New Zealand has been in the news lately for sweeping housing legislation that effectively abolishes single-family zoning throughout most of Auckland, Hamilton, Tauranga, Wellington, and Christchurch.
But before I get into how this will all work, here's a bit of background from an article that Matt Gurney wrote talking about Toronto's inability to build affordable housing and create safe streets:
Now it’s time to segue back to the New Zealand thing, and there’s no particularly graceful way to do it, so I’ll just be blunt and inelegant: the federal government in New Zealand intervened on local housing rules because there was a crisis that local leaders were unable or unwilling to address. New Zealand has severe housing-affordability challenges (though Canada seems determined to close the gap). This has been a problem in New Zealand for years, and not enough was done, so the federal government stepped in... The government expects this to immediately spur construction of new housing units.
New Zealand has been in the news lately for sweeping housing legislation that effectively abolishes single-family zoning throughout most of Auckland, Hamilton, Tauranga, Wellington, and Christchurch.
But before I get into how this will all work, here's a bit of background from an article that Matt Gurney wrote talking about Toronto's inability to build affordable housing and create safe streets:
Now it’s time to segue back to the New Zealand thing, and there’s no particularly graceful way to do it, so I’ll just be blunt and inelegant: the federal government in New Zealand intervened on local housing rules because there was a crisis that local leaders were unable or unwilling to address. New Zealand has severe housing-affordability challenges (though Canada seems determined to close the gap). This has been a problem in New Zealand for years, and not enough was done, so the federal government stepped in... The government expects this to immediately spur construction of new housing units.
It is no doubt a top down approach. But we all know how difficult it is to build anything at all when you start from the other end.
So the way this new legislation will work is that it forces local councils to allow landowners to build up to 3 homes and 3 storeys on most lots. This is instead of 1 home per lot. The maximum site coverage has also been increased to 50%. And all of this will be available on an as-of-right basis, so no special permissions or variances needed.
The pitch is that this will unlock as many as 105,000 new homes in already built-up areas. This is, of course, a good thing for a whole host of reasons. It uses land and infrastructure more efficiently, it makes public transit more viable, and it increases housing supply in a highly constrained market.
I suspect that we will be seeing a lot more of this in the coming years.
Seeing how we’ve started looking at data from last year, I thought it would be interesting to look at global home prices as of Q4 2015. Here’s a chart from Knight Frank, which they refer to as their Global House Price Index:
It is no doubt a top down approach. But we all know how difficult it is to build anything at all when you start from the other end.
So the way this new legislation will work is that it forces local councils to allow landowners to build up to 3 homes and 3 storeys on most lots. This is instead of 1 home per lot. The maximum site coverage has also been increased to 50%. And all of this will be available on an as-of-right basis, so no special permissions or variances needed.
The pitch is that this will unlock as many as 105,000 new homes in already built-up areas. This is, of course, a good thing for a whole host of reasons. It uses land and infrastructure more efficiently, it makes public transit more viable, and it increases housing supply in a highly constrained market.
I suspect that we will be seeing a lot more of this in the coming years.
Seeing how we’ve started looking at data from last year, I thought it would be interesting to look at global home prices as of Q4 2015. Here’s a chart from Knight Frank, which they refer to as their Global House Price Index:
They also have this set of interactive graphs that allows you to chart prices according to a number of different measures. The two metrics that The Economist focuses on (above) are house prices against rents and house prices against incomes.
The argument they make is that as (foreign) capital begins to think of property as merely a bolthole, it can start to detach itself from fundamentals such as rents and incomes. New Zealand, Canada, and Australia are specifically called out.
This isn’t necessarily news. And one chart can only tell you so much. But I like staying on top of the various indices.
At the top of the list is Turkey, with an 18.4% increase from Q4 2014 to Q4 2015. (Supposedly this is because it has recently become easier for foreigners to buy property in the country.) Canada is 13th with a 6.2% increase (during this same time period) and the United States is 17th at 5.4%.
This is obviously a high level analysis. There are lots of regional and local variations within each country. For instance in Canada right now, Calgary is a very different place than, say, Vancouver or Toronto.
Nonetheless, it’s still valuable to see the relative performance of each country and see what their (Knight Frank’s) prediction is for 2016:
“Our outlook for 2016 is muted. We expect the index’s overall rate of growth to be weaker in 2016 than 2015. The global economy is experiencing a potentially dangerous cocktail of low oil prices, a strong [US] dollar and a continued slowdown in China.”
It’s also interesting to see how the countries rank in terms of affordability:
Once again, Canada ranks as being one of the least affordable countries in terms of home prices.
They also have this set of interactive graphs that allows you to chart prices according to a number of different measures. The two metrics that The Economist focuses on (above) are house prices against rents and house prices against incomes.
The argument they make is that as (foreign) capital begins to think of property as merely a bolthole, it can start to detach itself from fundamentals such as rents and incomes. New Zealand, Canada, and Australia are specifically called out.
This isn’t necessarily news. And one chart can only tell you so much. But I like staying on top of the various indices.
At the top of the list is Turkey, with an 18.4% increase from Q4 2014 to Q4 2015. (Supposedly this is because it has recently become easier for foreigners to buy property in the country.) Canada is 13th with a 6.2% increase (during this same time period) and the United States is 17th at 5.4%.
This is obviously a high level analysis. There are lots of regional and local variations within each country. For instance in Canada right now, Calgary is a very different place than, say, Vancouver or Toronto.
Nonetheless, it’s still valuable to see the relative performance of each country and see what their (Knight Frank’s) prediction is for 2016:
“Our outlook for 2016 is muted. We expect the index’s overall rate of growth to be weaker in 2016 than 2015. The global economy is experiencing a potentially dangerous cocktail of low oil prices, a strong [US] dollar and a continued slowdown in China.”
It’s also interesting to see how the countries rank in terms of affordability:
Once again, Canada ranks as being one of the least affordable countries in terms of home prices.
