I’ve had a couple of posts (here and here) this week prompted by Phil Twyford’s generally encouraging recent speech about fixing the market in urban land, in ways that might – in his own words – flood the market with development opportunities, and thus materially lower land prices in and around our cities.
My bottom line: I see no reason to believe that far-reaching reform – in ways that might make a real difference, as distinct perhaps from just some rewritten laws – is actually likely to be implemented under this government. We have a weak government, united on relatively little, and there is no sign that serious reform in this area is a prime ministerial priority. A mere fifteeen months from now the election campaign will be in full swing.
More importantly, market prices suggest that people transacting in the urban land market don’t believe it either.
There was another excellent illustration in this morning Dominion-Post as to why one would be foolish to put a high probability on such reform happening. It appeared in the form of two articles, one with the (hard copy) headline of “Where will Wellington grow?” and the other with the hard copy headline “Tough Choices”. I’ll set to on side for now the point that with a sensible immigration policy, the abolition of corporate welfare and longstanding New Zealand birth rates the city probably wouldn’t be growing at all – as I pointed out recently, it is not as if stellar productivity growth is some irresistible lure. Wellington City Council can’t be held responsible for New Zealand population growth, so lets grant for the sake of argument that the population probably will keep on rising.
There are Labour mayors in all three of our largest cities. But it is worth recalling that the Wellington City Council is one the most woke-lefty outfits in the country – if any council is well-aligned with the government it must be them. It has a Labour mayor who surely has national political ambitions, several Green councillors, and deputy mayor who if she had her way would strip out all reminders of the Anglo heritage and culture of the bulk of the population, and even the councillors who are not from Labour or the Greens are mostly only a softer shade of pinky-green. The same issue of the newspaper reports council officers questioning the “appropriateness and relevance” of street names in my own suburb, mostly named for various British and European rivers. As I’ve noted previously, it must stick in the craw of councillors and their staff to have their offices on (Edward Gibbon) Wakefield St and (Queen) Victoria St and their (well, our) city named for the Duke of Wellington.
This is the opening of the article
City councillors are bracing themselves for a “nimby” backlash as a major plan to find space for 80,000 more Wellingtonians to live goes out for public consultation.
Councillors voted unanimously this week for their spatial plan to go out for feedback.
and goes on to note
The council’s spatial plan posits four scenarios that people will be able to provide feedback on: one centred on high-rises in the CBD, another focused on building upward in suburban townships, a third creating a new suburb in Ohariu Valley and a fourth scenario extending developments at some existing greenfield sites.
No sense anywhere of letting the market work, in response to the revealed preferences of prospective purchasers. No sense of getting the pricing right (for infrastructure connections etc) and then letting things develop in an evolutionary way. No, it is all a matter for councillors to choose, for councillors to “make space”. And, of course, all led by the Council’s (Australian) Chief Planner.
One councillor notes that
councils were required by law to have a plan for expected growth and Wellington had “no choice” but to come up with a plan to accommodate the extra 80,000 people expected in the city over the next 30 years.
Perhaps, but why couldn’t that plan be, we will get the pricing right, we will allow for appropriate differential rating, we will build (or allow to be built) connections pretty much as required, we will facilitate intensification where local property owners are agreeable, and then let people and the market take it from there? An abundance of competitive development opportunities – a superfluity – is what keeps prices down.
That sort of approach might look something like the fine words from Phil Twyford. But not a single comment, from councillors or council staff, in the article suggests anything like that sort of mindset.
If the government were really serious about thoroughgoing reform, wouldn’t it have been an ideal opportunity to have sought to work with their ideological allies on the Wellington City Council to make it happen here – to actually lead the way and bring land prices back to something more like the value in the best alternative use?
Instead, we have the right-on Labour mayor, emphasising not choice, not facilitation, but his own ideological preferences, all supported by the bizarre rhetoric of having to “squeeze people in”, when Wellington City (let alone the greater Wellington region has abundant land).
When mayor Justin Lester is asked for the scenario he wants he just points up
As I understand it, he himself lives in a low-rise family home in a quiet suburb. But apparently he thinks it is up to him to determine that many fewer of the next generation would have that opportunity. His Chief Planner is clearly right behind him – his distaste for a physical expansion of the city seeps through in almost every comment in the article.
It is a democracy, and too much power in such matters rests with councillors and their staff. My point here isn’t so much to champion an alternative model – much as I would support one – as to make the point that anyone who doubts the government is serious about thoroughgoing reforms and significantly reducing land prices in and around our cities, need only look to the lead being provided by the government’s close ideological allies at the Wellington City Council.
As the Dominion-Post articles suggest, there is likely to be lots of blowback against the options preferred by the council (intensification and more intensification) and so in the end whatever gets approved will be some sort of lowest common denominator. There will be more houses built over time – as there have been in fast-growing cities around the country in the last 30 years – but never enough land-liberalisation to ever create a sustainable rational expectation that future land prices in and around our cities will be materially lower than they are today.
Perhaps one day reform will really happen, and prices really will sustainably adjust. But, as yet, there is nothing in the wind – whether from the Prime Minister, or Labour mayors or Labour/Greens councils – to suggest it will occur on this government’s watch. And the young and the poor (especially the young poor) will be the ones who pay the price, in lost opportunities.