Demographia state that planning regulations – or, more precisely, metropolitan urban limits – cause houses to be unaffordable. Without planning, they claim that the median house would cost no more than 3 times the median household income.
Is this claim actually true? Last week, I took a look at some recent research by New Zealand economists that found that Auckland’s planning regulations had a much lower cost than Demographia think. (But still a substantial cost, especially for apartments.) So that’s evidence against Demographia’s claims.
But to really test the robustness of their analysis, I’m going to attempt what mathematicians call a proof by contradiction. My aim is to show that it cannot be the case that planning is the only factor that is pushing the median multiple above three for standalone houses. In order to prove that I will have to show that Demographia’s claims are mathematically impossible.
Somewhat to my surprise, this is not particularly difficult.
The first step in the proof is to consider the channels through which planning regulations can impact the cost of housing. They can:
- Constrain the supply of bare land for development, which will tend to drive up the price of land
- Limit the number or size of dwellings that you can build on a site
- Impose cost, delay, and uncertainty in the regulatory process, which may scare some people off entirely.
Consequently, I’m going to look at what houses would cost if only construction costs mattered. No land costs, no consenting requirements, or anything else. That way, we can be certain that we’re not accidentally including any costs that arise as a result of planning regulations.
If the cost to physically build an average house is greater than three times the median household income, then planning regulations cannot possibly explain all of the difference between observed prices and Demographia’s preferred median multiple of three. For Demographia to be correct, land costs would have to be negative in the absence of planning regulations. As this is a logical impossibility, this would be sufficient to prove that Demographia’s estimates of the cost of planning regulations in New Zealand cities are too high.
Without further ado, here are my calculations. I’ve drawn this data from several reliable sources:
- Household income data from the 2013 Census
- Construction cost data for different cities from a recent edition of Rawlinsons Construction Cost Handbook, a reliable source on building costs. I’ve used the midrange of their estimated costs for a single-storey weatherboard home – the most common, cheapest option on the market.
- Statistics NZ’s building consents data, which shows that over the last 10 years the average size of new residential dwellings has been around 190 m2. (This is actually likely to under-state the size of new houses, as it also includes apartments. Also, note that it’s necessary to go into Infoshare to actually access the data.)
| City (TLA) | Median household income (2013) | Average build cost ($/m2) | House size (m2) | Total build cost ($/house) | Median multiple of build costs |
| Auckland | $76,500 | $1,725 | 190 | $327,750 | 4.3 |
| Wellington City | $91,100 | $1,675 | 190 | $318,250 | 3.5 |
| Christchurch City | $65,300 | $1,725 | 190 | $327,750 | 5.0 |
| Dunedin City | $54,400 | $1,625 | 190 | $308,750 | 5.7 |
Fairly remarkable results. The costs of physically building an average-sized house in four New Zealand cities ranges from 3.5 times the median household income (Wellington) to 5.7 times (Dunedin). The “median multiple of build costs” seems to always be above three.
We have just shown that planning regulations cannot fully explain the difference between house prices in New Zealand cities and the prices that would be implied by a median multiple of three. That is, in fact, a logical impossibility. Demographia seems to be over-stating their case, probably substantially. Quod erat demonstrandum.
However, it does look like construction sector productivity might be a bit of an issue. Different sources disagree on whether New Zealand faces higher construction costs than Australia and other countries. In its 2012 Housing Affordability Inquiry, the Productivity Commission suggested that pay more for construction. On the other hand, a rather excellent NZIER report that benchmarked construction costs against Australia found that we don’t.
So who knows what to think? Economists, eh?
That being said, it’s clear that productivity trends in the building industry are not flash. Here, for example, is the Productivity Commission’s graph of growth in construction industry productivity since 1978. In short, there hasn’t been much:
To summarise, there are many factors driving New Zealand’s house prices. Planning regulations are part of the picture, but as I’ve shown here they cannot possibly explain everything about our high housing costs. We’ve got to also consider other supply-side factors, such as construction productivity and the availability of building tradesmen, and myriad demand-side factors ranging from urban amenities to tax policy to interest rates. And, of course, we might want to ask why people aren’t choosing to respond to high building costs by building smaller houses. (Perhaps it’s an income effect – wealthier people spending more on big houses? Or perhaps there are some rules that make it difficult to build small, efficient dwellings?)
What do you make of the data on residential construction costs?
Processing...
One of the larger contributors to the cost of building in NZ is the stranglehold on building materials by the bigger players, Fletchers, etc. Compare the actual material costs ($) per item between here and Australia, add in some freight and there is still a huge difference. Compare Bunnings / Mitre 10 prices between here and Oz for comparable items too. Build costs for houses in Oz are way less per sqm. Some of the smarter companies import house-lots of building materials in containers to get around this, e.g. GJGardner.
http://www.bmtqs.com.au/construction-cost-table
AUD 1245 + GST/m^2. Slightly lower in Hobart. Not a huge difference, and would still mean >3. Would be interesting to see what the breakdown in labour vs materials is in both cases.
Some recent changes in NZ, such as the requirement for scaffolding + nets when doing roofing will be pushing up costs here – dunno if Australia has the same requirements. It’s unclear as-yet as to whether such requirements are having any difference at all to accident rates in the industry, but based on the data currently out, any effect is pretty small.
Strip out the different taxes and whatnot, and there actually isn’t a massive difference in how much houses cost per square metre in Oz and NZ. 20% tops.
A couple of points and questions: does that Motu paper actually look at the costs imposed by the MUL? I haven’t read it in any detail but it didn’t seem like they they were comparing the stays quo to a no mul world?
The other comment is that MUL restrictions can indirectly affect build costs by affect economies of scale.
However agreed that 3 times median multiple is an arbitrary measure.
Good work Peter. But please note that these figures for house building costs only apply for cheap, simple, mass-market houses. The ones you might build if land was cheap. The $/m2 rate for medium-density housing, with better build quality and more expensive design features, is easily twice that.
Yeah good luck building anything but the most basic structure on a perfectly flat site with all infrastructure delivered to the door funded by someone else at those rates; even $2500/m^2 has been a fantasy for long time.
The per-square-metre rate for medium-density housing is certainly not twice that of a typical detached home. Although you do mention “better build quality and more expensive design features”. For high-rise apartments vs basic single storey dwellings, the cost might be nearly double, but not for terraces etc. Again just pulling some basic costs out of Rawlinsons, you’re talking $1430/sqm for very basic single storey detached homes, vs $1875/sqm for terraces. And in practise, people generally want better quality fittings and exteriors than the “basic”, so the percentage gap shrinks. For two-storey detached vs terraces, there’s almost no cost difference.
I wonder if this has implications for house price rises in Australia, namely Sydney and Melbourne.
Good post Peter – also note Rawlinsons costs exclude GST, design and other consultants, consent costs, siteworks, civil and subdivision works, development contributions etc.
Peter maybe both the Rawlinsons sqm rate and the average size incorporate part of the effect of planning regulations. It could work like this. There was a time when there was sufficient land for all. So poorer people built houses that were smaller (less than 120sqm) and that were also a cheaper rate to build ie only one bathroom. Now planning restrictions have squeezed supply to a point where only wealthier people can build (the wealth effect) and they have a preference for larger houses and things that result in a higher build rate (high quality finishes, more bathrooms etc.) The Rawlinsons rates reflect the costs of these prefeneces and exclude the preferences of those priced out.
Yes there was more land; or rather there were fewer people; Auckland was a little provincial town surrounded by proximate farmland. Houses were smaller because there was less money and fewer resources. Also people didn’t build bedrooms for cars in their houses back then. People do want bigger dwellings, all things being equal, but a significant number of people will choose much smaller dwellings if a) the price is right, and b) the location is good; ie close to amenity and connection. These conditions can be achieved by building more dwellings piled up on smaller parcels of land close to centres, known as apartment buildings.
I agree with mfwic, and his point still applies to planning restrictions on intensification not just greenfields. Minimum site sizes force people to buy a whole lot of expensive land for a house. Once they have paid that much for land it makes sense to only build large expensive homes.
Expensive land + density restrictions = large luxury homes.
Of course construction costs are also way too high and more needs to be done to improve productivity here.
I agree. A further problem with limited supply is it causes a boom/bust effect (look at the variability in yearly build numbers Peter) in the construction industry. Busts are devastating to builders who have invested upfront capital in improving productivity with business models such as prefabrication, factory builds and going to the expense of bringing new untried and tested but possibly cheaper/better product into the market.
The end result is NZ’s construction industry is very conservative, prone to monopolisation, unproductive and ultimately unaffordable.
Part of the Demographia argument is that it needs a Levitts type construction response.
The evidence from around the world is that when you have restrictions on fringe growth, site values are elastic to restrictions on density. All housing will be expensive – median multiple 6 or higher – and all that restrictions on density, and mandates on quality etc will do, is determine the density and quality of the finished housing. Hence Boston has a median multiple of around 6 with an average lot size of 2/3 of an acre; and UK cities have a median multiple of around 6 with an average lot size of 1/16 of an acre. Land prices per square foot vary by a factor of hundreds or even thousands, according to how many households you are allowed to cram onto your site and extract “economic rent” from them – i.e. the maximum they can stand to pay for housing.
HK’s median multiple of 15+ is glaring evidence that the correlation tends to run in the direction that the DENSER your plans for “housing space”, the HIGHER the economic rent for which households are able to be shaken down. The parallel would be – if you rationed food to prevent an overconsumption problem, the tighter the rationing, the MORE people would end up paying, for LESS – the lesser and lesser quantities would not mean lesser and lesser cost, it would mean higher and higher cost as people engage in liferaft-ethics bidding wars against each other for the available supply.
This is basic economics – it seems that basic economics is something very much missing from our “urban economics” expertise today, probably a lot to do with the perversion of the profession in practice by “where the MONEY is”.
I think your assertion that the denser the plan, the higher the cost, while factually correct misses the point.
The more desirable, the more demand and that leads higher the density, or would depending on an individuals view of trade off between proximity to services versus space.
The inability to meet the demand, either through planning restrictions, low building productivity, financing restrictions (LVR/Deposit restrictions or working capital for business) or whatever your favorite reason is, leads to price pressure as more people compete for what are in effect scarce resources.
In the Hong Kong example you cite, there is a definite boundary to expansion on the Island, although there may be less barriers on the main land, but this is less desirable and probably less expensive, as the proximity to the locations and services increases.
The problem that remains with Hong Kong, is that inland, if you could do what you like, like they can in Texas, the satellite city (Shenzhen) could have been affordable and this would surely have taken pressure off HK’s prices. But there is virtually nowhere in China you can do what you like, the whole system is planned and “extractive”.
Of course HK has long had geographic barriers but it is perfectly valid to use this as an indication of exactly what would happen within a regulatory boundary – there is no difference.
Re “desirability” – the problem is that there have been numerous examples of desirable cities that managed to be affordable until they came up against some boundary effect. Los Angeles was affordable for decades, until the late 1970’s. New York urban area was affordable until the 1990’s. Auckland was affordable until the late 1990’s. Most first world countries had decades of affordability, the UK did not because they imposed the Town and Country Planning Act 1947.
The correlation between the onset of affordability problems, and fringe growth coming up against some constraint, is undeniable. In rare cases geography is responsible (Hawaii?) but politically imposed boundaries and land rationing are by far the most common.
It wasn’t just availability of land but also the government helped people to build houses by supplying the land cheap. My grandparents were able to get land in Chch on a 99 year lease in Upper Riccarton in the 1950s on a government scheme and built a small house. The lease costs were minimal.
Later, they were given the chance to buy the land outright at a reasonable price.
Of course now that would be called socialism and rejected by the neolib acolytes.
We need to stop thinking of housing and transport as things that should be left the the market as clearly it doesn’t work. The government should plan housing and finance development – then use the profits for the next development. Just like the Hutt Valley in the 1940s.
The government also used to provide finance to people who might not otherwise have access to it. My parents first house was a $5000 Keith Hay home financed by the Housing Corporation.
Admittedly that was in the bad old days when you had to dress up to go see the bank and pled to the all powerful branch manager.
Exactly, Goosoid – that is a constructive alternative suggestion to Houston-style lassez-faire. It is so sickening that so many advocates of saving the planet from urban sprawl, are useful idiots for possibly the greatest social-injustice wealth transfers in history – and most of them claim to be “of the left”, to care for the poor, and to be in favour of government intervention. Why then, nil understanding or advocacy of how government SHOULD intervene in actual property markets if saving the planet from sprawl is a necessity? The other alternative would be simply pricing infrastructure use properly, and taxing land, especially in a targeted way “by zone”.
As Mason Gaffney put it so beautifully back in 1964:
http://www.masongaffney.org/publications/e3containment_policies.cv.pdf
“…….cities tend to fall most strongly under the sway of those who stand to gain or lose most by municipal decisions, and those whose assets are irrevocably committed to the city, that is, the landowners. The rest of the citizens are by comparison mere transients, outsiders and climbers whose organization and influence is seldom commensurate with their numbers.
To the dominant landowning oligarchy, few limitations on competition commend themselves with quite the same force of logic as limitations on the entry of new lands into urban use. It is therefore no accident that negative growth containment is the most respectable and salable kind of planning in many quarters. It harmonizes all too mellifluously with the interest of a dominant class. But from the viewpoint of social economy, of other interest groups, of the general welfare, of the region, state, and nation, and even of most urban landowners in their roles as workers and capitalists, negative growth containment is an instrument of monopoly exploitation……”
Your arguments would sound a lot better if you didn’t keep referring to Houston. Auckland has even less in common with Houston than Hong Kong – the city you seem determined to present as the natural consequence of dense housing.
There are many, many examples in between (like the 1940 Hutt valley development, Northern Europe, South America) that you never mention.
Also your tendency to assume that anyone in favour of density is in favour of the MUL – that is not so. A true free market would not restrict up or out but that is not what Houston has. There are many, many density restrictions in Houston that prevent medium or high density housing – whether zoning rules or private covenants that are enforceable through the public purse – you never seem to acknowledge this.
Houston’s “solutions” (though I don’t really see how that city has solved anything other than cheap housing) are not our solutions. Neither are Hong Kong’s.
Broaden your references and you would be a lot more convincing.
See that precipitous drop in productivity in 1991? There is no question that the Building Act 1991 greatly increased the cost and complexity of building houses in New Zealand.
And the end of apprenticeships as we knew them.
Didn’t the ProdCom report cite the costs of small-scale bespoke construction as a reasonable factor here, and note that releasing a lot more land could help to overcome that?
A few regulatory impositions on construction costs then:
1) Small scale production because little ability to open large-scale new developments;
2) Potential issues on building materials standards geared to NZ-specific conditions when materials from Tokyo or Seattle should be as effective in NZ’s equally wet and shaky climate;
3) Scaffolding regs that add to construction costs on single-story builds…
So if lack of large scale land developments is the problem, why aren’t Long Bay, Hobsonville and Stonefields offering much cheaper housing? The problem is lack of planning and integration into that plan.
Because price at the margins is set by the median in the market – which is the inefficient bespoke single-build stand-alone house. These greenfield developments aren’t set up for high-productivity either.
But ALL median multiple 3 cities have the stand-alone family house as the norm. Both currently, and in the history of markets that were affordable once – like here. There are NO high density cities that are anywhere near having a median multiple of 3. Six or higher – often a lot higher – is normal.
The reality is that the LAND is either the subject of a “gouge” of whatever the people you can cram onto it can “:stand to pay for housing” – or it is supplied under a competitive process where exurban rural land at $10,000 per acre is the baseline, and other site values are derived from transport cost savings on top of that. In technical terms, the former is “monopoly rent” and the latter is “differential rent”. Actually, the former is a form of “monopolistic competition”, which is a branch of economics that needs to be better known.
A few years back, the PM, in his capacity as MP for Helensville, loudly objected to a 3000-unit housing development on former air force land at Hobsonville as ‘economic vandalism’ that would weaken nearby property prices. As Audrey Young stated at the time, he sounded “like a rich man holding his nose at the thought of the poor getting too close to the rich”.
And building materials continue to be cartelised by Fletchers and Carters.
Goosoid; when you have a “supply quota” system, even quite a LOT of “supply” can be “gamed” to keep the prices high.
Spain managed to build as much as 25% too much “housing” during their bubble without any of it being affordable until after the crash happened. The difference between Spain and Texas, is that the supply chain in Spain is 7 years long and in Texas it is 7 weeks long. When a downturn in housing demand happens in Texas, a whole lot of small builders pack up their pickup trucks and go back home to focus on joinery, additions, alterations, maintenance etc. In Spain and now potentially some other countries (Australia is a big risk) when the downturn finally comes after years of speculatively driven boom, you have 7 years of everything from half-completed projects to land-banked sites to have their value wiped out.
Couldn’t find median house size on the Statistic website in a hurry, so do not know how they come about, but QV house sizes are including the size of internal access garages, and are therefore inflated. Size obviously matters for cost, and there are plenty of incentives to build large, minimum plot sizes being one. Lifting the MUL will likely not help with plot size reduction, though. Within urban boundaries, I cannot come up with any rationale for a minimum plot size, which could not be better addressed by other controls.
Cost to build: the winner in the cost-effectiveness category of this year’s South Pacific Passive House Awards has substantiated cost of $2,255.57 per square meter floor area (first video here: http://www.phinz.org.nz/videos). Granted, it’s not in Auckland, but another, soon to be certified, Passive House in Auckland was short-listed for the award. So: if high performance, high quality Passive Houses are being built for cost below $2,500 per square meter, it’s not too elusive to achieve this for code complying home, I reckon. None of the short-listed Passive Houses had developer margins on top of costs, though. If government was interested in reducing the cost of homes, they should look at selling government land to self builders – but that’s of course not what this deal is about.
Regarding cost for higher density builds: it’s funny that these are typically specifically lower than detached in Europe, which makes sense to me, as the envelope to floor area ratio of higher density buildings is smaller, and cost saved there more than compensate for increases elsewhere. But: this may be telling the “quality” of our envelopes, as well as the “quality” of our regulations.
While I agree that Auckland wont have houses at 3x median income regardless of planning rules, I think your basic assumption is invalid – Demographia are saying the average house would be 3x median income, you are looking at the price of the average NEW house. Demographia would argue that the average new house is always going to be more expensive than the average house. While 190m2 might be the average new house, it certainly isn’t the size of the average house (190m2 would be 5 bedrooms 2 living areas – my guess is the average house is more like 120m2). And the fact that new houses are so big is probably a result of the planning restrictions (developers trying to make the most out of their expensive piece of land).
Demographia uses the rough guide that if the median multiple is 3 times incomes across the city, new homes on the fringe should be about 2.5 times the median income of the city. They argue that in a liberal planning regime without artificially high land costs, prices tend to hover around the same multiple but people get more “house for their dollar” as building sector productivity improves. As other comments have pointed out, the opposite tends to happen when land is expensive due to supply restrictions. People may be happy to slap a $200,000 house on a $60,000 section but they’re unlikely to do so on a $400,000 section.
Agreed. Only looking at the price of new construction is like looking at the price of brand new cars and making a conclusion about average car costs.
Though I think the point about construction costs being too high still stands.
Actually, the problem stands out much more starkly if instead of median multiples, we were to look at the price of land per square foot in like-for-like locations.
In a city with a median multiple of 6 versus one with a median multiple of 3, that land price will be different by a factor of tens or even hundreds of times depending on the allowed density in the more expensive city. The greater the allowed density – or even the greater the crowding – the higher the land price will go. And the price will rise faster than the density, meaning higher housing costs with higher densities, not lower housing costs with higher densities. I mean comparing city with city – of course if you have a high density block next door to a 1 acre section with a mansion on it, in the middle of London, the latter will be a more expensive home than the former.
Another thing Demographia does not convey, is the disparate impact on low income earners. Median multiple 3 cities tend to have a good distribution of house prices around the mean – there are even $90,000 houses for $30,000 income earners – look on RE sites. But the same city, with a growth boundary and a median multiple of 8, won’t even have $240,000 houses for the $30,000 income earner – the tail at the bottom end of the market disappears. In fact the houses that might have been $90,000 often tend to end up close to $1 million because all the inflation is in the land price – the hovels nearer the middle of Auckland are a case in point.
There is an actual paper for the UK that shows a higher “bottom quintile multiple” than the median multiple.
So I say, indeed lets find better ways than Demographia’s median multiple, of really identifying the problem – but finding ways to deny that there is a problem, instead of ways to show it is really much worse – what does that say about the “experts” concerned?
Slightly off topic, but for the next 5 hours StatsNZ is asking about housing questions in the 2018 Census.
https://2018census.loomio.org/d/wIpPO5Z3/occupied-dwelling-type
I dont think those data are correctly measuring the issues we are having.
For example compliance cost per house hold is only measuring billed cost, but not the actual sale price stew. For productivity, what are those index based on?
Even at $400/unit, “planning” costs (I don’t know what comprises them) is a vanishingly small percentage of the cost of a house, and the costs assigned by the other studies are inconsequential. This is once more Demographia demonizing something – government – they don’t like, but this is a pretty weak effort.
Are there any/many building types for low-cost pre-engineered/manufactured housing in NZ? These are common in the US but unfortunately many city building codes don’t allow them so they tend to be a rural phenomenon. Lockwood is sort of what I have in mind but I am not aware of any lower cost alternatives, but I think they would help, at least as starter homes.
Has any country without real land shortage I.e Singapore and Hong King actually massively deregulated density limits, height limits, parking mins and etc. I think it’s hard to gauge the effect it would have because has anyone really done it.
Very intelligent question. As I am saying elsewhere on this thread, the evidence is that when the overall supply of land is rationed, the way the market works is that people will be forced to pay “the maximum they can stand” for housing; and all that building “up” will do, is increase the value of sites. Hong Kong has a median multiple of 17 to go with its 66,000 people per square mile; that means a site value of literally tens of thousands of times higher than those in a median multiple 3 city, all of which are typically less than 3,000 people per square mile.
Singapore does better because sites are all government leasehold and there is not the same gouge by private site owners. Planners have absolute powers, and rents/prices do tend to be the cost of actual building plus a profit. Nevertheless, when all you can do is build “up” on top of structures that are already there, even when there is NO private-owner site rent to consider, you still do NOT end up with median multiples anywhere near as low as 3. The capital cost intensity of building “up”, especially on top of existing structures, is stupid to deny.
Phil has gone on to talk about the two cities you specifically asked not to be referred to. Not very helpful.
Germany would be one example but there the government carefully plans and releases land as required with the intention that cost of housing drops over time – which it has. And only after putting in place the transport infrastructure to link that area to the rest of the city – not just houses in the middle of fields as we do with housing “developments” in NZ.
As a result:
“one-bedroom apartments in Berlin were then selling for as little as $55,000, and four-bedroom detached houses in the Rhineland for just $80,000.”
“German house prices in 2012 represented a 10 percent decrease in real terms compared to thirty years ago.”
http://www.forbes.com/sites/eamonnfingleton/2014/02/02/in-worlds-best-run-economy-home-prices-just-keep-falling-because-thats-what-home-prices-are-supposed-to-do/
We also need to keep in mind that renting is much more common in Germany too and tenants have very strong rights of occupancy. Is that a bad thing? Apparently not.
However, Demographia and other people only look at the English speaking world and therefore their results are skewed and don’t represent all the possible outcomes.
But Goosoid, one thing to remember is that Berlin has stacks of existing apartments – an excess in fact. Almost giving them away. Auckland has the opposite problem.
I think at least half the reason we have such high multiples is that our wages are far too low. Our governments have focused on providing a low wage economy so the cost of housing as a proportion of wages will always be high in NZ.
The cost of urban land when it is rationed, will always rise in tandem with incomes. It is impossible to order or plan or achieve growth in incomes without house prices (really urban land prices) going up at least as fast – and in fact LSE research suggests the price of land will go up faster as incomes rise, than the income itself goes up.
This works for Hong Kong – it is not “low wages” that give it a median multiple of 17.
In a previous life, Peter, you would have made an excellent witch-poursuivant or a medieval theologian.
Let’s get one thing straight, the Motu report you indirectly reference only analyses the planning impacts on the development costs after raw land is bought.So, the $50K-$100K you reference is on top of the planning costs that affect bare land prices. A previous Grimes & Liang report calculates the RUB impact on bare farmland price at around %900.
According to Auckland Council the current median serviced section price in Auckland is $475K. Take about $125K off that price for profit and infrastructure. The $350K the developer paid for the bare land is worth $35K-$50K outside the RUB., Let’s say the planning gain is $300K.
I would have to look at a calendar to find out what the median price of an Auckland house is today but let’s pretend it is $600K. Once you have knocked off Motu’s $300K for land price inflation and $50K for construction price inflation (both due to planning intervention) you are left with the real price of a house in Auckland being $250K – not a million miles from Demographia’s $225K.
And that’s not including the PC’s calculation of gross inefficiency in the construction industry.
Donald, you are a marvel.
The extra cost of infrastructure for greenfields growth sufficient to keep median multiples down to a historical norm of 3, will no WAY be as costly as all future home owners having to service the difference in housing costs represented by a median multiple of 6 to 8.
How smart is it for everyone to end up paying “big property” and “big finance” rentiers several thousand dollars extra per year, to avoid around $100 more per year in paying for infrastructure – if it even is that? The cost of expanding infrastructure in already-built locations is NOT lower than doing it on greenfields. The gain that can be made from “intensification” is true when you are going from very LOW existing density, to something higher – but it is NOT true when you already have medium density at least, and all capacity increases have to involve working around existing structures and activity and already-high land costs.
Houston is intensifying nicely at its centre because there is so much low cost, under-utilised sites that can have a skyscraper built on them. But Auckland, like London, has NO low cost sites, and the cost of building “up” and adding infrastructure capacity has to include a lot of demolition and working around surrounding structures and activity. Here is an excellent description of how the market for sites works under these conditions; affordability is impossible because every site vendor is a Lotto winner:
http://blogs.lse.ac.uk/politicsandpolicy/why-arent-we-building-enough-homes/?utm
Peter, I generally find your pieces analytically sound and insightful. Why does Demographia stick in your craw? What is it about their conclusions that you feel a need to attack them at every opportunity? I won’t comment on your latest, others have shown the ‘contradiction’ for what it is. Suffice to say the Herald runs stories every second day testifying that it is the price of the land that driving the high cost of housing. Other factors contribute, some exacerbate the problem but it is driven by land prices. So why might the price of land in Auckland (and many places around the world) have increased so markedly? Because the supply is being constrained. You yourself had an excellent piece a while back that demonstrated the link between inelastic supply and higher prices. You correctly advocate an easing of density and height restrictions for exactly this reason. But easing the urban limit is a no-no. Why? You have talked about under-priced infrastructure before. Ok. If you said we can’t relax the limit because it would cost too much for the infrastructure, I could at least accept that you had an argument. We could discuss how to pay for the infrastructure. You might argue that we need the agricultural land. Again something we could discuss. But you don’t. By attacking Demographia you are claiming that there isn’t a problem. There is a problem and relaxing the urban limit would help address it. It may or may not result in a multiple of 3, but the multiple would come down.
And I would like to know why Peter Nunns responds to other people, but never to my arguments about site rents, cost of land per square foot, and so on.
It is not just him – the denial is palpable in the entire, global, land-rationing-and-intensification racket. Intensification is in fact an inherent part of the great gouge by the one-percenters in urban land and finance, of the rest of society. As I observe, land rationing plus anti-density mandates results in SOME land price increase, but the BIG land price increases are to be had by upzoning along with the rationing. The greater the upzoning, the greater the land price increase.
The assumption that building more intensely would create more affordability, is an assumption that formed, justifiably, during the era when we had no fringe constraints, a low, flat urban land rent curve, and house prices that were systemically affordable anyway. Site rents were set by “differential rent” – the premium over and above exurban rural land prices (due to transport cost savings) – and site rents were not elastic to allowed density. You bought the site for about the same price anyway regardless of what you were going to build on it. So obviously if you built more units, you could split the land cost more ways and end up with cheaper units. But the land was so cheap, there was not a lot to be saved by doing this – you could bring a house on 1/8 of an acre to market at not much more than 3 times median income; the land cost embodied in it might be only $30,000 for a $250,000 total house and site package and there might only be $15,000 to be saved by making the housing 1/16 of an acre row-houses instead. The amenity value to most people, of having the space and the stand-alone aspect, was worth more than the “extra” for the land.
But under a total land rationing system, the site vendor will gouge more for the site, the more units can be built on it.
http://blogs.lse.ac.uk/politicsandpolicy/why-arent-we-building-enough-homes/?utm
Denial of the realities on the ground in urban land markets, is an example of one of the ugliest denials of reality in any human field of endeavour in history; akin to the denial of the existence of germs in medicine, for example.
Seriously? You turn up a day late to the conversation, spam nine rambling rants in one go before 7am then complain Peter hasn’t responded to you and claim there is a great global conspiracy to ignore you amazing insights?
Try being concise dude, you’lol be lucky if anyone reads past the first paragraph.
I am referring to experience with Peter Nunns going back months. Including attempted direct contact as well as on this blog and other forums.
And come ON, you don’t make a scratch on my confidence by referring to my observations as “spam”. I accept that these issues have complexities that many people won’t be able to grasp, and am glad of any constructive reframing of my points by people who get them, and can put them out better in their own words. Brendon Harre, for example, has been good at this, and there are a growing number of interested lay-people who do get it, ironic when most of the paid “experts” seem not to.
If people can’t or won’t read and engage with the complexities, they should not be taking the ground that they know best how to run everyone else’s lives – like the slope-brows who ended up running “planned” economies in the past. Hayek was right about the type of person who would end up in power, it would never be anyone whose actual intelligence matched their assumption to know best.
I think people should give Phil a break. I don’t always agree with him but I have learnt from him and he has a valid opinion that is expressed in a logical manner. He has a wordy way of expressing himself that can take some time to decipher but it is usually worth it.
Also it is a fair call about Peter Nunns. What is his obsession with Demographia and his constant articles minimising inflated and inflating urban land prices as a problem and the obvious solution to increase the supply response.
It is not just Phil Hayward who challenges Peter Nunns on this but David Lupton a transport economist too.
Really I see it as you ignoring the complexities. You only have one problem and one solution, making cheap land on the fringes available.
You don’t seem to link this to the removal of restrictions on intensification (which I imagine you object to on ideological grounds) and therefore, you are denying choice to people. Some people (like me) want to live in dense housing where a car is not needed. I would hate to live on the fringes in a McMansion where the nearest public transport is 5 miles away (a la Houston) and cycling is an impossibility.
Peter is only saying that this is more complex than just fringe land availability. You deny this and identify as the sole factor.
Goosoid: here is the reality that I challenge anyone to disprove. Intensification and affordability almost only go along together when there is fringe sprawl. Unless you use other fiscal and property rights interventions like they do in Europe and Japan. You CAN have affordability without intensification – dozens of very low density US cities have a median multiple of around 3 – but you cannot have affordability with intensification only. Intensification in cities with healthy fringe growth is even more affordable than intensification in cities with a rationed fringe, than the comparison in fringe housing is. It is all to do with the way land values are distorted and site owners empowered to hold out for prices that represent “the maximum people can stand to pay” for whatever finished housing is allowed to be constructed on the site.
“The greater the upzoning, the greater the land price increase.” This is very visible on a map coloured by land price, in suburbs you can see the lots with apartments light up in bright red.
Now, about the developments on the fringes, the last thing I heard of it is the council was holding back because it was concerned that providing the infrastructure to support these developments would prove too costly.
David i think you mischaracterise Peter’s position. As I understand it he is arguing that if there is a regulatory constraint adversely affecting dwelling prices, and he doesn’t deny that there is, then it is at least as much in the form of density restrictions as urban limits. So here is the first problem with Demographia, because they only ever argue for restrictions on exurban limits to be relaxed, never on the arguably more pernicious density restrictions. Ergo they are simply a pro-sprawl lobby rather than a disinterested group concerned about housing affordability.
And the local boosters for this monotonal lobby group are forever comparing Auckland to both Houston and Liverpool, neither of which it resembles in any condition. I can’t speak for Peter but the fact that these people are constantly using these specious arguments to try to shape policy is potentially very destructive for our city. That they deny or misrepresent the ongoing costs and burdens of outward urban spread is highly problematic.
Peter’s work simply brings some balance to a hitherto one-sided argument.
Patrick who are these local boosters for Demographia -Hugh Pavletich? Well he never writes here. So who are you referring to? Pretty much everyone else, even Phil Hayward take a more nuanced view that a number of reforms are required. Even Phil Hayward would probably agree with 80% of John Polkinghorne more nuanced view below.
The thing about Demographia and Hugh is they are polemics, the opposite to the compact city ideology. They take an extreme position to get debate started. There is some logic to Demographia’s argument so it cannot be dismissed completely. The solution will be found somewhere in the middle.
Websites like this that look at evidence are a good place to start to find that balance.
Can you please explain then what the other factors are that Phil calls for?
I imagine I am one of the few who actually reads his long diatribes and the only message I ever take away is: We need to be like Houston and have no restrictions on sprawl.
I have never seen him acknowledge that Houston has many public and private (enforced with public money) rules that restrict density. And if those exist then how is Houston an example of a free market or choice?
Goosiod – This has been explained to you before, Houston does not have a free market as in – anarchy. It has a presumed right to build, unless they have already said otherwise. The stupidity of our system is that over the years the urban growth boundary is extended anyway so generally over time low multiple and high multiple cities look the same, except one of the cities is a lot dearer.
The urban land curve is almost identical in shape in any city in the world, irrespective of whether it is a restrictive or non-restrictive zoning.
And why is it that you don’t understand public enforcement of private covenants. Covenants which are after all just a more personalised zoning. You don’t seem to mind that private individuals pay for the infrastructure in a new development and then hand it over to a public entity to control and manage. Why should covenants be any different?
Pete maybe correct that we will never be a multiple 3 x country, but he over looks that if the land is wrong then everything else will be to, so of course his figures don’t add up. I have done the numbers and if land was allowed to be bought and brought to the market under the MUD model, the cost of new greenfields site could be 2/3rd less than how they are developed presently. Once the gaming on land is broken, then any other construction cost gaming would also go, the end result far more affordable housing across the board. if you ‘get it’ on how land works, especially on the fringe, then the penny will drop on how the whole development racket works.
And for the record, you, Phil and Hugh (and me) have all said at various times that there should be less restrictions both up and out.
Goosoid, you are one of the fairer commenters here but even you are misrepresenting me. I have said volumes about targeted land taxes; about compulsory acquisition of land; about government operation in the urban property market as a landlord to provide competitive tension (I love the Japanese approach). I have praised German planning and urban form. I have not only acknowledged that Houston has enclaves with low density mandates, I have defended the rights of people to organise such enclaves if they want to. I have made suggestions how to change the incentives so people are not so keen on these mandates – targeted land taxes, for example.
I have also explained that the biggest difference in the USA to here, is education policy – schools are funded by local property taxes and yet run according to State and Federal mandates. And all sorts of exclusionary policies have been made illegal and the default legal mechanism by which Americans protect their local schools, is by low density zoning mandates. Glaeser discusses this in “Triumph of the City” (I seem to be the only one in discussion like this who has actually read it). Without this perverse incentive, suburban densities like in the British commonwealth and France and Germany would be more the norm even in the US.
And as land prices in real terms continues to fall in non-constrained US cities (fact), minimum lot sizes get mandated bigger and bigger in efforts to have them effective at all. When the land on the fringe is costing $20,000 per acre and new houses provided by developers competing for the modest buyer are typically $200,000, you can’t actually boost the values by a heck of a lot by mandating even 2 acre minimum lot sizes – this is only $40,000 of raw land cost! Ironically a growth boundary makes ANY prevailing lot size far more expensive – even the 1/16 of an acre lot sizes in typical Pom suburbs are like the equivalent of $400,000.
Patrick – if you see the argument as sprawl vs compact and see Demographia and Peter on different ‘sides’ then I fear we are never going to resolve things. Lets look at the problems facing Auckland and see how they are best addressed. There is good reason to think that planning controls are contributing to the problem and in that Demographia and Peter agree. The urban limit is stressed by Demographia, but it is only one of those controls. Rather than beat up Demographia, I would much prefer to see a discussion on possible solutions. What worries me is that Peter is downplaying the importance of the urban limit when I suspect that addressing the issues and reasons for the limit might comprise an key component of the solutions available.
“You correctly advocate an easing of density and height restrictions for exactly this reason. But easing the urban limit is a no-no. Why?” – Please provide a reference where Peter (or any other author on this blog) has supported the MUL.
I have never seen Peter do that. The only point he is making is that removing the MUL is not the silver bullet pro-sprawl advocates make out it is.
It needs to be combined with other factors. However it appears that unless removing the MUL and advocating sprawl is the sole solution advocated for, the only other position is to support the status quo. That is nonsense as there are many other models available internationally, all of which are ignored by Demographia and other pro-sprawl advocates.
However, I imagine those other models are unpalatable anyway as they against the tenets of the neolib religion.
Why do pro-sprawl advocates vilify density and argue that it will inevitably result in slums and expensive housing? There is plenty of evidence around the world that this is not necessarily the case – there are plenty of low density slums.
Making affordable housing available is not simple and shouldn’t be presented as such. For me, that is what Peter is trying to show.
David, as a professional economist myself, and one who also writes about urban economics from time to time, I’ll tell you what sticks in my craw about Demographia. They pull some good data together for cities across the developed world, but they are one-trick ponies in terms of what they conclude from it, and those conclusions are based on rather sketchy evidence, including a complete lack of econometric investigation. They then parade these conclusions to the media and anyone else who shows an interest as if they were axiomatic and no disagreement is possible.
They dramatically oversimplify complex issues. It’s all about “median multiples of 3”, and it’s all the fault of planners and urban limits when house prices are higher. They quote selectively from some urban economists but tend to show limited understanding of their wider bodies of work. Generally they prefer to quote from non-academic sources.
They then point to Houston as a poster child, which among other things, doesn’t have GST adding 15% to the cost of each new build, doesn’t pay for infrastructure in the up-front cost of houses (it’s a long term debt instead), doesn’t have the same geographical constraints as Auckland or most other “liveable” cities, and has just about the highest transport emissions per capita of any city in the developed world. Transport costs are a tradeoff with home prices, of course, and greenhouse gas emissions are also a significant externality.
Peter in the past has said that he has no problem with urban limit expansion if the externalities are properly internalised. At the moment, they aren’t. I would agree with that view.
In the case of this particular article, Peter has shown that you can’t build a typically sized new house in NZ for three times the median income. As I’ve noted in a comment above, even those costs exclude a lot of other things. To get anywhere near a “median multiple of 3”, multiple things would need to happen. That includes much, much smaller homes (most new subdivisions have covenants saying you can’t build homes that small, which is rarely mentioned, and I never hear Demographia arguing that we should build smaller homes).
I could go on, but that’s a good start.
Hear hear!
I think there is a danger in talking about an “average salary”, and an “average section” and an “average house”. Not sure if all of those ever actually co-exist at the same time. Therefore no wonder that the “average couple” can’t get a “average house” – when in fact it is likely to be a substantially “above average” earner getting the average house instead. Statistics can lie and make anything seem possible. Even Demographia’s “average density” of 2400/km2 is true under one set of data, and manifestly untrue under other ways of looking at the same data.
John. I agree the Demographia analysis is simplistic. I agree that it is possible to get high ‘multiples’ for all sorts of other reasons. But all the evidence seems to be that the problem in Auckland is the price of land. Am I misinformed on that? If that is the case we are not going to fix the problem with smaller houses. if the land price is the problem, all the international evidence shows that building smaller houses just increases the economic rent that can be earned from the land. If the problem is the high cost of land, the most probable reason is that the supply of land is being artificially constrained. So Demographia may be simplistic, it may get things wrong sometimes, but I suspect that it has got it dead right for Auckland. And I think that is what is upsetting Peter. He believes in compact cities. He accepts that there is a supply problem when the solution is densification but not when the solution is expanding the city. Rather than expand the city he wants to shoot the messenger.
Peter’s justification for rejecting expansion of the city is that infrastructure is incorrectly priced. I am sure that he is right. In fact I think if we sort out the infrastructure pricing issue, we would get more compact cities. I am sure that the sprawl that urban planners hate so much is largely created by inappropriate pricing of transport and infrastructure. So lets accept that there is a problem and lets see how to resolve it. If we don’t correctly identify the problem, we wont get the right solutions. Forcing people into compact cities without solving the infrastructure problems is creating new problems.
Transport is my field not housing, so I comment on this subject as a lightweight.
In pre-emption of anything Peter Nunns might say in response to Phil Hayward, I would make the following observations as I see things.
1) There seems to be unnecessary antagonism between the pro-intensificationists and the pro-greenfieldists, as if one is inherently all-wrong and the other all right. Is this mutual exclusivity necessary? Why cannot both happen?
2) My problem with ‘outer-margin-development’ – and I call it that rather than ‘sprawl’ because sprawl is merely a particular outcome of HOW o-m-d has been badly-done in the past rather than an automatic consequence of doing it – is that as with most developments in our society, it has fallen victim to car-centricity. This is the reason it has turned problemmatic.
The obvious alternative form of o-m-d would be greenfield villages or small satellite-towns clustered around public transport nodes (ideally commuter-rail), with proper community facilities provided, walkable within themselves and yes, with their own urban boundaries.
This is the model on which so much successful development has occurred in continental-European.
3) Intensification of city-centres and inner-suburbs should not be viewed as a draconian plan to force reluctant people into overpriced and undersized ghetto-accommodation, but as providing quality downtown-living opportunities for the substantial number that want it and are prepared to pay for it. Once again, if car-centricity is prevented from totally dictating form and cost, some very pleasant and affordable outcomes can be achieved. Continental-European experience again.
The number one wrecker in each case is car-centricity. We must get away from it.
Or is this just me being a naïve transport-engineer?
Good points there Dave. And clearly when the bluster is stripped away, we need both intensification and greenfields growth. Especially with Auckland growing at the speed it is. There are lots of things that need to happen to make that process easier; some of them are happening, some probably aren’t. The Nats have actually made more positive tax changes on this front than Labour ever did, but it’s not enough. Good to see the Reserve Bank being more targeted as well. On the supply side, things are starting to move, but not fast enough, and the Housing Accord and so on are helpful but not a silver bullet.
But I’d agree with Peter and Ed Glaeser that for Auckland, the biggest hurdles are the planning restrictions inside the city limits; those are the Council’s domain and will be (partly) thrashed out in hearings and courts over the next couple of years. There are strong NIMBY sentiments, as well as inertia, which will hold things back, while acknowledging that some of those concerns are valid. But there’s a continued mismatch between the land that is highly valued and the land that is zoned for development at present.
Yes, but you can’t rely on intensification alone to create affordability. It has to be accompanied by at least one of:
1) Freedom of fringe growth
2) Compulsory acquisition of vital sites under the plan
3) Targeted land taxes to force development on site-bankers
If Glaeser is saying that intensification alone can create affordability, he is flat wrong and plenty of his counterparts in urban economics would disagree with him.
That is just a statement, not an argument. How do you justify that? What examples can you give?
Based on your analysis of countries worldwide, including the non-English speaking world, you haven’t found one example of a country that has low house prices without those factors involved?
Please present detailed evidence as Peter has done in this post.
The onus is on my opponents to come up with an example that disproves my assertion. One example. A dense city with prohibitions on sprawl, with a median multiple of around 3. I could spend all day listing dozens, hundreds, of dense cities with median multiples of 6+. Every city in the UK. Every city in China. Every city in the developing world. All of Europe’s densest cities. The truly affordable cities in Europe are not high density overall – Lyon and other French cities; Hamburg and several German cities. Their densities are pulled upwards by the existence of cores that were around for yonks before the automobile, but their affordability is due to the suburban options. No city is affordable because it is built “up” only.
I can list a couple of really dense cities that are affordable because they DON’T have effective prohibitions on sprawl – Rome for example (because of lawlessness in illegal development rather than regulatory intentions). New York was affordable for decades as long as its urban area fringe kept sprawling at low density – now it is up against de facto green belts in the form of rural municipalities with their own zonings. I am serious – I value people who check out the reality and join the argument for more intelligence in our policy proposals. I know academics of stature who disagree with Glaeser; I correspond with some of them. Upzoning within a boundary increases site rents, it does not decrease rents per housing unit. Theory has to be based on observation otherwise it is useless.
Not freedom of fringe but close but distinctly separate small cities that are well connected to the main city of Auckland. Done properly, as is done in Europe, that’s quite different from what we usually see as sprawl.
“Done properly” includes the government compulsorily acquiring the land and controlling the price of developed lots for sale. Common in Europe; used to be done here (Porirua and the early Hutt sattelite developments to Wgtn were done this way). Otherwise it is just another exercise in Lotto ticket wins for the owners of the rural sites included in the plans.
I agree. I believe council should be buying the land intended for large scale developments, having major, controlling, oversight over the development plans, building necessary transport infrastructure and then selling off the sections – in blocks or singularly.
And “done properly” also includes the provision of rail infrastructure at the outset. As was done properly in the Hutt Valley.
Ah Phil, wondered what took you so long my friend. Musta been busy posting other diatribes on NewGeography or similar. Do they pay you?
Anyway, re: this bit:
“The onus is on my opponents to come up with an example that disproves my assertion.”
Do you really expect anyone to swallow that? I mean, really? Evidence please; your assertion, your onus. And while you’re at it I would like you to disaggregate all your observations on supply issues from demand side factors. Can’t? I wonder why?
Tim and Goosoid – I thought the original statement under discussion was “Glaeser is saying that intensification alone can create affordability, he is flat wrong …” Goosoid asked him to prove it. (ie to prove that intensification alone cannot create affordability). Phil has given a number of examples, but examples do not prove the general proposition. In fact it is impossible to prove the general proposition without an exhaustive consideration of every city on the planet, On the other hand just one example where intensification alone created affordability (ie a city that was constrained, but was growing through intensification and was affordable) would prove Phil wrong. So can you give us an example of that?
David: can you point out that statement above? Phil seems to infer it, but I don’t recall any such statement From Glaeser.
Dave B I think the moving beyond 100% car centricity is possible by carrot by the things you mentioned above. But even in Europe even though there are excellent options for non car travel (carrots) they do not neglect there road transport system. In NZ the debate has this crazy all or nothing aspect to it.
Even Houten -the poster child for biking and commuter train satelite town type developments has a big motorway next to it.
http://commons.wikimedia.org/wiki/File:Houten-stad-2014Q1.jpg
I do believe that ‘all or nothing’ aspect us due to our concentration- until now- on almost solely focussing on the road transport system. We are hopefully entering a period of rebalancing, which I don’t believe can really be characterised this way.
What needs to be understood is that automobility is what underpinned decades of improved housing conditions, democratisation of home ownership, and reduced wealth transfers to the rentier class in property.
Apart from the brighter urban economists like Haig, Alonso and Wingo; the architect Frank Lloyd Wright despised the “tyranny of rent” that underlay the constant vested attempt to concentrate urban activity centrally; so did Henry Ford, who loved the idea that he was practically striking a blow at these vested interests by giving people mobility so they could live anywhere – as well as striking a blow at a major reason Marxism had an appeal to the masses trapped in the tyranny of rent.
There are parallels today in countries like Vietnam, where as people get motor scooters, the slums get lower density, further away from the city centre, and higher quality. Motor scooter use exceeds mass public transport use by an order of magnitude and there is an inevitability about this because of the effect you spot – mass public transport tries to focus activity on the centre, and that centre is always expensive, so any alternative transport system that enables the use of dispersed, cheap land, is going to be a winner.
http://www.voxeu.org/comment/105237#comment-105237
http://www.voxeu.org/comment/105244#comment-105244
If you want to forego the automobility escape route from land rent concentration, you need to use government operation in the land market (as in Japan surrounding subway systems); compulsory acquisition of land vital to development under plans; and/or targeted land taxes.
I fail to understand why I am dismissed as a “pro sprawlista”. I am an anti wealth transfer-ista.
“automobility is what underpinned decades of improved housing conditions, democratisation of home ownership, and reduced wealth transfers to the rentier class in property.” – In the English speaking world, yes.
There has been sprawl in Europe, no doubt. But many cities (and I would argue the most liveable ones) there have rejected auto dependence in favour of a more balanced model.
You really need to stop only focusing on one small part of the world. There are billion of people who don’t speak English and have other experiences.
On your example of Vietnam, have you been there? It has almost no public transport to speak of. Neither Hanoi or HMC have an underground and the traffic is a disaster.
Hardly a great example of the benefits of the automobile to cities.
Sure, but I said “motor scooters” not cars. They have piss-poor roads too. People will find a way to get better housing at lower cost, even if it is informal. My point is the link between the availability of movement, and economic rent in land. Planning rail based travel for everyone is a rentier’s paradise. The cost of housing in Chinese cities, heavily planned and with massive “value capture”, is illustrative. It at least has the advantage that government captures a lot of the value uplift as revenue in lieu of taxation (but corruption siphons off a lot).
I have repeatedly said on this forum that European suburban development – more specifically, German suburban development – is about ideal. It is actually not a lot different in density to Auckland’s suburbs now, but far better planned in its nodes of density etc. But they manage to keep it affordable with a mix of policies that no-one here is recommending, including the threat and occasional exercise of compulsory acquisition. They also have subsidies of construction of rental accommodation along with rent control, to make renting an attractive option as well as making it worthwhile for the providers of the housing. They also have highly fragmented ownership of rural ex-fringe land, so plans do not deliver a monopoly to the owners of a few large farms like happens here. Lastly, the de facto supply of exurban towns housing to city workforces is exponentially higher when so many of them in multiple directions are accessible at 200 km/h plus on autobahns. Imagine literally 40 times as many Thames’s and Maungaturoto’s being options to Auckland workers.
Phil, clearly you don’t like the rail mode. I get that. But then you go on to commend how Germany has developed.
Any particular reason why you attribute its success to the (small number of) 200Km/h+ autobahns, yet fail to mention its efficient and comprehensive rail system?
Phil I can see no reason why a Houten type development that has good road and passenger rail cannot be as rentier busting developmental wise as a new suburb with just road connections.
In Australasia we had a number of cities -Melbourne, Sydney, Adelaide that provided multiple transport modes/networks and for most of last century that were affordable.
I can imagine a system in NZ where this could work affordability wise;
1. Developers (MUDs?)free to buy land anywhere.
2. GST from construction costs go to local transport authority.
3. Developers have to negotiate transport provision with local transport authority.
I think this sort of system would result in all sorts of multiple transport mode developments -cycle friendly suburbs, BRT, passenger rail like Houten etc.
Hi Brendon.
I agree with Conan. I don’t think anyone is suggesting that we “neglect our road transport system”, but rather that we stop allowing it to grab 95% of the transport ‘cake’. It is this, and the consequent neglect of the altenatives over many decades, which has brought about the ridiculous imbalance that we have today – and which the present government is nonsensically re-inforcing.
Unfortunately many Kiwis who have grown up with near-total car-dependency somehow consider this to be ‘normal’ and fail to recognise that a gross and detrimental imbalance exists.
+1. Too many non-thinking people just want to be able to jump in their car and to drive to their destination, park immediately adjacent no matter what. They ignore or don’t want to even think about the spatial consequences of this desire or the effect it is having on our cities. I would like to think we (and our planners) can do much better……………….!
Yes, very good points, Dave B, especially about alternative forms of greenfield development. There are some problems with it but I like the idea in general.
It reminds me of an experience I had when had recently started working in economic development in Phoenix, the world’s most car-dependent city (registered trademark). I was talking with a planner who was about to start a master plan for developing a part of the city that was as yet undeveloped – a *200 square mile area*. I asked, innocently, “are you considering any of higher density concepts like new urbanist design or conservation subdivisions?” He said, “NO” as if I had just asked if he’d like to eat a rattlesnake. And maybe he would have preferred that to caving in to radical lefty ideas of urban development that reduced automobile use. But that was the sum total of the conversation and an opportunity to build something truly extraordinary never even got *to* the drawing board.
One interesting thing about Phoenix is that a study on the costs of infrastructure for intensification versus greenfields, that shows it cheaper for intensification, and hence is quoted to death by people like Todd Litman, happens to be based on Phoenix. The reality is that it is indeed cheaper when you have very low density and oodles of spare space and land is dirt cheap. But there is a tipping point where you already have moderate density, where this ceases to be true.
Dave,
2) You’d think so, but this is Auckland and the MUL is sacred. Development in rail corridors from Swanson-Kumeu and Drury-Paerata is forbidden. Today there was a protest against the removal of train services to one of these zones.
So in our Auckland the obvious alternative to suburban o-m-d is lifestyle block o-m-d, this is what is occurring and has been occurring for decades. About 150,000 Aucklanders live in lifestyle blocks or car centric satellite towns, the fastest growing population in Auckland.
Well interesting but totally untrue: those areas are covered in fast tracked SHAs in fact. But sadly they won’t be well planned villages around transit stops surrounded by farmland, but undifferentiated sprawl, but with at least a Transit option.
You can blame the MUL and anti-sprawl numpties for that. Instead of carefully relaxing the MUL as needed to create planned communities the Council bought into the anti-sprawl propaganda which in turn directly caused the Government to intervene and create HAaSHA . Now we have fast track areas beside no growth areas and no reason to any of it.
The failure of Kumeu to develop has nothing to do with MUL and everything to do with crap town planning and incredibly little foresight.
They’re not SHAs, well at least according Auckland City Council:
http://www.aucklandcouncil.govt.nz/EN/ratesbuildingproperty/housingsupply/Pages/specialhousingareas.aspx
or Transportblog:
http://greaterakl.wpengine.com/tag/special-housing-areas/
When has the MUL ever been sacred? There is tons of land to be urbanised between Drury and Pukekohe under the Unitary Plan. The real question is where the money will come from to service these areas with infrastructure.
People seem to love talking about breaking down the MUL in an abstract sense but no one ever mentions which specific areas are suitable for development and how problems such as infrastructure financing should be overcome.
I’m guessing a lot of people think there is some small margin between the $327,750 it takes to build the house and the sale price, from which this could be taken.
It is sacred, because it encapsulates an orderly plan of advancement over the next 30 years that takes no account of anything else. Just as the council is now refusing to develop new suburbs on the back of today’s massive boom, someday in these next 30 years the council will open whole new developments in the midst of a property slump.
It is best if you make informed comments. The council Is not involved in developing any new suburbs. If you are referring to the two SHAs they gave declined they have done so for sound reasons, unless you are happy for current ratepayers to fund the development of these areas.
Can you really call it “sound” that the council chooses to restrict development in the face of a housing crisis because it is not competent enough to appropriately charge for infrastructure costs despite having tools such as targeted rates and development contributions?
Dave,
1) No they’re not mutually exclusive and shouldn’t be. But its political. Whenever there are two good things that can be done, there are likely small strident opposing groups to each. If a smart politician campaigns for one and opposes the other, he can be seen to be doing a good thing and have a ready made ardent bunch of vociferous supporters.
3) I agree, and also naively hope that others will too.
Cute theory except further auto-dependent sprawl ain’t good.
But why would “sprawl” with jobs-housing balance and properly priced roads/petrol, be “bad”? There is abundant literature to demonstrate that average commute times have not risen even as cities overall footprints have grown manifold times. People are not stupid – Los Angeles would sprawl all the way to Levin without a break if it was in Wellington, but that does not mean everyone would still travel all the way to Wgtn CBD to work. In fact there is no node of employment in LA with more than 5% of the total employment, which is what puts LA pretty much close to the average of commute time data – around 28 minutes, which is actually low for a metro area of 14 million people. London is comparable for worker population and its average commute time is 39 minutes; even though it is 5 times denser than LA, which in turn is 3 times denser than Boston and Atlanta.
“London is comparable for worker population and its average commute time is 39 minutes. . . ”
Phil – can you please clarify. Is this 39 minutes average of ALL commuting times, or just average car-commuting time?
If the latter then it is pretty meaningless since most commuting to and within London is not done by car.
If the former, then the long-distances travelled by many train-commuters would tend to push this total up for a significant reason: People are prepared to travel for a long time to get where they want to go. Or are you saying that London is somehow inferior to Los Angeles for having a strong central focus and less dispersion of employment?
But Phil you live near Wellington, you know what the topography is like; why do you pretend it isn’t ‘somewhat’ different to those US cities. Do you really think physical reality plays second fiddle to your dreaded planners? Bonkers.
Not sure where a figure of 39 minutes came from, but it seems pretty bogus: more likely an hour for most Londoners. And, if you have to mode shift, even more. Plus when things go wrong and you miss a connection, even longer. Say, an hour to work, and 90 minutes on the way home.
The likelihood of an entire half of London with a commute of under 39 minutes seems highly unlikely.
Case in point.
Next month we are closing down the Waitakere station, because of lack of demand due to insufficient population in that thinly developed area. At the same time we are experiencing a massive property boom that has the government demanding the council open up more land to intensification. At the same time we have the council demanding that the government provide more money to subsidise rail to cope with increased intensification. Now obviously a solution could be found – develop a railcentric Waitakere/Taupaki – that would impact positively on both council and government ambitions.
Except that can’t happen, because politics. The council and government are opposing factions who hate each other. One labelled as enviro-vandals set on creating sprawl. The other labelled as rent seeking office holders seeking higher rents & denying home ownership. As long as each side can maintain a granular bit of truth to these claims they can use the leverage to gain advantage over the other and they cannot afford to back down in the eyes of their supporters.
Sad, isn’t it.
I am a cynic.
I’m an optimist and I can’t see any justification in subsidising trains to Waitakere Station for a handful of users, especially when we have thousands and thousands using other parts of our networks that desperately need investment. Maybe, as I said elsewhere if the proposed development does occur along this route, it should be reinstated, but for now i rather see this money spent elsewhere on Auckland’s bursting PT networks.
I don’t get it either. Sometimes kiwis can be so stupid. Especially as Waitakere train station plus Swanson etc will be post CRL that much faster to all those inner city stations/locations.
It is just screaming out for a public (KiwiBuild?) or private transit/housing development.
One simple thing that it is important to understand about Demographia is that whatever you want to believe about their conclusions their input data is factually incorrect. They just use made up math. Here is the density profile for Auckland compared to their number:
There is nothing necessarily inconsistent with the graph and the quoted number. Also – off topic.
So the average density of Auckland is 2,400/km^2?
Do go on.
So demographia have reported a density for Auckland LOWER than what the average resident lives in? I thought it was demographia’s numbers that gave us the moronic belief that Auckland is denser than New York.
Km² Km² Km²
ALT + 0178 produces the character ² (make sure NUMLOCK is on) 🙂
The best density profiles are the ones Alain Bertaud does – that show the density per band at given distances from the city centre. What this shows for Auckland, is that its centre is below the density of many old world cities – which should not be a surprise at all – but it has “dense sprawl” like LA. You can Google the term “dense sprawl” for some academic analysis of this phenomenon. Overall density is very much affected by the density of the suburbs – LA and Auckland have medium-high density suburbs, far denser than what most US cities have, and comparable with anything in Europe and even modern suburban development in SE Asia (Malaysia and Thailand, for example).
I don’t disagree with you at all on central density really mattering; what we need to understand, is the best way to achieve that if we can at all, without making housing unaffordable and enriching property magnates and financiers. In a systemically distorted market where sites are like gold rather than just a resource to be allocated to best use, LESS redevelopment happens. London’s “height restrictions” are forever blamed and yet there is many square miles of upzoning where stuff all redevelopment ever happens. The site values go up on the rezoning and actual development is irrelevant. Any developer has to pay the capitalised value of the upzoning, upfront, and all the gain is to the site owner, not the developer, so the incentives are all wrong.
http://blogs.lse.ac.uk/politicsandpolicy/why-arent-we-building-enough-homes/?utm
In contrast, when all site values are merely derived from the value of exurban rural land plus transport cost savings, like they used to be here, and still are in dozens of US cities (let’s forget Houston, and talk Indianapolis, or Nashville, or something more comparable to Auckland) – if there really is demand for more accommodation and commercial space at more central locations, it is merely a question of which developers satisfy the demand earliest and most efficiently. If you look on RE sites for any US city with a median multiple of around 3, you will find CBD apartments with rents to die for, compared to Auckland. Even in Houston, which is manifold more an economic powerhouse than Auckland, and on its way to equal significance to cities like Chicago. Even the UK has no “next after London” city as powerful as Houston. And no UK city, not even the busted-arse ones, have CBD apartments anywhere near as cheap as Houston.
I agree Auckland shows a relatively high and consistent density for its largely low rise form, and in that it is similar at a much smaller scale to LA, over say Manhattan. And that is no surprise, after all both heavily consist of ‘streetcar suburbs’; those pre-1960s parts of the city that were formed by the walk-and-Transit scale of the tram network. With mixed use local centres and a glorious lack of monotonal zoning. Of course this changes for the more recent parts. Especially the totally auto-dependant SE Auckland; a disaster of a scandalously greedy land grab without the reservation of any Transit rights-of-way. Now the home of the misery commute.
But any talk of American cities of the deserts or plains, like Houston or Indianapolis totally ignores the role of geographical constraint. These cities can just go on endlessly in all directions so long as the American taxpayer is content to subsidise the highways that fan out with them. Auckland is critically bounded east and west by two harbours, plus two sets of mountain ranges that we use to collect our drinking water and otherwise wish to preserve from despoilation by inhabitation. Furthermore north and south expansion runs into land with three conditions that also limit its spread; it is either water afflicted, extremely hilly, or of such high quality agricultural value that we’ed have rocks in our heads to build little boxes and tarmac all over it.
Meh, Indianapolis we ain’t and will never be. A city I might add on that is currently launching a big Transit investment programme. Most likely a BRT based one because of a sprawl era ripped up rail legacy and has endless amounts of flat wide roads stretching out across sparse plains. http://www.indystar.com/story/news/2015/04/23/usdot-announce-boost-indys-rapid-transit-system/26229481/
The trend, after all what matters most; where we’re heading. Note the rebirth of inner city apartment living; that up-kick at the extreme right. And we know that is about to double again with the current boom in apartment construction there and in other centres. Auckland’s density is marching up, which is great as this is the way we ought to grow now, we’ve spread out across more than enough of this beautiful isthmus and need to stop destroying it further:
Patrick, I really want to find common ground, and there is a lot there I can agree on. Like the streetcar suburbs. But don’t miss all the infill that has taken place, in boosting Auckland’s density up to levels comparable with Amsterdam, Hamburg and Brussels.
Auckland managed to be affordable back when it was MORE contained within its isthmus – there is much less excuse now for the “geography” argument now that its fringes have moved onto wider land masses. The amount of land actually needed for growth to keep prices affordable, is miniscule compared to the existing urban footprint of a city – it just needs to be allowed to be “splatter”. There is established literature going back decades, that suggests that splatter and later infill is more efficient than a planners insistence on carpet-like incremental pushing out of the fringe, with site owners merrily holding out for maximum gains while the planners wait till their sites are utilised until they will move the boundary again. If you splatter now, infill later, you can do a lot more intelligent stuff in the left-over bits of land; and the price of these left-over bits will remain low because of the competition from rural land available to developers still not that much further away. In fact you can incentivise land owners to sell up quicker if they know that once a certain amount of splatter has occurred, the left-over bits may be compulsorily acquired for schools, parks, infrastructure; or declared “green space”.
BRT is the logical way to go if you are not Manhattan/HK/Tokyo – flexibility of the rolling stock to cover as much as possible of the region, is vital. Otherwise it is just another rentier gouge, with subsidies of the fares reflected in CBD property values.
Phil frankly I think you are too theoretical. You list all sorts of places that bear scant resemblance to each other in form. Auckland is entirely unlike Amsterdam, as it is entirely unlike Houston or Liverpool, whatever someone’s numbers say. Do you go and look at these places? Physical conditions are everything. BRT requires huge amounts road space. And Auckland’s streetcar suburbs have no room for BRT, they do for buslanes, but now really need LRT, which can move the volumes of people now trying to use the bus system but much more efficiently. We do of course have one BRT route, but only because there was a motorway ROW available and we had a government willing to invest in Transit Capex. BRT is a good solution for the North West m’way corridor but is not being built there now as it should be. And an option for the South East but there hundreds of houses have to be bought and destroyed to make the ROW. The ROW is everything.
Auckland is fortunate to have a small legacy rail system, now saved from vandalism and starting to really contribute to the city’s efficiency. The CRL is a huge opportunity to radically upgrade the usefulness of this system to something transformational; the ‘killer App’ for our necessary exploitation of the z axis; our shift up. Next we need to exploit the street space with a complimentary LRT network linking the old streetcar suburbs through the evermore dynamic city to the North Shore through a new tunnelled crossing. Then we will have a city of scale and density supported by complimentary transport networks [road, rail, ferry, and active] providing efficiency and resilience necessary to provide a 21stC urban services economy to support the resource based one in the rest of the nation.
Both the graph and a mean of 2400 people/sqkm could be true. Peter’s graph has density on the x-axis not sqkm so the mean isn’t necessarily the centroid of that shape.
ithink that you should stick to traffic engineering bro, maths clearly isn’t your forte.
And you should stick to being a dick as you are very good at that.. The ‘average density’ is the total population divided by the area you choose to use. They (Demographia say its 24 people per hectare, MRC say it is 27 per hectare. http://greaterakl.wpengine.com/wp-content/uploads/2014/09/Nunns-2014-NZ-Aus-population-weighted-density-small.pdf see Table 3. The difference will probably be Peter used the urbanised area and they might have used the total area but I cant be sure of that. The graph of Peter’s data shows something different. It is population in each area vs the density of population in that area. The centroid of that is not average population density it is a population weighted statistic.
Two minutes of mental arithmetic showed that by using the same land area and population figures the demographia finding was incompatible with Patrick’s graph. Sure, they could have used different land areas, but don’t try and wriggle out like that, you’re a better troll than that 😉
According to http://en.wikipedia.org/wiki/Auckland
Urban population density = 2,500 persons / SqKm
But as asked before on this blog, Is this figure meaningful in terms of what transport or housing strategy Auckland should be pursuing?
Or is it simply used as a contrived excuse by those who want to keep pursuing auto-centricity?
Demographia’s density figures are respected by Cheshire et al at the LSE. If someone wants to construct a better measure, there is nothing stopping them; it is a lot of work to include as many cities as Demographia does. I suggest that the centrality of the density is important – Bertaud does excellent density distribution graphs but he has only done about 70 cities around the world so far. Ironically, he identifies that density in the “wrong” places is a reducer of efficiency. It is quite common for imposition of a growth boundary, in the absence of low density mandates at the fringe and the ineffectiveness of intensification aims nearer the centre, to end up displacing a higher percentage of your population to further AWAY from the city centre than otherwise. You can see this in every such city you visit or look at on Google Earth. Townhouses being crammed in at the top of Stokes Valley, in Titahi Bay and overlooking Pauatahanui Inlet – while oodles of land closer to Wgtn CBD is undeveloped. You can see this on the Auckland fringe, on the Melbourne fringe, and at the edge of the Green Belt in UK cities.
I would suggest that most cities that managed to sustain a dense urban core by building “up” even after the automobile was common – like New York – did so in the presence of a low, flat urban land rent curve due to freedom of fringe sprawl at the same time. Also they had economic sectors evolving that required density. Wall Street could have been in Boston, in which case Boston might have had the skyscrapers and Manhattan might have lifestyle blocks.
Phil – I’m not quite sure what your point is with those examples you give. People buy and settle in Titahi Bay and Pauatahanui because they like the view and the amenities of the area etc, whereas the undeveloped land in between Wellington and Porirua is rather dull. The imposition of a “boundary” in this case has more to do with unfeasible geography and personal preference for view over travel time, than an argument for sprawl.
Ok Sailor Boy I will assume you learnt maths from the Numeracy project so it’s not your fault. The mean density is 24per hectare (or 2400per sqkm) according to Demographia, 25 per ha according to wikipedia as Dave B has pointed out and 27 per ha according to the MRC report. The graph above doesnt show numbers of areas vs density or even people vs area it gives numbers of people versus density. The middle of that will be the median population weighted density (MRC says the mean is 43.1 per ha). Maybe if you explained why you think that graph is incompatible with their mean we could show you where you have messed up.
Yeah, you’ll show the guy doing a BE in what is effectively a data analytics course where he messed up.
I’ll explain it to you. . There are 70,000 living between 2000 and 2500 = 31km^2, there are 90,000 living between 2500 and 3000 = 36km^2 = 2400p/km^2, this can be done for the next bands out from average, giving 2600, then again giving, 2700, and once more giving 3200. That is then half of all of Aucklands people living at or over the demographia average, and the other half living at over 4500/m^2, if you are good at maths, then you can clearly see this by inspection.
Thank you but not for your calcs, for explaining what you were thinking. My point was that Demographia could be right and the graph can be right. Demographia probably based theirs on a total population divided by a total area, that is the conventional definition of population density. The graph is not based on totals but looks at density by area and summarises them by area. You cant look at the graph and say Demographia is wrong. Using the bars of the graph as you have done gives a population weighted mean. I am not saying one measure is better or worse I am saying they are differnt things. Consider the units and you will see.
Running through Matlab with these numbers gives a mean density of 3400people/km^2
The difference is the number of km2 you do or don’t include in the low density tail. It’s impossible to tell what area Demographia chose to adopt based on the histogram.
Edit: As per Johns explanation below.
Guys, a big part of the difference is that Peter’s data is based on area units (or maybe it’s even meshblocks) so gives a lower weighting, if any at all, to the areas that have mainly industrial, or parks, or which are on the fringe and have a lot of land that is undeveloped. Demographia’s is averaged across the urban area, so it includes those areas. The data sets aren’t quite comparable.
Settle down kids. The issue is explained here: http://greaterakl.wpengine.com/2014/10/28/why-demographia-is-fundamentally-wrong/
The average density figure Demographia uses is accurate, it’s just irellevant and arbitrary. Weighting by population rather than area is far more precise, and reveals that indeed the lions share of New Yorkers live in much higher densities than Angelenos.
I think we were all aware of the reason for the apparent anomaly bar Sailor Boy and Patrick Reynolds who attempted to smear Demographia with an off topic comment, but got it wrong.
Perhaps you should reread my comments, not smearing demographia at all, just proving mfwic’s maths wrong.
Although i do think that Demographia’s figures are completely irrelevant, and probably use a deliberately misleading area.
I’ve been travelling for work the last two days, so haven’t had a chance to read or respond to comments. However, there seems to have been a pretty active and wide-ranging discussion in my absence. Thanks to those who participated.
However, I should remind people that I am not saying that MULs are a good policy. (I challenge you to find anywhere that I have made that claim.) Instead, I am pointing out that while they contribute to high house prices, they are not a complete explanation. Other factors, ranging from regulatory limits to intensification to financial market conditions to tax policy to construction productivity to urban amenity levels, also influence house prices.
As I’ve written in the past, failing to account for all explanatory variables can make us over-optimistic about the impact of policy changes. For example, in the Unitary Plan Auckland Council committed to opening up around 10,500 hectares of land for urban growth – equivalent to a ~20% increase in the size of the city. (See slide 36.) In theory, this should have restrained house price inflation, as people can expect zoned greenfield land to be less scarce in the future.
In practice, it hasn’t. House prices have risen faster since the Unitary Plan was notified. Why is that? I have to admit that I’m confused – and when I’m confused, I review my working hypotheses.
Re: Auckland Council committed to opening up around 10,500 hectares of land for urban growth -why didn’t this constrain urban land inflation?
Maybe it is because 10,000 hectares is a relatively small amount of land and very little of this comes on to the market naturally. Buyers/developers are at a negotiating disadvantage -needing to approach land owners directly signalling there weak bargaining position.
Maybe owners of developable land carefully assess the mood of the market, including the regulatory environment, when they get approached by potential developers. Assessing whether the land/transport policies of local and central government will favour owners/landlords or buyers and tenants?
Maybe if we had fairer regulations, if for instance land owners feared they might miss out on selling their land for development purposes then this might reset the urban land curve downwards.
Policies like LVT, compulsory acquisition combined with transport/housing development institutions, right to build, giving tenants longer residency rights etc are all policies that would make landbankers reassess their negotiating position.
Maybe there is no way to finese the release of land – 20 years supply might be no better than 10 years. Maybe it is more like a switch -market players either know/believe there is a competitive market or not.
At present land bankers are making so much money, none of these options would change their behaviour. To get rural land into houses quickly would require compulsory acquisition BEFORE it was rezoned. Stronger protection for tenants would require better protection for landlords to cover non-payment of rent and property damage.
Yes compulsory acquisition of rural priced land that is then rezone for residential purposes would be a very blunt but effective way to ‘reset’ the urban land price curve.
It would certainly send a signal to land bankers that they are not gauranteed mega profits.
If this was planned with multiple transport choices this could be very effective. This is how KiwiBuild should work.
Peter Nunns; Brendon Harre has a few clues.
Economists should understand the difference between superabundant, economically liberal “supply” of something, and a “quota” scheme, even if it is a seemingly generous quota scheme.
“Releasing more land” as pressures have built up due to inadequate past “releases” is not likely to put an end to expectations of hold-out land banking gains. In any case the “released supply of land” may still be subject to long delays in getting permissions, getting infrastructure connected, etc.
Land prices began to inflate inside Portland’s newly-imposed “20 year growth boundary” within a mere 4 years of it being imposed. Please read page 12 onwards of this submission (answering question 7):
http://www.productivity.govt.nz/sites/default/files/sub-using-land-for-housing-41-phil-hayward-128Kb.pdf
Please also read the answer to question 4, from page 6 onwards, particularly the role, in Spain’s famous property bubble, of a “quota” system on land supply. The quota system was so generous that it potentially allowed for as much as 25% too much supply of housing units without the bubble prices being reduced until a full-scale crash occurred. The supply chain was literally 7 years long due to regulatory processes and the land banking of the quotas of land, thus when the crash came, there was 7 years worth of everything from land-banked sites to semi-completed developments, to unsold empty units, all at bubble prices, to have “equity” in them wiped out.
In contrast, Texas is marked by a supply chain 7 WEEKS long; when a downturn in demand for housing occurs, a whole lot of small builders simply pack up their gear and go back to their home base to concentrate on maintenance, alterations, joinery, etc until demand picks up again. Somewhere between the extremes, we have decades of normal practice in most of the Anglo New World and Western Europe, where developers could get the necessary co-operation from local government, to do developments on sites acquired from vendors who did NOT possess powers of holdout (it is not so much monopolistic powers, as “monopolistic competition”. Unfortunately, most people with economics degrees have simply never grasped the complexities and exceptions that apply to urban land markets.
Just for the record Peter. A number of people have questioned and critiqued your article you wrote here about Demographia on the 3rd of June. Instead of responding to them you have chosen to write another article on the 5th of June for Transportblog on something else.
Peter the best way to respond to criticism that you have a bias or hidden ideological agenda is to engage in open conversation. To avoid genuine questions and criticisms seems contrived and well dodgy. This is probably not your intention but it is how it seems from an outsiders perspective.
Brendon, I write and schedule these posts two to three weeks in advance, because that’s the only way to ensure that I can stick to a schedule of two posts a week given my other commitments.
In any case, I’m not interested in responding to accusations of “bias or hidden ideological agenda”, because it’s not actually possible to disprove them. All I can do is cite my sources and be transparent in my analysis – as I have consistently attempted to do when writing on transportblog.
If you read my last two posts again, you’ll see that my critique of Demographia is not “they’re totally wrong about everything”. It’s actually “they’ve got some valid points about regulatory limits to growth, but their assertions about the cost of those limits cannot be validated by other evidence”. Frankly, I don’t see why such a fundamentally reasonable has gotten people up in arms.
I would like to thank Peter Nunns for raising the issues concerning Demographia.
I came across this blog site as a result of doing a search on Demographia.
Peter Nunns is far too generous by giving Demographia credibility at all.
My comment on “Peter the best way to respond to criticism that you have a bias or hidden ideological agenda is to engage in open conversation.” is that yes let us have a conversation about the ‘bias or hidden ideological agenda’ of Demographia.
Demographias website states it is a ‘Signatory to the Lone Mountain Compact, a statement of free market principles relating to land use and development (2000). Certified by the US Department of “…
The Lone Mountain Compact was drawn up as a reaction to the Ahwahnee Principles
Lone Mountain Compact was a negative response to intelligent urban design known as ‘Smart Growth’.based on the Ahwahnee Principles to plan low carbon emission cities of the future with added environmental, cultural, social and economic well beings.
Demographia is to urban planning what the New Zealand Climate Science Coalition is to climate science, and Wendall Cox is to urban planning what christopher Monckton is to climate science.
To gain an understanding of how disinformation activists distort studies and data try watching John “Abraham- debunks- Lord Monckton climate denialist” on you tube.
Disinformation specialists use credible well sourced information to lead regulators and public opinion to a predetermined and false conclusion.
I am sure a similar you tube could be made about the presentations made by Wendall Cox. Watch him on you tube. Wikipedia him. And follow links with Demographia. They will take you to The American Dream Coalition and many other right wing think tanks.
iDemographia is one part of a network of a global campaign of deregulation and the dismantling and destruction of democratic government collaborating with Act/ National/the right wing of Labour with Public Private Partnerships, Mixed Ownership Models, Privatisations, outsourcing, Free Trade Agreements. TPPA, GATS.
To understand where these people are taking us watch “Society- Without- a- State” — Hans-Hermann Hoppe 52:14min
Demographias role in this appears to be to create distrust and derision of government regulators to displace them and make room for private regulators defended by either the state or private law enforcers funded by private insurance companies much like the private tribunals for the TPPA or how we have a greater acceptance of commissioners who can be selected for their previous recommendations.
Wendall Cox is described in Wikipedia as an “anti public transport gun for hire” and I am sure that the only way these “leaders of public thought” get media traction is through relentless persistence and it is important to relentlessly shun disinformation activists and advocates.