David Farrar: Auckland needs to get bigger

A failure to increase Auckland's housing by 400,000 will see property prices skyrocket, and home ownership restricted to the wealthy. Photo / NZ Herald

On the 1st of February, Auckland will gain its 1.5 millionth resident. In 1961 Auckland had just 500,000 residents. 35 years later in 1996 the population hit the million mark and just another 16 years sees it make 1.5 million.

The trend is of increasing growth. In the next 28 years, Auckland is expected to gain an extra million residents, so that by 2040 there will be 2.5 million people living in Auckland.

These extra million Aucklanders will need 400,000 extra houses or apartments to live in. A failure to increase the housing stock by 400,000 will see property prices skyrocket, and home ownership restricted to the wealthy. Aucklanders will become tenants in their own city.

The draft Auckland Plan, authored by Mayor Len Brown proposes that 300,000 of these new dwellings be within the current metropolitan urban limit, and 100,000 outside.

This is a huge intensification of Auckland. There are around 500,000 dwellings at present, so that means 800,000 dwellings in space currently holding 500,000 - a 60% intensification.

This can't be done just by building more apartment blocks in the CBD. It would inevitably lead to houses being demolished and replaced with apartment blocks.

Now this has some advantages for city planners. Keeping the city more compact makes it easier to have good public transport links. In fact I suspect that the size of the city is being forced to fit into the Mayor's transport plans, rather than determine the optimum size and then devise a transport plan to fit.

Around 24% of dwellings in Auckland are apartments, and under this plan around 44% of dwellings would be apartments. And this is a major problem. I do not think anywhere near half of Auckland wish to live in apartment blocks. The number who would have to live in high-rises would go from 2% to 11%.

I personally live in an apartment block (in Wellington). I love where I live. However I have no kids, no pets and no relatives living with me. If you have family or pets, you probably don't want to be in an apartment with no lawn.

I've travelled overseas a fair bit, and I recall my first visit to East Berlin and discovering how rare actual houses are there. A huge proportion of their residents have to live in apartments. I reflected at the time how great it is to live in a country where most families can live in a proper house, with a section. Sure it may not be the mythical ¼ acre (or 1/10 hectare to be metric) section, but some section is better than no section.

I'm not sure if Aucklanders are aware how much is at stake with this Auckland plan. Do they want a city where almost half the dwellings are apartments?

The other impact of this proposed intensification will be on house prices. Currently there are 400,000 houses and 100,000 apartments for 1.5 million Aucklanders. By 2040 there would be 2.5 million Aucklanders competing for only 500,000 houses. I can't think of anything more guaranteed to push house prices up massively so only the rich can afford one.

House prices are deemed to start to become moderately unaffordable when the median house price is three times the median income, seriously unaffordable at four times and severely unaffordable at five times.

In Auckland the median house price is currently 6.4 times the median income.

Under the draft Auckland plan, Auckland could by 2040 end up like Hong Kong - where house prices are more than ten times the median household income. Again, this will restrict ownership to the wealthy, but also lead to rents significantly increasing as a proportion of income. Already a growing number of families are paying more than 30% of their income in rent. Under the intensification plan, some families could end up having to spend over half their income on rent.

Obviously there should be some intensification in Auckland. The CBD should grow upwards, and many people like living in apartments in town. But Auckland needs to grow outwards as well as upwards. A plan to have 75% of new dwellings occur within the current urban limit is too draconian. A 50/50 split would be a far better balance for Auckland's future.

The Government and the Productivity Commission have both asked the Council to alter their plan, to allow the city to grow outwards as well as upwards. I hope they listen.