Thursday, June 02, 2016

A housing plan which will not lower house prices is a failure

National released its response to the housing crisis today, in the form of a Proposed National Policy Statement on Urban Development Capacity: Consultation document. The short version? Its about blaming councils, not solving the problem.

There's a summary here. Local authorities will be required to monitor housing stocks in their area and plan to ensure that there is sufficient capacity in the short, medium, and long term. If there isn't, then they'll need to do something about it by "further enabling development". Examples of what that involves include "changing plan objectives, policies and rules and their application, activity status, rules about notification of resource consents" and consent conditions. Just to make it clear, the NPS states that in implementing this, "local authorities must in the... medium term, amend relevant plans and policy statements to provide more development capacity".

But this doesn't just apply to housing. The policy will also apply to business land. So, councils will be required to change their plans to ensure more malls and more McDonalds. Which makes it really about another of National's perennial policy goals: taking a hammer to the RMA. They haven't been able to gain a majority in Parliament to do this, so they're doing it by the back door, with an NPS to force councils to gut their own planning documents, under threat of developers suing them.

So will it work? The NPS' Regulatory Impact Statement - oddly, contracted out to a bunch of consultants who advocate urban sprawl - is rather equivocal. But they are very clear about one thing: additional supply will not result in a reduction in house prices. Most of us would consider that to be a failure right there. They also suggest that benefits will accrue to "new entrants to the housing market", because they have a bizarre assumption that new houses are bought by first-home buyers, rather than (as is actually the case) greedy Boomers leveraging the value of their existing homes to speculate on the bubble. But they also highlight that councils are under very real constraints around their ability to provide infrastructure (unmentioned: because those same greedy Boomers want low rates on their unearned wealth). Which means that they may not be able to do what the policy requires, even if they wanted to, unless rates rise or the government raises local body debt limits. The upshot, though, is that no, it won't work. And that's without even getting into the core scenario of landbankers taking all that newly released land and hoarding it for private profit, just like the always do.

So, it won't lower house prices, but it might gut plans. National will consider that a policy win. The rest of us shouldn't.

The good news is that this is currently only a proposal, and still has multiple rounds of consultation to go. And even then, it's judicially reviewable. So if those Auckland NIMBYs don't want tenement apartment blocks overshadowing their leafy green gardens (and to save the rest of us from the RMA being gutted at the local level), they might want to look at that.