States of the nation

In the first of an ongoing series, MASSEY looks at some of the ways New Zealand is changing.

Growing pains

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In 2021 New Zealand’s population is projected to break 4.5 million, a 16 percent growth on the census numbers in 2001. Not such a huge percentage over the course of 20 years, you might think, but the growth is dispersed unevenly. Most will occur in the four northernmost regions, with Auckland becoming home to 37 percent of New Zealand’s population, gaining the equivalent of the present-day population of Wellington or half of that of the South Island.

By contrast, in six of New Zealand’s 16 regions and over half of New Zealand’s 74 territorial authority areas the population is projected to decline.

While for some regions, such as the West Coast and Southland, this will be no new thing; for many parts of the central North Island this unwelcome phenomenon will be entirely new. Though the recent resurgence in the rural economy may delay the day, soon they too are likely to be embroiled in battles to retain schools and hospitals when there are too few pupils, too few patients.

Meanwhile, Auckland will continue to be bedevilled by housing shortages and traffic congestion.

For smaller communities, which face the loss of services as they lose people, population loss is particularly destructive. Losing a school or a church group or a shopping centre tears the community fabric, says Professor Robyn Munford. To lose a school, for example, is to lose a community focus: a place where people meet and where cultural and sports events are held. The people who remain, often because they have no choice, do so at the cost of increasing isolation.

Healthy families and whanau, says Munford, are associated with healthy communities, and while direct government intervention may not help things, there are ways in which the Government can help communities build the capacity to meet their own needs.

Why are the population patterns changing? The change is predominantly driven by migration, either into or within New Zealand. Then there is the childbearing age of the population. In Auckland the population, being generally younger, will have proportionately more children; in Southland, where the population is older, there will be both fewer children and a higher mortality rate.

As for why we choose to shift, lifestyle and jobs are the easiest answers. We are moving to where the jobs are and to warmer, drier climates. When younger, we look to further our careers; when older we fix our gaze on somewhere comfortable, somewhere that very likely features sun and nearby beaches. Graham Crews, a senior lecturer in property studies, points out that this sunbelt phenomenon is international. It can be seen in the migration of Americans from the north to the south and from the east coast to the west. California and Florida have been populated by people literally yearning for their place in the sun.

When it began, the sunbelt phenomenon was largely made up of retirees, but it grew to include people in their fifties, who were finished with the business of families, and then to downshifters: people prepared to trade the rewards available to them in the city for quality of life – and that windfall gain when they sold their city property and bought more cheaply.

Sometimes technology is also having an effect. If you can provide your services by phone or the internet, why not live where the lifestyle suits you? These new, comparatively well-off migrants are a stimulus to the local economy.

Hence the robust population growth of regions such as Nelson, Tasman and the Bay of Plenty. And the same thing happens within regions: in the Bay of Plenty the coastal retirement strip booms, while – showing the national pattern in miniature – the hinterland depopulates.

And as proof of our love of lakes and mountains, the Queenstown Lakes District tops the growth predictions: up 64 percent between 2001 and 2021.

Not all those buying their own piece of paradise are New Zealanders. Queenstown, the Aspen of the southern hemisphere, attracts buyers internationally, as do parts of the New Zealand coastline.

“Chesapeake Bay, the French Riviera, the Gold Coast, Santa Monica, you take any of those places and property has traded at a premium and it has traded in US dollars,” says Crews. The reasons we have joined this select group? Crews mentions the recovery of the domestic economy, a favourable exchange rate to the US dollar, the use of the internet as a tool for researching and buying property, and finally the effects of 9/11, which lent New Zealand’s remoteness a certain allure.

Contributors: Graham Crews, Robyn Munford, David Thomson

Statistics New Zealand produces a number of projections, each employing various combinations of assumptions about such things as fertility, mortality, and immigration and migration. Shown here are the ‘medium’ sub-national population projections.

Hot property

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Even if New Zealand’s population were to remain static, the percentage growth in the number of families and households would generate a demand for new housing. Combine this with a growing population and you have two of the ingredients for a healthy property market, but even senior lecturer in property studies Graham Crews is nonplussed by the current boom.

“Around Christmas 2002, people were saying we’ve got the SARS epidemic, the war in Iraq, an energy crisis, the dollar is going up, the market must have peaked. We sold 101,000 dwellings through real estate agents last year. I measured it at the end of February and annualised it and it had become 104,000. Tony Alexander [BNZ Chief Economist] measured it at the end of June and it had become 107,000 annualised. At the end of August 2003 annualised sales reached 113,846. We had never recorded the sale of 100,000 residential properties in one year since we began taking records. These figures are astonishing.”

The turnover has been accompanied by soaring prices. The September AMP Home Affordability Report, compiled by the Massey University Real Estate Analysis Unit, cites a16.2 percent increase in median dwelling price over the past year, from $185,000 to $215,000. Every region except for Manawatu/Wanganui showed an increase in median dwelling prices, with Nelson/Marlborough at 58.6 percent easily leading the market.

Crews dates the beginning of the boom to the resurgence in the economy, largely driven by the rural sector, back in 2000. Then, in 2001, the net outflow of people from New Zealand began to reverse, first with New Zealanders returning home, then with new migrants. Capital was migrating from poorly performing share markets. Then came 9/11. Now, with the property market overheating, the Governor of the Reserve Bank would normally feel compelled to raise interest rates, but to do so would be to drive up the New Zealand dollar. His hands are tied. All in all the circumstances represent an extraordinary planetary conjunction, says Crews.

An ageing population and the trend towards smaller families are two of the factors driving a market that scarcely existed before 1990: the inner city apartment. (Others include the growing number of overseas students and the attraction of apartments as an investment option.)

In May 2003 the Sunday Star Times counted over 7000 apartments in the Auckland CBD, with 38 high-rise developments adding a further 4000 apartments within 18 months. Bayleys Research has forecast 4450 apartments in Wellington by the end of 2003.

Is the current property boom sustainable, or has it become a bubble? There is little expectation within the real estate industry of any imminent slump.

The Massey University Real Estate Analysis Unit periodically uses a panel to poll sentiment within the industry about the three major residential property markets: Auckland, Wellington and Christchurch. When the poll was last held, in June 2003, the prevailing sentiment was for the market to improve or stay the same over the next six months. Auckland was the most optimistic, with 30 percent saying the market would improve and 60 percent saying it would stay the same; Christchurch followed, with 14 percent optimistic and 77 percent opting for the same; and Wellington came in at 0 percent optimistic and 88 percent the same.

The buoyant property market is, of course, a mixed blessing. House owners can celebrate a capital gain – even if it is effectively locked away – but for many low-income families the Kiwi dream of a house in the suburbs looks less and less attainable. Contributor: Graham Crews
http://property-group.massey.ac.nz/mureau/mureau.htm

The big smoke

New Zealand has a number of cities, and then it has Auckland, population 1,216,900, our one megalopolis (London, Los Angeles and Sydney are overseas examples). In 2001, 31.4 percent of the population lived in Auckland; in 2021 it is projected to be 36.7 percent.

Auckland accounts for a third of New Zealand’s economic activity. It has as many electorates as the South Island – a place it is more distant from, in some ways, than Australia’s eastern seaboard.

Auckland is not just growing. The pattern of the urban mosaic is changing. The original destination for Pacific migrants, Ponsonby, is now latté heaven as croissantisation (the arrival of the French bakery in the neighbourhood) reflects the growing affluence of the locals. The industrial and waterside areas are transformed into office parks or apartments, and older dwellings and suburbs gentrified. The CBD becomes the home of English-language schools and international students. The edge city emerges: new retail and leisure centres are built on the very edge of the metropolitan area, while suburbs, filled with ‘MacMansions’ (large houses on small sections), are interspersed with new green-field and high-tech industrial parks. Ethnic villages emerge, complete with a wide range of restaurants, supermarkets, and other services, which meet the economic and cultural needs of one ethnic group or another – Chinese in Northcote, South Africans in Browns Bay or Indians in Otahuhu.

Contributor: Paul Spoonley

Living intensively

Auckland’s urban landscape is currently undergoing a transformation in its housing stock. Around the city and the central business district you’ll see luxurious Viaduct Basin apartments, high-rise studio and one-bedroom pads, and elegant older buildings converted into apartment blocks. In suburbs from Albany in the north to Botany Downs in the south, terraced housing developments and low-rise apartments proliferate – often inspired by images of Tuscan villas or New Mexican pueblos. Even Orewa in the Rodney District, which until recently was a sleepy seaside retirement village, has its share of apartments.

Urban intensification has underpinned the transformation and has been the basis for the Auckland Regional Growth Strategy, introduced by the Auckland Regional Council in 1999 as a way of addressing the problems of urban sprawl and traffic congestion. The Strategy provides a vision for the region’s future and a plan for realising the vision over the next 50 years. One way set out in the Strategy for achieving urban intensification is through medium and higher density housing – defined as low- and high-rise apartments, terrace and cluster housing. The idea is that 70 percent of the new construction required to house Auckland’s growing population will take place within existing metropolitan areas, near town centres and along major transport routes. Mixed-use areas will be encouraged, where housing, employment, recreation and services will be sited in close proximity. The new housing will be predominantly multi-unit medium and higher density housing. In the future it is likely that between 25 and 30 percent of all Aucklanders will live in multi-unit housing.

Already the effects of the Strategy are obvious. In 2001, 22 percent of the region’s housing stock was classified as multi-unit housing and since 1997 between one-fifth and one-third of building consents were issued for multi-unit dwellings comprising five or more units. The new terrace houses and apartments have provided greater choice in a very high-priced housing market.

Although a proportion of intensive units have been affected by the leaky building syndrome, research carried out by Dr Ann Dupuis and her colleague Professor Jenny Dixon from the University of Auckland, showed that residents were generally satisfied with most aspects of this form of urban living. Their work also showed that intensive housing was not only for singles or couples, but accommodated many family forms including extended families and those with children.

Yet medium and higher density housing has not met with widespread approval. Critics contend that these developments will become the slums of the future. In part this criticism is ideologically based, expressing fears about the prospects of different forms of living and the rapidity of change. However, some critics have raised valid technical concerns, such as the poor quality of construction materials, poor design, the incongruence of form and location and the limited types of housing being built.

One area of major dissatisfaction with intensive housing is with bodies corporate, the legal entities set up for managing commonly owned property. Further research for the Auckland Regional Council undertaken by Dr Dupuis and Professor Dixon has been the catalyst for a proposed review of the Unit Titles Act, the Act under which bodies corporate are established, managed and maintained.

To date, intensive housing has occurred in the broader context of the effects-based Resource Management Act. For the Growth Strategy to be a success, however, much depends on whether developers and local authorities address the social implications of new policies in more responsive ways. This remains a major challenge for urban policy makers and planners.

Contributor: Ann Dupuis

A bit of a jam

Corsetted by the sea on either side of its isthmus, Auckland has sprawled north towards Northland and south towards the Waikato, spreading low-density housing over a 70 km strip from Orewa to Papakura. In population terms Auckland is growing 2.5 times faster than the national average.

This is a city built on the assumption that its residents will own and use cars, and, sure enough, so they do. Alongside the United States, Canada and Australia, Auckland has one of the highest car ownership rates in the world. Aucklanders are making more trips per person than ever before, and more of these trips are being made in cars. If current trends were to continue, the use of cars would double in the next 20 years.

If you happen to be stuck in Auckland’s ‘rush hour’, ponder this: most of your neighbouring cars will have just a single occupant – the average is 1.2 people. In the morning, of those that have two or more people, many will be parents taking their children to school: taking children to school now makes up half of the morning traffic peak. The traffic deters people from the eco-friendly options of walking or cycling.

The local government regional growth strategy, which directs the multi-million dollar decisions for transport, water and other services, envisages a more sustainable and people-friendly Auckland. This will be an Auckland of higher density living, better public transport and more integrated region-wide services.

More money is being spent on roads, and the publc transport system is being overhauled. But improved roads will generate more traffic and the public transport system will only work if people who have been habitual car users can be persuaded to make the switch, if there is traffic demand management.

Perhaps this will become easier with the rise in the number of inner city apartment dwellers and the number of foreign-born New Zealanders, both of them groups of people more likely to be sympathetic to public transport.

Contributor: Mark Bellingham