Increasing housing supply may become easier next year with the Government announcing to dramatically loosen residential planning rules. For our main urban areas, this will mean people will be able to develop up to three homes of up to three storeys on most sites without the need for resource consent.
Intensification is certainly one way to increase the housing supply, but the question is how much land is potentially available across our main centres. There are a number of factors to consider here, including the contour of the section (a steep section will be hard to intensify), the location of the existing property’s footprint (will the existing dwelling need to be moved), but most importantly will be an owner’s willingness (or lack of) to develop.
Homes.co.nz’s analysis provides an indication of just how many new dwellings could be built if our main centres were in-filled to their capacity.
Assuming the median house footprint of 110m2 and a section size of at least 300m2, and restricting this to only flat sections, there is potential space for more than 350k new properties within NZ’s “Tier 1 urban environments” (the councils where these changes will take effect from Aug 2022). This is calculated assuming there is space for 1 new dwelling on sections 600-900m2, space for 2 new dwellings on sections 900-1200m2 and space for 3 new dwellings on sections larger than 1200m2.
The biggest intensification opportunity is in Christchurch and the greater Hamilton area where sections are typically larger. In both areas over 50% of properties with level sections are over 600m2.
This analysis, while not realistic as it is unlikely that everyone would be interested in intensifying, does show that there are real opportunities to in-fill our main centres. and it’s good to see the new planning rules removing some of the red tape for those wanting to develop.
Jeremy Cauchman, Senior Economist at Kiwibank, reports that the future is brighter for the supply of housing. Jeremy says “Housing supply, that is the lack of it, has been one of the key factors behind skyrocketing house prices”. Although these changes will contribute to house price growth starting to slow, the biggest changes will be seen long term where “future housing supply should respond faster to episodes of rapidly rising demand and house price growth”.
Read more about the Government’s changes here.
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