Solving housing crisis will take leadership

Leadership is needed at central and local government levels to help ensure district plans and their administration come to expect more intensive forms of housing in the right areas, writes Morten Gjerde

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While the country’s attention over the past couple of months has been focused on the Covid-19 pandemic, by all accounts we still have a housing crisis. This was acknowledged in the Government’s pledge to build or acquire 8000 additional state homes during the next Budget period.

Although this will help reduce the long list of people needing housing, the problem is much bigger than that. The more difficult issues to address are whether new housing is built where people want to live and in formats that meet their needs? Newly produced housing fails far too often on both accounts, largely because we rely so much on market forces when developing new housing.

It is not just about numbers and it is now widely recognised that our increasingly diverse population would prefer a wider range of housing formats to choose from. The private developer-led paradigm we find ourselves in is, unfortunately, largely resistant to the innovative practices that would lead to those formats.

From the funding providers down to those who market the housing ‘product’, the development industry is by nature conservative.

In order to minimise their risks, banks and other financial institutions called on to fund development favour formats shown to sell in the past. The housing suppliers themselves are disinclined to change what they’ve succeeded with previously.

In a circular way, then, the market continues to be supplied with low density housing because that is what people have bought into before. The fallacy of continuing to build in this manner was made clear last year when the Government spent more than $8 million to buy suburban KiwiBuild homes no one wanted.

However, it is not just the conservative nature of homebuilders that causes homebuilding efforts to fall short of the mark. Despite several streamlining amendments introduced over the past decade, the Resource Management Act (RMA) continues to favour the lower level effects that come with suburban forms of development.

Recently, fellow researchers and I had the opportunity to interview property developers, architects and planners in connection with a project evaluating the influence planning approval processes have on producing medium density housing.

Despite changes to many of the country’s district plans to actively promote higher density housing, many in the industry recognise it is still the low density, peripheral forms of housing that are easiest to obtain planning approval for.

While objectives and policies may anticipate increased housing density in existing areas of a city, it is against the more conservative district plan rules, which continue to reflect low density housing, that the effects of new development are measured.

As a consequence, many developers adopt ‘compact suburbia’ approaches when redeveloping sites in existing centres rather than more appropriate urban typologies that could enable land and other resources to be used more efficiently.

A contributing factor here is the highly distributed ownership of land in these areas, which can make it difficult for developers to create parcels large enough to enable economies of scale and through which restrictive rules applying to perimeter boundaries shared with neighbours can be relaxed and amenity ensured through good design. The efficiencies and shared amenity benefits associated with terrace housing and other urban typologies cannot be secured through redevelopment of individual quarter acre plots.

The difficulties associated with redeveloping in the currently built up areas of a city lead many developers to retreat to peripheral sites, where they can enjoy economies of scale and few, if any, planning barriers.

As we won’t be moving away from a market-driven supply of housing in the near future, the Government must do more to enable and direct the market to provide diverse housing in the right areas.

Successive governments have sought to do this by streamlining the RMA and, more recently, requiring councils to provide capacity for anticipated growth in their plans. The current Government has taken this approach further through the proposed National Policy Statement on Urban Development, but will this be enough?

The policy privileges upward and outward growth equally and, as has been noted, the private sector will continue to work those areas where it encounters least resistance. Government policy is necessary to direct housing intensification close to urban centres. As one of our respondents noted, “district plans should be written to expect medium density housing as the norm”.

As the largest homeowner/landlord, government is also in a position to lead by example. More diverse forms of state-owned housing should be created appropriately around existing centres, which will primarily benefit its tenants but could also encourage others as well.

Over the past decade, Housing New Zealand partnered with private developers to renew and develop its housing stock. While tenure in these areas became more diverse, the physical configurations continued to pursue inefficient, less diverse compact suburbia models.

With the establishment of Kāinga Ora—Homes and Communities last year, the Government has indicated intentions to be more responsive and responsible in this area. The initial results of development under this model are encouraging, with more state housing being located in close proximity to suburban centres in the Wellington and Auckland regions.

The Urban Development Bill would provide Kāinga Ora with the tools to confront barriers to brownfield redevelopment by enabling site acquisition and the ability to override RMA obstacles. In a more ideal world, the RMA would be an enabler of better housing development, not a barrier to it.

Regulatory planning creates challenges private housing providers must overcome if they wish to create more diverse forms of housing in already built-up areas. This leads many to opt for simpler options, which in turn does little to address the housing crisis. Leadership is needed at central and local government levels to help ensure district plans and their administration come to expect more intensive forms of housing in the right areas.

This article was originally published on Newsroom.