New urban development policy ready to go

Announced back in June, the National Policy Statement on Urban Development Capacity (NPS) is one of the government’s initiatives to address the country’s widespread shortage of housing supply.

The NPS will ensure that councils in fast growing urban areas release enough land for new housing and building development to keep pace with the region’s growth.

It will be of most importance to the bigger councils experiencing high growth, like Auckland, but smaller, fast-growing cities, like Queenstown, will also be affected.

Building and Housing Minister Nick Smith has announced the policy has been signed off by government and will take effect on December 1.

He said the long-term root cause of New Zealand’s housing affordability problems is insufficient land supply.

“This is especially the case in Auckland where median section prices increased 350% from 1990 to now; building costs increased only 78% during the same time.”

Councils will now have to allow for a greater supply of houses, so prices rise more slowly and houses are more affordable, Smith said.

“The NPS will require councils to base their decisions on better information, including house prices in their areas.

“It is also a powerful lever for those seeking additional residential zoning from councils in that they can appeal council decisions to the Environment Court on the basis the council is not meeting supply requirements.”

Additionally, the NPS requires local authorities and infrastructure providers to better co-ordinate the provision of services needed to support housing and business growth.

Smith said the speed at which the NPS has been delivered reflects the importance of action on housing, particularly in Auckland, and the increased emphasis on the use of national Resource Management Act (RMA) tools.

“It sits alongside Auckland’s new Unitary Plan and the government’s RMA reforms to address the core issue of increasing land supply.”

While the NPS has been welcomed, some commentators are concerned that the NPS does not include the necessary level of detail and guidance to be effective.

Property Council chief executive Connal Townsend said the NPS is an important instrument to assist councils to meet the demand for urban development.

However, the Council still has concerns over the definition of the term ‘sufficient’, he said.

“Under the NPS, councils are not required to provide additional land over and above what is needed to meet demand.

“This could allow councils to understate demand and overstate capacity to avoid relaxing land use rules to facilitate development.”

Without greater guidance as to which tools councils should use to ensure there is more than sufficient development capacity the NPS will be a wet bus ticket, he said.

This includes independently reviewing the assessments and monitoring carried out by councils and ensuring council plans are responsive.

Townsend said that land supply is only one factor in the development of residential and commercial buildings.

"Roads, water, electricity and transport are all crucial to development but currently there is a massive lack of funding. The NPS will only be effective if there is sufficient infrastructure funding.”

A national conversation about how to fund the tens of billions of dollars of infrastructure required is needed, he said.