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The cost of sprawl

Written By: - Date published: 9:28 am, July 2nd, 2012 - 27 comments
Categories: housing, transport - Tags:

House prices and rents are rising quickly in Auckland. The reason is pretty simple: from 2008 to 2011, it added 70,000 people and only 10,000 houses. The shortfall will have been worsened by the exodus from Christchurch since then. While the population’s growing, more houses are needed. But is the Right’s answer – more sprawl – the way to provide them?

Emphatically, not. The international evidence shows that it costs the taxpayer/ratepayer about twice as much to add additional suburbs to the periphery of a city as it does to add housing within existing limits (there’s literally too many examples to cite, just google ‘cost of suburban sprawl’, but here’s a table from an Australian study).

You’ve got to build all that additional infrastructure – roads, sewers, power. And they still place additional strain on the existing system – sewer and power systems linked into the existing networks and adding load just as if the housing was built in the existing city.

More sprawl means more car-centric transport, low population densities make public transport uneconomic. So, the only option is the most expensive form of transport going – hurtling an average of 1.1 people per 1-2 tonne metal box along motorways that cost $400,000 a metre* running on muck that was pulled out of the ground half a world away and is poisoning the atmosphere. More commuters on the motorways (to become justification for more poor quality motorway spending down the track), because they have to drive further the system needs even more peak capacity than before, and the nation becomes even more dependent on increasingly costly imported oil.

In the case of Auckland, it’s already spread over some of the most fertile farmland in the country. Wasting more by plonking McMansions on it is a crime.

The false economy is that the houses seem cheaper to build because the land is relatively cheap. Great for the home buyer (if you ignore the 3 hour a day commute) but all the additional costs are footed by the ratepayer.

Done right, densification actually creates a better city. There’s more to see and do within a more practical radius of where you live when there’s the population to support it. You don’t have to spend do long commuting, leaving more time for living. Look at the cities that beat Auckland on the liveability scales: Vienna, Zurich, Geneva, Copenhagen – they have twice the population density. And they’re able to spend their rates and taxes on good things that make their cities more liveable because they’re not sinking it all on asphalt.

There’s one group, however, who do win from sprawl. The landbankers who have bought up the farmland at the edge of Auckland, and long the routes of National’s motorway projects – and it doesn’t take a genius to guess which party they support, and why National is so in favour of wasting more of our money on expensive sprawl.

*Waterview is to cost around $2b for 4.5km = around $400m per km or $400k per m

27 comments on “The cost of sprawl ”

  1. RedLogix 1

    If you do the numbers the actual original cost of the farmland is a tiny fraction of the total cost of providing a section. Even if the land was free, the break-even point for a typical 700m2 section would be in the order of $200k plus.

    This completely demolishes the argument that more land would equal cheaper sections.

    • David C 1.1

      Built many subdivisions have you? Numpty.

      • Colonial Viper 1.1.1

        Just do the numbers like RL suggests, instead of being a lazy smartass eh?

    • Herodotus 1.2

      RL where do you get such way out figures from?
      As a very rough idea of cost to develop excluding Earth Works costs (as these vary depending upon the geotechnical nature of the land being developed and the cost to remedy these e.g. shear keys, counterfort drains, palisade walls etc or if you are lucky nothing. = $40-80k/lot. Earthworks $20-$75k/lot. Way less thank your $200k
      Council costs and contributions
      Then there are the costs for roading, street lighting, power reticulation, gas, telecom, street-scaping/trees/planting, design, surveying legals and titles, drainage, curbings & footpaths, council costs for consenting, just to list a few 😉 . With council and Watercare receiving brand spanking new infrastructure and not paying a cent for these.
      The idea of intensification of land depends upon good town planning and making all aspect of live interconnected e.g. Work, ECE, schools, Universities, retail shopping, recreation, Home etc. There is little evidence that any of this has been taken into consideration. e.g. the inner loop train tracks do little if anything for most. How are those out in the Shore, East, Sth East, Pukekohe, Takanini etc to benefit?

      • Draco T Bastard 1.2.1

        The idea of intensification of land depends upon good town planning and making all aspect of live interconnected

        Yes it does but if you leave it to the market guess what doesn’t happen? In fact, if you leave it to the market the necessary intensification doesn’t happen as the developers only want to build cheaper sprawl which is, in long run, both more expensive and unsustainable.

        e.g. the inner loop train tracks do little if anything for most.

        Well, that’s where you’re wrong. The CRL benefits all of Auckland.

        • Herodotus

          DTB – Councils make the rules. The “market” works within them, so town planning is all council, and variations to the rules have processes to follow e.g. being notifiable.
          I am really surprised by your comment, as most developers would desire to have greater intensification not less. As the land component of the equation reduces dramatically with greater intensification.
          Where is the planning from council to position satellite settlements along the main rail line. Extend the rail lines to mirror SH18, link Hobsonville, Whenuapai, Greenhithe, Albany and even Albany or south to include Karaka, Drury & Pokeno. Match Wellington.

          • Draco T Bastard

            I am really surprised by your comment, as most developers would desire to have greater intensification not less.

            You’d think so but they seem to be complaining about the idea and this government is pushing for more land and sprawl against the councils plans.

            Where is the planning from council to position satellite settlements along the main rail line.

            Ever considered that they are there but that the “market” took over with roads a long time ago?

  2. djp 2

    It would help if the greedy folk in local govt would ease up on the staggering fees they charge to allow subdividing and multiple dwellings on a section

    • vto 2.1

      And the greedy folk in central government. If GST was dropped then there is a 15% saving just like that on new housing, plus the flow on effect to existing housing values.

      There are places in the world where housing is far cheaper relative to incomes and these places must be looked at to see how they do it. There are some places in Texas and other parts of the US like this.

      • Colonial Viper 2.1.1

        There are places in the world where housing is far cheaper relative to incomes and these places must be looked at to see how they do it.

        Easily done, you put major restrictions on the availability of bank debt for property. Prices will plummet quick. Just take a look at Stockton or Las Vegas.

        There are some places in Texas and other parts of the US like this.

        Are we including caravan parks in this. Just kidding. Sorta.

        • mike e

          I suppose we could look at the several million who sleep rough every night.

  3. muzza 3

    NZ has a problem, its called lack of direction.

    Why do we have this lack of direction, and the same problems that more than 20 years ago, were already a problem, and being talked about then, as they are now.

    Stating that we have short termism in our politics, is not the answer.

    The answer is that NZ’ers have abandoned their country, and its politics, until this changes, talk about making AKL “the worlds most liveable city”, is frankly insulting!

    In another 20 years, the same issues will still not have been addressed, until people take control of the politics, by serious involvement. Otherwise when the next 20 years is past, AKL will still be the unfinished mess of orange cones, and scaffolding that it still is!

    Only by then, it will be an unfixable mess!

  4. higherstandard 4

    “Look at the cities that beat Auckland on the liveability scales: Vienna, Zurich, Geneva, Copenhagen…”


    All rubbish anyway really – lot’s of people commuting into work and many of them sitting behind a desk all day or in meetings achieving sweet FA, weren’t they all supposed to be skypeing and high speed interneting by now?

  5. arandar 5

    Just heard on RNZ that housing in NZ averages l/3 more than Australia’s average and Australia is already higher than many comparable countries.
    What’s that about? Are our houses so much more expensive? Especially when our incomes are so much less?

    • prism 5.1

      I have read that in NZ there are many houses built by craft-builders. I think there is more use of pre-fabricated, standardised, modular types in Australia which brings savings. I don’t know how this would compare to the various national housing companies I see advertising for.

      • Colonial Viper 5.1.1

        Expensive housing is driven by too easily available bank debt and a Government which does not believe in housing as a social good.

        • Frank Macskasy

          Ah, Viper is on to it.

          The rise in housing prices is not just about availability of housing stock – it’s about availability of money as well.

          Prior to Roger Douglas opening up our banking system to a flood of foreign capital, mortgages were available through local savings (which was not very good at the best of times). Hence, the limited availability of mortgages kept housing prices low, and vendor’s finance (generally as 2nd mortages – remember those?) a reality.

          The only exception to inflationary housing prices were the two oil shocks of the 1970s – the latter being the worst. But inflation impacted throughout the economy, not just in housing.

          Had banks not had access to billions in offshore funds, housing prices would not have risen as much as they have. But with near-unlimited monrey from overseas, there was no CAP on vendor’s expectations, and prices rose.

          At first, a house could be bought on one income.

          Then, as expectations and prices rose, we needed two incomes.

          Now, it’s two incomes-plus-a-border.

          Gareth Morgan and Bernard Hickey have been telling us for years that the housing bubble was speculation based on foreign money. But New Zealanders couldn’t care less – why should we pass up the chance to vote ourselves more “wealth”. Hence over a million people voting for National – despite the dire need for Labour’s CGT to try to suppress speculative investments in property.

          We need two things;

          1. A CGT, set at least 15%

          2. A mass State house-building programme, as I outlined here, in one of my first blogposts; http://fmacskasy.wordpress.com/2011/08/03/743/

          Why state houses?

          Because if the private sector builds 10,000 houses, and no CGT is in place, we get the crazy situation of the poor bastard who builds these properties paying taxes – but every speculator after him clipping the ticket and making untaxed profits, as they onsell in a money-go-round.

          State houses would provide shelter – but no inflationary pressures. And no added damage to our Balance of Payments – which is bad enough already.

          This is fairly common sense. But right wingers won’t like it. They don’t give a toss about anything except their own personal circumstances. The rest of the country can go down the gurglar for all they care.

  6. Stephen Doyle 6

    Ask Fletchers.

  7. Draco T Bastard 7

    Done right, densification actually creates a better city.

    I remember seeing such structures in SimCity and thinking they’d be great. Personally, I’d much prefer to live in something like that than the sprawling death that is most cities.

  8. Afewknowthetruth 8

    All large cities are, by definition, unsustainable, since cities are places that people live which are dependent on importation of food and other resources from the surrounding areas.

    Now that widespread urbanisation has wrecked most of the productive land in and around Auckland and the globalised Ponzi economic system is falling to pieces Auckland is pretty well fucked (especially the inner wards).

    That will not stop the operators of the Ponzi scheme from attempting to profit from the collapse which has begun, of course, buy cramming more people into smaller and smaller boxes, and by covering more productive land in concrete and asphalt.

    Needless to say, without energy nothing happens.

    The implosion of the world economy has seen so much demand destruction that oil prices have fallen: in NZ petrol prices have fallen, reinforcing the delusion that all is well and that the system has a future.

    Now that Europe is kaput and the US is suviving on fear of Eurozone catastrophe we are just waiting for the bubble economy of China to pop.

    • prism 8.1

      There have been some interesting interviews on radionz in the last month? about the making of gardens in cities and city people finding ways to grow their own vegetables in a small space. That would reduce the dependency on imported vegetables etc.

  9. David C 9

    The price of a highway is closer to $30K per meter than $400K. Look at transmission gulley. It would be a lot less than that on a flat greenfields site too.

    • mike e 9.1

      David C motor way constuction is closer to $10 million per km making it closer to $500,000 than $30,000

  10. David C 10

    any idea what the $206 mil is for ? $206K per site.

  11. Given Waterview is largely tunnelled, it is hardly representative of the construction cost of motorways.

    It is perfectly feasible to have people who live on the edge of cities pay for the roads they expect, the power and the sewers. However, if you’re going to insist on charging everyone the same, you’re going to get massive cross subsidies. If you don’t like that, then of course you’re going to embrace the “get everyone living in smaller, denser housing” agenda.

    The biggest problem with the intensification agenda is that it completely ignores that most people in Auckland don’t work downtown and don’t commute to it, so the plea that so many can commute by rail is a fallacy when 11% of employment is in the CBD. Most of the others will drive or be driven, because employment is scattered across the metropolis. A phenomenon that is actually seen in most high density cities that are not capitals, and it is mostly those on lower incomes that do this because CBD jobs tend to be better paid (because the businesses have to make more money to pay the rentals).

    For example, in London the car is the dominant mode for commuting for trips that are NOT to “Zone 1” (City/West End).

    • Draco T Bastard 11.1

      The biggest problem with the intensification agenda is that it completely ignores that most people in Auckland don’t work downtown and don’t commute to it, so the plea that so many can commute by rail is a fallacy when 11% of employment is in the CBD.

      A valid point but that just means that we need more rail.

      We know where they work and we know where they live thus it can’t be that hard to design a rail system that connects and inter-connects those areas.

      • mike e 11.1.1

        Rail is 3x cheaper to construct than roading ,18 times more numbers can be carried on rail.
        Tunnelling is 3 x times more expensive than above ground.Both rail and road.

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