City risks missing the biggest opportunity of the past decade, writes
Idon’t think there has ever been a better time to pull out Homer Simpson’s term “crisitunity”. As everyone knows, the Chinese character for crisis combines danger with opportunity — hence crisitunity.
Everybody last week focused on the danger aspect of any potential tsunami of foreign Chinese capital looking to be involved in the Auckland housing market. But nobody has noticed the opportunity. And we risk missing the biggest opportunity of the past decade.
We know that Auckland has a housing shortage. Auckland housing has become ridiculously unaffordable simply because more people want to live there than there are houses or apartments available in which to live.
We see it most dramatically in the overcrowding statistics. Census reports that, in 2013, just over 15 per cent of Aucklanders lived in crowded houses. In Mangere-Otahuhu, it’s over 40 per cent. So long as Auckland adds households faster than it adds houses or apartments, this problem will not really improve.
Is it because foreign investors are buying up Auckland houses and letting them sit empty? Not according to the Census.
The 2013 Census showed that the proportion of empty houses in Auckland had dropped since 2006 and that fewer houses sat empty in Auckland than in many other parts of the country.
Unless we want to ban people from leaving a house empty between tenancies, while selling a property, or while undertaking renovations, we will never have zero unoccupied houses.
The problem ultimately stems from Auckland planning which fails to allow either enough density in town or enough subdivisions at the edges of town.
A popular city where people cannot build up and cannot build out is doomed to have higher house prices.
While that can be great for those who owned in the city early on, it is not so hot for those coming in, or for those whose kids are now stuck living at home for rather longer than the parents might like.
Whether or not you believe the numbers that Labour highlighted last week — and I do not put much stock in them — there is growing international evidence of substantial foreign capital that would be more than happy to find a home in Auckland housing.
So far, the debate has been pretty doom-laden and focused on ways of preventing foreign money from coming in — stamp duties, levies on foreign investors, bans on housing purchases by non-residents, registration and regulatory hassles for foreign investors or even outright bans on foreign ownership.
But what we really have here are two problems that, together, could solve each other.
Right now, the complicated mix of height restrictions, view-shafts, heritage overlays and density restrictions make new construction pretty difficult.
Add to that consultation processes that let any objection drag out resource consenting and building new housing becomes next to impossible.
Developers that try to provide new housing sometimes live to regret it — at least some with whom I have talked wish that they had land- banked rather than endure the trauma of trying to get a subdivision consented and built.
But imagine if Auckland substantially relaxed its constraints against density in town and against expansion on the fringes.
Foreign and domestic capital could then build new subdivisions, new houses, new mid-rises, new townhouses and new apartment buildings for Auckland rather than simply drive up the price of existing houses. Housing affordability would improve. Fewer people would have to live in overcrowded conditions.
And, an Auckland with sensible land use policy would also see less racism.
Nobody worries about foreigners buying up all our lamb, our Weet-Bix, or our Marmite. If demand for those goes up, we can produce more of them.
Auckland’s tight restrictions against new building fuel not only a housing shortage but also build a political market for racism.
If a tsunami of foreign capital really is available, isn’t it time Auckland changed the rules so that some of it could build new houses? Let’s not waste this crisitunity.
A popular city where people cannot build up and cannot build out is doomed to have higher
Co-operative Bank’s Bruce McLachlan says his sector has to capture the imagination of the public.