New NPS on Urban Development

Berry Simons is concerned about some of the assumptions underpinning the recently released proposed National Policy Statement on Urban Development and its effectiveness to address Auckland’s housing crisis.

Partner Andrew Braggins says, “While the proposed National Policy Statement on Urban Development Capacity contains a number of laudable objectives, it is sadly at least three years too late and will not alter Auckland’s housing supply for at least two years, if not longer. Worse, if Auckland Council considers that it will be tbusiness as usual’ under the NPS, then we probably will not see any meaningful change in Auckland’s housing supply.”

To the extent that the proposed NPS proceeds on the simplistic assumption that rising house prices and a shortage of affordable housing in Auckland is caused by a lack of land supply rather than a demand for housing that outstrips supply, the thinking underpinning the proposed NPS is flawed and risks misdirecting Government and Council resources from addressing the real issues.

At least three key points are worth making.

The first is that made recently by an economic commentator who said, “Freeing up land is one thing. We need houses that are affordable for lower income Central Government must know but does not seem to be prepared to admit that the lack of availability of houses for New Zealanders is not due to lack of supply but rather to demand – that a very large number of both existing housing stock and those being built are being snapped up by overseas investors – young and low income New Zealanders are simply unable to compete. Reports that 46 per cent of all new mortgages in May were to investors are consistent with what we see in the market – that the bulk of Special Housing Area houses are being sold to investors – often overseas investors.

Partner Simon Berry say, “We are consistently seeing that a large proportion of Special Housing Area houses are being sold, generally off the plans, to overseas investors. The same goes for the existing housing stock – I recently heard of an example of an overseas investor purchasing 55 residential properties in a single week. The Government’s scrutiny of the market has overlooked – unwittingly or otherwise – these basic facts but all real estate agents and resource management practitioners know full well that this is happening every day.”

Second, it is equally clear that Auckland Council did not pay nearly enough attention to urban land supply issues when preparing the Proposed Auckland Unitary Plan and while they might now be undertaking many of the assessments required by the proposed NPS – they are only doing so because they were directed to by the Independent Hearing Panel charged with hearing submissions on the Proposed Auckland Unitary Plan. In the meantime, the development capacity provided by the Proposed Auckland Unitary Plan is well short of what Auckland needs – an issue already acknowledged by Auckland Council when it sought to introduce the out of scope zone changes into the Proposed Auckland Third, the development of many Special Housing Areas in Auckland is being delayed by a lack of infrastructure. The release of further land will simply not deliver the infrastructure needed to service new development – this is a matter that needs to be carefully planned by the Council and its key CCOs, Watercare and Auckland Transport.

Partner Andrew Braggins says, “Not a single new dollar in the recent budget was allocated to Auckland’s transport infrastructure – but adding new zoned land without infrastructure and the funding to service it is only likely to distract Auckland Council and the Auckland CCOs from providing infrastructure to existing zoned land and SHAs – this is likely to slow everything down. It’s hard to see what they can do that they haven’t already done without more money.”

No doubt the Government’s reluctance to face facts that is due to the contribution that overseas investment makes to the economy. However, they should think twice before they act under this proposed NPS and address the other factors that they should know are the root cause of the problem.

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