A problem: our democracies are substantially/mostly fake. I say this as a Canadian, whose governments (and "opposition" parties) should be doing (or insisting we do) what has been done here....but will not, nor will they explain why they will not.
To achieve what you say, the entire structure of government as it is must be overthrown, at least in some cases.
Excellent article. I used to live in Wellington 30 years ago when it was cheap, grungy and fun. Now it’s expensive but it’s amazing how few new buildings have appeared since then. Hopefully the new district plan will begin to address the chronic housing shortage.
Prices in Auckland for rents fell over the last few years because supply exceeded demand, maybe due to intensification, but more probably pandemic migration restrictions. Many existing central apartments remained empty without overseas students, their normal customers. However prices in Auckland are rising again because migration is causing increased demand and those central apartments are full. There are a lot of moving parts in Auckland, the report you quote appears to have a lot of wishful thinking, correlation is not necessarily causation.
I am trying to get more data on inventory over the last 8 years to get closer to the reality, but this report has too much wishful thinking.
I live in Auckland. The recent flattening of house cost rises is due to increased, high interest rates (7.5%) and limits of affordability. Upzoning has not made houses cheaper, for example in an intensified area near where I live 8 Doreen Williams Way in Glenn Innes (a low socio economic area) sold for NZ$955,000 in March 2022. It has a floor area of 71 m2 and a land area of 105 m2. This cost is a similar price to a larger house and land a few years ago. Speculators are buying up land and making huge profits on the intensification. What was a "normal" house with a bit of land is now unaffordable ie. $1.8m as developers can build 3 or more houses where there was only one. Building 3 levels to within 1 m of the boundary of other properties.
So the experiment is forcing us into very small houses on small plots of land at the limits of affordability. The price set is not the cost but set on a sales comparison basis and so houses are no cheaper. Developers love it.
I am a manufactured home dealer/ developer in California. I can have homes built in our Silvercrest plant in Corona CA. and ship them to New Zealand. It is very cost effective to have them built and shipped from a factory. I have been a general contractor for 35 years and a dealer for 25 years. If you would like to contact me, my email address is John@Myprefabhomes.com Thank you
Hi Joseph - thanks for the article, you might find the following two articles interesting, a response to the NZ study written by Cameron Murray (Australian Economist), who recently released a good book on housing in the Australian context titled (The Great Housing Hijack: The hoaxes and myths keeping prices high for renters and buyers in Australia):
Nice article. However, I think you're incorrectly assigning New Zealand's mini crash in house prices to these regulation changes. Increasing the supply in housing will put downward pressure on house prices in the long term, but the recent mini crash was due to a sharp interest rate increase and a partial burst of a bubble that happened before and during COVID lockdowns.
Excellent. How did they achieve permitting approvals throughout the upzoning? Legislatively this looks amazing but practically I see issues implementing something similar where I am due to bottlenecks with permit issuance.
permits have been a major bottleneck and local authorities have consistently failed to meet statutory deadlines, set by the national goverment, which require a decision within (iirc) 60 days. in spite of all that they are obviously permitting a lot more now than several years ago. it has required local authorities to continuously expand the size of their permitting departments.
Fundamentally it's an arbitrary line—I think the US 30% threshold emerged from policymaking around Public and Section 8 housing, though I am unsure why exactly the OECD picked 40%. Of course, the US and New Zealand do breakdowns of the share of households at various different cost burden thresholds too.
I have a question, is the graphic at the top displaying:
the number of units?
the number of buildings?
I am particularly interested to see the rough percentage of units that are accounted for by multi-story apartments. In your graphic, it looks minor compared to townhouses, duplexes, etc.
Hi Michael—glad you enjoyed the article. That first chart is graphing the number of units, not the number of buildings (so one 50-unit apartment complex would count as 50 units there). You're right that it's not the predominant source of new housing, even as it has risen significantly post-upzonings.
If "multi-story" is defined as two or more stories, then it does not seem like a major shift in the types of dwellings being constructed. It is just an increase in the amount of construction, which I favor. The new units seem more like attached single-family residences than the 4-5 story buildings that most YIMBYs prefer.
I'm not sure whether I'm misunderstanding, but just in case - the category of 'townhouses etc' can be up to 3 story - the operative bit of 'multi-story apartments' is the 'apartments' bit, not the 'multi-story' bit.
Yes, the NZ housing breakdowns are confusing in an American context where we just categorize projects by the number of units. "Multi-story apartments" in NZ are just any building with housing units on top of each other (or above commercial/office space).
A townhouse can be 2-3 stories tall (most are), but so long as the stories are part of one unit it isn't a multi-story apartment. The primary distinguishing factor between a single-family homes and terraced/townhouse units is whether the home is attached and shares walls with other units or not.
Excellent article. The problem of unaffordable housing is simple to solve: repeal government regulations and let builders build.
A problem: our democracies are substantially/mostly fake. I say this as a Canadian, whose governments (and "opposition" parties) should be doing (or insisting we do) what has been done here....but will not, nor will they explain why they will not.
To achieve what you say, the entire structure of government as it is must be overthrown, at least in some cases.
Excellent article. I used to live in Wellington 30 years ago when it was cheap, grungy and fun. Now it’s expensive but it’s amazing how few new buildings have appeared since then. Hopefully the new district plan will begin to address the chronic housing shortage.
Prices in Auckland for rents fell over the last few years because supply exceeded demand, maybe due to intensification, but more probably pandemic migration restrictions. Many existing central apartments remained empty without overseas students, their normal customers. However prices in Auckland are rising again because migration is causing increased demand and those central apartments are full. There are a lot of moving parts in Auckland, the report you quote appears to have a lot of wishful thinking, correlation is not necessarily causation.
I am trying to get more data on inventory over the last 8 years to get closer to the reality, but this report has too much wishful thinking.
I live in Auckland. The recent flattening of house cost rises is due to increased, high interest rates (7.5%) and limits of affordability. Upzoning has not made houses cheaper, for example in an intensified area near where I live 8 Doreen Williams Way in Glenn Innes (a low socio economic area) sold for NZ$955,000 in March 2022. It has a floor area of 71 m2 and a land area of 105 m2. This cost is a similar price to a larger house and land a few years ago. Speculators are buying up land and making huge profits on the intensification. What was a "normal" house with a bit of land is now unaffordable ie. $1.8m as developers can build 3 or more houses where there was only one. Building 3 levels to within 1 m of the boundary of other properties.
So the experiment is forcing us into very small houses on small plots of land at the limits of affordability. The price set is not the cost but set on a sales comparison basis and so houses are no cheaper. Developers love it.
I am a manufactured home dealer/ developer in California. I can have homes built in our Silvercrest plant in Corona CA. and ship them to New Zealand. It is very cost effective to have them built and shipped from a factory. I have been a general contractor for 35 years and a dealer for 25 years. If you would like to contact me, my email address is John@Myprefabhomes.com Thank you
Hi Joseph - thanks for the article, you might find the following two articles interesting, a response to the NZ study written by Cameron Murray (Australian Economist), who recently released a good book on housing in the Australian context titled (The Great Housing Hijack: The hoaxes and myths keeping prices high for renters and buyers in Australia):
https://www.fresheconomicthinking.com/p/the-auckland-myth-there-is-no-evidence
https://www.fresheconomicthinking.com/p/the-auckland-upzoning-myth-response
recommend this piece on upzoning in Minneapolis. a much more complex story.
https://onefinaleffort.com/blog/a-detailed-look-at-minneapolis-housing-supply-reforms
It was a "Baptists and bootleggers" move; the Greens combined with the land developers to force change
Nice article. However, I think you're incorrectly assigning New Zealand's mini crash in house prices to these regulation changes. Increasing the supply in housing will put downward pressure on house prices in the long term, but the recent mini crash was due to a sharp interest rate increase and a partial burst of a bubble that happened before and during COVID lockdowns.
To be clear the bubble was forming pre and during COVID lockdowns. The partial burst happened afterwards.
Do you know how many jobs would have come from the upzoning plan?
Thanks for another brilliant article, Apricitas!
Does anyone have much insight into how this was achieved politically? I’d love to see if there are any tactics that YIMBYs can replicate elsewhere.
May I humbly direct you here: https://worksinprogress.co/issue/upzoning-new-zealand/
Excellent. How did they achieve permitting approvals throughout the upzoning? Legislatively this looks amazing but practically I see issues implementing something similar where I am due to bottlenecks with permit issuance.
permits have been a major bottleneck and local authorities have consistently failed to meet statutory deadlines, set by the national goverment, which require a decision within (iirc) 60 days. in spite of all that they are obviously permitting a lot more now than several years ago. it has required local authorities to continuously expand the size of their permitting departments.
Can't you just not require permits?
I wonder why the US defines cost burden as spending 30% of your income on rent but the OECD seems to say it’s 40%?
Fundamentally it's an arbitrary line—I think the US 30% threshold emerged from policymaking around Public and Section 8 housing, though I am unsure why exactly the OECD picked 40%. Of course, the US and New Zealand do breakdowns of the share of households at various different cost burden thresholds too.
I have a question, is the graphic at the top displaying:
the number of units?
the number of buildings?
I am particularly interested to see the rough percentage of units that are accounted for by multi-story apartments. In your graphic, it looks minor compared to townhouses, duplexes, etc.
Hi Michael—glad you enjoyed the article. That first chart is graphing the number of units, not the number of buildings (so one 50-unit apartment complex would count as 50 units there). You're right that it's not the predominant source of new housing, even as it has risen significantly post-upzonings.
Thanks for the clarification.
If "multi-story" is defined as two or more stories, then it does not seem like a major shift in the types of dwellings being constructed. It is just an increase in the amount of construction, which I favor. The new units seem more like attached single-family residences than the 4-5 story buildings that most YIMBYs prefer.
I'm not sure whether I'm misunderstanding, but just in case - the category of 'townhouses etc' can be up to 3 story - the operative bit of 'multi-story apartments' is the 'apartments' bit, not the 'multi-story' bit.
Yes, the NZ housing breakdowns are confusing in an American context where we just categorize projects by the number of units. "Multi-story apartments" in NZ are just any building with housing units on top of each other (or above commercial/office space).
A townhouse can be 2-3 stories tall (most are), but so long as the stories are part of one unit it isn't a multi-story apartment. The primary distinguishing factor between a single-family homes and terraced/townhouse units is whether the home is attached and shares walls with other units or not.