Thursday, 19 March 2015

We are not alone

We all know that demand for housing in Auckland is high, and supply is scarce. As the Governor of the Reserve Bank put it in a speech in February
Auckland’s housing shortage is estimated to have increased over the past year to between 15,000 and 20,000 dwellings, and the Auckland Council estimates that 10,000 houses a year will be required for the next 3 decades. Residential building permits are currently running at an annual rate of 7,700 – a 70 percent increase over 2012 and twice the 2011 level, but well short of the increase that needs to be sustained over a long period.
What people may not know is that our problem is not unique: Sydney's exactly the same, as a recent report prepared by MacroPlan Dimasi for the Property Council of Australia shows. Here's the guts of the findings, from the Property Council's press release, and the full report is here as a pdf.
  • In the first decade since housing targets were set for councils, they have collectively come up over 51,000 homes short – or 23 percent
  • Annual approvals over the past decade averaged 17002 – against a target of 22,178
  • Against population growth, the annual shortfall increased to 5632 – or 56320 over the decade
  • Population projections show Sydney will need to produce 31,076 new homes each year – but based on the current rate of approvals, the annual shortfall is 14,073
  • Even in the favourable market over the past three years, Sydney has averaged 23,350 approvals per year
  • Only five councils in Sydney are currently issuing enough approvals to keep pace with projected population growth.
 Here's an extract from the key Table 2 in the report which seemed to me to be quite interesting.

While the report, and the Council, are rather critical of local authorities' performance in issuing enough building consents, that doesn't seem entirely fair to me. Look at Canterbury in the table. According to the Great Plan From On High, Canterbury was supposed to issue building consents for 263 dwellings a year (column 1 of data). In the event it actually issued 324 (column 2), and got a gold star for achieving 123% of target (column 3) with 61 more than needed (column 4).

Unfortunately for the Canterbury planning office, however, those damn cussed humans weren't following the Great Plan when it came to deciding where to live. Far more of them were actually living in Canterbury than the Great Plan favoured: ideally there should have been 611 new dwelling projects consented to house the actual inhabitants (column 5). Building consents were 287 less (column 6) than actually needed, or only 53% (column 7) of what they needed to be. So rents and prices soared, and living space became tighter, as people were forced to scrunch up with their families, friends and flatmates. People, in short, didn't want to buy what the Great Plan was selling.

So yes, there is still an issue of local authorities not reacting to the actual demand for housing with enough consents in good time (though to be fair, the likes of Canterbury may well have felt constrained to stick to somewhere in the general vicinity of the Great Plan). And the planning process in Sydney is as rickety and slow and expensive and inconsistent as it is here: if you're into the microminutiae of planning processes the MacroPlan report has some detailed suggestions for improvement on page 28, most of which look as if they would be equally applicable to us, including "A broad scale review of employment trends and new employment needs in conjunction with housing needs — to identify land-use opportunities for housing development such as rezoning disused
industrial lands to residential", and "A more responsive development assessment system that curbs costs and recognises that ‘speed to market’ is crucial".

But there's also the bigger issue of getting a better match between the Great Plans of this world and what people will actually sign up for. I can see value to a Great Plan from a variety of environmental, social and economic perspectives (coordination with infrastructure investment, for example). And no doubt many planners would say that their Great Plan is the end result of extensive community consultation, and at some level is what the people want. Well, maybe. But in Sydney at least - and maybe Auckland planning aficionados will chip in about the situation closer to home - it hasn't turned out that way.

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