Self-inflicted land supply problem makes Chch recovery harder – economist

Eric Crampton

A leading economist has backed comments by Don Brash and Productivity Commission chairman Murray Sherwin that New Zealand has a land supply probelm, not a house price problem – and says it is making quake fallout worse in Christchurch.

"Getting land use policy right doesn't just help developers to provide low cost housing options for young families, it also builds in flexibility," Canterbury University senior lecturer Eric Crampton told NBR ONLINE.

"After the Christchurch earthquakes, the land use regulations that slowed development in normal times made it almost impossible for anybody to build new housing for those whose houses were destroyed. Bureaucracies just cannot move fast enough when the unexpected happens," he said.

"Seventeen months after February's earthquakes and it's still illegal for a homeowner to build a self-contained flat with a kitchen in his house to help ease the rental crisis."

Earlier, Dr Crampton noted that Christchurch had no natural boundaries preventing the city's expansion.

He was also frustrated at political hosility toward more intensive or high rise housing in places; unrealised potential for apartments in seaside New Brighton was a frustration.

"We can barely afford what our cities' land use policies do to housing prices in the best of times. Fixing policy before anything happens elsewhere might not be all that bad an idea," Dr Crampton said.

A recent Trade Me Property survey found Christchurch rents had risen 26% over the past year, against 4% nationwide.


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So obvious. So little political will to fix it.

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Not so obvious at all. The underlying question is what size population the economy of Christchurch will support after the "sugar hit" of the rebuild passes through. Overbuild by too much now and property prices will stagnate over the longer term making it difficult for new small businesses to get started (as these are overwhelmingly supported by a mortgage on the entrepreneur's home). Hence a spiral of economic stagnation. Although shortage of supply and higher prices might cause short-term pain, they are probably the best thing for longer-term economic recovery.

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Cheap housing brings more people, Badger. And having to service a massive home loan doesn't make it easier to start entrepreneurial ventures. Rather, the requirement to meet regular monthly mortgage payments makes salary and wages more attractive - lower mean but lower variance can be better when you have a mortgage.

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If you think the current price level is short term you are sadly mistaken, my friend. Unless there is drastic reform of the bureaucracies.

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good thinking; a pity our "leaders" do nothing about it.
liberte

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NZ has BOTH a housing land shortage, and a housing affordability issue.
Most Kiwi builders build bespoke housing, say a couple each year. Watch an Aussie subdivision being established, rows and rows of essentially the same 'affordable' model of residence, economy of scale, allows punters to make a start with a first home. Why doesn't Fletcher come down the scale and provide these at ChCh on new western subdivisions?

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A row of identical houses would look pretty funny here in Russell and in most of Northland. A clue: works on flat land like Oz. Doesn't work on hills like much of NZ.

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Frankly the issue of home builidng in Chch must also encompass the issue of the standards and quality of house-build in New Zealand, which by-and-large is shabby.
Insulation is considered whimpish, installation of decent central heating, the exception, no interest in solar PV, no grey water harvesting in spite of plot sizes far larger than those found in most developed countries.
These sort of things are also important - your costs of services water and electricity making the running costs of a home in Chch prohibitive as well.
Chch housing has numerous issues to be dealt with and that includes all parties extracting a digit that has been stuck in their ears since the earthquake, while repeating a mantra, 'I'm not listening, I know better.'

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As far as possible, for Christchurch you need to have mixed housing areas and not concentrate so much (or only) on new suburbia with family homes. A lot of older people and single people are here who will probably need to be re-catered for, and we don't want sterile suffocating places on back sections in monotone ghettos, we want air, openness and interesting variety, well integrated but perhaps in dense housing areas with a variety of people and households.

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