Monday, 18 October 2010

Affordable housing: Learning from Levittown

For almost two decades now New Zealand homes have been becoming increasingly unaffordable for would-be New Zealand home-buyers.  Even the global financial crisis and the bursting of the housing bubble has done little to arrest the growing problem.

But it’s not difficult to solve.  All it takes is realising the consequences of restricting supply while demand grows or stays the same—which as any first-year economics student could tell you, causes prices to rise.

There was some who believed that even new National ministers Nick Smith, Phil Heatley and the other bozos with building portfolios understood some of that.  There were people who thought they’d been hearing the right noises from these arrogant arseholes before the election, and were prepared to believe the noises meant something.  Until one Tuesday last month…

On Tuesday 12 September 2010, New Zealand’s Environment Minister Dr Nick Smith released the keenly awaited Resource Management Act (New Zealand’s land use law) Phase 2 Reforms, under the rather grand title “Planning reform needed for NZ cities to be competitive” stating –

            “We are not getting the right infrastructure in place at the right time” Dr
        Smith said. “Poor quality decisions on land planning are making homes too expensive.”

He got that much right, but that was all. Sadly, everything else in Smith’s document dump was a continuation of the same poor decisions from the same goddawful bureaucrats who’s caused the whole problem of unaffordable housing in the first place—or, more  accurately, an example of complete inability to make a goddamned decision, and decision at all, with the correct decision being to place a firmly wielded boot up the backside of all them. 

Instead, we got 165 pages of bureaucratic mush concluding that it’s all just too hard, so here’s some blancmange to make it better.

But it’s not that hard at all. After the Second World War a chap called Bill Levitt showed how making affordable homes could be done. 

After the Second World War ended, there was a worry that the 10 million home-coming American GIs were going to be all wanting houses at once, pushing housing prices through the roof.

It didn’t happen because of people like Bill Levitt, who out in Levittown, Long Island, “dragged the American residential construction sector from the ‘horse and buggy’ era to the modern disciplined production one we know today. Bill Levitt figured out how to supply US$7,000 - US$8,000 new suburban houses to SINGLE EARNER young families, earning US$3,500 a year. The wives/partners were not forced to be ‘mortgage slaves’ through that era either.”

A young family could buy a house in Levittown for just 2 to 2.3 times one of their salaries. This was just after the war. For young families who bought there, this set them up for life. Yet in New Zealand’s cities today, a land of peace, young families struggle to buy a home costing less than six or seven times the salary of both of them put together. And that’s before tax.

The resulting problem is almost in-human.

But it’s not insoluble.

As I’ve pointed out frequently here over past years, the simple solution is to stop ring-fencing New Zealand’s cities with planners’ edicts not to build. Take planners’ hands off people’s property so they can   have some certainty over what they can do with it—so they can free up their land to meet demand, and maybe even make a profit off it rather than a catastrophic loss. In the long term, abolish the Resource Management Act that gives these planning creatures power, and replace it with a codification of common law that gives power over land-use back to those who own it.

And in the meantime, as Hugh Pavletich points out, we can learn from the likes of Bill Levitt.  Who to solve the problem of affordable houses just went out and started building lots of them, on affordable land.

If only New Zealanders were allowed to.


  1. As I’ve pointed out frequently here over past years, the simple solution is to stop ring-fencing New Zealand’s cities with planners’ edicts not to build.

    What about folk like us in rural South East Auckland who paid a lot to live in an area with a so-called green-belt. Now council have decided that we will have 200 high density homes next to us.

    Objections matter not, nor does environmental damage, or that the development is out of character for the area; as council is in the pocket of the developers.

    All we have been offered is a protection order on one of the garden trees.

    So what can one do - and the males in the family have already suggested a Roark style explosion so don't suggest that! ;-)

  2. Actually Ruth what is happening to you is the consequence of ring fencing land because it is part of a dense thinking policy to intensify everything within the Metropolitan urban limit which is not a green belt at all.
    Consequently Auckland Urban Area is now the densest urban area in Australasia and would be the second densest urban area in the US – second only to Los Angeles, which is the densest.
    Cities without MULs actually allow cities to spread in new town town and hamlet developments with lots of green space. MUL fenced cities have high cost land and so open space is too expensive.
    Auckland's urban area density is about 2,200 per sq km. The most popular and rapidly growing cities in the US have an urban density of about 700 - 1200 people per sq km. Council is not in the pocket of the developers. The Developers are in the pocket of Council. Many have shut up shop in NZ because they refuse to build the junk that the planners want.
    Especially when after they have obliged the planners the developers get blamed for the results.

  3. @Ruth: The simplest transition I'd suggest is that upon abolition of the RMA all the present "no-bullshit" rules on District Plans would be registered as the equivalent of common-law covenants on everyone's respective titles in favour of their neighbours.

    This recognises that the both present title and present value of each site is based on present rules--upon which basis everyone has bought, and from which we should be able to advance in a peaceful manner without the grey ones waving thei big sticks.

    So, following that registration process and after the abolition of the RMA which (and after we'd all celebrated the sacking of all the planners), property owners would be quite able to freely negotiate between each other property-owners whatever arrangements they liked, using the codified common law as the framework.

    So in your case, for example, the covenant for the green belt would be on your neighbour's title, granted in your favour. A real property right, not something for which you have to play politics to protect. And to have that covenant eased, they'd need to offer you (and the other neighbours) something you valued more than the green belt.

    This states the thing very simply, of course, and neglects to mention any other rights that might inhere in any of the land presently without any title (for which another registration process would begin ASAP).

    But what I outline above that would be the basic process as I would see it. No need for blowing up Cortlandt. :-)

  4. Very true indeed, especially in a country as sparsely populated as NZ.
    Another reason for ridiculous housing costs in NZ are of course the building regulations, which appear mostly aimed at enforcing the government supported monopolies in building supplies and building technology.

  5. There is a very simple answer to the question as to why Smith does this - the advice he gets is from new-urbanist true believers.

    The Ministry for the Environment has for many years been filled with senior advisors who are convinced that the future belong to this faith. I know because I used to confront one on a regular basis which arguing against requiring what were then Auckland territorial authorities from adopting the then ARC's grand plans in this area. MfE was cheerleading on the ARC in this vision.

    Nick Smith has been captured by MFE. Their Sir (and Madame) Humphreys have trained him well.


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