The New Zealand Initiative’s Jason Krupp grudgingly argues that Auckland Council is right to give Nimbys the finger

By Jason Krupp*

Last week the cat was set amongst the pigeons after the Herald ran a story saying that Auckland Council was trying to raise the urban density limits in the green leafy suburbs that surround the inner city without public consultation.

Squawks of alarm were immediately heard from Auckland 2040, a community group dedicated to protecting the character of the city’s residential neighbourhoods. The process was labelled a “farce” that trampled on the natural rights of citizens to have a say on the urban policies of their cities.

In all, the story made out as if the council was operating in the shadows, presumably in cahoots with developers, to bulldoze Auckland’s suburban paradise and replace it with tower blocks in a slavish pursuit of a compact city dream. It is a compelling narrative, but it is also false. What we are seeing here is Nimby-ism (Not in my back yard) in a pure and unadulterated form.

Let me elaborate.

First, while the council may not have consulted with the public on the explicit details of its most recent plans, it has long been established, at least since the creation of the so-called Super City, that urban density limits were likely to rise as part of the Auckland Unitary Plan. This is a necessary and obvious step if the city is to tackle its housing affordability challenge. Numerous studies have shown that restricting urban density increases house prices, such that houses in Auckland are now more expensive than their counterparts in London according to Bloomberg.

Second, these new density limits are marginal not radical. The council wants to change the current single-house zone, characterised by a single one or two storey house on a property, to a mixed-house zone, which will allow development of up to three stories, and potentially consist of multiple properties.

Third, although the council said it will not be notifying individual households about the density changes, that doesn’t mean residents will have no say should a developer want to park an apartment complex between them and the afternoon sun. The Resource Management Act, benighted as it is, was specifically designed to allow affected parties to have a meaningful say on developments as part of the consenting process.

While the position of Auckland 2040 and the Herne Bay Residents Association is understandable on a personal level, preserving their little slice of inner city suburbia is a price that is too high for New Zealand to pay. Recent migration data showed that New Zealand’s population is growing at its fastest pace in 40 years, and many of these new arrivals will end up in Auckland. If the turgid supply of housing does not rapidly increase to meet natural demand, already astronomical house prices are guaranteed to rise further.

And it is not just about house prices. As I have written previously, Nimby-ism facilitates a wealth transfer from young people to the older propertied generation in the form of higher rents and house prices. That is because young people have to pay higher rates for accommodation to live in areas close to where the bulk of employment occurs, namely the inner city and immediate surrounds. The more excessive this burden is, the less likely emerging generations are to reach the same level of wealth than the ones that preceded them. Keep in mind that we are referring to the tax base that is expected to shoulder the costs of government services as baby boomers enter retirement.

People who disagree with the view expressed in this piece are likely to say that we hate suburbia, and have fallen under the spell of the compact city ideology. This is not true. The Initiative’s position has always been that cities need to grow up and out. What we have also advocated for is that land markets be allowed to function efficiently, such that properties get put to their most profitable use. In most cities around the world that means that the most valuable land, often closest to the city centre, has multiple properties on it, rather than a single home. Suburban homes, which take up more space, tend to occur on the outskirts where land is cheaper.

That said, not all the blame for Auckland’s housing crisis should be laid at the feet of Nimbys.

Byzantine planning regulations and processes, both at a central and local government level, have enabled Nimbys, and have unnecessarily choked off the supply of new homes onto the market. Efforts to constrain sprawl through the use of an urban growth boundary have also ensured that Auckland is prevented from growing up or out. Adding to the troika of urban development woes is the cost of infrastructure. If the city council picks up the bill, rates and debt are likely to rise substantially – never a winning strategy if you hope to get re-elected.

However, if councils pass these costs onto homebuyers via development contributions it increases the upfront price of a house. That is to say nothing of the fact that by passing on these costs, councils may be double charging new home buyers. This is because new buyers are paying for their portion of the city’s infrastructure through their mortgage, but they are also servicing the debt that was used to pay for previous infrastructure investments.

In all, Auckland’s housing affordability crisis is a classic wicked problem, one decades in the making. It will also take decades to unpick the regulatory structures that created it. This work will however achieve little if we continue to give objectors a disproportionately large platform to stymie urban development because it may bring change to their neighbourhood.

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*Jason Krupp is a Research Fellow at The New Zealand Initiative, which provides a weekly column for interest.co.nz.