Hon Dr Nick Smith

Minister for Building and Housing

Minister for the Environment

2 June 2016
New policy proposed for urban development

The Government’s proposed National Policy Statement on Urban Development Capacity will require councils to ensure land supply for housing and business keeps pace with growth, Environment, Building and Housing Minister Dr Nick Smith says.

“This new policy is about tackling the long-term root cause of New Zealand’s housing affordability problems. Insufficient land supply in Auckland has seen median section prices rise from $100,000 in 1990 to $450,000 now – an increase of 350 per cent. In the same time, building costs rose 78 per cent and the Consumer Price Index 71 per cent. The high section price compounds the affordability problem because the built home will also be highly priced.”

The policy requires councils to:

• Provide sufficient land for new housing and business to match projected growth in their region, city or district plans.

• Monitor and respond to housing affordability data, building and resource consent data, and value of land on the urban boundaries.

• Take into account the difference between planned and commercially feasible development capacity, and provide for over-supply to ensure competition (20 per cent short to medium-term, 15 per cent long-term).

• Co-ordinate their infrastructure and ensure their consenting processes are customer focused.

• Recognise the national significance of ensuring sufficient land is available over local interests.

“This policy is about a culture change to support development that connects planning decisions to economics, ensures plans are regularly updated and recognises the national importance of housing.

“This urban development policy is carefully nuanced to the different growth pressures across New Zealand’s towns and cities. There are requirements for all urban areas but the analysis and directions become greater for medium growth areas (between 5 and 10 per cent in a decade) and most demanding in high-growth areas (more than 10 per cent in a decade).

“This new urban development policy is part of the Government’s systematic dismantling of Auckland’s Metropolitan Urban Limit. The first step was providing for Special Housing Areas that enable developments to be approved in the interim contrary to Auckland’s old plans and rules. The second step was the fast-track process for a new Unitary Plan, to be completed in September. The third step is the Resource Management Amendment (RMA) Bill that adds new specific funding for councils to provide development capacity, and this proposed policy provides detail on how this is to be done. This policy reform process has been based on the comprehensive work of the Productivity Commission, with its high-level report on housing affordability in 2012 and its detailed work on the land supply problem in 2015.

“New Zealand’s decline in housing affordability and ownership is decades old and there are no instant or easy fixes. This systematic reform of our planning system is an important component of the long-term solution. This work is complemented by a wide range of other initiatives, such as KiwiSaver HomeStart, changes to tax law on property investment, increased investment in building apprenticeships, RMA reforms before Parliament, using surplus public land for growing housing, better utilisation of Housing New Zealand land and building regulations reform.

The draft National Policy Statement on Urban Development Capacity is open for submissions until Friday 15 July. The intention is to finalise the policy and for it to take effect in October this year, in conjunction with the Resource Management Act changes and Auckland’s new Unitary Plan.

Attachments and Links:
The Cabinet Paper and Regulatory Impact Statement and International approaches to managing development capacity can be found at: http://www.mfe.govt.nz/more/towns-and-cities/proposed-national-policy-statement-urban-development-capacity

The Productivity Commission Report - Using land for housing can be found at:http://www.productivity.govt.nz/sites/default/files/using-land-for-housing-final-report-full%2C%20PDF%2C%204511Kb.pdf

Consultation Document

Summary of the Proposed National Policy Statement

National Policy Statement on Urban Development Capacity Q&As

Urban Development PDF

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