Written by Vicki Holder
A turning point, it offers some radically new solutions to housing a population expected to increase by another 720,000, reaching 2.4 million in 30 years.
The aim is to accommodate Auckland’s growth by developing a quality, compact, urban form around activity centres close to transport options. The plan focuses on accelerating quality development at a scale that will improve housing choices, with more apartments and townhouses of different sizes and price points.
So far, the market has failed to provide those choices, so the plan calls for holistic thinking and action from local and central government, the development, design and construction industries and the financial sector, which all need to work together to find smart, practical ways to remove barriers and bottlenecks.
It speaks of attracting big development companies from overseas that have expertise in large-scale projects and will help build local skills, replicate overseas construction techniques, and use alternative products such as pre-fabrication to bring down the costs of construction.
Adopting these new approaches requires legislative, testing and accreditation mechanisms such as the Building Code to be more flexible and responsive. Our building industry must be more adaptable and move away from bespoke houses built on-site.
Renting must not be a second-rate option to home ownership, so private landlords will have to fulfil their responsibilities under tenancy legislation.
The plan also proposes trying different tax treatments for property investments, changing property sales methods and the financial sector’s lending and ownership criteria, and looking at how innovative building approaches can become mainstream.
Core Logic’s Nick Goodall says the overall idea behind the plan is commendable. “It’s on the right lines. It’s about intensifying the city so Auckland can handle more people rather than relying on car transport. Whether it can be enacted, I’m not so sure. We’ve arrived at a point after a lot of feedback from knowledgeable experts. This is a good starter.”
He does not believe the council, on its own, can build all the homes Auckland needs. “We have to call on the private sector, and central government needs to influence the shape of things as well. Everything has to come into line. In general, we’re making up for a bit of backward movement in an era of strong growth. We’re starting to make up for it now.”
The key, he says, is to enable the plan and make it viable for developers to make the best use of the land.
“From a building perspective, we need to see some details.”
Priorities, he says, include making the most of pre-fabricated and modular building systems – a way of allowing buildings to be built in a shorter amount of time.
“There’s definite proof that shows it can be done and we can scale up quickly. It comes back to KiwiBuild. That’s a significant focus for Auckland. Government has to have an influence, as well as council. It’s about how we can make the most of the Unitary Plan.”
He says there are challenges across the board which everyone has to embrace to make housing affordable – banking/lending systems, how insurance agents insure off-site, pre-fabricated modular housing, how banks fund apartments.
“Right now, it’s difficult to get funding for apartments, and banks aren’t doing more large-scale lending. But that’s exactly the sort of building we need to invest in. There are so many different tranches to this and we all need to think outside the box. We need separate funding for modular building and shared equity schemes. Some solutions are being worked on by some of the big banks right now. This is just the start of what’s going to happen.”
New Zealand Institute of Economic Research (NZIER) chief economist Christina Leung says, “Done well, this intensification of housing can mean more cohesive and connected communities, particularly in regard to the design of shared spaces. There is growing recognition that intensification of housing is needed for the housing shortage to be addressed within the land constraints. Consent issuance for apartments and townhouses is lifting in contrast to the easing in consent issuance for standalone houses. This will likely affect first-home buyers reconsidering what should be that first step on the property ladder.”
Although Sir Bob Harvey, ex-Mayor of Waitakere, commends Mayor Phil Goff for trying to sort out the culture of the housing industry, he has huge doubts around delivery.
“I can only look at the past and see paralysis by analysis. We’ve got to have these plans and I’m supporting them. But whether they signal delivery – maybe. Other countries around the world have planned ahead, with affordable, modular high-density housing. Auckland has been sitting on its hands.
“There’s plenty of housing around but it’s all $1, $2 and $3 million homes. It’s wretchedly indulgent. There are terrific young New Zealanders who aren’t near getting their first home."
“We’re in desperate catch-up mode because so little has been done in the last 30 years to plan the city’s housing. The Super City has been held hostage to the fabric of councils failing drastically, in the last 30 years, to realise the population growth ahead.
“The councils have ignored the warning signs from the 1990s of what was going to be needed for housing infrastructure. Right now, I think it only has a 50/50 chance of making the changes we need.”
Harvey recently met a large group of developers in West Auckland who were unable to get building consent to fast-track sustainable housing. With infrastructure and roading in place, they had spent thousands of hours and dollars trying to get consents to start building in July.
“Talk to developers and ask how they find the Auckland Council; they say, ‘bloody slow’. It’s about the culture within council. I’m not advocate of unsafe houses. But after the leaky housing thing, councils are risk-averse, and it’s in their culture to move slowly to make sure everything’s right because they’ll be sued. But there’s an urgent need for more houses and that’s why Phil Twyford announced his housing taskforce.”
Harvey is calling for sustainable, affordable housing that’s a different model, where your first home is a steel-framed, safe, warm and watertight kitset home.
But he thinks there needs to be a Royal Commission over the plan to drive it.
“It’s sitting there now and it’s already gathering its first layer of dust.”
Chief executive of the Property Institute Ashley Church, says the plan addresses most of the major challenges of intensification, “and most is taken from the Unitary Plan, so it’s pretty sound.”
He agrees we must be open to new ways of building more houses faster – which involves relaxing rules around foreign buyers, so we can borrow their expertise from both inside and outside the country.
“There are also social equity-sharing funds which go into markets around the world and are prepared to take lower yields because they’re doing social good. But it’s not the only answer. Banks need to relax their criteria. At the moment, they’re retrenching and there are issues there.”
Equity sharing will allow affordable housing as people co-buy their houses and retain a percentage of the equity relative to their portion, Church says.
He sees a vast array of living arrangements needed for the future. “Apartments are part of the intensification process, but they’ll be done in a more pleasant way.”
“The concept of physically going into work will change. Remote working will be far bigger. Then there’s artificial intelligence. It’s happening more in the manual space. As that improves, more sophisticated functions will also be carried out by machines as many jobs are replaced with new occupations.”
Leung adds that with the aging population and decline in the number of people getting married and having children, “we’re likely to see an increase in co-living arrangements and more housing choices for the elderly.”
And retirement living for active people will be more like resorts than retirement homes.
As he looks into his crystal ball, Church says that ironically Auckland will be more fragmented than before, with living consolidated around urban centres connected by great transport systems.
What does the plan mean for buyers and sellers in the future? In the past, the housing market has been determined by the laws of supply and demand. That, too, will change, says Goodall.
“In many ways, things aren’t like they were in the past: the triggers influencing the market, like KiwiBuild, the Unitary Plan changing the landscape, new tax laws, the foreign buyer ban, LVR changes and the ability to loosen or tighten them, the fact that banks are under greater scrutiny. There’s much more external intervention rather than simple drivers like wages, interest rates and available homes.”
Regardless of the changes, Church still sees the property market doubling in value every 10 to 12 years – with a caveat. As the gap between salaries and property values increases, he says, it will get to an unsustainable point.
“We won’t be able to pay a mortgage in a lifetime. As we get to that point 20 years away, the market will work that out. Something will put a brake on prices. There will be a better way of paying as whole new products are introduced. You just need to look at how airlines adapted by getting more creative to encourage air travel.
“The same principle will apply to housing as we introduce equity sharing, and different structural arrangements that enable you to buy, like leasehold and rent to own. There will be different ways of meeting the problem.”
Changes are necessary and inevitable. One thing that won’t change, says Church, is the whinging. It’s the same as when he arrived in Auckland as a young man in the 1980s.
“But it’s a far better city now. Auckland offers a fantastic lifestyle and it’s one of the most beautiful locations on the planet. I can only see it getting better. Yes, we’ll have population issues going forward. But ultimately, we’ll get there, I’m certain; it will be a great place in 30 years’ time.”