Beyond constraint - urban form and housing affordablity

Resolving the housing affordability crisis

New Zealand’s rock star economy might just get deflated.  Prices in the Auckland and Christchurch housing markets are growing at unsustainable rates.  And when the bubble bursts, the implosion will be far-reaching.  The solution proposed here addresses the critical issue – how to get the land market working effectively and efficiently.  Without that, abstract aspirations for liveability in our main cities will, like a bubble, burst.

The solution is multi-faceted.  It lies in:

·     acknowledging the centrality of land supply;
·     changing how we think about urbanisation;
·     bringing multiple sites forward for development;
·     moving on six related fronts

• change traditional mindsets
•  realign institutions
•   regulatory reform
•   rethink infrastructure
•   rethink funding
•   back off excessive prescription

·     Moving to “why not?”

I expand on these points below.  If we can pull all this off, we might not only create a more productive, liveable city, we might also save the bubble blowers.

Sort the supply problem and the rest follows

It’s no news that that the housing affordability problem is multi-faceted. It’s tied up with fiscal and financial conditions, incomes, the size and structure of the market, inter-generational “competition”, the unpredictability of migration, the configuration of the building industry, and so on.   But without resolving supply constraints, and especially land supply, forget initiatives in these other areas. 

Get land supply right, though, and some of the other impediments might just melt away.

The issue really is land.  It is simple minded to think we can simply build our way out of a supply problem by Increasing building coverage and heights.  Boosting densities within cities might help, but raises a number of other issues: the cost of replacing or extending ageing and under-capacity infrastructure, how to spend our way out of congestion, redevelopment of transport corridors, and obesity and other health and social issues associated with confined and crowded living conditions.

My suggestions focus on Auckland but with relevance, I believe, for other settings.

Changing how we think about urbanisation

Get away from the obsession with contiguity.  Places aren’t urban simply because they are all joined up.  Urbanisation has its roots in transactions, not simply being there. Better to think about cites as networks – a mass of corridors linking nodes across a variegated landscape.  Take this approach and urbanisation and nature need no longer be in conflict. 

Think outside arbitrary administrative constructs. In Auckland, we might start with a focus on the super-regional corridors, and the quality and strength – or potential strength -- of our linkages with the smaller cities of Hamilton, Tauranga, and Whangarei.  Through this we can act beyond local constraints, as part of a potentially powerful and extensive crucible for New Zealand’s next round of development.

Breaking out the land

A growing city is not homogeneous.  Increasing land supply for urban development can and should take multiple forms.

Bring aboard multiple sites and forms of greenfield land. Within Auckland these can readily access and strengthen the region’s well-defined north-south access corridor.  They can also be distributed in such a way that they extend but work within the realities of sub-regional and sub-urban housing and labour markets. 

Think of townships as well connected urban nodes, without necessarily enveloping them within a creeping built landscape.  In Auckland we can apply well thought through extensions to villages and townships – Wellsford, Warkworth, and Waitoki in the north, Waimauku and Helensville in the west, Whitford and Clevedon in the east, Pukekohe, Tuakau, and Pokeno in the south, all surrounded by bush and farmland, linked to each other and to the urban core by a dense network of roads and, for some, by rail.   

And we can envisage of larger settlements closer to the existing built up areas, creating sub-urban communities with character as well as mass, some building on incipient development.  In Auckland we have multiple opportunities that align with existing sub-regional communities but assume their own form and character: Think Dairy Flat and Riverhead in the north, Kumeu in the west, Beachlands-Maraetai in the east; Drury, Ardmore, Runciman, and Karaka in the south.

And for traditionalists still wedded to singular edges, contiguity, and sprawl, seeking to preserve the city within arbitrary limits there are still possibilities for pushing existing suburban boundaries outward beyond, say, Albany, Orewa, and Silverdale in the north;  Massey and Hobsonville in the west; Wiri, Weymouth and Papakura in the south.

Suburban opportunities for selective intensification are still around.  They will increase as boomers age and voluntarily or otherwise relinquish their particular legacy of modest houses on large plots.  Medium density housing – perhaps by way of terrace houses and duplexes, low rise apartments, and especially residential villages (the retirement industry leads the way here) – offer the prospects of modest intensification without undermining communities or destroying the amenities which make the suburbs attractive in the first place.  But the costs can be high and progress slow.  Growing cities cannot wait around for successive generations to be bought or simply die off. 

Brownfield development may be seen as the silver bullet at the moment, because it implies swathes of already urbanised land simply waiting for the first sod to be re-turned and deliver intensive inner city settlement. Well that’s not so easy.  Issues around title consolidation, infrastructure rehabilitation, decontamination and the removal of hazardous materials, impacts on households and businesses in adjoining and proximate communities, the consequent battles for consenting, and the cost associated with often prolonged holding periods all-too-often turn brownfields into red ink or black holes.  Brownfield development is no solution for a supply constrained city.

While we are at it, let’s put the CBD into perspective.  It’s the leading office, visitor, and entertainment precinct in a city.  But it’s not where many of the city’s population lives, works or plays.  Sure, it may make sense to surround it with cheap apartments for Generation Zero to pass through, and where a very small group of the privileged may purchase a water-view, high amenity apartment.  But even in our wildest dreams, that’s not a path to the affordability or the capacity that a growing city requires.

So resolving the supply and affordability housing crisis presumably requires action on all those fronts, and in a wide range of localities.  One consequence of such an approach would be to reduce the capacity for speculative gains and land banking.  Another might be to encourage and sustain the development of significant, medium sized developers and builders, moderating current reliance on a small number of large developers on the one hand, and a large number of very small builders on the other. 

What to do?

All this is easily said.  So how is it to be done?  Here are some ideas.

First, we have to change from the traditionalists’ mind set.

What we have today, or what we thought of yesterday, may not suit tomorrow.  Tomorrow’s urbanisation may be more connected but less contiguous.  Greenfield development need not raise images of never-ending suburbs or houses to the horizon, but of settled landscapes that are penetrated and defined by natural features and green corridors.  Fields of green will stretch away from a diverse urbanised core interspersed with supplementary settlements – towns, villages, suburbs – connected to corridors that link a network of cities into a coherent economic and social unit across multiple administrative boundaries. 

But that’s getting ahead of ourselves.

More immediately, let’s throw off an outmoded mind set, and think about communities, not just housing.  Urbanisation involves business and work settings, community centres, local transport and recreational networks, and houses – detached, semi-detached, multi-storeyed, high and low density.  Don’t just count house sites when assessing potential; allow the land for a whole community.   Then let the landscape, the designers, the developers, and the market –future residents – bring it about (subject, always, to appropriate environmental constraints). And think about how connections with other centres work rather than how to maximise densities in any one of them.

Second, we need to realign our institutions.  Simply moving planners from one Auckland Council office to another was never going to ramp housing supply up quickly in Auckland.  Changing planning rules around Auckland’s plan may have slowed the process and dimmed the prospect for significant early movement as well.

How about setting up a government agency charged with assembling or defining the areas of land throughout Auckland and adjoining regions that might be brought to market?  A development corporation might tag or even purchase, consolidate, and then on-sell land for urbanisation, or put it out for tender to develop with some clear social objectives included. 

A complementary approach would be to draw on development agreements reached between council on behalf of community and developer.  These would spell out required (and realistic) outcomes as a condition of proceeding with the development of substantial parcels of land.  This approach should give more satisfactory outcomes than relying on the long-winded consent and appeal process encouraged by the Resource Management Act which may only achieve a compromise between public and private objectives. 

The proposed approach would need public input, though, so that as the agent of the community the local council would have a clear mandate regarding what provision for community amenities and infrastructure should be provided for in a development agreement.

Third, we need to change the regulatory framework within which it so is comfortable for traditional minds to remain wedded incrementalism and yesterday’s answers.  I have discussed elsewhere an initiative that might help, the rejigging of New Zealand’s environmental and local administrative legislation. 

Fourth, rethink infrastructure supply.  It may be time to get away from monopolistic suppliers wedded to old technologies and allow the innovative to seek out and apply more localised solutions to such matters as water supply, wastewater disposal, solid waste handling, and even power generation and distribution.  Of course, most alternative initiatives tend to be small in scale and currently relatively expensive to implement.  Costs tend to be dropping, though, and people may be prepared to pay a little more if resilience is increased and running costs are low.  One way or another the door needs opening to innovation, modernisation, and increased resilience, if for no other reason than to push current suppliers down this path. (I also wonder whether localised solutions are really more expensive than gold plating the capital works applied to large scale, monopolistic services).  

Fifth, rethink funding.  Why should future owners fund upfront the long-term infrastructure required when purchasing new homes given the value they bring to a community by playing an active role in its social and economic life as well as assuming a share of current fiscal liabilities. 

The real beneficiary of development is the party that sells land into a higher value use.  So a development levy on the profit realised from the sale of rural land into urban use, an underutilised brownfield site into intensification, or a large single-dwelling suburban site into apartments might be a more expeditious means of funding the works required to realise the enhanced potential.

Another possibility is to promote the commercial funding of infrastructure.  Privatisation of energy companies has facilitated this. Competition has been allowed into solid waste collection.   The creation of council controlled organisations for the provision of local infrastructure, however, hasn’t necessarily achieved improved funding. 

Commercial entities, whether investors or operators, can be expected to define an appropriate level of service and find efficient means to achieve it.  The long-term income streams may be an attractive proposition for bank lending (especially in deflationary times) or for the issue of high ranking bonds to raise finance.  They might also attract private and public equity.  There are plenty of examples – but we need more effective coverage of local infrastructure.  Regionalised entities for basic services can reflect the particular needs and circumstances of communities and tailor development options rather than simply extend the old system to new users.

Sixth, back off prescriptive plans by local councils and instead require that spatial plans set out long-term, broad-brush land use options and a commitment to where public money will be  spent on public services and amenities.  This should help shape a city in ways that the community wants.  It should also supply sufficient certainty for providers of infrastructure and services to plot their own investment priorities and programmes subject, of course, to their capabilities and risk management policies.  And where they fall short, expect other suppliers to step in.

The role of risk: moving to “Why not”

Risk and how it is treated may well lie at the heart of the problem.  Rather than evaluating risk and adopting protocols which allow for it without undermining the capacity to innovate and extend, policy makers in public institutions and monopolies appear to manage it by sticking with what they know, through imitation, replication, and repetition, and by the simple expedient of saying no: “Why should we?”  This is a sure recipe for constraint – of supply and of opportunity. 

I wonder if the biggest risk, the one that explains this conservative attitude, is that in pricking the housing bubble we might just bring the bubble blowers down.  Any significant readjustment of the housing market would hit the banking sector the hardest.  The American experience shows us what the banking sector does when it gets hit.  The community, economic and the political consequences of widespread mortgage foreclosures and business failures loom large over the whole housing crisis. 

If nothing else, an approach to managing the release of additional land supply that identifies and works through multiple sites and agencies, that helps to free up and fund the infrastructure sector, and boosts the development and construction sectors would moderate any such impact.  It might even allow the banks to participate in the transformation we need in the housing market  by moving some of the current funding from houses to infrastructure, .

Living in the CBD - or Simply Passing Through?

Liveability on a pinhead
The CBD accounts for under 0.1% of Auckland’s land area.  Yet Auckland Council is boosting it as a key to its ambition of making Auckland the world’s most liveable city.  Spatial and transport planning and infrastructure investment are all geared towards this. Among other things, plans include tripling the CBD population based on promoting medium to high density apartment living.

It has to be asked who this benefits?  Sure, the notion of laid-back café culture in the CBD may work for middle class Aucklanders. It may encourage people to visit more often, and stay longer.  But who wants to live there?  And who lives there now? 

The Data
I addressed these questions with a little number crunching using the 2013 Census. I divided Auckland into four areas for illustrative purposes: the CBD itself, the surrounding inner city Census Area Units (CAU); the Rest of the Auckland Isthmus (the city’s central and longest-established suburbs); and the Rest of Auckland.  The latter takes in suburbs to the north, west, and south, and rural areas.  It encompasses diverse, growing communities also worthy of analysis if plans are to be sensitive to local circumstance.  However, they are not the focus here.

The CBD is booming (in a small way)
At 26,300 people the CBD accounted for 6.6% of Auckland’s population in 2013.  It grew at a high 5.8% a year from 2006 (albeit from a low base) and accounted for 7.5% of Auckland’s growth. The “outer central city” grew at 2.6%/year, and housed another 10,000 residents.

The Rest of Isthmus grew pretty slowly (0.7%/year), but still accounted for 18% of Auckland’s growth. 

Even at a modest 1.1%/year the Rest of Auckland, however, accounted for 73% of growth, confirming that suburban living remains the popular and practical choice for most Aucklanders.

A transient population
So, in residential terms the CBD is a bit player.  Its residents are also distinctive: Census statistics show just how unlike the rest of Auckland it is. 

The CBD may be a great place to visit, but living there appears temporary.  Only 11% of residents were at the same address five years ago. 46% were overseas and 41% elsewhere in New Zealand (Figure 1).  73% were born overseas, with 53% of 2013 residents Asian (Figure 2), compared with 23% across the city as a whole.

Figure 1: Years Living at Current (2013) Address

 

      Note: In this and following graphs percentages sum to100% within each of the four areas

 

Figure 2: Ethnicity

 

Packing them in
The CBD is densely settled with 31 dwellings/ha compared with just 15/ha in the outer parts of the Central City and 8/ha across rest of the Isthmus. 

The heart of the CBD, Central Auckland East and Central Auckland West CAUs, is the most intensively settled area in the city, with 50 dwellings/ha and between 100 and 109 residents/ha.  These compare with medians of nine dwellings and 30 people/ha across the 298 predominantly residential CAUs in Auckland (defined to exclude CAUs with under 5 houses/ha, thereby omitting predominantly rural, commercial, and industrial areas).

The dwellings
CBD housing is dominated by small units and rentals.  Only 26% of residents own the homes they occupy (in part or whole, privately or through a trust).  This compares with 58% elsewhere on the Isthmus and 67% beyond the Isthmus.

The majority of dwellings in the CBD are apartments, units, or townhouses (Figure 4). And they are generally small, with only 10% having more than two bedrooms. A high 47% have only one bedroom (Figure 3). 

Figure 3: Dwelling Type

 

Figure 4: Number of Bedrooms per Dwelling

 

The People

Not surprisingly the CBD population is dominated by young adults (Figure 5).  35% are aged 15 to 24 (the age of tertiary education) and another 35% are aged 35 to 34, the family formation/career development age group.  The all-Auckland figures are 15% and 14%.  Only 12% of CBD residents are aged over 50, compared with 29% city-wide.

Figure 5: Age Structure

 

A youthful population is distinctive in a number of ways.  32%of CBD residents study fulltime compared with 13% across Auckland.  Fewer are in long-term relationships, with 41% partnered compared with 59% city-wide. 

There are fewer family households than in other parts of the city (Figure 6), and fewer of those families include children (Figure 7).

Figure 6: Household Composition

 

Figure 7: Family Status

The list goes on

CBD residents are different. They generally fall into lower income groups; they are more likely to be unemployed; they are less likely to hold senior management or professional positions than residents of other parts of the Isthmus; they are more likely to be in sales or service occupations.

The lessons are clear
The residents of the CBD (and surrounding areas) do not represent Aucklanders.  Recent CBD growth does not indicate a switch in housing preferences.  The CBD population is transient, people passing through: migrants arriving, students studying, young people commencing their working careers, relatively few settled relationships, and so forth.  It is not a place of families and children, of people settled in their jobs and housing, or of retirees.

For those people, the preferences remain for three or four bedroom dwellings, a little space, and suburban living. 

If Auckland's plans continue to elevate the high density living options tuned to the youthful, the transient, and the less well-off, they will fail the majority of Aucklanders.

The consequences
The message is not new, but the 2013 data reinforces it.  Plans and policy must front up to who wants to live where in Auckland, rather than imposing a narrow model of urbanism based on an unrepresentative demographic profile that overrides the city’s physical and social realities. 

New housing would ideally be directed to more expansive areas throughout and beyond the city, areas that offer the best opportunities for community amenities, employment, recreation, and connection without congestion. 

An obsession with increasing densities in and around the CBD and on ageing arterials won’t deliver that.  It will instead undermine rather than lift the city’s liveability. 

Cities, Cars, People: is changing car use a function of new urbanism?

Thinking dense

One cornerstone for urban designers and planners seeking to transform the polycentric or suburban city of the 20^th Century into something resembling the high density city of the 19^th was a cross-city comparison by Newman and Kenworthy and successors. [1]  They argued that this proved automobile dependence is a function of city density.  It followed that regulating for greater residential densities and increasing the capacity of public transport systems to avoid the congestion that would follow if people continued to drive themselves would improve the sustainability of cities.

Of course, any comparison with the overcrowded and unhealthy cities of an earlier century is unfair: today’s density is achieved with higher standards of private and public space, and much enhanced transit and sanitation.  And many, probably the majority, of 21^st century citizens in high income nations can escape the confines of the urban environment on occasional sojourns to country or coast (or beyond), unlike their 19^th Century or developing world counterparts.  They can even find repose in the midst of 24/7 city hubbub in their own in-house media centres.

But can we really build urban policy on the Newman and Kenworthy analysis?  Especially given evidence that car use is declining anyway?

Questionable correlation

There are still questions over the original analysis and it successors.  Cross-cultural effects, physical geography, differences in economic structure, incomes, wealth, and growth all intervene in the relationship between city density and car dependence.  And cause and effect are hard to pin down. 

Perhaps more critical: the leap from observing relationships across cities at a point in time to regulating travel behaviour, housing ,and consumption choices into the future assumes that individual behaviour is a microcosm of collective behaviour. This fallacy of inference has long been recognised by the biological and sociological sciences.  And the likelihood of getting policy wrong by making such an assumption is far greater when dealing with populations of people, with their diverse circumstances, beliefs, values, and means, compared with, say, populations of penguins. 

Is it this blind spot that has made it so much more difficult to get people out of their cars or their low density houses than anticipated by urban reformists?

The city as a time warp

One problem is that analyses of city density and car dependence are usually static.  Plotting urban form and transport consumption at a particular point in time – the mid/late 20^th century in the Newman and Kenworthy case – embodies particular patterns of technology, wealth, and, behaviour.  Consequently, their urban prescription is based implicitly on the 9 to 5 work day; single city centres that focus urban employment, exchange, and consumption; and the nuclear family with its distinctive housing and service demands; all urban artifacts that have been breaking down since the 1960s.

But the times they are a-changing

In a 2011 paper the authors acknowledge that things are changing as international evidence shows rates of car use beginning to decline in parts of the world.  A partial view of what they are changing from, though, sustains a deterministic explanation of the why and what they are changing to:

“technological limits set by the inability of cars to continue causing urban sprawl within travel time budgets; the rapid growth in transit and re-urbanization which combine to cause exponential declines in car use; the reduction of car use by older people in cities and among younger people due to the emerging culture of urbanism and the growth in the price of fuel which underlies all the above factors”.[2]

The view remains time-bound; even the reference to exponential decline is a simplistic inference of the relationship between public transport and car use taken from a cross section of cities in 1995. 

Individual agency barely gets a mention.  Any description of an “emerging culture of urbanism” needs to be embedded in the reality of evolving patterns of wealth, income, and consumption and even in simple demographics to determine just how real and significant it is.

Growing old and driving more

What are the grounds for the claim that older people are reducing their car use, for example? I took a quick look at the evidence for New Zealand.  It is certainly not the case here.  The rate of growth in driving has been higher among older age groups than among younger – with decline most evident among the under 45s.  

Is it so different in the other ageing societies from which Newman and Kenworthy draw their examples?

Figure 1: Changes in Annual Driving Distance by Age, New Zealand 1990-2008

Fewer kilometres doesn’t mean less dependence

What does go a long way to explaining declining car travel in the aggregate is the fact that older people don’t drive as much younger people, and populations in western cities are simply getting older.  It’s simple maths – as the population ages car usage will go down, despite a greater propensity to drive among older cohorts. Again, look at the evidence from New Zealand:

Figure 2: Automobile Dependence by Age Group, New Zealand 2004-2008

Car usage appears to decline after age 44, rapidly after retirement age, 65. 

Why does car use fall with age?

There are a number of reasons why this may be so.  From 45 years on households have fewer transport-dependent children.  Mature families may have more localised social networks.  A greater share of recreation may be neighbourhood based.

On retirement work trips disappear and incomes, discretionary dollars and consumption fall.  The capacity for more shared travel and trip planning increases as households age.  Diminished car use doesn't necessarily mean that  households are less automobile dependent.  They just doesn’t generate as much travel demand.

These explanations don’t depend on particular urban designs.  Yet Newman and Kenworthy claim that diminished driving happens because “older people move back into cities from the suburbs”.  This is not consistent with the common observation of people’s preference to age in place.[3]  (For the New Zealand evidence, see my posting Ageing in the City).

Moving into the centre - a one-way street?
And their notion “the children growing up in the suburbs would begin flocking back into the cities rather than continuing the life of car dependence” rather simplifies a historically specific event: the transition of sons and daughters of the baby boomers from young adulthood, advanced education, and job seeking to the career and housing paths associated with their movement into more stable relationships.  As they age, it is highly likely that suburban preferences re-emerge, sustained by the capacity to purchase and operate a private vehicle.

Generation X boosted inner city dwelling over the past two decades, and Generation Y will do so, to a lesser extent, for another decade.  The 15 to 24 year age group also coincides with the age of greatest automobile independence (illustrated for New Zealand in Figure 3).  But don’t expect this historically-specific phenomenon to sustain some sort of indefinite culture of city consolidation, and I wouldn’t bet the fiscal bank on expensive transit systems designed around the assumption that it will. 

These are passing generations: their successors will be that much smaller and facing a somewhat different world.[4]

Figure 3: Use of non-Automotive Modes by Age Group, New Zealand 2004-2008

Who are we planning for?

Of course, there are plenty of exceptions to prove the rule: but that is the point.  Diverse communities have diverse expectations and behaviours.  And they are continuously changing, in composition, in form, and in behaviour. 

The failure of modernity lay in its assumption of conformity and convergence, compounded by the conceit that we could regulate for it.  And planning for what is little more than a statistical construct – the auto-independent city – risks blinding us to the richness and opportunity of alternatives, of lifestyle, of environmental stewardship, of urban design, and of mobility.

If we start with the behaviour of individuals and households our designs for sustainable cities may be less deterministic and our planning less didactic, better informed, lighter in touch, and a lot more effective in meeting the long-term needs of evolving urban communities.

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[1]           Newman, P and Kenworthy J (1989) Cities and Auto Dependency: A Sourcebook. Gower, Aldershot

                Newman, P and Kenworthy, J Sustainability and Cities: Overcoming Automobile Dependence, Island Press, Washington, D.C.

[2]        Newman P and Kenworthy J (2011) “‘Peak Car Use’: Understanding the Demise of Automobile Dependence”, World Policy Transport and Practice, 17, 2, 31-42

[3]        Pynoos R, Caraviello R, and Cicero C (2009) “Lifelong Housing: The Anchor in Aging-Friendly Communities”, Journal of the America Society on Aging, 33, 2, 26-32

[4]         For New Zealand, check the numbers