Since the Resource Management Act's (RMA) enactment in 1991 most national governance action around planning has been through the Ministry for Environment (MfE) and its Minister. This has been changing in the past few years - in part because of the affordable housing crisis.
The Ministry of Business Innovation and Employment (MBIE) has become more interested and involved in planning. Its messages make for interesting analysis. This post contains a little bit of that.
An MBIE Message about Housing Affordability
The Housing and Property section of MBIE's website has a statement which says:
...Local authorities impact on development and control land use through their Resource Management Act plans.One of the criticisms of RMA implementation has been the absence or lack of the central government guidance that could have been provided through National Policy Statements (NPS). Five national policy statements are now in place:
Some urban areas in New Zealand are growing quickly, and the supply of space to meet housing needs isn’t keeping up with demand, so house prices in some areas are increasing much faster than incomes.
The recent Productivity Commission inquiry into ‘Using land for housing’ found that local planning decisions are overly constraining the supply of space for housing. The Productivity Commission recommended that the Government prepare a national policy statement giving direction to local authorities to help address this. In August 2015, the Minister for the Environment and Building and Housing announced his intention to consult on the development of a proposed urban national policy statement.
The Ministry of Business, Innovation and Employment worked in partnership with Ministry for the Environment to develop a proposed National Policy Statement on Urban Development Capacity. (bold added)
- National Policy Statement on Urban Development Capacity
- National Policy Statement for Freshwater Management
- National Policy Statement for Renewable Electricity Generation
- National Policy Statement on Electricity Transmission
- New Zealand Coastal Policy Statement
- Work has been done on a proposed National Policy Statement for Indigenous Biodiversity
Update – National Policy Statement on Urban Development Capacity (NPS-UDC)
During a meeting last week with the RMLA, the Ministry for the Environment (MfE) and Ministry of Business, Innovation and Employment (MBIE) shared their plans for supporting the implementation of the NPS-UDC as well as details of an implementation programme for 2017. The implementation programme comprises the following workstreams:
Workstream teams are now developing the detail of their work programmes. This includes defining the support and guidance they will deliver, and how they will develop this. Timelines as always are tight, which means that councils will need to be working on their assessments, targets and future strategies ahead of when the guidance on these requirements is delivered in its final state. MfE’s workstreams will be looking at what can be done to help councils during this transitional period to give some confidence that they are on the right track. Their intention is to build on existing capacity and to close any gaps, rather than expecting local authorities to invest in sophisticated modelling from the outset. Market indicators and housing and business development capacity assessments
- Monitoring market indicators
- Housing and business development capacity assessments
- Responsive planning Consenting processes
- Future development strategies
- Monitoring and evaluation (i.e. monitoring the implementation of the NPS-UDC and evaluation of the effectiveness of the NPS-UDC)
The immediate focus is:
An advisory group has been set up for each of these workstreams and both groups met for the first time in the week beginning 12 December 2016. The advisory groups include a mix of council staff and consultants who have been brought on board for their specific technical expertise.
- developing market indicators, and technical guidance on how to use these (May 2017)
- guidance on housing and business development capacity assessments (June 2017)
- price efficiency indicators and related guidance (September 2017)
You can see how tight the timeframes are. They need to be because New Zealand's High Growth councils (Auckland, Hamilton, Tauranga, Christchurch and Queenstown) will need to submit their housing and business capacity assessments with MfE/MBIE by December 2017.
Another MBIE Message about Housing Affordability
You can download MBIE's September 2015 issue of NZ Housing and Construction Quarterly here. The issue focuses on the housing markets in Auckland and Christchurch, with a particular focus on net migration into Auckland and how it affects the Auckland housing market. It starts:
The growth rate in both house values and rents in Auckland stabilised in December 2014. Since then the trend value in house values has grown steadily at 4% per quarter and the trend value in rents has grown at 2% per quarter. This means that while rents and house values in Auckland are still growing, the growth rates have not increased in six months.... It is important to bear in mind that this is a stabilisation of the growth rates in rents and house values, not a stabilisation of rents or house values themselves. Both house values and rents in Auckland are still growing rapidly by historical standards....Then we get to the body of the report.
|From MBIE's Housing & Construction Quarterly for September 2015|
Net migration into New Zealand, and into Auckland specifically, has increased sharply since 2013. This consists of increased permanent and long-term arrivals, as well as lower than usual permanent and long-term departures (Figure 1). A comparison of migration with growth in rents and house values shows some historical relationship between rents and net migration: rental growth peaked in mid-2002, at the same time net migration was at its height. A relationship is expected as an influx of migrants entering an area could be expected to affect demand for housing and therefore rents. While we do not have enough data to examine house value growth during the 2002 migration surge, we can compare how house value growth and rent growth changed around December 2012, when net migration started to increase rapidly. Prior to this time, changes in house values had closely followed growth in New Zealand gross domestic product (GDP); from late 2012 Auckland house values grew rapidly while quarterly real per capita GDP growth rates have stabilised or declined. There is a suggestion in the data of net migration and house values moving somewhat together between 2004 and 2010, but both series are also closely related to general economic conditions. In the latest cycle the upward movement in price growth that began in 2010 substantively preceded the upswing in net migration that began in 2013. It is clear that, at most, international migration is only one of many factors that influences house values and rents.(This is interesting when you note the data available this week from QV - here - comparing residential house value trends, and annual increases, for the year ended December 2016: Wellington Area - 20.5%; Auckland Area - 12.2%; Christchurch City - 2.5%. Thus in the 18 months to December 2016 Wellington house values have rocketed, while Auckland's rate of increase has dropped significantly below Wellington's. What explains that? Certainly not the population growth cause cited in then first MBIE message - Infoshare has Wellington's average pop growth at 1.36% compared with Auckland's 2.2%.)
What MBIE has to say about this graph contains an important message:
This graph compares the historical growth of house prices with the difference between rental yield (annual rents divided by prices) and interest rates. The purpose is to compare the price of the housing asset with how well it is performing as an investment (by comparing cash flows to costs of borrowing). Auckland house price growth has been gradually rising over the last four years, while its rental yield has remained roughly constant. In the June 2015 quarter there is stronger growth in Auckland house prices, while its rental yield is now showing a clear decrease. This suggests that the demand for investment properties is being driven by expected future price increases and not by higher rental income.
Wow. Let's have some more data (and messages) like this please. Speaks the truth. Government's current emphasis on supply management rather than demand management tools to address housing price/affordability issues is not supported by the combination of these MBIE messages.
Message Post Script
Other statistics present in the MBIE Housing and Construction Quarterly report include social housing statistics and construction and consenting data. Extremely useful.
Unfortunately, it seems the September 2015 issue was the last. MBIE's website states:
"MBIE has decided to review the NZHCQ to ensure it does the best job of sharing housing and construction data with the general public. While this review is under way, we will not be publishing the NZHCQ in December 2015 or March 2016. We will be releasing our new-look building and housing reporting in June 2016. In the meanwhile, you can find a range of tables on the rental bond data page...."It appears that the "new look" reporting has yet to appear.