Showing posts with label housing research. Show all posts
Showing posts with label housing research. Show all posts

Thursday, September 1, 2011

Living in the city – the path to CBD redemption?

A tale of two city centres
Auckland and Christchurch councils see housing playing a much greater role in the central city.  They have released plans for transformation (or bits of a plan in Auckland’s case), both with visions of more active, exciting, and greener central cities.  Auckland is already on its way, with the recent extension of public waterfront amenities into the Wynyard Quarter.
For Christchurch, the path is more difficult but the council’s vision for the CBD following the devastation of repeated earthquakes over the past year is a bold one: increasing green spaces in a low-medium rise centre, an ambitious combination of restoration and remembrance, public spaces, public transport, and a revival of inner city retailing and housing.  It is an ambitious blueprint for creating certainty from chaos.
Common hopes
Both cities share a hope that the redemption of downtown will be sustained by an influx of city dwellers, people trading off the space of the suburbs for the buzz of the centre. 
Will it work?  I am not sure.  The quest to revive the CBD by relying on expanding residential precincts within what are already quite confined spaces raises conflicts between accommodating residents' needs and catering 24/7 for many more visitors and a wider variety of educational, entertainment, recreational, professional, and employment activities. 
In any case, the plans appear founded on a vision of place more than people: views of structures, precincts, and building controls define them, rather than consideration of dwelling needs and lifestyle preferences.  Where are the people (other than as stylised figures in rose-tinted renderings)? 
Even though the rhetoric is strong on getting people there (although preferably not by car) little attention seems to have been paid to who will live in expanded central dwelling precincts, how they might live, and what their housing and neighbourhood needs might be.
False expectations
Recent experience suggests that land purchase and aggregation, remediation, and redevelopment, and building costs mean affordability will only be achieved by sacrificing amenity and quality.  This in turn implies that inner city residential development will continue to displace the less well-off, with gentrification leaving no room for the sort of social housing envisaged in the Christchurch mix. 
At least Christchurch central does not lend itself to the shoebox blocks that have become part of inner Auckland’s apartment scene over the past decade.  On the other had, more of the same may be the only real hope of squeezing in the inner city resident numbers Auckland Council hopes for. Either way, it is questionable just how many more young, unattached professionals and students there will be to occupy large numbers of additional medium-density dwellings in either city.
This is one of the questions considered in a report by CityScope Consultants just published on the website of the now discontinued Centre for Housing Research Aotearoa New Zealand.   It examines the international evidence, looks at the numbers, and reports primary research (interviews with buyers and residents) to identify what might make medium density housing more attractive. (By medium density we mean anything from single storey units, through low rise apartments of 2-3 storeys, to medium-high rise apartment blocks – all of which involve a significant shift from New Zealand’s suburban tradition).
Here are some of the relevant findings:
Extracts from Key Points
It is important to understand the nature of ... demand ... as adoption of medium density housing has not matched expectations.  This may reflect:
  • The limited market for centralised, multi-medium density housing;
  • A mismatch between where plans are directing housing and where the market lies;
  • Supply difficulties with recent development that feed negative market perceptions.
...  New Zealanders’ long-standing cultural preference for detached housing on individual sections has been reinforced by the leaky homes episode and failures in the developer driven, retail investor apartment market.  People see medium density housing as inferior: characterless, drab, monotonous, cramped, leaky, subject to the complications of bodies corporate, lacking privacy, noisy, insecure, lacking an outlook, lacking hobby and storage space, having parking problems, not allowing pets, and with poor prospects for capital gains. 
...
Changing tastes and experience could lift long-term acceptability of residential intensification ... The influences on choice can be organised across three levels spatial resolution:
  • accessibility to activities at the city or sector-wide level, including how easy it is to get to jobs, higher order services and retailing, formal recreation and cultural activities, and the like.  In some respects this can be treated as a necessary condition, although the level of accessibility required will vary according to household characteristics;
  • domain, which encompasses the area over which day-to-day social relations are formed and regular or lower order transactions take place. This corresponds broadly with suburb or neighbourhood, and may include elements of the medium density complex itself; and
  • sanctuary, which refers to the dwelling, and may be influenced by the relationship of the dwelling to the complex and the immediate neighbourhood.
The must-have parameters people look for in their sanctuary are much the same in medium density as in conventional housing: a safe and secure environment, privacy; space, light, and warmth; and flexibility in how it may be used;
...
Domain preferences are influenced by lifestage:
  • Younger people (usually in non-family households) at the beginning of their working careers, housing ladder, and relationships tend to favour central city locations;
  • Young families tend to favour familiar neighbourhoods;
  • Family households tend to favour suburbs and town centres ...;
  • Older families and post-family households tend to remain in their established neighbourhoods ...
The resolution of preferences around sanctuary and domain will influence where and what style of housing is generally favoured according to lifestage segment, with the actual choice conditioned by limits of affordability and usually confined to geographic submarkets.  ..
...  future demand for new housing will be driven increasingly by the preferences of empty nester and retirement households, many of whom own their dwellings.  This gives them the capacity to purchase well-appointed medium density housing that satisfies their expectations for domain and sanctuary.  They are less likely to favour small, centralised apartments than younger households and are more likely to have a commitment to particular residential submarkets, built on a stronger sense of domain.
Consequently, residential intensification is more likely to be achieved with plans allowing for diversity of locality and form.  This, in turn, means meeting supply challenges in suburban environments ...
Source: CityScope Consultants (2011) Improving the Design, Quality and Affordability of Residential Intensification in New Zealand, Centre for Housing Research Aotearoa New Zealand, Wellington

Putting future housing in its place
Meeting residential needs, achieving higher residential densities, and restoring the CBD are not objectives that necessarily converge.  A liveable city calls for an emphasis on where most people will be living – the suburbs.  Meeting housing needs and demand will not be achieved by building undifferentiated, small footprint apartments in the centre for what is essentially a minority, transitional and diminishing market segment. 
Equally, reviving the central city will not happen as a result of creating more swathes of medium density housing, and nor should it depend on such a strategy.
It is likely that residential densities will increase in mature cities over the next thirty years naturally: just don’t expect this to favour the CBD.  Certainly the central city has an exciting future as a place to visit.  Let’s not rely too much, though, on getting a lot more people to live there, especially not in medium rise apartments.

Friday, July 1, 2011

What happens when there are not enough houses?

Closing CHRANZ
Yesterday the Centre for Housing Research Aotearoa New Zealand (CHRANZ) closed. This public agency funded independent and contestable research into New Zealand’s housing markets.

The Centre commissioned some important research, developing tools for analysing housing markets; looking at housing supply and demand, and their impact on prices; identifying the needs of different groups; examining regional markets; and most importantly documenting changing trends in affordability, ownership, and the disturbing emergence of the intermediate housing market.

But this posting is not a wake for CHRANZ.  Fortunately it has created an important knowledge base that enables us to understand the challenges we face, and which will be relevant for some time to come.[1]

It’s ironic, though, that its closure takes place at a time when there are more questions over housing than ever, more challenges and more uncertainties.

Housing – the perfect storm?
Rebuilding Christchurch The earthquakes in Christchurch throw up huge questions over how and where many residents will be housed, and even more questions over just what will happen to the city’s population in the medium term, and its projected demand for housing.

Since writing the first version of this post I have been reminded of the leaky homes saga - a housing crisis all of its own.  The New Zealand Herald today reported that many owners of monolithic cladding homes which are not damaged or have been certified as watertight will be in for a shock when new valuations are received: the market is downgrading them on apperances alone. That in itself is enough to slow the market down as equity diminishes and the rungs in the housing ladder get just that much further apart for a large number of owners.

Much worse though is the continuing prospect of major repairs or even demolition for those that do have leaky homes.  The 2009 "consensus forecast" was 42,000 homes leaking then or that would do so in the future. (The figure could be a lot higher).  That's a lot of people stalled in the housing market, a significant number of whom presumaly need new homes.

Housing affordability has become a persistent problem, nowhere more than in Auckland. This is manifest in measures of housing stress, falling affordability, and a rapidly growing rental. [2]

Rapid growth in rental demand (up 56% between 1996 and 2006) is happening in a country with no strong culture of renting (except in social housing), with poorly defined tenant/landlord rights for long-term tenancies, and a weak supply sector.  Rentals used to be based on ageing detached housing stock.  In the past decade small apartments proliferated.  In both cases, though, landlords are mainly small scale investors, individuals, family trusts, and the like.  A string of failures among developers and financiers has now scared them away, highlighting a major institutional market gap.
The Intermediate Rental Market (households with at least one income earner that cannot afford to purchase housing even in the lower price quartile) has exploded. This group grew by two thirds and accounted for all national growth in rental demand from1996 to 2006:

Growth of the Rental Market and  the Emergence of the intermediate Market 1996-2006


Source: DTZ New Zealand (2008) The Intermediate housing Market in New Zealand CHRANZ, p7)
Falling home ownership raises social and economic uncertainties over: household consumption behaviour; family formation and fertility; marriage dissolution; household mobility; quality of schooling received; stability of labour markets; inter-generational equity; crowding and public health; the emigration of skilled people; and so forth.  The tight rental market  where stock is low and rents are high - in Auckland especially - exacerbates these issues.

Housing starts have fallen dramatically since 2006, shrinking supply and sustaining high prices. We can see this by comparing annual dwelling consents issued between 2001 and 2006 with those issued since. Nowhere is the fall more pronounced than in Auckland:

Annual Average Dwelling Consents Issued:
The most obvious consequence of this collapse in house building is that we cannot begin to meet demand for new housing called for by our population growth, with new houses falling well behind our projected needs.  The first column in  the diagram below shows the level of house building between 2001 and 2006.  The second column shows projected housing from 2006 to 2016 (most forecasts agree on these sorts of figures).  The third column shows what we got over the the last four years - already well behind the projections.
Actual and Projected Housing Demand, 2006-2010


Source: Building Research Association of New Zealand (2007), Changing Housing Need Report 183,

And help isn’t obviously on the way. Over the three years to March 2011 construction employment shrank by 15,800 nationally or 12% (Quarterly Labour Market Indicators, Statistics New Zealand), confirming that the sector is hollowing out. According to the Statistics New zealand Business Directory, Auckland lost 4,820 employees from construction over just two years ending February 2010, 13% shrinkage.

Recent migration offers no consolation. Among people coming and going who nominated their occupations, New Zealand only gained in the professional category in 2010.  It lost out on people in the trades, technical vocations, machinery operations, and labouring. It looks like we've got more people to think, plan, regulate, and litigate, and a few less doing things.

Occupational Composition of Net International Migration, 2010



Source: Statistics New Zealand
A quick intro to the agencies
CHRANZ' role was to help us understand these issues, and explore solutions.

Other agencies continue to be responsible for devising and delivering housing policy solutions. The Department of Building and Housing is responsible for the regulation and standards required to protect home buyers or renters. The Department also monitors the housing sector and the building industry, and undertakes monitoring and policy research.

Housing Corporation New Zealand is a crown entity responsible for social housing.  It manages 66,000 rental properties and also works with third sector providers. These are the community based organisations, such as the Cooperative Housing Centre of Aotearoa New Zealand, that work to get low income households into their own homes.

The Department of the Prime Minister and Cabinet has also got involved, preparing a report on the price of housing in 2008, and continues to monitor things. Now the Productivity Commission is also looking closely at housing, showing that government is taking the current state of affairs seriously.

The Building Research Association of New Zealand (BRANZ) represents the building industry and promotes good practice. Its research tends to focus on materials, building systems, standards, and the like, although it has delved into projecting future demand.
Of course, local councils have the most immediate impact on and prime responsibility for housing supply and affordability through their capacity to zone and release greenfield and brownfield sites, how they regulate it, the infrastructure services they provide, and the charges – including development levies – they apply to do so.

So how do we weather the storm?
How these agencies work together and adapt their programmes to focus on a real, pressing, and complex need is the outstanding question in today’s housing policy environment. Getting across multiple agencies and creating the conditions for them, the third sector, and the private housing suppliers to work towards the common aim of increased, affordable housing of an appropriate standard is a major challenge that the country faces.

The Canterbury earthquakes may be the game changer. They could demonstrate just how we might respond to a housing crisis through a statutory body set up to drive recovery (the Canterbury Earthquake Recovery Authority) and a commitment to training the people required to resource rebuilding.
This is important because, while they may not be as spectacular, visible, or traumatic, there are housing crises elsewhere in New Zealand.

Moving forward
CHRANZ has set out the parameters of the housing problems facing us: now may be the time for those left standing to progress the solutions - with urgency. 

This will involve a range of parties working purposefully together to provide practical and realistic solutions.  Among other things, the private and public sector and central and local government may have to really collaborate towards a common end.  And councils need to think seriously about what the part have to play to avert the crisis.  It may just be time to shift their plans for housing to focus on people's needs and the constraints they face.

If they do not get on with it we may be left with just three possibilities.

One is that we will be landed with powerful housing authorities in different parts of the country tasked with circumventing existing barriers to solve the problem.  Crises may justify centralising power.

Another is that frustrated demand might just disappear, melting with the departure of growing numbers of young people (and others) from New Zealand, and fewer arrivals from elsewhere.  This does nothing for the economy as a whole and might further reduce the capacity to resource the housing supply sector.

The third? A deepening housing crisis, with all the personal, social, and economic dislocation that can bring.








[1]           I have to declare an interest here, having been involved in one of the last pieces of research commissioned by CHRANZ – but not yet published.
[2]        DTZ New Zealand, 2007, The Role of Home Ownership and the Role of the Private Rental Market in the Auckland Region, CHRANZ, Pp81-91.