5 years, leaving the
shortfall to be plugged by developments not yet known or imagined:
5.17. It is true that as land prices increase, and as public investment in transport
infrastructure and other amenity-enhancing investments bear fruit, then more areas
will become sufficiently market-attractive over time to increase the feasibility of
development. It is also true that as the Unitary Plan is reviewed after (or within) the
statutory 10-year period required by the Resource Management Act, then additional
areas can be zoned for higher densities and yield. Nevertheless, for the purpose of
assessing the sufficiency of development capacity provided by the Auckland Unitary
Plan, we prefer the larger demand projection provided by the longer 30-yeartimeframe. This is for the following related reasons:
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5.17.1. We consider a well-functioning housing market requires a large number of
potential development opportunities to be available, so that developers and
prospective homeowners have a wide variety of choices, and so that
downward competitive pressure is applied to land prices across the city. If
the market has confidence in the sufficiency of future development
capacity and supply over the long term, then this would help reducespeculation-driven price increases, as well as encouraging landowners to
develop their land sooner rather than hold out for higher prices later (i.e.
land-bank). We note that 240,000 dwellings is approximately equal to, or
slightly less than, the 30-year demand projection, and only about 200% of
the 10-year demand. Notwithstanding the additional opportunities that may
arise over time, this would require every currently-feasible development
opportunity to be taken up within 30 years to the maximum feasible
capacity of each site, or for every other opportunity to be taken up over a
10-year period.
5.17.2. In addition, given ‘development chance’ — that is, the observation that the
owners of feasible sites may not wish to realise the development potential,
or may wish to develop to a sub-optimal density for lifestyle reasons —
then the feasible capacity in existing urban areas needs to be significantly
more than projected demand in order to ensure enough redevelopment
opportunities are realised. Focusing on the longer-term demand
projections as the benchmark provides a larger figure to aim towards.
5.17.3. Perhaps more importantly, we consider that focusing only on the capacity
required over ten years risks foregoing future redevelopment opportunities,
by locking in sub-optimal housing typologies and sizes which will not besubsequently redeveloped within the 30-year horizon of the Unitary Plan.
For example, we consider there will be scenarios where a market-attractive
area has a constrained zoning, but where the economics could feasibly
support development at higher densities (say, medium-density apartment
typologies). The low-density development may still be considered feasible,
and there may still be sufficient demand for some wealthy households to
purchase the resulting expensive, large houses. If the area has a less
constraining zoning, the higher-density option that yields a greater number
of dwellings may provide the higher development return. However, the
zoning precludes this option, and pushes developers towards the sub-optimal outcome. Re-zoning the area in 10 years’ time could be a fruitless
exercise given the lower-density development that occurred in the interim
will have many more decades of economic life before it is suitable for
redevelopment once more. This dynamic, experienced across enough
areas, could exclude a large number of current and future redevelopment
opportunities if the Unitary Plan is too conservative in its residential zoning.
It distorts investment incentives, affects productivity on that investment and
carries real economic cost.
5.17.4. We also note the importance of having more than 10 years’ worth of
dwelling capacity in a plan even with a 10-year life span. Even if the PAUP
had sufficient capacity for 10-years’ worth of household growth, by the
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ninth year of its life there might only be one year’s worth of that capacity
left. The market may anticipate the shortages in capacity and supply that
could occur through such an approach, and reflect this through unhelpful
land-banking and higher house prices. In this regard, we note that the
Auckland Plan calls for the Unitary Plan to have 20 years’ “forward view” of
housing supply.
5.18. Given the above discussion, we consider that the feasible capacity for
approximately 240,000 dwellings provided by the PAUP, according to the
ACDCv3.7 outputs, is insufficient to ensure Auckland has a well-functioning housing
market and a competitive urban land market over the longer-term.
The spatial distr ibut io n of capacity
5.19. As we have noted in previous evidence, increased prices are both a signal to use a
resource more efficiently (in the example of land values) and to produce more of a
good or service (in the example of houses). In urban areas, these dynamics playout in tandem — increased land values and house prices will lead to intensification
of the land-use, by increasing the ratio of dwellings to land area. Land values are a
clear indicator of the demand for that land, and thus the urban locations with the
highest land values are usually by implication the areas with the highest levels of
housing demand.1
5.20. The high demand is usually explained by proximity to and/or accessibility to
employment opportunities, urban and natural amenities, and transport links. In an
Auckland context, this is easily revealed through land-value maps which show the
highest land values in the central isthmus and coastal areas:
Auckland land value ‘heat map’ (source: Auckland Council GIS)
1 We note that whether that underlying demand is being met or not could be determined by examining
improvement values. You would expect that high value land would be used more intensively (by way of greater
improvements to land) and provide the highest economic returns. The ratio of improvements value to land
value, therefore, can signal the areas with the highest levels of unmet housing demand. High value land areas
with relatively low improvements value to land value ratios might indicate that land supply is particularlyconstricted in those areas. We haven’t had time to undertake this analysis for this evidence.
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5.21. These high-value areas are therefore the primary locations for intensification, and
should be supported by commensurate plan provisions in order to support an
efficient and well-functioning housing market. In contrast, intensification is less likely
to be viable where land is cheaper, even if planning provisions enable it to occur. Mr
Balderston notes this in his evidence, where he states “denser developments are
able to moderate the cost of new floorspace on expensive land (compared to lessdense developments) but are more expensive on lower value land”.
5.22. From MBIE’s perspective, reducing the rules that constrain residential intensification
in these more in-demand areas is desirable not just from a narrow housing market
perspective; it also speaks to our interests in the efficient and productive functioning
of the Auckland economy, and the opportunities that brings for all its current and
future residents, and for New Zealand.
5.23. Auckland benefits from the advantages that cities bring in terms of scale, diversity
and specialisation. Because of its size, and because of agglomeration economics
that work in its favour, Auckland is on average more productive than the rest of New
Zealand. Its economic performance will be increasingly important for New Zealand’s
future wellbeing. But Auckland’s success and advantages rest on the ability for its
firms and people to connect easily with one another in the region: for firms to be
able to maximise the number of skilled workers they have access to, and for people
to be able to maximise the number of employment opportunities, and opportunities
for specialisation, that they have access to. Accessibility, therefore, is a key
component of city performance, and economic and social wellbeing.
5.24. The Auckland Transport Alignment Project (ATAP) is an ongoing collaboration
between central government and the Auckland Council. The ATAP FoundationReport was released in February 2016, and amongst other things revealed that
access to employment in Auckland varies significantly by location and declines
comparatively rapidly beyond the central area. It notes that “by 2046 more than a
million people will be living in the western and southern parts of Auckland, nearly
half the region’s population. However, these areas see relatively little improvement
in their access to employment over time, particularly by private vehicle. The wider
implications of these areas being at least partly excluded from the benefits of
Auckland’s expanding employment base over the next 30 years are potentially
significant, particularly given they include parts of Auckland with higher levels of
deprivation, as well as a number ofkey future urban growth areas.”
5.25. This reveals a transport investment challenge for central and local government,
which ATAP is focused on solving, but it also reveals important information about
the preferred locations for residential growth from an employment-accessibility
perspective. In contrast to areas in the South and West, the report notes that
“access to employment by both car and public transport for those living in the
central (isthmus) part of Auckland appears to improve throughout the next 30 years,
reflecting the general growth in employment as well as its projected centralisation”.
5.26. This finding contrasts with the spatial rendering of the ACDC15v3.7 results and the
accompanying ‘heat maps’ provided by Mr Balderston. In Mr Balderston’s own
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words, they show that the development capacity constraints in the PAUP resemble
a “donut with a candle in the middle”:
Extracted from the Evidence of Kyle Balderston for Auckland Council
5.27. The results reveal there is feasible capacity provided for standalone dwellings in a
large number of more peripheral suburban areas, particularly in the southern and
western parts of Auckland, and there is much feasible capacity for higher-density
apartments in the central city area and in Takapuna and some other centres and
corridors. However, there is very little feasible capacity in most of the more central
isthmus locations that, from the land-value and employment accessibility
perspective outlined above, are the most desirable areas to be focusing
development opportunities. This reveals that large parts of the central area have a
constraining single-house zoning as well as restrictive heritage and other overlays
under the PAUP.
5.28. With the exception of the city centre and some other centres such as Takapuna, the
ACDCv3.7 modelling reveals that development capacity is mostly provided in areas
where land prices reveal lower relative housing demand, or which have lower levels
of employment accessibility. Because of this, we do not consider that the PAUP
currently provides a suitable spatial distribution of residential capacity to support
either a well-functioning housing market or an effectively-functioning urban
economy in Auckland.
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The distr ibut ion and m ix of typolo gies, sizes and p rices
5.29. The ACDC15v3.7 modelling reveals that the PAUP provides a lot of feasible
capacity for standalone houses in many suburbs (80% of feasible capacity), a lot of
capacity for apartments in the city centre and some other centres (12%), but very
little in the way of capacity for terraced housing and other attached, medium-densitytypologies (8%):
5.30. We do not consider this is an accurate reflection of the mix of current or anticipated
demand for these typologies. Nor does it reflect the Auckland Plan growth strategy,
which expects that around 60% of all new dwellings will be attached if the Council
achieves its strategic aim for 70% of new dwellings to be supplied in existing urban
areas. In that scenario, the Auckland Plan calls for an average of over 8,000
attached dwellings per year over 30 years.
5.31. In our evidence for Topics 059-063 we highlighted the third National Construction
Pipeline Report, produced for MBIE in July 2015 by BRANZ. This forecasts 94,000
new dwelling consents in Auckland between January 2013 and December 2020
(about 13,000 a year), but importantly it projects the number of multi units (attached
typologies such as terraces and apartments) to grow to over 6,000 a year, to be
almost the same number as attached dwellings in 2020:
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Number of consents for detached and multi-unit dwellings in Auckland
5.32. In our previous evidence we also showed that the rate of building consents for
attached dwellings in Auckland has grown rapidly since 2013, and was about 3,000
in 2015 — as seen in the building consent data from Statistics New Zealand below:
5.33. Since highlighting that data we can confirm that this upward trend is continuing, and
in the three months between October and December 2015 1,281 dwellings in multi-
unit buildings accounted for 47% of all new dwellings consented in Auckland.
5.34. In contrast to the above figures, the ACDCv3.7 modelling reveals that the PAUP
only provides for 20% of current feasible capacity through attached typologies, even
when developers are currently building attached dwellings at more than twice that
proportion (utilising legacy plans and special housing areas), a proportion that is
projected to be maintained over the longer term.
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5.35. The Housing We’d Choose Study undertaken for the Auckland Council in 2015
confirms what has been observable across Auckland for some time: that people are
willing to trade off house size for location, affordability and quality, and that there is
an under-supply of quality medium- and higher density housing in most Auckland
suburbs. Although it’s true that buyers show a preference for larger homes (and
large sections) wherever possible, that preference is still constrained by what theycan afford.
5.36. These typologies are more likely than standalone houses to be smaller and more
affordable, given that land price makes up a lower portion of the overall house price,
something that can hold true even when the house is located in a more desirable,
higher-value area. They are also a typology that are in increasing demand from
renters and investors, first-home buyers, and elderly households wishing to down-
size but remain in their familiar neighbourhoods. The low capacity for medium-
density typologies (an under-represented typology in Auckland) is particularly
concerning. This is the typology that best suits the more central suburbs outside thecity centre.
5.37. Certainly, when looking historically, the fact that new homes were smaller and a
much greater proportion were priced below the median value of existing stock
suggests that the residential construction market once supplied significant demand
from first home buyers and less wealthy households. As there is little to suggest
that this market has disappeared, tapping this latent demand once more by
removing restrictions on smaller, denser dwellings (which can also provide greater
returns for developers) would increase the breadth of the target market for
residential construction and thus increase the likelihood of supplying sufficient
additional housing.
5.38. Our analysis of the ACDCv3.7 results reveals that the PAUP does not provide
sufficient capacity for medium-density and other attached typologies to meet
projected demand, and as a result does not provide sufficient housing choice to
deliver a well-functioning housing market in Auckland.
6. CONCLUSION
6.1. The analysis and views above reveal that the PAUP as notified, even with the
changes to residential provisions proposed by the Council in previous evidence,
does not provide sufficient feasible development capacity to give us comfort that awell-functioning housing market — and by extension, an effective-functioning urban
economy — will result. We consider this position lends weight to the need for further
‘up-zoning’ of geographic areas in Auckland for higher density. Alongside the well-
managed greenfield expansion that the PAUP (and the Council’s Future Urban
Land Supply Strategy) promises, this will ensure there is appropriate balance and
choices in Auckland’s housing market.