anagement Act, New Zealand’s land use regulation, can hold up developments and city planning
for a decade or more in some cases. Time is money because development is risky.
New Zealand’s residential build volumes are small, and the construction sector is
highly fragmented.Only five firms in the country built more than 100 homes in 2011. The vast majority of buildersbuild only one house each year. New Zealand is a late adopter of prefabrication and use of standardised materials. In New Zealand, if a window is to be added into a house, it will usually bemeasured and built by hand. Construction industry productivity has stagnated in the past 30 years,and is now below where it was in 1978. Industry regulation favours single person operations. New Zealand has inadvertently created a cottage industry to supply one of our most important assetclasses.Low build rates produce downstream problems. Shortages are absorbed through household
composition and there is some evidence of overcrowding. New Zealand’s housi
ng stock is ageing and appears to be of relatively low quality, which has consequences for health and well-being. Thelarge boom and bust cycles of the New Zealand industry discourage fixed investment in employeesand systems, weakening productivity.From
the Government’s perspective, worsening housing affordability creates a number of problems.
Fiscal pressures increase because financial assistance for housing is tied to its market price. Homeownership provides financial security and a form of savings and lowers dependence on publicassistance later in life. Worsening affordability increases demands for direct intervention through rent controls and publichousing. We are aware of the results of these sorts of interventions overseas and must avoid them.New Zealand is not alone in its housing affordability problem and there seems to be increasing awareness around the world that the planning pendulum may have swung too far. Land useregulations and intrusive development rules have consequences. The Conservative government in
the UK has recently taken first tentative steps to, as David Cameron put it, “[get] the planners off our backs” by increasing permitted activities by residents.
New York is considering relaxing minimum size rules on apartments.
Government’s strategy is to address the varied causes of housing affordability and avoiding ‘magic bullet’ solutions that paper over causes and create more problems downstream.
In New Zealand an important political driver of urban controls is environmentalism, but thisconcern is misguided. Cities are environmentally friendly places if the alternative to city living ishigh-
footprint lifestyle in the country. New Zealand has seen a proliferation of ‘lifestyle blocks’