Auckland Zoning Reforms: Lower Price Increases & Increased Density

Auckland’s 2016 decision to allow higher-density housing presents intriguing data on moderating house price and rent growth, offering insights for cities grappling with housing affordability.

Why it matters: In a world where skyrocketing housing prices are the norm, Auckland’s zoning policy offers a potential blueprint for stabilizing if not entirely reversing, the trend. The experiment could become a guide for cities globally.

Driving the news:

• Auckland removed certain zoning restrictions in 2016, green-lighting higher-density developments.
• Building consents saw an immediate surge after this policy was proposed.
• While rents in other major New Zealand cities climbed, Auckland’s rents gradually rose.
• House prices, too, are growing, but at a reduced pace compared to national trends.

Details:

• Before the 2016 policy, most of Auckland’s city land was designated for buildings of a maximum of two stories, covering only 35% of a land block.
• Now, zones exist where buildings of five to seven stories, occupying up to 50% of the block, are permissible.
• While critics argue that increased density can impact “neighborhood aesthetics” and potentially lower property values, many homeowners have seen their property values climb, especially those selling large lots to developers.

State of play: New Zealand faces housing challenges, with historically high costs and lower wages than other developed nations. Auckland’s experiment is a bright spot in an otherwise challenging landscape.

Yes, but: House prices are rising at a gentler pace, yet they haven’t taken a nosedive. (It’s worth noting that many reform critics also continue to caution against decreasing prices.) Additionally, a surge in building consents doesn’t necessarily translate to actual construction.

What’s next: The success of Auckland’s zoning changes influenced the creation of the nationwide Medium Density Residential Standards (MDRS). But with the upcoming NZ elections, the future of this policy — and Auckland’s continued experiment — is uncertain.