The reforms could address housing affordability issues
New Zealand’s sweeping zoning legislation to permit medium-density housing in all of the country’s major cities can be a model for other countries to follow if it can bring down house prices in the years to come, according to a University of Auckland associate professor.
Writing for the Brookings Institution, associate professor Ryan Greenaway-McGrevy said that large cities around the world, including those in New Zealand, have experienced a significant rise in housing costs over the past decade. Between 2011 and 2021, New Zealand’s median house price skyrocketed by roughly 130%, eroding housing affordability. Contributing to the rising housing costs is the chronic shortages of houses in locations where people want to live.
The NZ government recently passed the Medium Density Residential Standard to stimulate housing construction through redevelopment. The policy requires the country’s most populous cities to allow up to three stories and three dwellings on all existing residential parcels of land. This means a parcel with a detached single-family dwelling can be redeveloped into row houses or a small apartment block.
The zoning reform is the latest of the three policies enacted over the past five years – including the Auckland Unitary Plan (AUP) and the National Policy Statement on Urban Development (NPS-UD) – that encourage more housing construction through a more compact form of urban development.
Enacted in 2016, AUP, which upzoned about three-quarters of residential land area in Auckland, has tripled the dwelling capacity in the city, Greenaway-McGrevy said. From about 6,000 new housing units permitted immediately prior to the plan in 2015, the figure had climbed to over 14,300 by 2020. The policy also shifted residential construction into attached multifamily housing, with new dwelling permits for attached housing reaching 8,100 by 2020 (compared to 1,300 in 2015).
Meanwhile, NPS-UD, issued in 2020 requiring large cities to zone for residential structures of up to six stories within walking distance of rapid transit stations, not only redressed housing shortages but also promoted lower energy consumption through shorter commutes and increased patronage of public transit.
“The results from Auckland to date indicate that these reforms can enable housing construction and redevelopment,” Greenaway-McGrevy said. “Understanding and identifying the catalysts that enabled construction in Auckland can help policymakers in the design and implementation of zoning reforms in the future. What remains to be seen is the extent to which zoning reforms can enhance affordability.”
