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AucklandAugust 1, 2016

Shamubeel Calls Bullshit #2: on Andrew Little’s problem with the Unitary Plan

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Labour says the Unitary Plan won’t provide affordable housing. Our mild-mannered economist Shamubeel Eaqub says that ignores the basics of supply and demand.

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People are getting worried the new Unitary Plan won’t provide enough affordable housing. Modelling done for the Independent Hearings Panel that authored the plan appears to show only 15% of the 247,000 new homes planned inside Auckland’s existing urban boundaries will cost less than $800,000. Labour Party leader Andrew Little has seized on those figures, saying they’re proof the new plan won’t provide for prospective home buyers on lower incomes.

He is missing the point. The panel’s modelling doesn’t look forward. It projects what would happen if new houses were built in the current market. The word current is important. It locks the cost of land in at its present, unaffordable level.

That’s not going to be the case. The Unitary Plan allows for 400,000 extra houses by 2040 – nearly double the amount we currently have. Its gigantic, unprecedented, ambitious aim is to oversupply the Auckland housing market. That will inevitably reduce house prices. It’s the basics of supply and demand: where there’s more supply, prices will fall.

The chart below* shows the history and future paths for Auckland houses and population.

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The ‘high’ Auckland population projection from Statistics NZ vs housing stock data from the recommended Unitary Plan, the council’s final Unitary Plan submission and the council’s draft plan.

The key takeaways are:

  1. The council’s initial plan was silly. It would not allow for enough population growth.
  2. The revised plan was better, but there was no room for error.
  3. The recommended plan is vastly superior, because it allows for more than enough housing for likely population growth. It also allows for falling household size (that is more houses for a given population) for an ageing population.

This new plan goes further than any other when it comes to actually supplying Auckland with the land we need to make housing affordable over time.

To suggest otherwise is bullshit.  

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* Before anyone gets all annoying about scales and charts, it is an illustration. And there is a reason for using the axes: the household size in Auckland has been broadly stable at a little over 3 people per household for many decades. Although we should plan for falling household size over time, due to an ageing population.

Keep going!
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AucklandAugust 1, 2016

The Coalition for More Homes’ open letter to the Auckland Council

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A group calling itself ‘The Coalition for More Homes’ emerged this morning, bringing yet more pressure on the Auckland Council to pass the Unitary Plan.

This morning The Spinoff received an email from a group calling itself ‘The Coalition for More Homes’, demanding, essentially, more homes. What’s interesting and significant about the group is its make-up: groups as diverse as Generation Zero, Unitec, the Property Council, Habitat for Humanity, The Salvation Army and Ockham Residential all uniting under a banner demanding that the Unitary Plan be passed. We will be following this story with interest, but have decided to publish their open letter below.

To the Governing Body of Auckland Council,

Mayor Len Brown, Councillor Penny Hulse, Councillor Arthur Anae, Councillor Bill Cashmore, Councillor Linda Cooper, Councillor Alf Filipaina, Councillor Calum Penrose, Councillor Cameron Brewer, Councillor Cathy Casey, Councillor Ross Clow, Councillor Chris Darby, Councillor Chris, Fletcher, Councillor Mike Lee, Councillor Dick Quax, Councillor Sharon Stewart, Councillor John Walker, Councillor Wayne Walker, Councillor John Watson, Councillor George Wood

Everyone deserves a safe, healthy, and affordable place to live. But housing options in Auckland are becoming too scarce and too expensive. Auckland is in the midst of a housing crisis. The median income to median house price ratio has now exceeded a ratio of 1:9 making it one of the most expensive cities in the world. Rents have been increasing seven times faster than the rate of inflation.

Across the board, everyone is forced to spend too much on housing. It doesn’t have to be this way. Auckland’s culture and quality of life is being threatened by the high cost of housing. There is a growing divide between homeowners and those now locked out of the housing market. Unless we do something, we will lose our teachers, our new residents and our young people. Even middle-income families will be forced out, except for those lucky enough to already own their own home. These are just some of the many reasons we need to solve the city’s housing crisis.

The immediate cause of the problem is straightforward: we are not building enough housing to meet the demand. One reason for this is that former council planning rules unduly restrict housing development and a mix of housing types in places where people want to live.

On 20th of July, the Independent Hearings Panel issued their findings on the Unitary Plan. These recommendations include a range of strategies to allow for more housing across the City. The Unitary Plan is not the only action that is needed from Auckland Council and the Government to address the housing crisis – but it is an urgent first step.

The Unitary Planning process, including the Independent Hearing Panel review, has taken four years. The time for deliberating is over, the process has been followed, it’s time to get on with it. That is why the following signatories are calling on you to vote to pass the Unitary Plan as received from the Independent Hearings Panel and make it operative in August 2016.

Yours sincerely,

The Coalition for More Homes

Generation Zero
Greater Auckland
Community of Refuge Trust
The Salvation Army
Shamubeel Eaqub
Unitec Institute of Technology
Urban Auckland
The Morgan Foundation
Ockham Residential
Property Council of New Zealand
Habitat for Humanity
Jasmax
Monte Cecilia Housing Trust
Bays Community Housing Trust
Crosson Architects