The Kākā by Bernard Hickey
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Watching the ladder being pulled up in real time
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-11:44

Watching the ladder being pulled up in real time

Inside the panel quietly strangling the home ownership dreams of another generation & killing Wellington's future with lines on maps banning extra supply in a city with increasingly unaffordable rents
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Stuck in that flat: Home ownership hopes are receding further for millennial and Gen Z Wellingtonians after the rulings on a new district plan for the city. Photo: Lynn Grieveson / The Kākā

TL;DR: Shock and outrage is mounting at the rulings of the Independent Hearings Panel (IHP) on a new District Plan for Wellington City, which actually expand character protections on villas on the equivalent of an extra 120 rugby fields in the leafiest inner city suburbs such as Mt Victoria, Thorndon and Kelburn.

The panel’s rulings fly in the face of evidence in Auckland and Christchurch that increasing housing densification and supply reduces rent and house price inflation. Politicians, economists, most urban planners and housing advocates are gobsmacked and are now pleading for Wellington City Councillors to reject or rewrite the de-densification implied by the IHP’s rulings when they vote to progress the new plan on March 14.

The panel pictured below actually argued over 300 pages of reports there was no evidence they could see that more supply of land zoned for a lot more dwellings per hectare would improve affordability. They simply shrugged and wrote that housing near city centres would always be unaffordable and nothing could (or should) be done. They even ruled the Johnsonville train line was not rapid transit enough to build a lot more homes around and they rezoned areas based on the idea commuters would not be able to cycle up Wellington’s hills and therefore carparks and roads were essential.

In my view, the eight commissioners on the panel should answer these questions1 before that March 14 meeting of the Wellington City Council:

  • Do you own a home and/or rental properties?

  • How much in untaxed and leveraged capital gains on land values have you and your families made in the last 30 years from home ownership?

  • Have you had to help any of your children with deposits or guarantees to buy their own homes and/or had to help them to pay rent while studying or on low incomes?

  • Are any of your children or near relatives living in Australia or elsewhere because they have given up on a healthy and secure future of family home ownership in Wellington or elsewhere in Aotearoa-New Zealand?

  • Have you or the firms and organisations you’ve managed had trouble recruiting young staff because of housing costs?

The same questions should be put to all the councillors making the decisions, as well as the politicians and economists commenting on the plan’s recommendations. That should including National, ACT and New Zealand First ministers professing surprise and concern over the IHP recommendations, while also moving to allow councils to opt out of densification and supporting the complaints of NIMBYs about ‘daylight robbery’ and new Kainga Ora developments ‘lowering property values.’

Elsewhere in the news in Aotearoa-NZ’s political economy and beyond at 9 am:

  • Christchurch Mayor Phil Mauger has secured a meeting with ministers later this month to halt Christchurch’s district plan process to stop the densification ordered by the previous Labour Government via the NPS-UD and MDRS, which at one point was also supported by National, The Press-$$$’s Sinead Gill reported this morning.

  • The Supreme Court ruled yesterday to overturn High Court rulings blocking iwi Leader Mike Smith’s attempts to sue Fonterra, Genesis, Dairy Holdings, NZ Steel, Z Energy, Channel Infrastructure and BT Mining for damages from their climate emissions, RNZ’s Eloise Gibson and Stuff’s Olivia Wannan report.

  • Jobs growth, unemployment and wage growth figures for the December quarter were stronger than expected yesterday, raising market expectations to around 20% from nil that the Reserve Bank will hike another 25 basis points on February 28 , with a speech due next Friday morning from Governor Adrian Orr now in focus.

  • Insurer Suncorp (Vero and AA Insurance) has warned the Government of higher home insurance premia and less coverage, saying that “New Zealand no longer presents only significant earthquake risk, but also significant weather risk to reinsurers,” The Post-$$$’s Rob Stock reported this morning.

  • The Post-$$$ is reporting Science Minister Judith Collins has cancelled Labour Government plans for a $450 million science hub in Wellington.

  • Alex Spence reports for NZ Herald-$$$ this morning from MSD OIA documents that hundreds of disadvantaged teens are now expected to spend virtually their entire working lives on a main benefit, at a cost of nearly $1 million each in future payments, according to modelling by actuaries Taylor Fry.

Full paying subscribers can read and hear more detail in my Dawn Chorus podcast above and below the paywall fold. Join our community of paying subscribers to get access to ‘Hoon’ webinars, our private chat system and be able to comment on articles. Paying subscribers also support the public interest journalism we do at The Kākā on housing affordability, climate emissions and poverty. They can request it be opened publicly.

Watching the ladder being pulled up in real time

This is how awful things actually happen in democratic societies: faceless lawyers, accountants, planners and bureaucrats change the rules in a committee and then issue a doorstop of a report that few read or understand, but which circumscribes the choices of generations for decades.

They’re not being evil or deliberate in causing the mountains of pain and expense that these decisions unleash. They’re responding to decades of political, cultural and legislative messages and practices they consider normal and, shockingly, good.

The Wellington City Council District Plan IHP panel’s report(s) from these commissioners are already being seen as a landmark for being completely out of touch with the problems in our society and on our planet.

The faces on the committee that recommended a de-densification of Wellington. (Supplied via IHP document)

Here’s how The Post-$$$’s Tom Hunt reported the reaction today:

Recommendations that would give character housing protection to the equivalent of more than 200 rugby fields in Wellington are seen as a kick in the guts by a housing advocate.

A panel of independent experts is advising Wellington City councillors as they look at revising the city’s district plan — essentially the city’s rule book.

The Independent Hearing Panel’s latest recommendations suggest a dramatic increase in the areas given protection from housing intensification — or apartment blocks — in order to preserve their character.

Under the recommendations, most Wellington suburbs will get a larger area of character protection. However, the eastern Wellington suburb of Kilbirnie is earmarked for greater intensification.

“They really do fly in the face of evidence,” he said.

It is the latest in a long-running debate in the capital, where there is already a housing crisis and an extra 50,000 to 80,000 new residents are expected in the coming 30 years. The debate is roughly split between those who don’t want apartment blocks in existing suburbs, and the so-called YIMBYs (yes, in my back yarders) who favour intensification over sprawling green field developments. The Post-$$$’s Tom Hunt

The reaction reported via BusinessDesk-$$$’s Dileepa Fonseka was just as shocked and appalled in its tone, although a couple of those ‘shocked’ by the decision (National’s Chris Bishop and ACT’s Cameron Luxton) have only themselves to blame by prevaricating on their apparent support for more housing supply and enabling NIMBY objections to densification.

The Greens’ infrastructure spokeswoman and MP for Rongotai, Julie Anne Genter, slammed the assessment. "It's just the most absurd statement I've ever heard that increasing the supply of housing will not affect affordability,” she said. “It's like saying there is no evidence the earth is round."

Labour's Wellington issues spokeswoman Ayesha Verrall called it bizarre. Genter said increasing zoned capacity and the supply of houses had been shown to have held back rent increases in Auckland after the unitary plan was put in place – even if the new buildings enabled through upzoning changes had been expensive initially.

The IHP report referenced evidence suggesting there was more than enough capacity provided for in the plan change and said it wasn't clear that existing constraints were the cause of housing affordability problems. However, Genter said cities needed to zone for roughly three times as much housing capacity as forecast population growth to make a dent in affordability.  BusinessDesk-$$$’s Dileepa Fonseka

ACT ‘bufuddled and bewildered’

Act’s infrastructure spokesman, Cameron Luxton, was as befuddled by the report as his counterpart in the Greens.

"It’s clear the IHP report is lacking some economic sense," Luxton said. "While there are multiple factors at play, all else being equal, it’s economics 101 that an increase in the supply of something will lead to a greater affordability.

“Economies of scale mean upzoning in areas with existing infrastructure, such as through intensification, can involve lower infrastructure costs than growing out into new places.” BusinessDesk-$$$’s Dileepa Fonseka

In my view, ACT is talking out of both sides of its mouth by insisting on Councils being able to opt out of densification, while also saying the only solution to the housing crisis is more housing supply. Its argument can be summed up as: ‘we want lots more houses built, but just somewhere not near our supporters, and they shouldn’t have to pay for it.’

ACT has been a vocal critic of the medium density rules, a supply-side response to the housing crisis that allows three homes up to three-storeys high on most sites in tier 1 cities. 

The party has put forward a range of arguments against the directive, including concerns about infrastructure in existing suburbs being unsuited for density. Some people wouldn’t want to live in dense housing developments, Luxton said, and councils needed to ensure they were zoned for the type of housing people wanted.

“That can involve significant infrastructure costs, but the provision of such infrastructure is a core function for councils,” he said. “If they want to penny-pinch, they should look at winding back lower-priority spending in other areas.” BusinessDesk-$$$’s Dileepa Fonseka

National’s tears also appear crocodile-ish.

Housing minister Chris Bishop also appeared to disagree with the assertion from the IHP about extra supply not improving affordability. 

"Wellington has a housing crisis, and restrictive zoning rules are a big part of the problem,” Bishop said he expected to make an announcement soon regarding government plans to make the medium density residential standards (MDRS) optional, and to make councils zone for 30 years’ of supply, something a number of major councils say they have already done.

The notified plan change put forward by Wellington City Council, which provides for significantly more zoned housing capacity, incorporates upzoning directives in the national policy statement on urban development (NPS-UD) and the MDRS. BusinessDesk-$$$’s Dileepa Fonseka


Chart of the day

A chart to chill the bones of wine marketers

Jesse Mulligan notes in his new Substack that a recent summer winery concert reported Gen Z are not shifting to drinking wine.

Quote of the day

Hope for a generation evaporates

“We are all at our wits’ end,” City for People spokesperson Luke Somervell via The Post-$$$ after reading the Wellington IHP recommending EXPANDING character protection of Wellington’s villas to 206 hectares (the equivalent of more than 200 rugby fields) from 85 hectares in the draft plan.


Cartoons of the day

Anyone listening?

Rod Emmerson via NZ Herald-$$$ and X

Self awareness Trump style

Morten Moreland for The Times and via X

Timeline cleansing pic of the day

Abundance in the Gulf

Ka kite ano

Bernard

PS: Thanks to all the subscribers who corrected my Cabbage Tree error yesterday. They were Yuccas. My subscribers are often better informed than me on plant identification. Pretty sure they are bananas above though.

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1

None of the answers to these questions are in the declarations of conflict of interest by the IHP on its website.

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The Kākā by Bernard Hickey
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