In 2023, the media in Australia and around the world became enamoured by research claiming that ‘upzoning’ planning changes introduced in Auckland in 2016 had resulted in a building boom and lower home prices and rents.
I showed at the time that the research was inaccurate because it used a “biased sample” to skew the results. Dr Cameron Murray did the same on his Fresh Economic Thinking website (see here and here).
The research also conveniently omitted that a large number of Kiwis fled to other cities to escape the COVID-19 pandemic lockdowns. As a result, the population of Auckland and ergo rents fell:
The Grattan Institute was back at it again last week, claiming that Australia could magically solve its housing shortage and rental crisis if it merely copied Auckland and permitted governments to construct three-storey apartment buildings on any residential block in any suburb.
“The equation is simple: if we build more homes where most people want to live, housing will be cheaper and our cities will be wealthier, healthier, and more vibrant”, lead author Brendan Coates said.
The Grattan Institute claims that this one planning change would lower rents and home prices by 12% over a decade, shaving $100,000 off the cost of a home.
I comprehensively demolished Grattan’s claims last week, noting that Australia’s homebuilding industry is already stretched to capacity, bulging with homes that have been approved for construction but not yet built:
The time taken to build dwellings has also ballooned, further emphasising that the construction industry is stretched to the limit:
Therefore, without a significant increase in capacity, simply adding more approvals to the backlog will result in the pipeline swelling, rather than homes actually being built.
Apartments are also too expensive to build, meaning they cannot be delivered at a reasonable cost to buyers and therefore will not improve affordability.
As a result, the bulk of apartments that have been built have been the shoebox variety, often with severe structural defects.
Hilariously, the Grattan Institute also delivered the following lies about Auckland’s purported construction boom, which Grattan claims has lowered rents by 28%:
“Auckland, which upzoned 75% of its land area in 2016, subsequently had a building boom that added an extra 4% to the city’s housing stock in just six years and reduced rents by 28%. Productivity in Auckland’s construction sector rose by 8% after the reforms”.
However, actual rental bond data, presented below by Justin Fabo from Antipodean Macro, shows that Auckland rents have risen alongside the rest of New Zealand:
I fail to see how the trend growth in Auckland rents changed after the city’s planning reforms were introduced in 2016. And where is the much-vaunted 28% reduction in Auckland rents that Grattan boasts?
As argued last week, the Grattan Institute should examine Vancouver, Canada, which is North America’s most expensive city for purchasing or renting.
Vancouver has transformed into a high-density city, following decades of apartment construction.
Having North America’s most expensive home prices and rents runs counter to Grattan’s high-density urban planning utopia.
The Grattan Institute also conveniently overlooks the serious problems surrounding the poor construction quality of new apartments and exorbitant strata fees.
Remember, the Grattan Institute is sponsored by the Big Australia lobby, the Scanlon Foundation, and is an avid supporter of high immigration.
Consequently, Grattan always focuses on the planning bogeyman, rather than finding the most effective way to moderate Australia’s rapid population growth to a level that aligns with the availability of housing and infrastructure.
Australian cities would not need to transform into slums of poor-quality high-rise shoeboxes if the federal government did not expand the population so aggressively via immigration.
The fastest, simplest, and most cost-effective solution to Australia’s housing shortage is to simply limit net overseas migration to a level well below the country’s capacity to build housing and infrastructure.
Sadly, with former senior immigration bureaucrat Abul Rizvi forecasting 300,000 annual net overseas migration as the new normal for Australia, population demand will forever outrun supply.
Blanketing Australia’s suburbs with low-quality, expensive shoebox apartments, even if it were possible, would be a suboptimal solution compared to simply slashing immigration to sensible and sustainable levels.
Who genuinely wants Melbourne to grow to more than 9 million people and Sydney to surpass 8 million? This is precisely what Grattan’s and the federal government’s mass immigration dystopia proposes.
