David Clendon

Sprawling housing not really cheaper

by David Clendon

As promised, some further thoughts  about the way Auckland should or could grow. One of Auckland’s biggest problems is housing affordability and any plan to grow the city must address this. 

While housing affordability is a serious issue for all NZers, it’s particularly bad in Auckland. Recently I asked the Parliamentary library to do some research which showed the average house price in Auckland is generally at least $100,000 higher than the national average.

This is largely because Auckland is growing so quickly  - and it’s going to get worse! Another 600,000 people are predicted to move into Auckland over the next 20 years.

Unfortunately, it seems the government has brought into the myth that the best way to increase housing affordability in Auckland is to encourage greenfields development on the fringes of our cities.

This is at best only a short-term solution to housing affordability. Houses on the urban fringe may cost less for first time buyers but over time they’ll cost us all more. Why? Well, the cost to local and central government of providing new infrastructure and services (e.g., waste disposal, water, electricity, roads, public transport) to spread out developments on the peripheries of cities is high.

The Auckland Regional Council commissioned a report into this recently. It looked at various scenarios for Auckland’s growth.

It found that if Auckland was allowed to grow outwards rapidly at a low density it would cost $10 billion more to provide just transport infrastructure (let alone water, energy etc), than if it grew in a more compact fashion.

That’s a lot of extra rates for people to pay!

Also, the cost of transport for people who buy houses on the periphery of our cities is significant.  For example, to commute by train from Ranui to the CBD would cost $170/month. Of course, any family living in spread out Ranui would likely need a car as well with all the related running costs.

Right now, it might still be cheaper to buy a house in Ranui and commute than live in the CBD. But given the various reports coming out about the likelihood of increases in oil prices (and petrol has cracked the $2.00 / litre mark again) , it seems very likely that the cost of transport (particularly private vehicles) will rise dramatically in the near future.

Finally, the more people live on the outskirts of our cities in areas with poor public transport the more likely they are to commute by car. Added congestion on motorways heading into the cities costs us all in terms of lower air quality, wasted time, and stress.

And, of course, when they get into town they need to park their cars somewhere - taking more space in the centre of our cities that could otherwise be used more profitably for housing or commerce.

So is sprawl really a long term solution to housing affordability in Auckland? I doubt it. I’ll blog more about Green solutions to this problem next week.

Published in Economy, Work, & Welfare | Environment & Resource Management | THE ISSUES by David Clendon on Wed, December 15th, 2010   

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