Planning reforms under Jacinda Ardern have boosted housebuilding and affordability in New Zealand, with big lessons for British housing policy.
Britain’s housing crisis may be unusually severe, but we are not the only country with a terrible shortage of housing. As politicians in the UK become increasingly confident in calling for planning reform to end the housing crisis, other countries that are already changing their planning systems to get more homes built and make housing more affordable provide us with important lessons.
Chief among these is New Zealand. The antipodean country’s housing shortage is one of only a few that is as bad as that in the UK, but recent planning reforms are already attracting attention for decreasing rents, getting homes built, and driving growth.
For the UK, New Zealand’s success shows the importance to cities of housing policy and why we need a new flexible zoning system as soon as possible.
Auckland, the largest city in New Zealand, released a new local plan in 2016 that changed the ‘zoning’ for large parts of the city. In practice, this meant that most of the land that was previously designated as ‘Single House Zone’ was redesignated as either a ‘Mixed Use Suburban Zone’, a ‘Mixed Use Urban Zone’ or as a ‘Terraced Housing and Apartments Zone’.
This city-wide ‘upzoning’ meant that planning permission for proposals for semi-detached and small apartment buildings was now certain on the same plots that previously were designated solely for detached houses, so long as the proposals followed all the rules on safety and other building regulations.
The benefits for housebuilding, rents, and prices can be seen by comparing Auckland to the rest of New Zealand. By the end of 2021, Auckland had 5 per cent more homes in the city than it would have, had it kept building at the same speed as other Kiwi cities. That may not sound like much, but a similar boost to housebuilding would have doubled the number of homes built in Greater London from 2016 to 2021, resulting in an extra 184,000 homes in the capital.
As a result, housing became more affordable in Auckland. Average rents after inflation in Auckland fell by 2 per cent from 2016 to 2021, and, for those on low incomes, they fell by 6 per cent. In contrast, rents in the rest of New Zealand rose, with Wellington overtaking Auckland as the most expensive city in New Zealand. Likewise, house prices rose by 70 per cent in the rest of New Zealand over the same time period, but rose by only 20 per cent in Auckland.
Auckland’s success meant the city’s planning reforms were then scaled up nationally. In 2021, the New Zealand Government under Jacinda Ardern announced that Kiwis could now build at least three homes and up to three storeys on every plot of land in the five biggest cities, effectively abolishing the ‘Single House Zone’ nationwide. Figure 1 shows that, following these reforms, housebuilding in New Zealand in 2022 hit its highest level in decades.
Source: Statistics New Zealand, Table DDE007AA https://infoshare.stats.govt.nz/ViewTable.aspx?pxID=f32282a1-cc1e-4c29-bf23-62006335055a
The national upzoning was estimated to lead to a 2.5 to 5.4 per cent increase in New Zealand’s dwelling stock over the subsequent five to eight years. Were an equivalent planning reform passed by Westminster, it would increase the number of homes in England today by between 610,000 and 1.3 million by 2031.
This planning reform will have economic benefits too. The additional homes in New Zealand are estimated to grow the economy through to 2043 by roughly £7.45bn, or about £6,000 per household. The distributional effects – the wealth that will not be transferred from renters and young people to homeowners and older people as housing will be cheaper – are estimated to be even larger, amounting to almost £83,000 per 2022 household through to 2043.
An increase in housebuilding of this scale might have been controversial, but it has been the quite the opposite. Although the New Zealand Labour Party had an absolute majority in Parliament in 2021, the national upzoning reform was announced and passed with the support of the centre-right opposition, the National Party, as there is a consensus that the housing shortage must be brought to an end.
Planning reforms have not stopped at upzoning reform. Separate planning guidance released by the New Zealand government in 2020 has required local governments to zone for at least six storeys in city centres and within walking distance (800m) of railway stations – similar to the proposal by Centre for Cities and LSE to build roughly 2 million suburban homes around railway stations in the English green belt.
Despite the similarities in language, history, and culture, there are differences between New Zealand and Britain that matter for housing policy. New Zealand is a smaller country, but its urban form is much closer to American or Australian cities – plots are larger in Kiwi cities than in British cities, which makes it easier to sub-divide plots and build upward.
Nevertheless, New Zealand has three key lessons for English housing policy:
First, all of New Zealand’s planning reforms have been delivered in and near cities. The reforms are providing new places for people to live in commuting distance of growing cities because housing is correctly understood to be an urban problem. Supplying new homes in remote parts of the New Zealand countryside with low demand would make little difference to the housing crisis – the same applies to the UK.
Second, New Zealand shows planning reform works. Making the system less discretionary and more rules-based increases housing supply, improves affordability, and will improve growth and equality. These benefits can emerge and be felt in housing markets within a few years if the reform is bold enough, but grow even larger over time.
And third, zoning made New Zealand’s planning reforms possible. Proposals that follow the rules are guaranteed planning permission. That now happens because the reform process debated those rules and how they are applied.
In contrast, the English planning system is not rules-based, but discretionary. Plots of urban land in England do not have clear rules attached to them setting out what types of new development are guaranteed planning permission.
England must therefore change its discretionary planning system into a new rules-based ‘flexible zoning system’ to repeat New Zealand’s strategy and success. Changing the rules within the current discretionary system will only have a small impact on supply as applications that comply with the new rules can still be rejected.
As planning reform rises up the British political agenda and becomes more and more likely, the end of the housing crisis will come into view. Trailblazers like New Zealand show that it is possible – what we have to do is follow their lead.
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