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AucklandAugust 1, 2016

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


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.


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.

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.

* 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.

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