Rodney Hide: City planners should be told: Don't fence me in

The only way to squeeze in more people is to build high-rise apartments. Photo / Chris Skelton

There's a plan about to make houses affordable by taxing capital gains. I am not a supporter. The Government taxes tobacco and alcohol to put up their price. It's hard to see how a new tax will have the opposite effect on houses.

Politicians prove incredibly inventive in arguing for new taxes, but claiming they will make houses affordable takes the biscuit.

There are many reasons why Auckland house prices are high. A lack of tax isn't one of them.

One reason is that Auckland councils have for years run a deliberate policy to hike house prices. The council doesn't put it that bluntly, calling it "smart growth" or a "compact Auckland". But the policy works by hiking house prices.

The policy's purpose is to get us to live in apartments over train stations. That way we will be more likely to take a train and the mountains of cash that councils have sunk into trains, stations and rail lines over the years won't look such a waste.

And so Aucklanders are priced out of the housing market. The council forces us to settle for dinky apartments to make trains look less of a dog. It's a double whammy. The trains burn through ratepayers' and taxpayers' cash. Plus the "push-the-trains" policy prices Aucklanders out of the housing market.

The policy works by the council running a planning fence around the city, a fence called the Metropolitan Urban Limit. Inside the fence houses can be built; over the fence, not so much. It's the fence that has us piling on top of each other.

It's said that the housing market isn't working. Actually, it's working perfectly. The council is artificially holding down the quantity of land supplied and people are bidding up the price of the precious little that is available. That's how a market works when there is a shortage.

The result is easily seen. Average section prices in New Zealand account for 40 per cent of the cost of a new house. In Auckland it's 60 per cent. There's a 20 per cent council planning tax on Auckland houses.

It's not hard to make houses more affordable in Auckland. Just loosen the fence. Land over the planning fence costs only 12 per cent of land inside the fence.

Unlock the planning fence and house prices would tumble. At the very least, the heat would be taken out of the market. Auckland families and couples would once again be able to afford a house. But the council is heading in the opposite direction.

The Auckland Plan is to squeeze 70 per cent of the predicted extra one million Aucklanders behind the planning fence. Squeezing them in means going up.

The plan is for the city centre and 10 metro areas (Albany, Takapuna, Henderson and so on) to have high-rise apartments, another 30 areas to have a mixture of low-rise to high-rise apartments, with the rest of the new housing across the city to be mostly attached, low-rise apartments and terraced houses. That high-rise is only going to occur by holding the planning fence tight and pushing house prices even higher. That's why couples and young families can't afford a house. The council doesn't want them to live in a house but in high-rise apartments near train stations.

It's not like there aren't options: 93 per cent of Aucklanders squeeze within the planning fence. But the area within the fence is less than 12 per cent of the council's land area. Auckland's people density is already way out of whack given New Zealand's population and land area. The density within the fence is 2375 Aucklanders a square kilometre. The council's aim is to bump that to 3500. Auckland's density is nearly twice that of Chicago (population nine million).

Auckland is packed tight like an old European city and about to get way tighter. The council's aim is to squeeze us up like Frankfurt and Birmingham.

There's a reason for high house prices. It's us. We have been voting for years for councils promising trains, "smart growth" and a "compact" city. That's why young families and couples can't afford a house.

It's our votes that are doing it. It's that simple.