Eric Cramp­ton

City risks miss­ing the big­gest op­por­tu­nity of the past decade, writes

The New Zealand Herald - - BUSINESS - Eric Cramp­ton is head of re­search with the New Zealand Ini­tia­tive in Welling­ton.

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

house prices.

Pic­ture / NZME

Co-op­er­a­tive Bank’s Bruce McLach­lan says his sec­tor has to cap­ture the imag­i­na­tion of the public.

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