The RMA replacement acts will be abandoned, and the new government will likely look at another replacement for the RMA. No doubt, this will be a lengthy process. Whilst we generally welcome the change, in many cases, it is not the legislation that is the problem but those trying to interpret it.
The MDRS (Medium Density Residential Standards) are identified in the national party’s first 100-day plan to be removed. This policy was rushed in 12 months ago with both parties’ support.
The new government will likely look to require councils to always provide for 30 years of growth with respect to available land/zoning. These numbers, in our view, will be cooked again by the Council with respect to practical intensity and preferred market direction; the Council has a track record of arguing that there is capacity by upzoning areas that are not desirable or viable.
Auckland Council has recently released a revised Future Urban Land Strategy, which removes some future urban zones and/or delays their likely date to come online on the grounds of flooding and infrastructure. It is a mechanism in effect to minimise urban sprawl. We believe this was a response to the MDRS rules, which encouraged more intensification, and the Council took this as an opportunity to justify their strategy, which now appears to be in direct conflict with the likely next government housing policies.
It is our view that land located in good built-up areas will become more popular to develop under the current Unitary Plan as the other options appear to be taken away.
There’s been a move by developers away from the smaller 2-bedroom 2-level terraces towards slightly larger stand-alone and semi-detached dwellings, which results in a lower yield per site but what appears to be easier to sell.
This appears to be due to investors no longer being in the market and, first-time home buyers wanting a bit more space, and those first-time home buyers that are active appear to have more borrowing capacity despite higher rates.
The bigger property developers are being very active this year, gaining consents and looking to start construction of larger schemes in more central areas.
Smaller scale and mum and dad developers are noticeably less active due to what we believe are related to the ability to gain finance and a slow market.
In the apartment scene, there is a strong move to pre-fab or modulated apartments that are being built overseas. This is primarily due to the extremely high construction cost of building in NZ.
Going forward, we can expect housing/planning rules to be a bit of a football over the next year as Central and Local Governments battle each other with their ideologies, with the likely outcome to be fewer development options outside of the existing build-up urban area.
The small-scale develop-and-hold model is becoming more popular as a nest egg option where units are held rented for 10+ years in order to minimise or avoid tax implications. Thus, if you have existing large land holdings in established areas, they are likely to become more popular again with respect to creating additional dwellings.