The cost of the Auckland Rural Boundary

Don Brash writes:

What would bring prices back to a more affordable level? Only the removal of the artificial boundary around Auckland which is keeping section prices at truly ridiculous levels. At the moment, 400 square metre sections (one-tenth of an acre in the old terminology) are being offered in Papakura at $977,000, with title not available till 2023. That isn’t the price of a house, but simply of a very small bare section. That implies that the price of land is in the order of $20 million per hectare (allowing for the need to leave space for roads). Given that the price of good dairy land is around $50,000 per hectare, it is clear that something is seriously nuts.

$20 million per hectare vs $50,000 per hectare. It is nuts.

Labour promised to repeal the boundary in 2017. It was a good policy. Merely moving the boundary just moves the price difference. Abolishing it would result in a huge drop in the price of land in Auckland.

But surely we don’t want urban sprawl? Why not? Less than 1% of New Zealand’s total area is currently urbanized. If in a decade’s time 1.25% was to be urbanized, would that be a disaster if, as a consequence, the great majority of ordinary New Zealand wage and salary earners could afford to buy a home? (By way of comparison, some 9% of the United Kingdom is urbanized, and 15% of the Netherlands.)

The recent deal between National and Labour now makes it easier to build up, which is good. But you will only fix the housing crisis if you allow people to build both out and up. As Don points out, an increase from 1.0% to 1.2% urbanisation would still be miniscule compared to other countries.

But what about the environmental impact of urban sprawl? How can we tolerate that? Well, the Government is planning that most of us will be driving electric cars within a few years and given that, it is by no means obvious that allowing the suburbs to spread a bit further will have a serious environmental impact. Indeed, high rise apartment buildings – made of concrete and steel, requiring 24-hour lighting and elevators, often involving air-conditioning systems and certainly requiring electric clothes dryers rather than an old-fashioned clothes-line – may have a more adverse impact on the environment than “sprawling suburbs”.

Exactly.

Despite all the media stories about “house” prices – and yes, I know the price of building materials has gone up over the years, and wage rates as well – the real culprit is not “house” prices but section prices. Those have gone through the roof, and the only way to reduce them, and thus to reduce the price of the house-and-section package, is to remove the artificial boundary around Auckland (and our other major cities).

Those who oppose the removal of that boundary are effectively condemning nearly half the population to a life of continuing financial stress, with all the adverse consequences for the physical, mental and emotional wellbeing of literally millions of Kiwis.

I hope National in 2023 campaigns on abolishing the boundaries.