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Beyond Zoning: A Quick Look at New Zealand's 'Going for Housing Growth' Policy

The New Zealand Government's Minister for Housing, Chris Bishop, recently announced his "Going for Housing Growth" policy:

https://www.beehive.govt.nz/speech/going-housing-growth-speech

Minister Bishop stated that he wants to “flood the housing market”, we’re not sure that’s the best use of words when it comes to our communities here in Hawke’s Bay and on the East Coast, but we get his point.

This policy aims to address the country's persistent housing crisis through a series of ambitious measures. While the intention to increase housing supply is commendable, a closer examination reveals both opportunities and significant challenges that warrant careful consideration.

Key Elements of the Policy:

1. Housing Growth Targets: The policy establishes growth targets for Tier 1 and 2 councils, aiming to create a 30-year "live-zone" capacity.

2. Urban Fringe Expansion: New rules make it easier for cities to expand outwards.

3. Intensification Focus: Strengthening of intensification provisions in the National Policy Statement on Urban Development (NPS-UD).

4. Mixed-Use Development: New rules requiring councils to enable mixed-use development in cities.

5. Removal of Certain Requirements: Abolition of minimum floor areas and balcony requirements.

6. Optional MDRS: Making the Medium Density Residential Standards (MDRS) optional for Councils.

Challenges and Considerations:

Infrastructure and Servicing:

While the policy pushes for expanded growth capacity, it raises crucial questions about infrastructure. Tier 1 and 2 councils, already engaged in growth planning, face the daunting task of servicing these expanded areas. The expectation to immediately provide infrastructure for a 30-year capacity seems unrealistic after years of underinvestment in infrastructure.

Urban Sprawl vs. Intensification:

The policy's allowance for easier outward expansion contradicts sustainable urban development principles. Urban sprawl often leads to increased car dependency, higher infrastructure costs, and loss of productive land. Instead, here at Bay Planning we believe the focus should be on intensification within existing urban boundaries, creating vibrant, accessible communities with reduced reliance on private vehicles.

Regional Variations:

The policy's one-size-fits-all approach fails to account for regional differences. For instance, in Hawke's Bay, specifically Hastings, outward expansion conflicts directly with the need to preserve highly productive agricultural land, as mandated by the National Policy Statement on Highly Productive Land (NPS-HPL).

Market-Driven Development:

Many councils are already zoning for mixed-use development, recognizing its benefits for creating efficient urban spaces. The market has shown capacity to deliver such developments where public demand exists, suggesting that mandates may be less necessary than supportive policies and incentives.

Fundamental Obstacles:

While the policy focuses on zoning and planning regulations, it overlooks two critical obstacles hindering development in New Zealand:

1. Infrastructure Deficit: Years of underinvestment have left a significant backlog in necessary infrastructure.

2. Skilled Labour Shortage: There's a critical shortage of tradespeople to build houses and infrastructure.

The Cost Conundrum:

Perhaps most crucially, the high cost of construction in New Zealand presents a significant barrier that zoning changes alone cannot address. Factors contributing to these high costs include:

- Expensive building materials

- Labour shortages driving up wages

- Infrastructure development costs

- High land prices, especially in urban areas

These cost factors mean that even with more permissive zoning, new housing may remain unaffordable for many New Zealanders. There's also a risk that attempts to build more affordable housing under these high-cost conditions could lead to lower quality homes. The specific point made in Minister Bishop’s speech about the abolition of minimum floor areas and balcony requirements seems like low-hanging fruit that in the long run will lead to a worse outcome for residents.

Towards a More Comprehensive Solution:

To create meaningful and lasting change in the housing market, a more holistic approach is needed:

1. Infrastructure Investment: Prioritize significant investment in infrastructure, potentially through partnerships between central government, local councils, and the private sector.

2. Skills Development: Implement comprehensive strategies to address the skilled labour shortage in construction and related trades.

3. Cost Reduction Initiatives: Support efforts to reduce building material costs, encourage innovative construction methods, and streamline regulatory processes.

4. Flexible, Localized Approaches: Allow regions to prioritize intensification where outward growth conflicts with other national interests, like preserving productive land.

5. Public Transport Integration: Ensure that housing growth is accompanied by corresponding improvements in public transport and other essential services.

6. Quality Assurance: Balance the drive for increased housing supply with measures to maintain living standards and housing quality.

So what’s next?

While the "Going for Housing Growth" policy represents a step towards addressing New Zealand's housing crisis, its effectiveness may be limited without addressing the underlying issues of infrastructure deficits, skilled labour shortages, and high construction costs.

We appreciate that the Minster for Housing is trying to get more houses built, and there is no argument that any tool implemented by the Government that can achieve that goal is worthy of consideration. Here at Bay Planning we are committed to achieving the best outcome for our clients as we can. We understand the pressures that development in Aotearoa New Zealand is facing and look forward to working with our clients to explore ways to increase our housing supply.