Auckland, New Zealand — The correlation between increasing housing supply and keeping property prices in check has been confirmed by Auckland’s experience with radical zoning reforms. In 2016, a significant shift in zoning laws in New Zealand’s largest city resulted in a construction surge that successfully countered the steep rise in house prices and rents observed nationwide.
Pre-2016, Auckland’s planning regulations severely hindered the construction of sufficient homes, which Ryan Greenaway-McGrevy, a research economist at the University of Auckland, attributes to the disproportionate 10% population growth and just 5% increase in occupied homes between the 2013 and 2018 censuses.
This insufficiency caused a 130% surge in Auckland’s house prices from 2011 to 2021, exacerbated by zoning regulations favouring single-family detached homes.
Paving the Way
The change was initiated in 2010 when Auckland Council was formed by amalgamating seven city and district councils. The central government mandated creating a spatial plan, the Auckland Unitary Plan, to guide future growth with uniform land use rules.
The draft, issued in 2013, aimed to concentrate 60-70% of future development within the existing metropolitan area, curtailing urban sprawl. However, the New Zealand government eventually took charge, appointed an independent panel for submissions, and returned with a more ambitious version in July 2016.
The final plan categorized residential zones into three intensities: the highest permitted five to seven-storey buildings in areas with robust transport connections; the next allowed three-storey buildings; and the least intensive permitted two-storey structures with more extensive site coverage.
As a result, 75% of Auckland’s residential land was upzoned, tripling its dwelling capacity. In comparison, the remaining 25% was preserved for heritage reasons or inadequate transport connections.
The plan’s implementation in November 2016 marked the onset of a construction boom in Auckland, with dwelling approvals soaring from 4,500 in 2012 to over 21,000 in 2022. Notably, the current boom, focused on multi-family and mid-rise dwellings, is approximately double the size of the 2002-2004 boom centred on CBD high-rise apartments.
Impact on Prices
The surge in supply effectively moderated rent and house price increases. Rents in Auckland rose by 10-20% since 2016, compared to a 40% increase in Wellington, while house prices increased by about 20%, significantly lower than the 70% hike outside Auckland.
Auckland’s success could be a model for other cities grappling with housing shortages and soaring prices despite the inevitable changes to neighbourhood character and urban form.
The Way Forward
Ultimately, Auckland’s experience underscores the necessity of zoning reforms in addressing housing shortages and keeping property prices in check. This lesson could prove invaluable for cities worldwide.