Hard News: Housing: the Feudal Model
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andin, in reply to
there is a fundamental market failure happening: what new housing is being built is not the housing that’s most needed;
The "market" is failing in more than that. As long as the "market" (I put it in quotes because this mythical beast is a creation, made to suit a lazy purpose, just like some peoples god) is slanted to favour those with the most power or money, it is a bad joke.
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Russell Brown, in reply to
In broader terms, though, I think the two big problems are,
1. As Mark Graham identified above, there is a fundamental market failure happening: what new housing is being built is not the housing that’s most needed; andAnd the NZ Initiative not only ignores that, but actively denies there is any market failure at all. It's just councils being councils apparently. Absurd.
2. There is a fundamental miss-match between New Zealander’s continuing aspiration to live in low-density housing but close to their places of work/school/play; and our national need to prevent urban sprawl/increase urban density. It’s a problem that can only be solved through culture change, and that takes time.
And there are, of course, certain local body reporters who indulge and encourage that disconnect, and never talk about what the implications of failing to intensify actually are. If they talked about Great Fucking Big New Roads through existing suburbs that will be necessary to enable the sprawl strategy instead of fanning panic about new regulations that aren't that different from the old regulations, things might be a bit different.
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Nail, head. It's also a demographics thing, namely the ones against intensification seem to be rich and older.
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Socraates, in reply to
Sorry Rich (if I can take a liberty and address you as such), you're off the mark on that one (I really hope I'm not feeding the troll).
Not all the residents in Mangawhai Heads have million dollar baches, and some have been there for generations with the 'good ole kiwi bach' still in evidence. What some object to (as do I, and I do not even own property there) - is a complete Council fiasco in the implelementation of a modern sewerage system.
It's actually a bloody good example of a quasi PPP gone very bad, to the detriment of the local residents. It has also put immense pressure on the local Council's financial viability and has impacted on it providing for essential services across the entire District.
Last I heard the Auditor General was looking into it.
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Glenn Pearce, in reply to
My understanding of the Auckland market is that we have a housing "affordability" crisis but not an "availability" crisis.
In Auckland rental listings are at an all time seasonal high at the moment with rental prices fairly static while house prices skyrocket.
In Christchurch and Wellington the 2 variables (rent and price) are tracking almost in alignment as common sense would suggest. (supply and demand)
There's something weird about the Auckland market.
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Russell,
correct me if I'm wrong, but since the Proposed Auckland Unitary Plan came out on the 30th Sep...you've been a bit quiet on it (and so to the MSM).
I remember reading a great piece from you when the Draft plan came out...but not recently.
There's been a shift from the intensification philosophy first mooted back in the Draft Plan (that caused great debate in Granny's letters page) to more of the same 'urban sprawl'. There is a rediculous amount of proposed 'future urban' within the Plan now and less of the intensification that had the opportunity to really transform Auckland.
Some would say the local body politicians have gone back to the safe option as opposed to enabling a real cultural shift. I wonder about the the mood out there for intensification? The submissions on the plan will be very interesting!
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Russell Brown, in reply to
correct me if I’m wrong, but since the Proposed Auckland Unitary Plan came out on the 30th Sep…you’ve been a bit quiet on it (and so to the MSM).
I remember reading a great piece from you when the Draft plan came out…but not recently.
Fair call. I enthusiastically retweeted Auckland Transport Blog :-)
Some would say the local body politicians have gone back to the safe option as opposed to enabling a real cultural shift.
We might as well say it out loud: they did.
I wonder about the the mood out there for intensification?
Who knows? It's a low-information environment.
The submissions on the plan will be very interesting!
I hope so.
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I haven't been to Auckland since I was a kid, but all I see on the news and such (google knows all, but won't tell me) is traditional section divisions and huge apartment blocks. Are there still no skinny 3-story townhouse rows for packing in people? That's the problem here, right.
Because I've played Sim City, and that medium density housing is the shiznit. Lets your public transport become efficient and well used, makes optimal use of distributed fire and police stations, health clinics, saves schooling costs, all sorts. Lets you pack your amenities around them and provide cheap happiness boosts to good numbers of people.
Low density certainly lets you crank up the rates, but they all end up going on massive motorway projects to shift everyone around, huge school catchments, extra water costs, and so on. All those cars, nightmares.
High density's alright once your office blocks can support a decent subway system, but that in turn needs fed by your medium density base.
Yes, I'm sort of kidding. You shouldn't have to have played the various Sim City games as much as I have over the years to know all that.
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James Bremner, in reply to
"Sprawl is hugely expensive"
As expensive as median houses at 7 or 8 times the median salary? How much is too much? Median houses at 10 times the median salary? -
Sacha, in reply to
Some would say the local body politicians have gone back to the safe option as opposed to enabling a real cultural shift.
They have listened to the loud and organised current owners of detached coastal houses over also bringing the interests of future residents to the table as they are meant to. That lack of gumption is sad for all of us.
Seems they're pinning their hopes on being able to revise the Plan towards density in another decade, but frankly the electoral calculus won't be any better by then as our demographic bulge puts more power in the hands of older voters. Perhaps a culture change campaign could remind them all to think of what our city will be like for their grandchildren.
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Matthew Poole, in reply to
“Sprawl is hugely expensive”
As expensive as median houses at 7 or 8 times the median salary? How much is too much? Median houses at 10 times the median salary?Sprawl won’t fix that. It doesn’t fix it anywhere in the world. Sydney and Melbourne sprawl, and sprawl, and sprawl, and still have high median prices.
What fixes it is houses being built for the entry-level part of the market rather than all new construction having five bedrooms, four bathrooms, three-car garaging, and a partridge in a pear tree. Which is Auckland’s current situation; big houses, on big lots, at big prices. -
Moz, in reply to
"Sprawl is hugely expensive" As expensive as median houses at 7 or 8 times the median salary?
I think you've nailed the problem. We need cheaper houses, and that means cheaper infrastructure. Building a new house 100km from the CBD and needing to build new roads, power lines, water and sewer pipes, libraries, parks, emergency services, public transport and every other thing is just unaffordable. The train line alone will cost $50k per house.
The only affordable solution is to use as much of the existing infrastructure as we can. It's much cheaper to run trains every 10 minutes instead of every half hour than to build a whole new railway line. Ditto double or tripling the size of a fire station or other public amenity. Knocking down houses that are close to amenities and building decent blocks of flats, terraces or home-over-shop setups is the only way to go. But they need to be built nice rather than cheap in order to attract people, and that's hard in a "market economy" like we pretend to have.
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Rich of Observationz, in reply to
I'm not trying to troll, and I totally take your point on the mismanaged PPP.
But it remains that if a (rural) community chooses to allow widespread subdivision and development, then it will need expensive services and that every property owner (including those with original 50 year old baches) will benefit financially from increased land values. If the community chooses to restrict subdivision, then it probably won't need those services and shouldn't have to pay for them.
Of course, it's a problem when those decisions don't get made by the community, but by the aggregate views of a huge area with different attitudes.
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Matthew Poole, in reply to
Perhaps a culture change campaign could remind them all to think of what our city will be like for their grandchildren.
There won't be any grandchildren in Auckland at the current rate of progress. Their parents will have left for cities that take health and well-being seriously.
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The housing bubble in NZ is a textbook case of an industry cartel, with the incumbent players imposing barriers to entry. And it's fomenting polarised communities.
If you want a good indicator of how polarised a community is, the wrong side of the tracks feel threatening and lifeless, and the right side of the tracks feel safe and lifeless. Detroit's Eight Mile follows this to its logical extreme.
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Lucy Telfar Barnard, in reply to
My understanding of the Auckland market is that we have a housing “affordability” crisis but not an “availability” crisis.
In Auckland rental listings are at an all time seasonal high at the moment with rental prices fairly static while house prices skyrocket.
Auckland has both an affordability and an availability crisis, if you include "suitability" under "availability".
i.e. If you're a family of 5, it doesn't help you if there's a huge glut of 2 bedroom rental properties available, because depending on the ages and sexes of your children, you need a 3 to 4 bedroom house to avoid being classified as crowded. The larger your family, the harder it is to find suitable housing, even for the few who can afford market rates. In the same way, if you're a single or couple who'd like to not have flatmate(s), a glut of 2+ bedroom properties is no use to you.
Possibly also under "suitability", or alternatively a different problem of looking at "Auckland" as a single housing market, there's the question of location. If you're that family of five, it's not much help to you if there's a whole lot of 3 to 4 bedroom houses available to rent in Glen Eden or Glenfield, but your work, childcare, schools, and friend and family support are all based around Glen Innes and Glendowie.
So a seasonal high in rental availability doesn't necessarily translate to there not being an availability problem. It can also mean that the rentals available don't match the needs of the people who want to rent.
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Matthew Poole, in reply to
a seasonal high in rental availability doesn’t necessarily translate to there not being an availability problem.
This time of year is a really bad one for looking at rental availability in Auckland, because student flats are breaking up. In three months' time, availability declines back to nearly zero, before getting back to its some-but-not-much availability around May.
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Glenn Pearce, in reply to
But they're actually at lower levels at the moment than Feb, we haven't heard the stories of people queuing outside rentals for a few years now.
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david kinniburgh, in reply to
Hi Socrates:
. What some object to (as do I, and I do not even own property there) – is a complete Council fiasco in the implementation of a modern sewerage system.
It’s actually a bloody good example of a quasi PPP gone very bad, to the detriment of the local residents.The link below, from the irrepressible Matt Taibbi, shows how its done in the land of the free...
http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620
Not that it could ever happen here ;-) -
Here is a good read on rethinking urban planning, specifically "smart growth", with lots of links to other related articles.
When the price of housing is as out of whack as it is in NZ, with the tremendous harm that does to the less well off, it really is time for a rethink. What can't go on forever, wont. And in relation to housing bubbles, when the end eventually comes, as it must, it is a horrible mess and everyone gets badly hurt.
One of the points made worth noting in particular, is that one of the central tenants of smart growth, the belief that most workers work in the center of the city, thus driving the need for compact cites to reduce travel times etc. is not correct. In most cases, only a minority of workers work in the central core of cities, most work outside the core of the city, so a bit of growth on the fringes of a city to allow supply to meet demand isn't the problem it is purported to be. -
This whole thing is so complicated. As they say, 'for every complex problem, there's a simple solution. And it's probably wrong."
I'd say many Aucklanders want medium density housing and you can see the odd one here or there but we're talking a makeover of large swathes of Auckland. It's not going to be easy and I suspect the Vancouver approach to allow specific intensification development on existing central urban sites - their 'Laneways' approach - may be an effective approach and may make for affordable options out there, too.
The unitary plan had a lot of good thinking in it but the way it was presented on MSM was somewhat misleading, with great grey blocks of high-rise office/apartment blocks, no greenery or urban design features presented. No wonder the nimbys freaked. The main Nimby got shut down swiftly and pointedly by Toderian at his presentation a few weeks ago.
Of major concern to me is the building sector charged with making all this happen. There are law changes removing council accountability, transference of responsibility to builders through a less-than-robust LBP scheme (http://www.radionz.co.nz/audio/player/2576720) - and all this on the cusp of another building boom. Leaky Homes anyone?
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Sacha, in reply to
The main Nimby got shut down swiftly and pointedly by Toderian at his presentation a few weeks ago.
- which was lacking from Council's earlier responses, allowing way more oxygen than warranted.
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Sacha, in reply to
a bit of growth on the fringes
if only it was a 'bit', not endless acres of sprawl we're talking. Auckland's Unitary Plan already includes other major centres across the region for intensification to focus around, not just in the downtown cbd.
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James Bremner, in reply to
Where does the "endless acres of sprawl we are talking" come from? I haven't seen any plan that involves endless acres of sprawl. Now in Dallas you have a large city getting larger, but that doesn't mean that you need endless acres of sprawl to take a lot of the heat out of the Auckland market. For some time demand has exceed supply in Auck creating a one way bet that attracts speculators, land bankers and mom and pops investing their savings. To stop that you need the council to have a plan that clearly states that "the expected growth in required housing is x000 houses per year for the next so many years, we are aiming for a split of a:b between brown and green field, and that if we don't meet the infill targets, we will make sure, through expanding the UGB if necessary, that more land is made available so the total demand is met". That way you take the one way bet off the table and get a lot of hot money out of real estate, with a major beneficial impact on price inflation. Demand is reduced and supply is increased, exactly what needs to happen.
I would have thought that, given the desperate situation with extreme house prices in Auck (and NZ generally) that most people would be up for trying new ideas, such as MUDS. Why can't it be tried in an area for a few years to see how it works out?
The surprising aspect of this situation, is that it is the land use restriction policies generally favored by the left, that are absolutely f*&king the less well off, those that the left generally seem to think they care about the most, while delivering a windfall to the well off. And it is the left that is resisting any changes to the root cause of the supply problem that would actually have a positive impact on the situation.
One of the left's proposed solutions to this situation, a capital gains tax, doesn't begin to address the fundamental supply issue and would just further add to the price inflation, making the situation worse.
One would hope that in such a dreadful situation, that people could agree to try alternative solutions as the current policy settings so clearly aren't working. -
Bart Janssen, in reply to
trying new ideas, such as MUDS
The problem is that while MUDS may be new to you and new to New Zealand they are in fact not new at all. They have been used in many places. Uniformly they have resulted in very rich developers and very shitty housing.
So what you are suggesting is to try something that has been proven to be very bad for the city and very bad for the majority of people with the sole gain being to the bank balances of a small number of developers.
To me that goes beyond stupid and well into the world of corrupt.
As for opening up more greenfield development, again the record shows that such developments are uniformly for the building of expensive homes for the rich by rich developers. It is easy to see why the (corrupt) right wing advocates would favour that solution. It is easy to see why the "left" ie those concerned for the wellbeing of all parts of society including the poor, would be opposed to such a strategy.
Simplistic supply and demand theories do not fit with observed results hence your theories are bollocks.
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