Pushing the boundaries
Auckland’s expanding city needs space to grow, but ideas differ about how that should be done. Catherine Harris reports.
The idea of pushing out Auckland boundaries is as much about changing thinking as controlling house prices, experts say.
Respected economist Arthur Grimes grabbed headlines recently when he suggested relaxing the city limits and a massive six-year building programme could return house prices to 2012 levels.
He argues this would be preferable to putting curbs on migration, since growth is good for the city.
While his call to ‘‘crash’’ house prices drew controversy, Grimes says he never said it should happen overnight and that he was really challenging the Government to make a stand.
‘‘The point I was trying to make ... was that the Government makes these targets and they’ve made it very clear when you set these targets you go out and achieve them, such as the public services targets.
‘‘Auckland Council has a target – five times the median household income by 2030 – and they’re the only people have put their name to something.’’
Grimes’s call to relax the ruralurban boundary is broadly echoed by the Productivity Commission, amid a raft of other suggestions.
Planner believe that rezoning land just outside the present boundary will give landbankers the incentive to sell.
‘‘If restraint on supply is eased, than a landowner is then going to start thinking, maybe I should sell now rather than wait. So you’re changing the incentives,’’ cocommissioner Graham Scott says.
The commission has also discussed having a ‘‘trigger,’’ possibly a ratio between the price of development-zoned land inside the urban boundary and identical land just outside it. The answer is an indication of how tight the supply is.
Scott says such a move was not about taking away a property owner’s rights.
Adjusting the city limits is a useful tool but Scott says it’s not nearly enough to make a difference on its own.
Just as vital are other policies such as targeted rates, which ensure the people who benefit from a development pay for it.
Regarding the present boom, he says it is impossible not to see migration as a major factor.
But perhaps another key just as important is the New Zealand attitude towards property investment.
With 46 per cent of Auckland house sales being to investors, the enduring appeal of property for investment is entrenched in the Kiwi psyche and is appealing to foreigners.
It’s an attitude the Reserve Bank has been unable to permanently alter with its LVR (loan to value ratio) mortgage limits so far.
So BNZ chief economist Tony Alexander predicts the Reserve Bank and the Government will be out to shift people’s views about housing.
‘‘We need to change people’s expectations and generate a feeling out there of, maybe things have peaked, maybe I’d better do something with this land, maybe I’ve held it long enough.’’