Julie Anne Genter

On housing affordability and transport: it’s the parking, stupid.

by Julie Anne Genter

There are two parallel debates going in Auckland that really need to be combined.

On the one hand, we have a housing affordability crisis. The solution, we are told, in the very disappointing  Productivity Commission draft report, is to free up more land for development on the fringes of the urban area. This will presumably bring down house prices, though it will result in higher transport and infrastructure costs.

On the other hand, we have a chronic transport problem, which we hear about all the time. The Auckland Council has a huge funding gap, and have just released an (also slightly disappointing) paper on possible ways of raising revenue to fund all the big roading projects and the critical city rail link.

The Government’s supposed solution to congestion is to spend over $1 billion a year for at least the next decade on just a very few expensive motorway projects (which will do nothing to lessen congestion on existing local roads), raise fares on buses, and stymie the Auckland Council from raising revenue to pay for the city rail link.

I bet if I told you there is an extremely low cost solution to both of these problems, which will actually be better for business and households (and developers!), you would think it is too good to be true. But it is not.

Cars take up a lot of land. So much more than we realise.

For decades, planning rules have set aside huge amounts of land for car parks, which inflict large costs on developers and reduce the availability of land for productive uses including housing. These costs are passed on to us, of course, through higher rents, and higher prices for goods and services. Because we rarely pay directly for parking, we all collectively pay much more for it. And “free parking” and car oriented development, forced on us by traffic engineers and council planners (who meant well), has resulted in worse peak hour congestion, by 1) massively subsidising single occupant vehicle trips, and 2) making it nearly impossible to get around the city in any other way.

Proponents of car oriented sprawl claim they want to improve housing affordability, but try to deny the huge cost of minimum parking requirements.  One would think good free marketeers would support removing bad government regulations. They also attack ‘smart growth’ and compact development as being unaffordable.

But wait, why would compact development result in higher land values than sprawl?  It takes up less land, and per capita infrastructure costs are lower.

Is walkable compact development more expensive because in fact, people prefer it to sprawl, and the transport costs are lower?

It’s no accident that the least affordable cities in the world are the places where people want to live, and vice versa.

I’m not saying that everyone wants to live in walkable neighbourhoods. But the Urban Land Institute has done some research that has shown the market share in the US is something like 30%. The supply of housing stock that is compact and walkable is about 2%.

This is a significant market failure caused by planning and traffic engineering regulations, among other things, and it likely the reason why compact walkable neighbourhoods well-served by public transport are unaffordable — the supply is very low relative to demand.

This seems to be a problem in Auckland as well, as noted by Barfoot and Thompson yesterday on morning report (at 6’08″). The suburbs that have become the least affordable in Auckland are largely inner-city suburbs, many of which are fantastic and walkable, because people don’t want to waste time commuting if they can avoid it.

So in fact, the solution to our land affordability and our transport problems is one and the same: get rid of minimum parking requirements. Allow more urban land to be used for truly productive uses. Invest in better infrastructure for walking, cycling and public transport.

There are other tools we can use to improve housing affordability, like a capital gains tax and increasing the supply of state housing. But increasing car-oriented development on the fringes of Auckland is not a long-term solution to housing affordability. It will result in higher transport costs and worse traffic congestion, and we could just follow the USA down the path of financial ruin.

We can retrofit our existing low density, car-oriented urban areas for less than what we are spending now, and it will improve transport AND housing affordability, plus create lively, walkable neighbourhoods that New Zealanders obviously value. (Example below, or more here.) But we need to put the paradigm shift on the radar of the Productivity Commission, the Government, and the Auckland Council, because for the moment they are missing our best opportunity to respond to the environmental and economic challenges we are facing, and foster smart green towns and cities.

Use the slideshow controls at the bottom ^ to browse through.