Faced with skyrocketing housing prices and insufficient housing stock, the New Zealand government relaxed zoning rules in 2021. Auckland, its largest city, did the same in 2016.
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As Calgary heads toward a public hearing on April 22 about a proposed change to allow for more types of low-density housing, an example from the other side of the world might serve as a cautionary yet inspirational tale.
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New Zealand is in some ways like North America, with built-up city centres surrounded by lower-density, car-oriented suburban areas.
But faced with skyrocketing housing prices and insufficient housing stock, the national government changed zoning rules in 2021, allowing construction of semi-detached home, townhomes and even small apartment blocks on land previously reserved for single-family homes.
The move was backed by both main — and typically opposing — political parties.
Calgary’s proposal is nowhere near as liberal, with apartment buildings excluded.
Meanwhile Auckland, New Zealand’s largest city with about 1.5 million residents, had upzoned about 75 per cent of its land in 2016.
To grossly simplify: more homes got built and it’s still too soon to gauge the long-term impact on lofty home prices, but it seems rents in Auckland rose more slowly than the New Zealand average.
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COVID-19 complicated matters, with low interest rates leading to a run on housing, pushing the median house price in Auckland to NZ$1.1 million by 2022 before they finally fell. (That’s about C$900,000 at current exchange rates.)
This should assuage the fears of those who believe blanket upzoning will automatically send house prices plummeting.
Auckland’s experience shows the importance of pairing zoning changes with other rules and incentives to encourage the construction of affordable homes — yet it also demonstrates how national macroeconomic policies and global crises can throw curveballs.
Also, housing decisions aren’t necessarily quick ones. It might take time for home values to moderate as people move from one place to another, freeing up homes for sale at varying price points.
“What remains to be seen is the extent to which zoning reforms can enhance affordability,” writes Ryan Greenaway-McGrevy, a researcher at the University of Auckland in a commentary for the Brookings Institution. “If the increase in housing supply in Auckland and other cities can bring down house prices in the years to come, New Zealand’s reforms can be a model for other countries struggling with housing affordability to follow.”
Back in Calgary, there some concern city-wide upzoning will cause a surge of home construction everywhere, but that won’t necessarily be the case.
“The development that does occur will not be spread like an even blanket across the entire city or region, of course: it will tend to concentrate in areas where demand is strongest and potential profits are highest,” argues U.S.-based urban planner Daniel Herriges, a founding member of the Strong Towns movement.
“But it is unlikely to be anywhere near as concentrated as under the targeted-upzoning scenario, where local government policy forces development into one or two neighbourhoods only.”
In other words, just because upzoning somewhere is allowed doesn’t mean it will happen.
Another limiting factor: labour. There are only so many homes we can build at a time, no matter where they’re allowed to go up.
Of course, none of this means we shouldn’t be building homes in the most efficient and taxpayer-friendly manner possible. It does mean, however, we need to be realistic about our expectations with regard to how quickly changes will occur.
Row houses won’t suddenly appear everywhere like mushrooms, nor will our housing shortage be instantly resolved.
Calgary’s upzoning proposals won’t fix today’s housing issues. Rather, they will help prevent future crises.
The current crunch is a result of earlier mistakes that will require creative, novel solutions — including office-to-residential conversions, for which Calgary has become a poster child.
It’s still less expensive to buy or rent a home in Calgary than it is in Canada’s hottest housing markets, so it should be no surprise if people continue to move here.
With that in mind, we should do everything in our power, responsibly and within reason, to prevent the housing market here from becoming as unmanageable as it did elsewhere.
rleong@postmedia.com
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