Auckland land supply policy plays minimal role in property prices, new report shows

David Norman, Auckland Council Chief Economist

Last Updated : 07 Mar 2020
Auckland land supply policy plays minimal role in property prices, new report shows (1)
David Norman

Auckland’s Unitary Plan, the biggest change in rules about what and where you can build in New Zealand’s history, was introduced in November 2016. Until now, no studies had been done on whether the Unitary Plan and the Rural Urban Boundary (RUB) it introduced affected land prices.

Studies on the now-obsolete Metropolitan Urban Limit (MUL), using data from before the Unitary Plan was introduced, suggested the old planning rules have pushed up land prices by limiting how many new homes could be built inside the boundary.

Our new study: An evidence-based approach: Does the Rural Urban Boundary impose a price premium on land inside it? shows the new planning policies have little to no impact on property prices.

The research analysed almost 37,000 property sales across Auckland since the Unitary Plan and RUB were introduced, and shows that the impact of the RUB is at most between 0.6% and 5.2% of the price of an average property with land that is inside the RUB.

These upperbound figures assume a low estimate of infrastructure costs, so are likely to significantly overstate any premium the RUB may put on land inside it.

Having a rural urban planning policy is necessary to reduce urban sprawl, traffic congestion and carbon emissions. A more compact city has benefits in making public transport more viable and reducing infrastructure costs.

It is important to make decisions on a robust evidence base. Our findings today show that the actual impact of the Rural Urban Boundary on property prices is at most a small fraction of what was previously estimated with regard to the old MUL, and could even inflate prices outside the boundary, once costs for bulk infrastructure are taken into account.

This study provides a reliable evidence base for a grown-up conversation about whether the relatively small premium the RUB may place on property prices is justified given the considerable social costs of more expansive development that are not captured in property prices.

About the RUB

Auckland’s RUB includes development capacity for up to two million new dwellings in existing urban areas, plus an estimated 137,000 more in greenfield areas. Unlike the previous MUL, it is not a hard, fixed line. It is designed to be flexible for the changing needs of the region, and it can be changed by a private plan or council-initiated plan change.

Within the RUB there is 13,000 hectares of future urban zoned land in greenfield areas which can accommodate approximately 137,000 homes and 67,000 jobs. This is about twice the size of Hamilton’s urban area.

The purpose of the RUB and the greenfield future urban zones within it is to give certainty to the public, developers and infrastructure providers as to where urban development will occur in the next 30 years.

The study was undertaken in the Chief Economist Unit’s independent advisory role.

Link to report brief: Rub of the green? Auckland’s urban boundary and land prices [PDF]

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