Are New Zealand's regions missing out on high density housing?

Local adviser says a rollback of consenting rules is desperately needed

Are New Zealand's regions missing out on high density housing?

New Zealand’s major centres can expect to see higher density housing developed over the next few years, with the government giving developers the green light to build homes up to three stories high without resource consent.

However, regional advisers have expressed the need for similar permissions outside of New Zealand’s main cities - particularly as supply in the regions has been seriously constrained throughout the COVID-19 pandemic.

The government’s recently announced Housing Supply Bill currently applies to Auckland, Hamilton, Tauranga, Wellington and Christchurch, where councils will be required to adopt medium-density residential standards. National leader Judith Collins said that getting rid of tough consenting rules would be key to addressing the property shortage, but with these rules still in force for New Zealand’s lesser populated regions, local developers will still need to jump through many hoops to try to develop the land they own.

Nelson-based Mike Pero mortgage adviser Scott Jackson said that there is absolutely a need for similar concessions in the regions, particularly given how much supply has been constricted over the past two years.

“It was interesting to see the news about the Housing Supply Bill, because I’ve been saying for a long time that we need more townhouse-style dwellings here in Nelson,” Jackson said.

Read more: Government announces reforms to boost housing supply

“We need the ability to stack places up side-by-side, and build the kinds of multi-storey dwellings which are everywhere in other parts of the country. We need to better utilise the land that we’ve got, and there are patches of that happening, but we need more.”

“The numbers are actually quite scary, there’s been unusually low stock for Nelson since COVID-19,” he explained.

“A good level of stock for the Nelson market is around 500-600 properties for sale, and that’s in a good buyer-seller market. Recently we’ve had numbers as low as 180, and that’s significantly less than what we’d traditionally see.”

Jackson noted that his brokerage has been seeing a significant number of first-home buyer clients expressing their interest, but low stock has meant that there simply aren’t enough properties to allow them to buy.

This has resulted in an increasing exodus to larger centres like Christchurch, where supply is more plentiful and prices are just about manageable - but with more interest in the region expected over time, the supply challenges will only increase.

“It’s made more challenging by the fact that we have lots of offshore Kiwis wanting to come home, and lots of people from around New Zealand looking to move to Nelson,” Jackson said.

Read more: Is the Housing Supply Bill bad news for existing homeowners?

“We’ve got a lot of local first-home buyer clients trying to get their foot in the door of the market, and there’s just nothing there, which has been really tough.”

“From our perspective, we’ve been flat out - we’ve been doing a heck of a lot of pre-approvals for first-home buyer clients, but a lot of them aren’t able to come to fruition because there’s just nothing for people to buy,” he explained.

“We’re seeing more and more clients thinking of relocating to Christchurch, where they can actually buy a house that’s just within their budget and finally get on to the property ladder.”

Ultimately, regions will be facing some disappointment at being left out of the Housing Supply Bill, and Jackson said that rolling back the difficult consenting rules is something he would certainly like to see.

“You can only work with the land you’ve got available, but I’ve heard from developers that jumping through the hoops and consents that are needed to develop that land is excruciating,” he said.

“That’s why we just don’t have enough supply. Developers working with councils are just infuriated with how slow the process is to get the necessary consents, and those delays just push everything down the line.”

“Anything local councils can do to shorten the approval process has got to be a good thing,” he concluded. “I believe some of the bigger regions like Nelson need to be looked at in the same light as those main centres, because the problems are just as real here as they are in the major cities.”