Central and local government are struggling for social licence to build bigger, denser residential developments, and that's because doing so is tantamount to a licence to change the very way we live as New Zealanders
When Mark and his partner's baby arrived last year, they decided it was time to build more living space.
Their plans are hardly the sharp end of large-scale urban densification: they figured they'd build a 40 square metre studio on top of their garage for visiting family, allowing them to turn the guest room into a bedroom for their new daughter.
But this is Bethells Beach on Auckland's rugged, rural, west coast. Development is not encouraged. They quickly discovered that persuading the neighbours was the least of their challenges; they would have to reach deep into their pockets to pay for resource consents and building consents and the construction of a new septic system. $5000 here, $10,000 there, $100,000 somewhere else....
"We're in a bit of a catch 22," Mark says. "It's a shame because the city needs more houses built, more capacity in existing houses, and it needs cleaner water. It's just that the rules kinda get in the way of actually doing anything."
As the construction sector gathers in Wellington this week for the Building Nations infrastructure conference, the rate of completion of new homes has dropped 6.8 percent from the highs of a year earlier. Seasonally adjusted, the volume of ready-mixed concrete fell 1.2 percent in the September 2022 quarter, following a 2.2 percent fall in the June 2022 quarter.
Investment in horizontal infrastructure like the Three Waters is embroiled in politics, and last week's unveiling of new built environments legislation to replace the derided Resource Management Act was itself greeted with scepticism.
Mark says the costs of property and construction are driving home ownership beyond the reach of younger generations – he wonders if his daughter will ever own her own home. Previously parents lent their children money to get a foot on the property ladder; he and his partner have instead contributed to a small managed shares fund for their baby, not yet two years old.
"She's really young and things just seem so uncertain for her," Mark says. "I think for Auckland, home ownership is definitely becoming a little bit more out of reach."
High rates of home ownership have traditionally enabled New Zealanders to fund travel, buy businesses, pay for their children's education and, most of all, to support themselves in retirement. It has underpinned the New Zealand economy.
But a Statistics NZ report, Housing in Aotearoa, showed the number of New Zealanders who own their own home dropped from 73.8 percent to 64.5 percent in the 20 years to 2013 – corresponding with a big rise in the cost of homes.
According to the Retirement Commission, that trend has continued since 2013. Today, only about 55 percent of New Zealanders own their own home. For Māori it's just 35 percent; for Pasifika it's 20 percent.
Housing intensification was meant to help close those gaps – but it may do so by lowering the home ownership rate for everyone and turning the next generation of New Zealanders into lifelong renters. Many apartment blocks come with a reduced security of tenure.
Never has the dream of the half-gallon, quarter-acre pavlova paradise seemed more laughable.
A legacy of home ownership
On a flight to Wellington this week, Mark the frustrated Bethells Beach home-owner got talking to the person next to him. Serendipitously, that person was Darren Wu, an advisory technical director at Beca.
Wu was heading to this week's Building Nations infrastructure conference, where he is leading a panel discussion into the future of New Zealand housing. And he has with him a black and white photo that serves to ground him in the knowledge of the importance of housing infrastructure.
It shows his great grandparents in front of their home in New Plymouth in the 1960s. Some 15 years later, in 1975, his grandparents and their kids – including Wu's mum – migrated from Hong Kong to New Zealand and lived in this same house.
For a number of years, this small three bedroom bungalow housed seven adults and two teenagers. While there were definitely downsides to the living conditions, Wu says, it was a vast improvement on their 20 square metre apartment in Hong Kong.
"Most significantly, the dream of potentially owning their own home one day was actually now an attainable reality.
"There was a lot of hard work to follow, but I am extremely thankful for the opportunity that legacy gave me to also be a homeowner. But the question in my head is about my own children’s opportunity to own a home one day."
Wu has another photo, this time in colour. It's of his kids Noah and Ellie at one of their local playgrounds in Ellerslie, Auckland.
When they are in their 30s what will be their prospects of owning their own home?
"For me, decisions on housing from the past have had an impact on my generation and I know my decisions today will have an impact on my kids and their kids," he says.
He points out that it's now far more affordable to rent than to service a mortgage. The average share of income that is going to mortgage repayments is 53 percent and rising. In some places in New Zealand it's already as high as 71, Wu says.
By contrast, the average rent-to-income ratio is around 21 percent. "I do think into the future, intensification provides greater affordability in metropolitan areas. At the same time, the proportions of rentals may also need to go up. Home ownership is the lowest in 70 years, and it continues to decline in New Zealand."
Perhaps that move away from home ownership is why Housing Minister Megan Woods didn't save up the traditional big infrastructure announcement to coincide with the start of Building Nations.
Instead, she gathered reporters in the Beehive theatrette to announce plans to regulate property managers. It's a nod to New Zealanders' changing priorities – nearly half now rent their homes.
"For the likes of yourself and myself, in our generation, we're not going to give up on the ideal of continuing to own our own home. But if you've got kids, like me, ask yourself, what does it look like for them?" – Darren Wu, Beca
Darren Wu says renting needs to be a bigger part of the picture, and intensification is ensuring that happens. "If I compare again, to my wife's brother and sister-in-law in Hong Kong, they live in government flats, paying the equivalent of maybe NZ$1000 a month – it's really affordable.
"But they accept the fact that renting for the rest of their life is their future. That is much more culturally accepted there as well. But it will take generations to shift that mindset here in New Zealand, if that is one of the future outcomes we need to be real with."
Wu acknowledges that the economy is built around owning a home. Changing that means changing how we invest for our future, changing how we pay for our kids' education, and changing how we retire.
"For the likes of yourself and myself, in our generation, we're not going to give up on the ideal of continuing to own our own home," Wu says. "But if you've got kids, like me, ask yourself, what does it look like for them?
"And the question that boomerangs back to me and my wife is, what is it that we need to do to help them be prepared for that? It may not look exactly like what we have. But in whatever case, it looks like we do need to make provisions to support them in 20 years time."
Perhaps that means carving up the family land, or building intensive housing on it for the children and grandchildren.
Any case, Mark and his partner's small managed investment fund for their baby daughter looks like a better gamble than saving up to help her with a deposit for her first home. New Zealanders need to diversify beyond real estate into other investments like equities, and into owning and growing their own businesses.
The Quarter-Acre Paradise may have been the parable parents taught their children in the 1970s. Today, it's the Parable of the Talents – the lesson from the Gospels in which a rich man gave each of his three servants a sum to invest.
Funnily enough, Wu has a latter-day take on that.
"Over Covid, I heard a story of a family locked down with everyone at home. So the father took their three kids, who were probably in their teens, and said: We're gonna have a little bit of a game on Sharesies, and each get $100 to invest. And so he was trying to teach them that principle."
Winning hearts and minds
With changes to the RMA and Government investment in infrastructure, Is building homes going to get easier? That's far from certain.
Law firm Chapman Tripp published its annual report on the country's infrastructure this week, to coincide with the start of the Building Nations conference. It's titled "Hard slog to progress" and highlights the complex web of competing regulation that is contributing to the slowdown in construction.
Law partner Paula Brosnahan says the Government's national policy statements on urban development and other environmental imperatives are often contradictory.
These inconsistencies of intention and language are creating uncertainty and inhibiting progress on the ground, she says,
"The decisions can't be made on the basis of maps and statistics. People in communities really do need to be able to get across what they think the rationale is – for intensification or otherwise." – Matt Ensor, FranklyAI
She cites the friction between the pro-density thrust of the National Policy Statement on Urban Development, and recent Building Code amendments that penalise the embodied emissions in high rise concrete buildings.
And there is no parallel policy statement to enable the strengthening and upgrading of infrastructure services – in particular Three Waters and transport – to support residential intensification.
Matt Ensor, the founder and chief executive of FranklyAI, works with Darren Wu at Beca. FranklyAI is a product which allows consultation with thousands of people on projects like housing intensification, and to analyse and understand their nuanced, personal views in a way that's never before been possible at scale, Ensor says. The slogan: "no voice left behind".
Intensification is tough for many in our communities, he says, and their concerns shouldn't just be dismissed as Nimbyism. It's about more than the houses we live in. It's about the communities we live in. It's about the economy we live in.
"It is disruptive for people anywhere in the world," Ensor says. "It's essential for organisations to understand the complexity of the impacts of intensification. And there are definitely different impacts, for better or for worse."
While there might be good arguments for intensification, broadly, there are places where it isn't appropriate, he says. That might be because of the cost of connecting up a sewer or stormwater drain or power is too great. "There's a rational kind of Nimbyism. People who feel that intensification is great, but maybe somewhere else.
"The decisions can't be made on the basis of maps and statistics," he says. "People in communities really do need to be able to get across what they think the rationale is, for intensification or otherwise.
"Social licence is great when you have the majority of people agreeing with what you're doing. But it doesn't doesn't help the minority of people who may have legitimate special needs and special consideration. My fear is that we just we think of it as getting the majority of people onside – rather than engaging with with everyone who wants to engage."
