Today’s announcement is very exciting and represents a much needed shift in the way New Zealand plans and funds urban growth, but it is not yet clear whether housing in the new city will be affordable or supports Government aspirations for competitive land supply, says Infrastructure NZ CEO Paul Blair
The new Drury development south of Auckland takes some concepts from Infrastructure New Zealand’s October 2017 ‘Innovation City’ report on how to create a satellite city.
The Government is integrating housing and employment via $2.4 billion in strategic transport links around Drury, which was announced in January as part of $6.8 billion in Government transport infrastructure investment.
We applaud this new delivery partnership with local government and the private sector.
The old model of permitting growth and then trying to retrofit transport and other infrastructure has resolutely failed, resulting in high infrastructure costs, constrained housing supply and poor urban outcomes.
On the back of today’s announcements, property owners, developers and housing providers have been let off the leash and we should now see housing and development at scale and aligned with a shared vision for Auckland’s south.
Of importance to all New Zealanders is that the $2.4 billion of Government transport investment will unlock over 40,000 homes.
If these homes sold for Auckland’s median home value of around $900,000, $36 billion in residential development activity would be generated. The Government would yield $5.4 billion in GST alone – more than twice its transport investment.
Add in commercial and other development and it’s no exaggeration to say that the Drury project is a $50 billion initiative built off just a $2.4 billion transport injection.
However, while this new approach is to be commended, it is still not clear whether it will materially shift the dial on Auckland’s housing crisis.
Auckland does not need 40,000 million-dollar homes, it needs 40,000 five hundred-thousand dollar homes.
Unfortunately, land rezoning around Drury has been anticipated for many years, meaning land prices have already escalated in expectation of public investment.
Construction of affordable housing will now be difficult, if not impossible, without public subsidy and developers will be under pressure to manage housing supply to maintain land values.
For the Government to really get on top of housing in Auckland and other growth areas, more announcements like today’s will be required.
This will generate competition in land markets, discouraging land banking and speculation, and will provide government with the ability to negotiate with land-owners for shared benefit.
We agree with Minister Twyford that this is a very rare New Zealand example of the infrastructure ‘cart’ coming before the housing ‘horse’.
The Government should seize the chance to scale this model up dramatically to the regional level around new, co-designed spatial plans.
Infrastructure New Zealand calls for most of the unspent $4 billion capital allowance to be applied in the May Budget to the fifth, unfunded limb of the Crown’s Urban Growth Agenda, Urban Growth Partnerships.
Infrastructure New Zealand’s 2019 Building Regions report provides a framework for how urban developments such as Drury can be incorporated into larger regional spatial plans to deliver cheaper, high quality housing but also co-designed and integrated schools, industrial areas, hospitals and transport links.
If we can manage this in Drury, just imagine what cheaper, faster, better quality outcomes can be achieved for all New Zealanders through a regional growth partnership model.