New Zealand Lifestyle Block Mythology – The Need For Rigorous Research

Since the early 1980’s - as forced urban consolidation began to “bite” and the process of artificial urban property inflation got underway – as part of the “flight to affordability” (preference always trumps policy) a reverse process of rural migration gathered momentum, as people sought “more affordable” housing options. For the first decade or so, urban planners attempted to stem this tide, by requiring these “urban refugees” prove that their new lifestyle blocks were “economic units”, which precipitated much unproductive and time wasting work for farm consultants, as they generated fictitious intensive farming / horticulture schemes with fanciful financial projections. More often than not these were “approved” – but eventually this “economic unit test” regime was abandoned. It was a farce of course – although it took some considerable time for the urban planners to wake up to it.

There has been some research done on this issue, such as that by the Rodney Council , following an earlier one during 2004 by LincolnUniversity– that could at best be described as “shallow and sketchy”. The Lincolnresearch indicated that around 376 square kilometres (37,600 hectares) are converted from farming use annually throughout New Zealandto around 6,800 new lifestyle blocks for 18,000 people. Expanding on these figures - it seems likely that as much as 10,000 square kilometres of land area (3.72% of total land area) has moved from farming use to lifestyle blocks over the past couple of decades.

The attached article suggests that lifestyle blocks turn over every three to five years. The turnover rate for conventional suburban housing is significantly less – probably around once every 16 years on average. With 80% (3,360,000 people) of our population of 4,200,000 living in urban areas and at an average of 2.7 people ( Statistics NZ 2006 Census Housing Quickfacts ) per household - this would indicate that our “usually occupied” urban housing stock is in the order of 1,244,444 units.

The Real Estate Institute of New Zealand (REINZ) Market Trends Graph indicates that in October 2006 8867 residential units transacted nationally – with a decline to 6854 during the month of October 2007. This would suggest that the current total residential unit’s transaction volumes via Real Estate Institute members are running at about 90,000 annually (REINZ members are reputed to handle in excess of 90% of all transactions) – so this would indicate that the annual national residential unit transaction volume is running at about 100,000 – and slipping.

There are approximately 25,000 new residential builds annually (again currently slipping) according to the latest Building Consents Issued: September 2007 Report from Statistics NZ. We have hit the “affordability ceiling”.

Within the same edition of The Press (Christchurch NZ) there was an interesting article on the growth and consolidation of the booming Dairy farming industry, with an excellent Table illustrating land use in New Zealand.

New Zealand has a land area of 268,680 square kilometres – and the Table from this article suggests (converting 100 hectares to 1 square kilometre) that New Zealand now has 21,115 square kilometres in dairy use (7.85% of our total land area), some 80,916 square kilometres in sheep farming use (30.11%), 15,055 square kilometres in beef farming use (5.60%), some 2230 in deer farming use (0.82%), 1990 (0.70%) in mixed livestock use and 656 (0.24%) square kilometres used for grain growing. The Press did not indicate where it got these figures from.

The Demographia Global Urban Density Tables states that Christchurch, New Zealand has an “urban density” (Christchurch is mid range – Auckland and Wellington higher) of 1900 people per square kilometre – and with our urban population being some 80% of the total population – this would suggest that (3,360,000 divided by 1900) some 1768 square kilometres of our land area – or about 0.66% of our total land area is urbanized.

The above figures indicate that there is more land available to farm “deer” ( 2230 sq km - 0.82% of the total land area) than the current land area of our cities / urban markets (1768 sq km - 0.66% of the total land area). The deer industry in New Zealandcould not be described as a “stellar performer”. Provisional estimates of its total exports for 2007 are expected to be a paltry $NZ317 million (around $US244 million) and the industry has been struggling with poor profitability for many years as production has shrunk . Beef (5.60%) and sheep (30.11% of our land area) have generally been poor performers as well. Yet sadly – urban planners appear “hell bent” on strangling the land supply to our cities – the “engine drivers” of a modern economy.

New Zealand’s (using 2006 IMF figures) had a GDP of $US108 billion ranking 53rd in size (or approximately – representing 0.20% (one fifth of one percent) of the world economy. The urban markets of Houston and Dallas Fort Worth have GDPs in the order of $US315 billion – and (according to the US Bureau of Economic Analysis ) New Zealand’s GDP is comparable to the State of Iowa($US106 billion) or the city of Pittsburgh($US102 billion).

At the Christchurchurban density of 1900 people per square kilometre – we would require one fifth of one percent (0.20%) of our total land area to urbanize a further one million people. We could not urbanize a further half a percent of our total land area over the next fifty years – if we tried.

Yet – we are “burning up” an additional (according to the Lincoln Study) 376 square kilometres of farmland annually for “lifestyle use” because we are not prepared to “allow” around 20 to 25 square kilometres annually for natural urban expansion. This would (again) “allow” young and lower waged people the opportunity to purchase new fringe urban housing of 200 square meters on 500 square meter blocks for between $NZ140,000 to $NZ180,000.

These issues were covered within the Demographia submission to the New Zealand Parliaments Commerce Committee Housing Affordability Inquiry.

The Press article attached “The end of the good life” outlines how these lifestyle blocks transact every three to five years, as their new owners quickly become acutely aware of their isolation, inconvenience and costs. Not surprisingly – the further out the lifestyle blocks, the cheaper they become, to partially compensate for the additional and unnecessary travel costs involved.

At this stage – the “comprehensive disruption costs” – in environmental, social and economic terms - of misguided policies of “forced urban consolidation” are poorly understood. Rigorous research on these unnecessary “costs” is long overdue.

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