More needed to meet Unitary Plan goals

Under Auckland’s new Unitary Plan, there is now capacity for more than 400,000 new dwellings to be built to meet the demands of the city’s growth over the next 30 years.

While everyone agrees this is necessary, a chorus of voices are suggesting there are issues that have to be overcome to achieve the Unitary Plan’s supply goals. 

According to ASB’s latest Home Economics report, Auckland is highly regulated and has an inflexible planning process which has driven up development costs and led to a sluggish supply response.

The bank’s chief economist Nick Tuffley said that while the Unitary Plan is relaxing regulations further, the new rules will not drastically reduce the level of regulation.

This means the impact of the Unitary Plan on housing supply and prices may not be dramatic.

It will be uncertain for a number of years whether the dial has been shifted enough to ensure that Auckland can adequately cope with its future growth, he said.

“And, arguably, the supply response needs to be swifter than what has been seen to date during five years of a booming Auckland housing market.”

Further, boosting housing supply is more than just granting permission to build, Tuffley said.

“New homes also need the infrastructure to support them. So infrastructure provision goes hand-in-hand with new home building.”

To this end, it is critical to acknowledge that planning regulations, along with the associated trade-offs, play a part in the development of supply, he added.

It is not just ongoing issues with planning that could limit the impact of the plan, it is also capacity issues in the construction industry.

Infometrics chief forecaster Gareth Kiernan said he doesn’t see anything much happening till 2017.

“We would expect a pick-up in townhouse and apartment building to occur as a result of the Unitary Plan. But there’s a few jumps yet, so it will take more than a 12 month period to show some effect.”

One major reason for this is the shortage of labour, particularly skilled labour, in the construction industry.

As a result, Keirnan said he has concerns about what scope there is for residential construction activity to increase further from its current levels.

Costs may go up to some extent, but there is only so far you can push productivity – even if you lift costs, he said.

“Under the Unitary Plan they have said they need something like 19,000 new dwellings every year for seven years. But this year consents are running at around 10,000. So that goal of 19,000 just doesn’t seem obtainable.”

In his view, a lack of supply to meet demand is going to be a persistent problem in Auckland for some years to come yet.

Prominent Auckland developer David Whitburn also said there are capacity issues in the construction sector.

“We have failed Auckland like we did Christchurch with its rebuild, by not having enough suitably qualified tradespeople to cater for the demand.

“We need to encourage in secondary school and tertiary institutions more trade courses and bring in skilled teachers and workshops and specialised rooms to cater help this.”

Infrastructure was another problem, Whitburn said.

“There are massive infrastructure issues in Auckland right now, which are really holding us back.

“Wastewater, stormwater, roads, power, schools (rolls under pressure and we need many more) and more are needed. We need to do much more here.”