Property

Rules for massive residential intensification only weeks away

Just eight weeks away plans will be in place for huge residential intensification of Auckland, Hamilton, Tauranga, Wellington, Christchurch and Rotorua mainly through multi-unit development.

Wednesday, June 29th 2022

The Government’s National Policy Statement on Urban Design (NPS-UD) and the introduction of Medium Density Residential Standards (MDRS) obligates councils to set out new development standards by August 20 at which time they must publicly notify plan changes.

The NPS-UD allows Tier 1 councils (Auckland, Hamilton, Tauranga, Wellington, Christchurch and Rotorua) to intensify land use through the development of up to three dwellings of up to three storeys per site as a permitted activity without the need for resource consent.

The legislation has significant implications for city planners, developers and property owners, says Colliers International in a recent research report. 

Advocates argue intensification will lead to better functioning, more sustainable cities and will enable the development of more homes in areas closer to places of work, public transport and community facilities.

Critics say the scale of intensification which the legislation allows will adversely change the character of communities, lead to the loss of heritage homes, and place additional pressure on existing infrastructure.

Multi-unit trend

Increases for land zoned for greater intensification will bolster the growing trend towards multi- unit development.

Figures released by Stats New Zealand show that in the year to March this year 50,828 new homes were consented and it is the first 12-month period where there have been more multi-unit homes consented than stand-alone houses.

Multi-unit consents numbered 25,475,comprising 50.1% of total residential consents up from 18.8% in 2012.

In Auckland the influence of higher intensity development is more significant. In the year to March, 15,007 multi-unit dwelling units were approved, a new record, up by about 38% on the 2021 figure. Multi-unit development comprised 70% of residential dwelling consents across Auckland, a figure which stood at 22% a decade prior.

The MDRS will apply in all residential zones (except large lot residential and settlement zones), including areas that are being rezoned as residential.

Supersizing the super city

The impact of the legislation will be particularly significant to Auckland.

Auckland Council wants intensification within walkable catchments of metropolitan and town centres and adjacent to public transport routes.

The walkable catchments and heights of development proposed are:

A 15-minute walk (1,200m) from the city centre (enabling at least six-storey development)

Auckland’s 10 large metropolitan centres: Newmarket, Manukau, New Lynn, Sylvia Park, Botany, Papakura, Takapuna, Henderson, Albany and Westgate (enabling at least six-storey development)

A 10-minute walk (800m) around the metropolitan centres (enabling at least six-storey development)

A 10-minute walk (800m) around train stations and rapid busway stops - such as the stations for the Northern Busway (enabling at least six-storey development)

A 5-minute or less walk (400m) around large town centres with high accessibility (enabling five-storey development)

A 3-minute or less walk (200m) around small town centres or large local centres with high accessibility (enabling five-storey development)

Land within the proposed light rail corridor through Dominion Road, has not yet been zoned for intensification, however the council signalled potential changes by designating the corridor a precinct under investigation. Other precincts also remain under investigation.

The MDRS has resulted in a majority of land previously zoned as residential single house and mixed housing suburban being changed to mixed housing urban. Another significant change being made by the council, in order to meet its statutory requirements, is the removal of minimum requirements for onsite car parking.

Scope for variations limited

There is scope for movement on issues such as the extent of walkable catchments within which more intensification should be enabled.

Councils may exempt some areas and properties from the intensification rules through the application of “qualifying matters” which are characteristics where intensification standards may be reduced to protect or recognise a particular feature or quality such as sites of cultural, historic or ecological significance.

Concerns over change in character

There are concerns the widespread nature of changes will result in the character of suburbs being adversely affected through the loss of heritage properties. The position regarding heritage properties is a complex one.

Auckland Council is taking steps to address these concerns through confirmation that it is proposing to include identified Special Character Areas (SCA) as a qualifying matter. This would ensure the continued protection of many of the city’s older built character areas. What constitutes ‘special’ along with a number of other contributing factors are up for discussion.

Impact on land values

The impact of the new legislation on land values will vary across cities and suburbs. Land values have been rising in the county’s growth cities boosted by high demand for housing which has led to increasing development activity.

The introduction of greater intensity, and therefore development potential in areas of Wellington, Hamilton, Christchurch and Tauranga will likely exert price rises.

In Auckland, there is likely to be greater variation due to the fact the Unitary Plan has been operative for some time. Higher density development has therefore been permitted within areas close to the city centre, metropolitan centres and adjacent to public transport hubs.

Scope for further increases in land values within these areas is likely to be more reserved, capped by development feasibility, particularly given the current rapid escalation in building costs, interest rates and inflation. 

An increase in land values seems greater in areas in which the MDRS is permitting increased development of sites for the first time.

A mitigating factor, however, is the scale of land which falls within this category and the necessary infrastructure to support high levels of growth. This could see property owners facing heightened levels of competition when bringing their property to market, says the Colliers report. 

Where to from here?

Scrutiny over the processes enabling this government directed level of intensification will be the next key consideration, says Chris Dibble, Colliers International’s research director.

Public consultation has already closed, and Dibble expects some changes and alterations will occur as a result of the process. “How much change is unknown given the intense desire to enable faster change.”

“While some short-term uncertainty is evident in residential market conditions that could stall the outcomes, and ongoing challenges will continue to arise from high building costs and suitable levels of infrastructure, it is certain that greater intensification will form a key role in the future development of our Tier 1 cities,” says Dibble.

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