04-11-2013

Take a hint from Texas, report says

Landlords.co.nz

1. News
2. 2013
3. November

New Zealand could learn something from Texans when it comes to policies relating to housing development, a report by the NZ Initiative says.

The report, Different Places, Different Means: Why some countries build more than others, compares Switzerland, Germany, Britain and Texas.

The authors, Michael Bassett and Luke Malpass, say the British example could be a case of what not to do.

“The British have a nominally localised, but practically centralised, system of government that does not lend itself easily to housing reform. The Town and Country Planning Act 1947 envisaged a plan-led environment but, and this is crucial, where the public authorities provided many dwellings. As Britain’s welfare state eroded and private builders were expected to fill the gaps, the poor performance of the planning system has come into sharp focus.”

They said there was a “Britishness” about attitudes to new houses and developments that was also present in New Zealand. “People who own homes and live in picturesque British settlements or on the outskirts of settlements often fight tooth and claw to protect what they have at the expense of those who do not.”

Britain has had similar housing price cycles to New Zealand.

By contrast, Germany and Switzerland have had very little increase in values over recent times, although more Swiss residents are now homeowners – 40% from the 20% reported 30 years ago.

The authors said Swiss planners took a broader economic view and there were incentives to attract people into regions.

“However, other factors keep rents down: heavy involvement of superannuation fund investment in property and rigid rent controls provides attractive alternatives and competition with home ownership. The fact that so many people rent means there is obviously less social status attached to owning a home where people purchase only once in a lifetime. Infrastructure is provided incrementally and primarily by the state governments.”

The Germans and the Swiss have a right to build within set plans. If an area is zoned for housing, no one can stop anyone going ahead, and it takes only a few months to get a consent.

Texas was one of the few US states to avoid a price collapse in the aftermath of the GFC. Prices had been increasing at a relatively slow pace, although they are taking off this year.

“Texans on the other hand have gone in a very different direction. In opposition to the other systems examined, the State views its role as a regulator rather than an interested party, except in limited circumstances… The Municipal Utility District [MUD] is a model that could be closely examined in New Zealand: as a way of financing infrastructure, getting councils out of the immediate provision of infrastructure services, and confining them to being the providers of civic services makes for a tidier system.”

Texas doesn’t have a problem with NIMBY-ism, the report says. “In countries such as New Zealand, there seems to be a latent fear (founded in evidence or not) on the part of many locals that ‘we’ are paying for ‘their’ infrastructure. The MUD model clears up any confusion on this issue.”

The authors said this was already happening in New Zealand to some degree through developer contributions and the cost of infrastructure being front-loaded on to the initial price of a house. The MUD model progressed the idea further.

“At the very least, it makes it more difficult for existing citizens to link new developments with higher rates, thereby placing a black mark on the whole idea of further development. The notion of being able to set up a new housing development outside of town limits as long as all infrastructure can be provided by the residents/developer is certainly worth exploring.”

Tags: luke malpass

Source: Landlords.co.nz