Sometimes – well, quite often actually – I’m tempted to despair of the elected leadership in this country. For decades they’ve failed to reverse – barely even stopped – our decline in the international league tables, when productivity growth is the only secure foundation for sustained improvements in material living standards. They’ve presided over an economy that has mostly been inward-looking – remember, foreign trade shares have been shrinking, as has the relative size of the tradables sector of the economy – when increased international trade is a typically a key marker of a successful economy. Business investment has been weak, for decades. And they’ve managed to preside over a situation in which, in a land-rich country, we have some of the most unaffordable houses in the advanced world. And still, apparently, they and their advisers think they know best. And they wonder why life is tough for altogether many people, as they run around proposing band-aids, while never sorting out the fundamental problems. Arguably, in fact, they are simply making them worse.
The prompt (the latest one) for that paragraph was an article that appeared on Stuff a couple of days ago (and made it to the hardcopy Dominion-Post this morning). In it, we read
Wellington region’s population, including the Hutt Valley and Porirua, will increase from 413,400 to 459,200 over the next 25 years, according to Statistics New Zealand.
Wellington City Council district plan manager John McSweeney said there was about 290 hectares of greenfield land left to develop in the region – enough for about 3500 houses, based on existing residential subdivision plans which allows up to 12 houses per hectare.
McSweeney said it was likely that the council would have to encourage developers to build more houses closer together.
When I checked, I found that Wellington City covers an area of 29024 hectares. And yet the Wellington City Council’s (WCC) planning pooh-bah claims there is a mere 290 hectares of land left to develop – not just in Wellington City, but in the entire region.
This is how much land is in each of the five local authority areas that make up greater Wellington.
Wellington City 29024 hectares
Hutt City 37664 hectares
Upper Hutt 53992 hectares
Porirua 18251 hectares
Kapiti 73148 hectares
Wellington City itself has more than 40 per cent of the population of the greater Wellington region, less than 15 per cent of the land, and yet – check out the map at this link (and especially the satellite image) – less than half of Wellington City land is in built-up area.
There is abundant land. Visible, in particular, to anyone who ever flies into or out of Wellington.
And if you object that much of the land is quite hilly, well take a look at the existing city. This is part of the view from my study.
Hills are everywhere. Die-hard locals (the sort who find plausible Deutsche Bank’s claim that Wellington is the most liveable city in the world – of whom I’m not one) even claim to like them, but at very least we all live among, or on, them. And, in among that vast undeveloped area of Wellington City is lots of pretty-flat land – the Ohariu Valley for example.
The Wellington City bureaucrat, presumably channelling his political masters, decrees that
The council was looking at options in some of the northern suburbs where land could be rezoned from rural to residential, McSweeney said.
That could create enough residential land for another 10 years of housing developments.
When the real question for him, and for Justin Lester and each councillor, should be, why is all of Wellington City not zoned residential (with appropriate requirements on developers regarding infrastructure provision)?
As one my readers notes, the only way that house prices can be where they really should be – and for a long time were – at around three times median income is when developers can buy rural land at rural land prices (in turn, requiring that there is plenty of competition so that no potential seller can corner the market, holding the only parcels of (lawfully) developable land. And yet what we see in and around Wellington – and around so many other cities and towns – is almost the precise opposite.
Thus, there was a story the other day about the sale of 386 hectares of farm land just north of Wellington (in Porirua city).
The land is currently zoned for farming, but is part of the Porirua City Council Northern Growth Structure Plan. In 2016, it had a rateable value of $3m, but has previously been assessed as being worth more than $60m.
It is obscene. “Value” created by bureaucrats and politicians, at the expense of potential home owners in greater Wellington, in this case apparently accruing to a family that has held the land since the 1960s.
It calls to mind a conference the Reserve Bank and Treasury held a decade or so ago at which a very able senior figure on the Wellington city council staff spoke. He noted that most of the developable land (ie zoned residential) was owned by perhaps four groups who, of course, managed the release of this land in a drip-fed way, so as not to dampen the price of their land. There was, of course, no thought to zoning all the land residential, or even applying land value rating which, at the margin, creates more of an incentive to actually use the land.
Meantime, each new rising generation suffers the heavy burden of trying to get into the housing market, all while bureaucrats and their political masters talk of a “need” to squash people in tighter or live in apartments without gardens etc.
It is 40 years and a few weeks since I first moved to Wellington. Coming from Auckland as a teenager in 1970s, I still vividly remember the shock I experienced as we drove in Newtown and Berhampore (for those who know the place, think Rintoul St and Adelaide Road) for the first time, on our way through to Island Bay. Was this the New Zealand equivalant of Coronation St, I wondered even then? Most of Wellington (city in particular) is pretty densely populated as it is by New Zealand standards, and even the roads are often pretty narrow. And yet the bureaucrats and politicians want everyone to squash in tighter. It isn’t how economic development is supposed to work – space is, after all, a normal good and, in New Zealand, there is no shortage of land.
For once, I’m with a real estate agent, quoted in the original story linked to above.
Bayleys Wellington general manager Grant Henderson said the thousands of sections set to come on market was not enough.
“For Wellington to continue to keep up, it has to keep developing greenfields. It’s crucial we do the developments.”
The latest residential development is earmarked for Plimmerton Farm, which was sold to Upper Hutt developer Malcolm Gillies and his business partner Kevin Melville.The duo plan to create more than 1500 sections and 60 lifestyle blocks on the site, with some lots expected to hit the market in late 2020.
Up to 100 sites a year would be developed, meaning it would take about 20 years to complete.
By then, the region’s population will have grown by 45,800.
Henderson said there was a lot of residential land yet to be unlocked in Wellington.
“There are huge opportunities, and the sooner we get some supply into the marketplace, the better.”
And Council planners, even if they had the best will in the world – about choice, and options, and lowering house prices – still couldn’t tell what would be enough. That is one of things we have markets for.
Elected councillors do make an appearance in the article
Wellington City Council councillor Andy Foster, who is in charge of urban development, said about 40,000 houses needed to be built in Wellington to cater for population growth over the next 30 years.
This did not include growth in the wider Wellington region, he said.
The council has commissioned research to establish how much space was left to develop and if the city could hold another 40,000 houses, he said.
“Most likely we can’t, and we are very much expecting that. So then we have to say, ‘Well where are they going to go? What do we need to change to accommodate growth?'”
There was a need to densify further. However, it was unclear which parts of the city were best suited for that, Foster said.
“This is going to be a really challenging conversation, and it’s going to be a really big one.”
Or, councillor Foster, you and your colleagues could just give citizens, residents, and potential residents, the choice. People who want to live more densely should, of course, be free to do so. Revealed preference – the way our towns and cities evolve when there is no particular population pressure – suggests that most would prefer not to, and of those who do end in terraces or apartments many do so simply as a less-unaffordable second-best, there being less land per dwelling in those sorts of developments.
The tragedy is that there is no public revolt against this political and bureaucratic mentality, which undermines communities and renders housing ever-more unaffordable, all in pursuit of some central planner’s vision for the way people should be, more or less, compelled to live. There is no shortage of land – and certainly not in Wellington city, or greater Wellington. Even politicians who seem occasionally to display signs that they know better – and there have been a few in both National and Labour – don’t actually do anything about it. We wouldn’t be having futile debates about Kiwibuild – or “shortages” of physical houses – if the land market was deregulated. Instead our so-called leaders – elected officeholders anyway – just preside over regimes that, by doing the same thing again and again, can’t but produce much the same dreadful results for a another new generation. In a few years those will be my kids entering the market, another generation betrayed by our leaders.