Housing intensification report criticised for ‘scoffing’ at economics

Friday, 2 February 2024

The new District Plan will determine whether more intensive homes like the townhouses on the right can be built throughout the city.

Recommendations from an independent panel of experts are under fire for their conclusions about Wellington’s housing supply.

The Independent Hearing Panel’s first report on intensification recommended the Wellington City Council roll back some of its plans for high-density (apartment-style) zoning.

Among the conclusions were repeated statements that removing constraints on the supply of housing ‒ allowing upzoning and intensification – would not help with Wellington’s housing crisis.

Economist Stuart Donovan from Motu Research said the conclusions were “contrary to a large body of economic evidence formed from studies both in New Zealand and overseas”.

Economist Eric Crampton from the New Zealand Initiative said the panel gave weight to risible arguments, “while scoffing at evidence consistent with the mainstream academic consensus in urban economics”.

“That the panel took a view that normal supply and demand does not apply to the housing market suggests that future panels need a greater diversity of expertise, including in economics,” he said.

The panel is made up of an independent group of resource management experts, planning experts and a barrister.

Crampton thought the council would have a lot of work to do in putting together “a more sensible” set of recommendations for Environment Minister Penny Simmonds to approve.

Chief economist Eric Crampton says the panel “took a view that normal supply and demand does not apply to the housing market”. (File photo)

Some of the panel’s conclusions were that “enabling intensification does not, of itself, improve or even address affordability” and that providing for more growth will not solve the current problems with access to houses.

Theodore Heeringa from affordable housing advocacy group A City For People said the panel had got it wrong and misunderstood the evidence about how planning regulations could lead to more affordable homes.

“Constricting housing supply does not help the housing crisis,” he said. The group continued to ask the council to respond to its five asks for more affordable housing and implement a “long-term vision” of more homes in the city.

Councillors had to watch what they said because of strict legal advice to avoid pre-determination.

But councillor Rebecca Matthews was willing to say that her initial read of the recommendations indicated “there is likely to be need for amendments from council”.

The vote won’t go ahead next month at all, if a notice of motion from her council colleagues to delay the plan until later in the year goes ahead.

The motion to delay could see the council decision coincide with the Government’s plan to make the Medium Density Residential Standards (MDRS) optional – meaning the council would not have to apply the policy which required councils to allow three-by-three townhouses on sections throughout the suburbs.

Housing Minister Chris Bishop said he would be reading the recommendations. While the Government was making the MDRS optional, it would require councils to zone enough land for 30 years worth of housing immediately.

“I will be making further announcements on this soon. Wellington has a housing crisis and restrictive zoning rules are a big part of the problem,” he said.

The spotlight is back on the humble Johnsonville train line, which could see more housing intensification in Wellington’s western suburbs if it is designated a “rapid transit service”. (File photo)

The recommendations from the panel are the baseline from which the council will decide where and how to apply government direction on upzoning around transit routes and in the central city.

Within a “walkable catchment” of “rapid transit stops”, the policy directs urban councils to upzone to six storeys. But both parts of that direction were heavily contested in the District Plan hearings.

The panel came to the conclusion that Newtown’s town centre was not part of the walkable catchment from Wellington’s centre city, despite evidence showing that many people made the journey on foot every day.

“Some people could walk from Cape Reinga to Bluff, but most cannot, and an even fewer number would choose to do so, particularly on a regular basis.

“Closer to the current context, many people could walk 4-5 kilometres, particularly on flat ground, but whether many people would choose to spend the time required walking that distance to and from work each day is doubtful,” the panel wrote.

With Wellington’s amphitheatre-like topography, the panel concluded that it could not rely on the data showing high rates of walking to work from Newtown, because it was not clear how people returned home from work.

“We do not consider that an area can be considered within a walkable catchment if people have to rely on other modes of transport to travel in one direction.”

Whether the Johnsonville train line was rapid transit was another contentious point at the hearings. If yes, the council would have to allow apartments of up to six storeys within walkable distances of the stops through the hills of Ngaio and Khandallah.

Because its average speed including stops was 27km per hour, its capacity was 1176 people per hour and its frequency was once every 15 minutes, with no planned upgrades, the panel decided the train line was not a rapid transit service.