Can Great Design Help Solve the Housing Crisis?

A Master Planned Block Proposal

The pattern of plot shapes and sizes -the cadastral survey of suburbia needs to be considered when transitioning from standalone housing suburbs to more desirable higher density walkable neighbourhoods.

Slide 17 from Slideshow -Auckland’s Surprising About-Face on Density by Mark Fraser, Precinct Director for HLC

The purpose of this paper is to improve the intensification of private property.

In particular, this paper gives a framework for how neighbourhoods could work with an urban development authority and other master planning entities, to make the best use of new rapid transit infrastructure, by producing better built environments.

This paper takes a case-study approach to urbanisation -looking at some specific opportunities and challenges in the housing and transport space for New Zealand’s largest city -Auckland.

From this examination general rules are illuminated.

A possible remedy (that could complement a broader package of reforms) for the housing crisis is described that might be more helpful than the controversial large scale removal of zoning restrictions, that has been politically unsuccessful in places like California.

Case Study: Auckland

Ngai Tahu’s new Hobsonville-Kerepeti development has a dwelling density of approximately 100 per hectare

Hobsonville Point a master planned development by HLC has been a great commercial success.

Hobsonville’s densest residential blocks have about 100 dwellings per hectare, such as the Kerepeti development which is being built by Ngai Tahu in partnership with the NZ Super Fund.

New Zealanders are eagerly choosing to live in this higher density environment as it is designed to a good quality.

The challenge for Auckland is to affordably replicate that success in existing suburbs that were originally designed for low density autocentric living.

Hobsonville is the northern red circle. Sunnyvale, Glen Eden and Fruitvale Road train stations are within the western red circle

Auckland has the opportunity to build Hobsonville type well designed medium developments in its many low-density suburban areas that have much better access to Auckland’s centres of economic activity.

There is evidence from Auckland Council showing the Auckland property market is increasingly valuing properties that have greater intensification potential (upzoning premium) compared to those properties that cannot be intensified due to being located in a Special Character Area (SCA).

An Auckland economist Ryan Greenaway-McGrevy, used a different data set from recenting zoning changes in Auckland, showing that properties with the most development potential from upzoning, benefit the most from property price increases.

The CRL will significantly improve access to the city for the western rail corridor

Given the demand for housing in Auckland and the improvement in commuter train travelling times that will eventuate once the City Rail Link is completed in 2024, an ambitious proposal would be to facilitate a greater degree of intensification for the entire western rail corridor.

Spatial economic theory (and empirical observation) indicates for a monocentric city, resident’s collective preference (not planners dictates), results in a city, such that as one travels towards the city centre, house prices rise, dwelling sizes decrease, building heights rise, density increases and land prices increase. A polycentric city is similar but instead of a single centre there are multiple centres.

From “The importance of housing choices in cities” by Peter Nunns

When the City Rail Link is operational it will in effect move all of the western rail corridor suburbs closer to the centre of Auckland. Which theory indicates will increase the demand for higher density housing. The increase in some Auckland property values resulting from the recent Unitary Plan upzonings discussed above, also increases demand for higher density housing in those locations.

Currently land values beside Auckland’s western rail corridor are towards the lower end of the spectrum for Greater Auckland. Land value maps for Auckland can be seen here.

Ideally, if intensification can be competitively provided, an increase in demand would trigger a large house building supply response, rather than a large increase in land values which has been case for Auckland in recent decades.

In a recent joint announcement by Auckland Mayor Phil Goff and Government Minister Phil Twyford, they outlined their plan to invest $28 billion on Auckland’s transport infrastructure over the next decade, much of it developing a congestion free rapid transit network.

A map of Auckland’s planned congestion free rapid transit network

This means there will be more rapid transit connections in Auckland where the supply of intensified housing can be provided along corridors of growing demand.

It is therefore worthwhile investigating the specific supply potential of these newly connected rapid transit suburbs.

Three intensification examples along Auckland’s western rail corridor.

Auckland’s western rail suburbs are medium to low income suburbs, land values are relatively low, they are not the high value ‘leafy suburbs’ of Auckland’s isthmus. These suburbs mainly consist of older (40 to 70 year old), single story standalone houses with large driveways and outside areas, their property values will be near Auckland’s median property value of $850,000.

I examine three examples below where suburban blocks could be intensified fivefold to the Hobsonville level, to yield a net of 500-plus new homes. There is potential to replicate this process many more times in Auckland’s newly connecting rapid transit suburbs.

Sunnyvale example

A residential block adjacent to the Sunnyvale train station on the east side. Block surrounded by bush and trees.

Approximately 35 existing houses.

Area 350 m long by between 40m and 100m wide giving an approximate area of 1.75+ hectares.

Current density of 20 dwellings per hectare.

If Hobsonville type housing were built here then this block could be intensified to 175 or more houses, a fivefold increase in density.

Update 22.5.18:

I have been informed that the old Waitakere Council removed some sections from the market -the plots at the end of Serwayne Place -as they were flood prone. So the economics of this particular intensification proposal change as there is less pre-existing houses/sections and less land (about 0.4 hectares less).

This illustrates the site specific nature of Master Planned Blocks and the usefulness of engaging with the community who have valuable local knowledge.

Glen Eden example

A residential block approximately 500m from Glen Eden train station with the following boundaries; the wide Clayburn road and the narrower Malam Street, Clayburn park and the train line.

Approximately 29 existing houses.

Area is approximately 2 hectares, making a density of 15 dwellings per hectare.

If built to Hobsonville type density it could contain up to 200 residential dwellings, a more than sixfold increase.

Fruitvale example

A larger residential block that is less than 500m from the train station at its farthest point. It has the following boundaries -Fruitvale, Northall and Westhall roads, the train line and some existing newer higher density housing.

There is an area of natural storm water drainage in the middle of the block that drains eastward, which will need to be retained. Public walkways may benefit the wider community to prevent such a large block being an obstacle for accessing Fruitvale station.

Approximately 50 existing houses.

Area approximately 2.5 hectares and a density of 20 dwellings per hectare.

Potentially this site could be intensified to 250 dwellings depending on how much land area is required for storm water drainage and public paths.

What sort of mechanisms would enable a fivefold increase in intensification for Auckland low density autocentric suburbs?

Auckland Council’s 2016 Unitary Plan upzoned a lot of Auckland, especially areas around rapid transit, such as the western rail corridor.

In the above examples, the Sunnyvale and Glen Eden sites are zoned for terraces and apartments, with a height limit of 16m and a boundary recession plane of 3m vertical and then angled in at 45 degrees.

The Fruitvale site is in a mixed housing urban zone, which has a height limit of 11m plus 1m extra for an angled roof. There are some other minor differences, such as, building and impervious ground coverage (see above Unitary Plan link).

Building five story 16m high apartments would certainly give a fivefold plus increase in housing density. How affordable these would be is questionable, given the savings on land costs per dwelling would in part be countered by more expensive foundations, lifts, sprinkler systems etc.

The more affordable medium density housing option from a construction point of view, is terrace housing and three story walk-ups -the type of dwelling that makes the bulk of Ngai Tahu’s Hobsonville development.

The main difficulty in achieving a fivefold increase in density across large residential blocks, is they are broken up into many individual property titles (29 to 50 in the examples examined), where various Unitary Plan rules prevent one neighbour’s development being a ‘nuisance’ to another. Such as recession planes and outlook requirements -for sunlight and privacy externalities.

Typically these individual property titles are only 15m to 20m wide, by 40m or more long. For a 15m wide section, with a 3m height at boundary rule and a 45 degree recession plane -the roof ridgeline can be no higher than 10.5m high, for a 20m wide section the ridgeline can be no higher than 13m.

Recession plane rules, in particular have a major influence on the shape and nature of future building developments.

Recession planes

Note: For the terrace and apartment building zone or the residential mixed housing urban zone the height at boundary is 3m.

Outlook requirements

If bigger sites are assembled then these externalities can be better internalised i.e a master planning approach can ensure the gains from upzoning are maximised whilst the externality losses are minimised (by attaching houses in rows, perimeter blocks etc).

Bloomsbury is a historical example of master planning where a single landowner maximised the benefits of the site by internalising the externality costs. See the History of the Bloomsbury Area

What this means in practice is that for larger sites, where there is a clean slate, like what HLC had in Hobsonville, the master planned development can more efficiently package a greater number of houses to maximise density while ensuring each dwelling has a better level of light, privacy, outlook space, street or lane frontage, access to green space and other externality considerations.

Smaller sites like the individual property titles in the western rail corridor examples are not big enough to maximise height and bulk that the Unitary Plan would allow in larger sites. If intensification happens at this individual property title level it will achieve much less density -perhaps only a two or three fold increase. These developments will also tend to be the low amenity value ‘sausage flats’ that were common in the 1950/60s in Auckland and more recently in Christchurch, New Zealand.

Sausage flat infilling wastes a lot of space in driveways. Full discussion of the phenomenon is here. Note how the individual house on the middle left ended up surrounded by sausage flats of questionable value. If four or six of the original property owners had cooperated they could have created a new laneway with more, higher quality housing facing the new lane.

Larger sites could be assembled by sole private developers, purchasing neighbouring lots to create bigger sites, with more housing density potential and therefore more profit potential. This takes time and is prone to holdouts from neighbouring landowners who can maximise their monopoly negotiating position, at the expense and potentially the viability of such projects.

Due to the holdout problem, sites are usually slowly assembled in a way where the intent of the purchase is secret. Those landowners who sell their properties not knowing this intent, therefore do not share in the increased profits that result from assembling a larger site. The sole developer attempts to keep all this increased profit to themselves, often using mechanisms like slow accumulation and proxy buyers to avoid their true intent being discovered.

Is there a better way?

Terraced streets is an option for housing a large number of people in urban form with high amenity values. Although it is traditional building option there are many modern day advocates for this type of walkable, human scale built environment.

In New Zealand it is difficult to build this type of urban form.

I believe if small groups, such as, neighbours, streets or residential blocks had systems available to them, that encouraged cooperation in response to intensification demand, then urban forms, such as modern versions of terraced streets would be possible.

I have speculated that groups of agreeable neighbours, in order to get the best degree of density and value from their combined assembled landholdings could openly join together to facilitate development on a equal party basis, in neighbouring pairs that I call reciprocal intensification or larger groups to create new laneways.

Effectively this approach internalises the externality losses against the upzoning gains like a single landowner would.

This general concept is called hyperlocalism and is discussed in the “Rebalancing the continuum between devolution and centralisation” section of my report — Unravelling the strands of the urbanisation debate: To improve urban performance.

These kind of mechanisms are needed because assembling larger property sites is more difficult than acquiring other marketplace goods and services. This assembly difficulty causes a monopoly type market failure in addition to the problem of nuisance externalities that is discussed above.

A simple analogy of the monopoly market failure is to consider a bakery expanding its apple pie production. It doesn’t matter what the location source is for most of the factors of production. Where the machines, the apples, the sugar, flour etc comes from is not particularly important. Apples for instance do not need to be harvested from neighbouring trees. But if a larger bakery is desired, then that land must come from the neighbouring properties. It is no good acquiring seperate pieces of land down the road and around the corner.

Amassing groups of properties from owners who are willing to intensify is challenging because of the site assembly problem (Evans refers to this problem as contiguity). If all that needed to be done was advertise for a number of properties from anywhere in the city that are agreeable to intensification, like you would say when recruiting office workers, then the monopoly site assembly problem would not exist.

Market failure problems are often addressed by government intervention or legal remedy. Restrictive zoning is an example of a legal remedy applied by a intervening government. This may be the best policy response for the market failure of nuisance externalities. Although doing nothing because the costs outweigh the benefits is always an option. Restrictive zoning could be largely removed. This is the choice that Tokyo has chosen, for instance.

Liberalising zoning restrictions in Anglocentric cities can be difficult though.

Recently some Californian State politicians attempted to massively liberalise the zoning rules in the urban areas adjacent to California’s rapid transit networks so that residential building could be built four to eight stories high, as of right. This broad sweeping legislative agenda to remove zoning restrictions failed to get enough political backing, in part because of its ‘one shoe fits all’ nature.

It is this political challenge that has influenced the London YIMBY campaign, to find the best political rather than economic solution to the housing crisis. Their proposal involves allowing individual streets to vote on giving themselves permitted development rights, to build upwards to a maximum of six storeys and take up more of their plots.

Managing nuisance externalities is the only really honest reason for zoning (there are lots of dishonest reasons, such as, racial or class exclusion and NIMBY capital gains).

Redlining practices in the US was a ‘dishonest use’ of zoning to discriminate against the black community. See also A ‘Forgotten History’ Of How The U.S. Government Segregated America

In my opinion zoning is at best a blunt policy instrument. At worst, zoning excludes others from the opportunities that urban environments provide. This has massive productivity and inequality implications for society.

A theoretical political economic model of residential supply restrictions developed by Ortalo-Magne & Pratt (2014) found a U-shaped level of voter support for upzoning in relation to jurisdiction size.

Considering this model and Fischel’s home-voting hypothesis the following practical propositions can be interpreted;

  • The smaller the jurisdiction size, the more voters favour upzoning, down to a single landowner who would always choose to upzone themselves, because for smaller jurisdictions the development potential is the key factor.
  • The larger the jurisdiction -up to the nation level -voters are more favourable towards removing unnecessary zoning restrictions, as taxpayers and the government are burdened with the consequent inequality and productivity costs that result from the under-supply of housing. Governments at this level are more aware of the opportunity costs of excluding new residents from places of economic opportunity.
  • It is the mid-sized jurisdictions that are problematic. For this voting group, developmental gains are a diffuse benefit and they do not bear the inequality and productivity costs. All that is left to determine their voting support for/against upzoning is the anticipated capital gain benefit received by the homeowning majority -if one exists. (H/T John Myer from London YIMBY for his input re Ortalo-Magne & Pratt (2014) and Fischel’s home-voting hypothesis).

My favoured legal remedy -hyperlocalism addresses the jurisdiction size issue and both the nuisance externality and the site assembly monopoly market failure issues. The hyperlocal approach therefore may be more politically achievable compared to massive Tokyo style upzoning. Because hyperlocalism, like other forms of intensification, provides an economic benefit to existing property owners and lowers land costs by using this space more efficiently, not by crashing land values, this method of increasing house building should be more politically acceptable. See the paper Escaping the High Price Trap for further discussion for why improving intensification can help politicians afraid of falling house prices (H/T @nzsd).

Hyperlocal solutions are based on community cooperation, at its heart it has the value of ‘equal treatment’ for each member. It therefore is impossible for a holdout to achieve an unequal monopoly price.

Because hyperlocal solutions address both the site assembly monopoly and nuisance externality market failure, they represent a better solution to the market failure issues than restrictive zoning. Although there is nothing stopping them working as a secondary system, where agreeable neighbourhoods can largely opt out of an existing restrictive zoning framework for the purpose of intensification. This is what I propose New Zealand does.

My two proposed hyperlocal remedies that I discussed earlier, where two neighbours co-operate or small groups of landowners create new laneways, do not appear well suited for intensifying the residential block examples in Auckland’s western rail corridor.

This is due to the large size of the residential blocks, the shape and layout of the property titles and that these property titles are in multi-owner private ownership. Technically this is called the cadastral survey plan.

This is an important point that was publicly discussed in response to the earlier version of this paper.

The economics of location and the spatial complexities that arise from the underlying multi-owner private ownership cadastral pattern in Auckland’s western rail corridor, means that many common ‘missing middle’ overseas housing development types will be difficult to build, when intensifying these residential blocks. (H/T tweet from Lauren Semple -Resource Management Lawyer).

Sausage flat infilling surrounding a pre-existing house

For the western rail corridor suburbs the likely direction of urban development, if no new intensification mechanism is provided, is a mixture of mainly sausage flats plus some bigger apartment buildings where private developers can assembly enough existing properties to achieve that outcome.

Missing Middle housing works best when it faces a main street or a newly created laneway, square, pocket park etc.

The cadastral pattern seen in Auckland’s western rail corridor is the common pattern of urbanisation for Auckland’s middle and outer suburbs. In fact this is the common streetscape for most New Zealand towns and cities.

This low-rise, single dwellings on largish plots of land, with multiple separate owners cadastral pattern is also commonly found in many Anglocentric towns and cities around the world.

If neighbourhoods in newly connecting rapid transit suburbs want to take control over the intensification process, if they want better designed developments, then they need new mechanisms for collective cooperation.

My suggestion would be;

Master Planned Blocks

This requires a legal structure be created that allows a residential block of neighbouring landowners to develop a ‘special purpose vehicle’ where the neighbourhood community contributes their land and houses, becomes pro-rata owners of the resulting housing development project, can access finance and can partner with a master planning entity, such as an Urban Development Authority.

This would allow all the landowners to jointly benefit from a scheme that maximises the density, rehousing benefits, amenity and profitability values from their ‘special purpose vehicle’ (I call it a Master Planned Block but it could have another name; Planning Authorised Housing Association? Community Development Trust?….).

A Government-commissioned report found that land use regulations add about 56% to the cost of houses in Auckland: Source Interest.co.nz. Note how construction costs are only 40% of the of the total cost of housing and land costs are 60% in Auckland.

If each Master Planned Block had its own planning authority and if there are many Master Planned Blocks competing against each other and against other housing development models, then in theory planning regulation costs would over time be competed down to there true social benefit value.

An outcome should be achieved where costs are minimised (per new dwelling) whilst amenity or good design values from better managing nuisance externalities are maximised.

If intensification is competitive, it should be possible to compete down the land cost percentage, through a process whereby existing homeowners swap cheap older low-rise dwellings on large expensive sections (plots) for modern, taller, more expensive houses on smaller, less valuable sections (per dwelling).

This form of development should result in increased profitability for the master plan developers and the original community of landowners, higher quality new houses and lower prices for new home buyers.

Depicted above is a modern high-end house in Ngai Tahu’s Hobsonville-Kerepeti master planned development, being a 190 sqm house (including garage) on a 169 sqm section. It has a sale price of $1,214,000. Nineteen of this type of house can be seen along the front and left hand side of the Kerepeti design plan, which is the first illustration in this paper.

The questions are; firstly would existing landowners in the western rail suburbs swap their current house and land package for something like the above higher valued package? If they do agree then these high end houses would need to be 20% of Master Planned Block to cater for the number of existing homeowners (note some existing landowners could choose to take a smaller less valuable new dwelling in the new Master Planned Block, with the difference in value being paid out in cash).

Secondly, assuming a fivefold increase in density, can the other 80% of the Master Planned Block be profitably built and sold, when they also incur the building costs for these high-end houses?

Note effectively the land cost for the other 80% of the Master Planned Block is the build cost of the 20% high end houses, the demolition costs of the old houses plus block-wide infrastructures -laneways, three water pipes etc. Whatever this ‘land cost’ figure results in only needs to be under 60% of the final purchase price to be more competitive than what the current Auckland property market is delivering.

Guesstimate of a Master Planned Development land cost budget in Auckland

For a 1 hectare site with 20 existing houses and a fivefold increase to 100 new houses. 20 high end new dwellings are needed and a net 80 new dwellings is created.

Construction costs of 20 high end houses @ $550,000 each =$11 million

Demolition costs of the 20 old houses @ $25,000 each = $0.5 million

Master planning professional fees, contingency allowance and profits = $1.5 million

Site preparation, laneways, paths, underground pipes and systems for fresh, storm and sewer waters, etc for 100 new houses @ $50,000 each = $5 million

Total costs $18 million

Land costs per net new dwelling, $18 million divided by 80 = $225,000

If something like this sort of budget could be achieved in the Auckland market then a $225,000 section (plot) price is considerably less than what the current market can deliver.

Given a section price of $225,000 if a Master Planned Blocked partnered with KiwiBuild -the New Zealand government backed house building programme -then the proposed KiwiBuild pricing should easily be achievable. This being one-bedroom properties selling for a maximum of $500,000, two-bedroom for $600,000 and three-bedroom for $650,000, for Auckland -less elsewhere in New Zealand.

These KiwiBuild prices are very similar to the pricing of the Axis Series Homes in Ngai Tahu’s Hobsonville Kerepeti development.

Axis Series Homes in Ngai Tahu’s Hobsonville Kerepeti Development

Over time competition from professional master planning companies and the construction industry should lead to costs falling and quality increasing, so these prices should be seen as a upper limit.

Experimentation, innovation, aesthetics, beauty and diversity

The case-study narrative of this paper has been about bringing Hobsonville into Auckland. In the sense that Auckland should learn how to do urban density well. The exact design plan of Hobsonville may or may not be worth replicating though.

Vinegar Lane is a master planned development in the centre of Auckland with a high density of 150 dwellings per hectare. It is a fine grained urbanism development. Each plot is separately developed by different owners within an overall masterplan design code.

There are many other possible design approaches, for example the Vinegar Lane master planned development in the heart of Auckland has a Japanese ‘wabi-sabi’ or world view, of accepting imperfection as being an aesthetic. The developers believe that aesthetic is something Aucklanders as a people are comfortable with; believing Aucklanders don’t feel comfortable if all the houses look the same.

Borneo Sporenburg. Amsterdam’s master planned redevelopment of an industrial port was the inspiration for Auckland’s Vinegar Lane development

Vinegar Lane’s master planning approach not only has a Japanese inspired worldview, it was also inspired by the 1993–1996, Amsterdam -Borneo Sporenburg project.

Master Planned Blocks will enhance the competition on quality factors -energy efficiency, sustainability, aesthetics, beauty etc, as well as the important but more prosaic factors of price and quantity.

What cities should be aiming for is experimentation, innovation and diversity as they intensify. Hopefully that way problems are solved, amenity is enhanced and all residents have opportunities at a price they can afford.

There is a lot to consider for Master Planned Blocks to be successful but none of it seems insurmountable.

Proposed Master Planned Block activation procedure

  1. Central and local government supports the concept and gives some funding to master planning agencies or an Urban Development Authority to facilitate intensification in particular areas.
  2. These master planning agencies conduct neighbourhood meetings to explain the benefits they can provide.
  3. If a residential block expresses an interest in becoming a Master Planned Block and has the support of over half the residential landowners then a process is started.
  4. There is a set timeframe for submissions on what sort of design values are important.
  5. Local government also submit on what would benefit the wider community, such as, public through lanes, walkways, bike lanes and particular sewer and stormwater requirements, etc.
  6. The master planning agency is given time to develop a conceptual master plan design, an estimated construction budget, market value assessment etc, which they present back to the residential block community and to local government. The agency can also present a study on how the residential block will likely intensify without master block planning.
  7. A crown agency (something like a Queensland Land Court) assesses whether local government requests have been adequately provided for in the master plan. Local government do not get to make further requests.
  8. Residents are then given a simple yes/no binding option of whether to proceed or not, with 80% agreement being the minimum threshold required.
  9. If there is unanimous support then the master planned block can proceed directly to the applying for finance and construction stages.
  10. If there is greater than 80% support but less than unanimous agreement. Objectors are given a time limited period to join the scheme. It is explained that the Master Planned Block has gained planning authority over the entire block, so any future building or subdivision alterations would require the approval of the Master Planned Block. This is to discourage holdouts from speculating they can wait and negotiate a higher monopoly price. At the end of the opt in period if there are any landowners who choose to continue to opt out, the Master Planned Block should attempt to plan and build around them, in the first instance.
  11. Compulsory acquisition could be divisive to the community and as such should be rarely used and only in the last resort. It should require an application to a seperate crown agency with a legislative ‘taking’ power. This power should only be used in cases where there is a very, very small number of holdouts, who because of their location, shape or size of their land they are stopping a scheme that has overwhelming wider social benefits. There should be checks and balances protecting the interests of landowners whose land is being compulsory acquired, provided by this separate crown agency.

What are the benefits of Master Planned Blocks to a city?

  • Master Planned Blocks can alter existing suburban environments by creating new connecting laneways which will turn an auto-centric urban environment into a built environment that is walkable and active mode friendly. Research indicates that walkable and permeable urban areas have intersections for active mode users (walkers, cyclists etc) in grids or similar shapes of less than 100m square -giving at least 100 intersections per square kilometer. Auckland for example, is poorly provided in this regard, which makes for an inefficient urban form, impacting on congestion, public transport and a lack of local active mode accessible commercial activity. Efforts should be made to correct this poor street pattern.
  • Housing intensification maximises the benefits from public investment in congestion free rapid transit systems. Housing intensification close to rapid transit increases ridership levels, which improves the cost benefit ratio of such projects. This also means in the long-term less public subsidy is required, as fare revenue will be higher. This greater revenue stream will also encourage private sector interest in investing in rapid transit congestion free network proposals, like the NZ Super Funds offer to invest in Auckland’s light rail.
  • Master Planned Blocks will be a faster intensification process than sole developers slowly assembling larger sites for intensification. It will also produce more houses than properties being intensified on an individual property basis, especially in cities with restrictive planning rules -such as recession planes. Master Planned Blocks will therefore improve the intensification housing supply response (more elastic supply in economic terms). Improving the responsiveness of housing intensification supply helps address the housing crisis. It will allow more people, to live more affordably, close to places where there is the most economic opportunity.
  • Combining intensified housing with rapid transit is one of the best ways cities can reduce their environmental impact on climate change.
  • Greater intensification of the nature that Master Planned Blocks enables, leads to a downward shift in land percentage values but does not affect absolute per square metre land values. New houses will be on much smaller plots of land, so land costs fall, even though the absolute land cost per square metre can be unchanged. It therefore is less disruptive to the wider property market, see the paper -Escaping the High Price Trap for a description how intensification can deliver government promises of building affordable homes whilst not crashing existing house values.
  • Master Planned Blocks and hyperlocal solutions in general should be politically feasible. Many of the different special interest groups who would normally oppose greater housing development have their concerns addressed. This process has many wins for multiple groups -existing homeowners, excluded residents, those concerned about the environment or good urban form (pro biking groups etc), those concerned about housing affordability, employers concerned about the difficulty of accessing workers due to the cost and availability of housing, activists worried about the inequality effects of the housing crisis, ethnic groups suffering from poor housing (In New Zealand Maori and Pacifica) and so on.
  • Master Planned Blocks would only require a very small percentage of the existing housing stock to ‘opt in’ to have a major influence on supply. For instance the current government would like 50,000 additional KiwiBuild homes to be built in Auckland over the next 10 years. In the unlikely event that all of these houses were provided by Master Planned Blocks schemes, that would require only 12,500 out of over 500,000 existing homes in Auckland to join. So less than 2.5% of Auckland’s existing housing stock would need to ‘opt in’ to Master Planned Block schemes to supply all of Auckland’s KiwiBuild demand.

For these reasons, I believe Master Planned Blocks and Hyperlocalism is worthy of further consideration.


References

Alan W. Evans Economics, Real Estate & the Supply of Land, 2004, Chapters 14–16 on Contiguity, Pages 187–217

John Myers, May’s new adviser understands the scale of the housing crisis, CAPX, 25 April 2018

Peter Nunns, Legalising Perimeter Block Housing, Greater Auckland website, August 29th 2017

Peter Nunns, Book review: William Fischel, Zoning Rules (The homevoting hypothesis), Greater Auckland website, (1 of 2, 2 of 2), January 2016

François Ortalo-Magné & Andrea Prat, On the Political Economy of Urban Growth: Homeownership versus Affordability, American Economic Journal: Microeconomics, Vol. 6, №1, February 2014, pp. 154–81

Edward Glaeser and Joseph Gyourko, The Economic Implications of Housing Supply, Journal of Economic Perspectives -Volume 32, Number 1 -Winter 2018 -Pages 3–30


Learnings from publication feedback

This article was based on feedback from an earlier article published on Greater Auckland website. The major criticism of the original proposal was concerns about a ‘tyranny of the elected majority’ against a minority of disagreeing households (at most 20% or less of households).

This is why I proposed a more graduated process for the Master Planned Block gaining development control over the residential block which rewards (with speed) a cooperative unanimity approach. I also propose that independent institutional entities are part of the process to protect any dissenting household.

There was no further criticism on the tyranny against a dissenting minority issue from a later article which discussed how small public entities at the urban block or street level could provide benefits for cities. This article directly referred to my updated Master Planned Block concept and most of the comment section focused positively on the politics and practicality of the proposal.

I believe the Master Plan Block proposal achieves a reasonable balance between protecting the rights of existing householders with the wider rights of New Zealanders to access affordable housing in places of importance and economic activity.