Auckland Economic Quarterly - March 2024
Research shows that Auckland's approach to managing growth has led to a surge in new homes, more housing choices, and positive impacts on house and rental prices.
In the latest Auckland Economic Quarterly, Auckland Council's Chief Economist Gary Blick discusses the effect of the Auckland Unitary Plan, the city's planning rulebook, and how increases in housing capacity brings benefits for affordability.
Significantly more new homes
“Like detectives, economists want more than circumstantial evidence to make their case and, in the case of Auckland, we’re effectively seeing the fingerprints on a smoking gun," says Blick.
"The evidence clearly shows that upzoning for greater housing capacity has generated significant positive outcomes, including substantially more new homes and improved housing and rental affordability.
"The Auckland Unitary Plan is the hero with its bold changes in 2016 to boost housing capacity by rezoning much of our residential land for higher density housing. This shift enabled a substantial increase in new homes and greater housing choices in urban areas near public transport and town centres,” he says.
Research from the University of Auckland finds that around 22,000 new homes consented between 2016 and 2021 were a direct result of upzoning in the Auckland Unitary Plan. To put this into context, that is one-third of all homes consented in residential areas in that period.
That equates to 50 per cent more dwellings consented than would otherwise have been the case.
Blick says this points to the Auckland Unitary Plan being significantly responsible for the recent surge in new homes, beyond what would have been possible without it.
Source: data from Stats NZ
Consents for new homes hit Australian levels
When compared to Australia, Auckland has surpassed New South Wales and matched Victoria in new home consents on a per capita basis. Building consents per capita have also been stronger in Auckland than across the rest of New Zealand, over the past seven years.
This is on the back of Auckland’s record-breaking numbers of building consents, skyrocketing from under 12,000 annually before the Auckland Unitary Plan to over 20,000 in 2021 and 2022.
This upsurge has been driven by new multi-unit dwellings, such as townhouses, as people choose to live in locations upzoned for higher density living, closer to employment, transport options, and amenities - where housing demand is highest.
More homes improving affordability
Blick highlights the pivotal role that enabling more housing density plays in improving affordability. Allowing for higher potential density lowers development costs per dwelling and contributes to a more responsive housing supply and a more favourable trajectory in housing prices over time.
“This trend is reflected in Auckland’s rental and housing prices, which have been on a lower growth path than New Zealand as a whole. Between 2017 and 2024, Auckland rents increased by 22 per cent, compared with 34 per cent nationally.
“Moreover, the University of Auckland research finds rents for three-bedroom homes were 26 to 33 per cent lower than otherwise six years after the Auckland Unitary Plan was introduced.
“This doesn’t mean that Auckland is affordable, but it does show that prices are lower than they would have been without the Auckland Unitary Plan. We have a long way to go yet, but Auckland’s experience shows how land use policy is a powerful lever for enabling more housing to be built,” says Blick.
Choice matters
Auckland Council recently adopted its new Future Development Strategy. This strikes a balance between focusing growth mostly within existing urban areas - especially in locations with proximity to transport and amenities - and in some greenfields growth areas timed for when new infrastructure can be funded and built.
"We need to recognise that choice matters," says Blick. "While some households want to locate further out, many more choose to live closer to jobs, amenities, and transport options to get around. Those preferences have driven demand for multi-unit housing in accessible urban locations.”
"Auckland has enabled enough capacity to cater for projected housing growth over the next 30 years, However, if the goal is to improve affordability, we need to do more than meet these projections.
“This means giving serious consideration to creating more abundant capacity, particularly more new homes in areas of high demand, with good access to jobs, transport, and essential amenities, such as parks, schools, and shops.
“Allowing for more density reduces development costs because less land is used for each new home and there is increased competition among landowners by bringing more development opportunities into play.
"Fortunately, we have the advantage of having this rich evidence base on the beneficial impacts of the Auckland Unitary Plan to inform future decisions about how Auckland grows," says Blick.
Key findings:
- On average, between 2017 and 2023, Auckland issued 9.5 consents per 1,000 residents, compared to 5.9 between 1996 and 2016. The average rate of consents per 1,000 residents for the rest of New Zealand rose from 5.4 to 7.0. The equivalent rate for the Wellington region rose from 4.1 to 5.6.
- This rate of consenting between 2017 and 2023 has outperformed New South Wales (7.1 consents per 1000 residents) and matched Victoria (9.6 per 1000).
- 21,800 new homes consented from 2016 to 2021 were a direct result of the Auckland Unitary Plan and would not have occurred in its absence. That is one-third of the dwellings consented in residential zones in that period.
- Without the Auckland Unitary Plan, there would have been 43,900 consents for new homes between 2016 and 2021, rather than the actual 65,700 consents in residential zones, a 50 per cent increase.
- Rents and house prices in Auckland have been on a lower growth path than New Zealand as a whole. Rents in Auckland increased by 22 per cent between 2017 and 2024, compared with 34 per cent nationally and 36 per cent in the Wellington region.
- Research finds that rents for three-bedroom homes in Auckland were 26 per cent to 33 per cent lower six years after the Auckland Unitary Plan than they otherwise would have been.
The full report
Read the full Auckland Economic Quarterly article here.
Also available is an accompanying Insights Paper: “Zoning reform in Auckland – what can we learn from the emerging literature?” – available here
Sign up to receive the Auckland Economic Quarterly and the Insights papers: email the Chief Economist here.
