Intensification eases housing affordability in Auckland

Auckland Council Chief Economist says that slower increases in housing costs are ‘the fingerprints on a smoking gun’ proving upzoning improves affordability

Nearly eight years after the Auckland Unitary Plan was implemented, new research suggests that its regime of greater intensification has alleviated even worse housing affordability problems in the City.

But in the wake of a government change which brings a new legislative approach to housing, what can Auckland expect from the next eight years?

In research published in Auckland Council’s Economic Quarterly, rents and house prices in Auckland were found to have been on a lower growth path than New Zealand as a whole since 2017. 

The Big Bang Change

Auckland has had a 22% increase in rental prices since 2017, compared with a nationwide increase of 34%, and 36% in Wellington. Auckland Council Chief Economist Gary Blick put this down to the impact of a “big bang, bold policy change,” the Unitary Plan, which allowed for increased housing capacity in the City.

He said that one lesson to learn from this was abundant capacity can have a very real impact on the affordability of housing, and therefore people’s quality of life.

“This does not mean that Auckland is affordable; we have got a long way to go,” he said. The median house price in Auckland is eight times the median household income.

“But we have learned that the Unitary Plan is a powerful lever.”

University of Auckland research found about 22,000 new homes consented between 2016 and 2021 were a direct result of newly allowed intensification. That represents roughly a third of all of the homes consented in residential areas during that time.

“That is a material and significant number of homes when you put it in context. You do n not often see such clear policy impacts,” Blick said.

Townhouses top in Auckland

On a per capita basis, Auckland has beaten out New South Wales and Victoria when it comes to the amount of new home consents in recent years.

The engine driving this new development is the rise of the townhouse – multi-unit dwellings and higher-density homes that allow people to use less land while living closer to amenities. Since 2017, townhouses have overtaken houses as the leading type of consent granted in the region.

In recent years the future of intensification in Auckland has revolved around a bilateral government policy opening up high and medium-density development across the city.

However, the National-led government has proffered something of a U-turn on this, suggesting that Councils will soon have the ability to opt out of medium-density standards provided they zone housing to meet the next 30 years of demand.

Last month, Housing Miniter Chris Bishop told the New Zealand Planning Institute that the Bill allowing this would be introduced to Parliament later in the year.

“The Bill will make the medium-density residential standards optional rather than near-mandatory for Councils and require Councils to ratify their use. It will also require Councils to live zone 30 years of growth and strengthen the National Policy Statement on Urban Development, particularly around mixed-use zoning. There will likely be other changes as we design the legislation.”

That means the exact details are yet to be ironed out – however, a distaste for medium density and an increased appetite for expansion at the city fringe is apparent.

Blick said that greenfield expansion could be a part of the mix, although there were challenges around lead times for new infrastructure.

“It is not up or out, it is a mix of both. Although we do always need to respect household preference, and while it does vary, the weight of that preference seems to be taking up closer to things people need to do every day,” he said.

Meanwhile, in a survey of the growing library of literature on upzoning, urban data scientists Dr Kade Sorensen and Dr James Allan Jones said the research showed how land use policy decisions can have powerful demand and supply side effects on land and housing markets.

They said that when zoning policy was relaxed, housing supply became more flexible and able to respond to demand.

“This in turn benefits current and future residents’ wellbeing and enhances Auckland’s competitiveness, nationally and globally,” they said.

Matthew Scott is a Reporter at Newsroom writing on inequality, MIQ and border issues based in Whangarei, Northland, New Zealand. The above Report and pictures have been published under a special agreement with Newsroom.