Growing up in Auckland?
Mapping drivers of residential land growth
NZIER public discussion paper
Working paper 2016/03, July 2016

 About NZIER
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Authorship
Each year NZIER devotes resources to undertake and make freely available economic
research and thinking aimed at promoting a better understanding of New Zealand’s
important economic challenges. This paper was funded as part of this public good
research programme.
This paper was prepared at NZIER by Dr Kirdan Lees.
The assistance of John Stephenson is gratefully acknowledged.

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 Key points
The new National Policy Statement requires councils to plan for growth


This is the latest in a series of moves by central and local government to
make land supply more responsive to slow growth in urban house prices.



Our work shows councils with rapid population growth could test plans for
the capacity of urban land for development by learning from the past.

We decomposed growth in residential land into population growth,
household size, and land use per capita


We find that, based on past experience Auckland will struggle to intensify.
Historically, demand for housing has pushed Auckland out and not up.

Surging city land prices mean rethinking plans to accommodate growth


House prices across many of our cities, but mainly Auckland, are
skyrocketing, reducing housing affordability and limiting economic growth.



Current approaches to planning to accommodate future growth are fraught
since they require precision on just how many people will find Auckland the
place to live and work and how many households people will form over
coming decades.

Soaring house prices signal we haven’t got it right


With demand running up against a lack of homes, house prices are
squeezed ever higher – a clear signal of a market that needs repair.



Migration matters but Auckland’s geography constrains growth,
exacerbating the impact of intransigence by local communities to intensify.



Auckland will need to grow out by providing a lot more additional land for
development at the edge of the city.



Auckland will also need to grow up, by lifting some combination of existing
constraints on height restrictions and lot sizes. The price of preserving
heritage, protecting volcanic viewshafts and providing land intensive public
sports to a fraction of the population has gone up. Something has to give.

We can learn from our past


Planning – releasing land and putting in place the infrastructure to enable
firms to build homes – has not got the scale of what is required right.



We can learn much from the history of the development of residential land
in Auckland and across the rest of New Zealand.



We don’t need to develop detailed and complex models. We first establish
a measure of residential land based on population density at the suburb
level and show that residential land grew 28 percent between the 1996
Census and the 2013 Census.



Between 1996 and 2013, density remained little changed since population
growth was identical to the rate of land growth at 28 percent – on average
New Zealand has been growing out not up and house prices have gone up.

NZIER public discussion paper – Growing up in Auckland?

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 Only a few areas accommodated people by growing up more than out


To quantify what might be required to accommodate future population
growth, we assume half of population growth might be accommodated by
growing out and half might be accommodated by growing up.



But between 1996 and 2013 only a small fraction of suburbs attained the 23
percent growth consistent with the scenario of accommodating population
growth equally between growing out and growing up. So policy will have to
do much more than we have seen historically if growing up is to be part of
the solution.

A closer look at Auckland shows levers will need to be pulled very hard


Our land decomposition shows that a 203.8 square kilometres increase in
residential land in Auckland between 1996 and 2013 was driven mainly by
population growth: national growth and a shift in the population towards
Auckland (a regional ‘pivot’). See Figure 1.



Auckland’s household size remained relatively constant, at least compared
to other regions of New Zealand where smaller households increased the
amount of residential land required to meet demand.



Effects of population growth were offset only slightly by a modest increase
in land use per household (density).



Much, much more needs to be done to accommodate moving up if we
expect Auckland to accommodate more people over the coming decades.

Figure 1 Population growth pushed Auckland out rather than up
Drivers of the change in Auckland’s residential land area between 1996 and 2013

kms2
250

2.6

19.6
8.1

200

203.8

97.1
150

100

131.9
50

0
Population
growth

Regional pivot Household size Land use per
household

Interactions

Total growth

Source: Statistics New Zealand

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 Contents
1.

Introduction ........................................................................................................... 4

2.

What is driving urban growth? .............................................................................. 6
2.1. Defining the city footprint .............................................................................. 6
2.2. Drivers of New Zealand urban growth ........................................................... 9
Box A: Breaking down residential land growth into drivers ................................ 10
2.3. A look at the regions .................................................................................... 12

3.

Accommodating Auckland’s future population growth....................................... 16
3.2. Moving out? ................................................................................................. 17
3.3. Moving up? ................................................................................................... 19

4.

Conclusion ............................................................................................................ 21

5.

References............................................................................................................ 22

Figures
Figure 1 Population growth pushed Auckland out rather than up .............................................. 2
Figure 2 We use meshblock-level density to define residential land .......................................... 7
Figure 3 Residential land expanded 28 percent from 1996 to 2013 ........................................... 7
Figure 4 Residential land growth has been uneven..................................................................... 8
Figure 5 Population expanded 28 percent between 1996 and 2013 .......................................... 9
Figure 6 Number of households grew 32.3 percent from 1996 to 2013 ..................................... 9
Figure 7 Many factors drove increased residential land use in the US ..................................... 10
Figure 8 Population growth and smaller households grew residential land ............................. 11
Figure 9 Population growth pushed Auckland out rather than up ............................................ 12
Figure 10 Regional migration flows have been uneven............................................................. 13
Figure 11 Expect many more people ......................................................................................... 16
Figure 12 Expect more households ........................................................................................... 16
Figure 13 Our metric shows city growth in the west of Auckland ............................................. 17
Figure 14 Outskirts and downtown housed past population growth ........................................ 18
Figure 15 Wellington increased density between 1996 and 2013 ............................................ 18
Figure 16 Auckland’s suburbs intensified but not enough to accommodate much growth ..... 20

Tables
Table 1 Decomposition of urban residential land growth by territorial authority .................... 14

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 1. Introduction
Soaring house prices
House prices in Auckland and elsewhere continue to skyrocket, pricing out many
younger productive workers that would otherwise boost income growth in our cities.
Many agencies across central and local government are looking for solutions. Those
solutions lie in unlocking enough flexibility of land supply to keep pace with strong
population growth and immigration that has been unevenly distributed and focussed
on Auckland and other urban areas. Existing land use regulation is simply too
restrictive.

Moving up or moving out?
Relaxing the suite of land use restrictions that apply within the city limits would allow
developers to build up, so-called brownfield developments that intensifies and makes
the most of land supply within the city limits.1
Progressively moving out Auckland’s city limit, by providing additional developmentready greenfield land and resolving the funding of infrastructure needs would also
help make land supply more responsive.2

Current forecasting approach is fraught
But understanding the likely limits to moving up and moving out are difficult. Typical
approaches take forecasts for population growth and then reverse engineer land
requirements based on assumptions about future household size and land use per
household.3
These forecasting exercises are often fraught and generally struggle to robustly
confront that development hinges on the types of dwellings and residential land that
people want and the willingness of residents and developers to make those
properties available.4

We can learn from our past
Much can be learned about future needs from a detailed assessment of what has
driven growth in residential land in the past. Has population growth been driving
increases in the use of land? Is the relationship one-for-one or is demand for land
increasing on a per person basis as well?
If land use per person – or more precisely per household – is growing, then we might
expect that residential land growth has to accommodate not just a growing
population, but a population that is prepared to pay to more for additional land.

1
2
3

4

See Lees (2014) on the benefits of moving out the city limit in simple model calibrating to Auckland city.
Lees (2015) scopes the likely magnitude of relaxing the suite of land use restrictions within Auckland.
See New Zealand Productivity Commission (2015) for example and NZIER (2014) on issues with long-term demographic
forecasting.
See Cheshire, Overman and Nathan (2014).

NZIER public discussion paper – Growing up in Auckland?

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 Our approach
To analyse the drivers of land use growth, we define residential land using Census
population density at the suburb level from 1996 to 2013. Then we decompose
growth in residential land into demographic factors that include population growth,
household size and land use per capita.
This approach isn’t perfect, in the sense that what we see both affects and is affected
by land use regulation. But, it is a straightforward step towards understanding
changes in demand for land. With a solid understanding of what has driven
residential land growth, our final section takes a closer look at how the past can be
used to frame likely possibilities for Auckland to move out and move up across the
next twenty-five years.
Our approach also has the benefit of providing a simple test of the feasibility of
change – how far aspirations for urban form are from past experience.

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 2. What is driving urban growth?
2.1. Defining the city footprint
Before mapping and scrutinising the drivers of residential land use, we first need to
define residential land and the extent of the urban area within which it is found.
Previous work uses a variety of measures to define the reaches of an urban area or a
city. This includes many aspects of urban living including, labour markets (see for
example, the approach in Demographia 2015), travel times (see Jacques and ElGeneidy 2014), identifying building structures using satellite imagery (for example,
Overman, Puga and Turner 2008 and Pesaresi et al. 2009) and minimum population
and population density.
Ideally a boundary would neatly separate urban residential land from other areas but
cities tend to have fluid boundaries, not easily defined by a single feature or
administrative boundaries. Other approaches to defining cities include weighting
density measures by population so that density measures reflect the experience of
the average resident (see Nunns 2014, for example).
To define residential urban land, we use population density at the meshblock level –
the most granular administrative region available from Statistics New Zealand – to
obtain population data and the number of households.5
Our measure is simple, transparent and easily replicable. We fix the boundary
between urban and non-urban areas at 100 people per hectare, lower than
international norms that sometimes define cities as areas with 400 people per
hectare but across broader land areas rather than our granular measures.6
Incrementally larger density thresholds result in a smaller urban footprint.
We focus on residential land. Since industrial and some commercial land contains no,
or few, residents these land areas are not included. That can produce a quilt-like
coverage of some cities with industrial or commercial land.7 In Figure 2 we use the
example of Dunedin to show how our meshblock measure defines the residential
land footprint relative to other possible density choices.

5
6

7

In 2013, the average meshblock contained 90 people living in 33 households. There were 46,637 meshblocks in 2013.
Since we use residential areas to define the urban footprint and don’t use contiguity on urban areas (for example, by
imposing an algorithm that groups together less dense meshblocks that are near dense meshblocks) our measure of urban
growth excludes areas of commercial development.
Overman, Puga and Turner (2008) note that the ratio of commercial to residential land in the US was close to constant
between 1976 and 1992.

NZIER public discussion paper – Growing up in Auckland?

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 Figure 2 We use meshblock-level density to define residential land
Dunedin, 2013 Census

Source: Statistics New Zealand

Figure 3 compares the footprint of residential land between the 1996 and 2013
Census years. Residential land expanded 28 percent in this period or 1.5 percent per
year.
Figure 3 Residential land expanded 28 percent from 1996 to 2013
Residential land, square kilometres, 1996 and 2013

km2
3000
2500

2,792
2,168

2000
1500
1000
500
0
1996

2013

Source: Statistics New Zealand

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 The amount of residential land in some regions grew much faster than others.
Tauranga, Selwyn, and the Queenstown-Lakes District exhibited the most rapid
residential land growth. Residential land in Auckland grew 41.3 percent over the
period at a compound average growth rate of 2.05 percent per year. Figure 4 maps
residential land growth across New Zealand.
Figure 4 Residential land growth has been uneven

Source: NZIER

NZIER public discussion paper – Growing up in Auckland?

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 2.2. Drivers of New Zealand urban growth
To explain the 28 percent growth in residential land and the distribution of growth in
Figure 4, we focus on decomposing growth in urban land into several key factors:


national population growth



a population “pivot” where people shift to other regions and their demand
for residential land changes to reflect typical land use in their new region



changes in household size at the regional level



changing intensity of land use



interactions – a term which captures interactions between these various
effects.

This decomposition allows us to examine some of the key factors that determine
urban land use. This is the same decomposition Overman et al. (2008) used to
examine growth in residential land that we discuss in more detail in Box A.
As a precursor to a closer examination of the decomposition, Figure 5 shows that the
New Zealand population grew 26.7 percent – a little less strongly than the rate of
residential land growth. An accompanying decline in household size implied the
number of households grew 32.3 percent, outpacing the rate of growth in residential
land (see Figure 6).
Figure 5 Population expanded 28
percent between 1996 and 2013
millions

Figure 6 Number of households grew
32.3 percent from 1996 to 2013
millions

5

5
4.24

4

4
3.35

3

3

2

2

1.55
1.17

1

1

0

0
1996

2013

Source: Statistics New Zealand

1996

2013

Source: Statistics New Zealand

There are many alternative decompositions of urban land growth available to explain
the 28 percent growth in residential land. For example, we could decompose growth
according to growth in coastal regions vs interior regions, warm regions vs cooler
climates or provide detailed decompositions based on a variety of demographic
characteristics such as age cohorts.

NZIER public discussion paper – Growing up in Auckland?

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 Box A: Breaking down residential land growth into drivers
We can use simple analytical relationships – that do not require estimation – to show
the drivers of increasing residential land use. Many decompositions are possible but
the Overman et al. (2008) breakdown spans key factors:
𝐿2013
𝑁𝑍

−

𝐿1996
𝑁𝑍

2013
1996
𝑃𝑁𝑍
− 𝑃𝑁𝑍
= ∑
𝑃𝑅1996 𝑙𝑅1996 } 𝐶𝑜𝑛𝑡𝑟𝑖𝑏. 𝑜𝑓 𝑁𝑍 𝑝𝑜𝑝. 𝑐ℎ𝑎𝑛𝑔𝑒 (1)
1996
𝑃𝑁𝑍
𝑅=𝑁𝑍

+ ∑ (
𝑅=𝑁𝑍

2013
1996
𝑃𝑅2013 − 𝑃𝑅1996 𝑃𝑁𝑍
− 𝑃𝑁𝑍
−
) 𝑃𝑅1996 𝑙𝑅1996 } 𝐶𝑜𝑛𝑡𝑟𝑖𝑏. 𝑜𝑓 𝑝𝑜𝑝. 𝑝𝑖𝑣𝑜𝑡 (2)
1996
𝑃𝑅1996
𝑃𝑁𝑍

(𝑟𝑅2013 − 𝑟𝑅1996 )} 𝐶𝑜𝑛𝑡𝑟𝑖𝑏. 𝑜𝑓 𝑐ℎ𝑎𝑛𝑔𝑒𝑠 𝑖𝑛 ℎ′ ℎ𝑜𝑙𝑑 𝑠𝑖𝑧𝑒 (3)
+ ∑ 𝑃𝑅1996 ℎ1996
𝑅
𝑅=𝑁𝑍

)𝑟𝑅1996 } 𝐶𝑜𝑛𝑡𝑟𝑖𝑏. 𝑜𝑓 𝑐ℎ𝑎𝑛𝑔𝑖𝑛𝑔 ℎ′ ℎ𝑜𝑙𝑑 𝑙𝑎𝑛𝑑 𝑢𝑠𝑒 (4)
+ ∑ 𝑃𝑅2013 (ℎ𝑅2013 − ℎ1996
𝑅
𝑅=𝑁𝑍

+ ∑ 𝑃𝑅2001 (ℎ𝑅2013 − ℎ1996
)(𝑟𝑅2013 − 𝑟𝑅1996 )} 𝐼𝑛𝑡𝑒𝑟𝑎𝑐𝑡𝑖𝑜𝑛𝑠
𝑅
𝑅=𝑁𝑍

+ ∑ 𝑃𝑅1996 (𝑃𝑅2013 − 𝑃𝑅1996 )(𝑙𝑅2013 − 𝑙𝑅2001 )} 𝐼𝑛𝑡𝑒𝑟𝑎𝑐𝑡𝑖𝑜𝑛𝑠 (5)
𝑅=𝑁𝑍
1996
2013
1996
where 𝐿2013
𝑁𝑍 − 𝐿𝑁𝑍 is the change in urban land, 𝑃𝑁𝑍 is 2013 total population, ℎ𝑅
is average urban land per household in 1996, 𝑙𝑅1996 is 1996 residential land per capita
by region and 𝑟𝑅2013 is the 2013 households-to-population ratio by region.
Overman et al. (2008) use this decomposition to show the 102.6 million acre increase
in residential land in the United States between 1976 and 1992 was only partly due
to increased land use per household despite population growth driving only a
fraction of the increase. Decreasing household size and a regional pivot where people
move to less dense areas also increased residential land use.

Figure 7 Many factors drove increased residential land use in the US
Growth in residential land, United States, 1976-1992

102.6

millions
of acres
100

9.8
23.3

80
60

25.0
6.1

40
20

38.5

0
Population
growth

Regional Land use per Household Interactions Total growth
pivot
household
size

Source: Overman et al. (2008)

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 Figure 8 shows that the lion’s share of residential growth can be attributed to
population growth alone. National population growth drove 596 square kilometres of
residential land growth (roughly twice the size of Wellington city).
Over the period household size decreased a little, falling from 2.86 to 2.74 people per
household. This increases the number of households, beyond the population growth
effect, lifting residential land by 216 square kilometres or 21.4 percent.
Unlike the example of the United States, inter-regional migration flows favoured
movements from territorial authorities that have relatively large amounts of
residential land used per household to territorial authorities (and in Auckland in
particular) where land use per household is lower than the national average. That
reduces the residential land required but is not sufficient to offset national
population growth and the decrease in household size.8
Figure 8 Population growth and smaller households grew residential
land
kms2

800
216.0

700

124.7
102.5

600

107.8

500

476.9

400
300

595.9

200
100
0
Population Household
growth
size

Regional Land use per Interactions Total growth
pivot
household

Source: Statistics New Zealand

These increases in residential land are offset a little by a fall in land use per
household that reduces residential land required by over 100 square kilometres. The
interaction of the factors also reduces the residential land required by just over 100
square kilometres.

8

We use Census usually resident measures and drop the Chatham Islands and other off-shore islands from our metric. We
also define the 1996 boundaries to be consistent with the 2013 definitions by replacing the territory authorities within
Auckland with a regional definition, including Banks Peninsula within the Christchurch TA.

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 2.3. A look at the regions
We also apply the decomposition in Box A across New Zealand’s territorial authorities
and find a diversity of experiences. Some territorial authorities experience rapid
increase in residential land. Our measure suggests residential land in Selwyn tripled
between 1996 and 2013 and more than doubled in the Queenstown-Lakes District.
Regional population flows were a key factor for high growth regions driving 59
percent of growth in the Queenstown-Lakes region and half the growth in Tauranga.
Only 13 of 66 territory authorities experienced positive regional migration flows (see
Figure 10).
The regional population pivot is particularly important for Auckland. Figure 9 shows
the shift in population from other regions and towards Auckland accounted for
almost half the growth in residential land in Auckland between 1996 and 2013. Land
use per household failed to move much – Auckland moved out rather up.
Figure 9 Population growth pushed Auckland out rather than up
km2
250

97.1

2.6

19.6
8.1

203.8

200

150

131.9

100

50

0
Population
growth

Regional
pivot

Household Land use per Interactions
size
household

Total
growth

Source: Statistics New Zealand

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 Figure 10 Regional migration flows have been uneven
Ratio of residential land growth from regional flows over national population growth

-3
Queenstown-Lakes District
Selwyn District
Tauranga City
Waimakariri District
Kapiti Coast District
Waipa District
Auckland
Western Bay of Plenty District
Waikato District
Wellington City
Hamilton City
Tasman District
Ashburton District
Whangarei District
Nelson City
Hurunui District
Porirua City
Central Otago District
Napier City
Carterton District
Matamata-Piako District
New Plymouth District
Hastings District
Marlborough District
Christchurch City
Thames-Coromandel District
Far North District
Kaipara District
Horowhenua District
Palmerston North City
Upper Hutt City
Taupo District
Manawatu District
Hauraki District
Rotorua District
Lower Hutt City
Dunedin City
South Wairarapa District
Timaru District
Mackenzie District
Masterton District
Waimate District
Buller District
Kaikoura District
Westland District
Whakatane District
Waitaki District
Invercargill City
Otorohanga District
Grey District
Southland District
Wanganui District
Central Hawke's Bay District
Gisborne District
Waitomo District
South Waikato District
Clutha District
Stratford District
Opotiki District
South Taranaki District
Gore District
Tararua District
Rangitikei District
Kawerau District
Wairoa District
Ruapehu District

-2

-1

0

1

2

3

4
3.7

2.9
1.6
1.3
0.8
0.7
0.7
0.5
0.3
0.3
0.2
0.1
0.1
0.0
-0.1
-0.1
-0.1
-0.1
-0.2
-0.2
-0.2
-0.3
-0.3
-0.3
-0.3
-0.3
-0.5
-0.5
-0.5
-0.5
-0.6
-0.6
-0.6
-0.6
-0.7
-0.7
-0.7
-0.8
-0.8
-0.8
-0.8
-0.9
-0.9
-0.9
-0.9
-1.0
-1.0
-1.0
-1.1
-1.1
-1.1
-1.1
-1.1
-1.2
-1.2
-1.2
-1.2
-1.2
-1.3
-1.3
-1.3
-1.4
-1.5
-1.7
-1.8
-2.1

Source: Statistics New Zealand

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 Table 1 Decomposition of urban residential land growth by territorial authority
Territorial authority

Land
growth

New Zealand
population

Regional
Population

Household
size

Land per
household

Interaction

Far North

14.49

35.68

2.55

46.84

6.84

8.09

Whangarei

13.75

47.16

54.82

35.74

-34.21

-3.51

1.55

160.64

7.05

201.90

-227.81

-41.78

203.83

28.97

83.36

1.27

-9.64

-3.96

Thames-Coromandel

8.35

46.70

23.61

41.79

-15.03

2.92

Hauraki

3.25

61.40

-6.82

93.94

-44.70

-3.82

Waikato

21.59

20.15

37.45

11.17

19.15

12.08

2.29

90.64

68.70

89.29

-123.73

-24.90

Hamilton

16.32

38.01

68.04

11.59

-15.56

-2.08

Waipa

17.08

14.55

41.93

11.07

17.09

15.36

Otorohanga

0.08

909.98

-1028.15

1380.37

-980.73

-181.46

South Waikato

1.02

155.02

-218.36

173.23

-1.32

-8.57

-1.05

-88.75

124.11

-61.79

119.69

6.74

6.69

46.06

-2.97

53.59

-2.12

5.43

Western BOP

10.29

38.16

87.68

25.17

-40.50

-10.51

Tauranga

41.03

14.01

66.87

4.94

6.11

8.07

Rotorua

8.98

54.90

-14.52

48.59

5.61

5.42

Whakatane

0.47

483.56

-457.40

417.41

-311.84

-31.73

-1.22

-78.37

202.14

-144.57

94.42

26.38

Opotiki

0.13

539.61

-844.02

678.77

-213.01

-61.34

Gisborne

0.97

404.56

-551.14

392.40

-120.64

-25.18

Wairoa

-0.67

-136.62

367.38

-167.78

3.39

33.62

Hastings

7.17

73.13

44.91

28.75

-41.90

-4.89

Napier

10.74

29.19

22.94

17.28

20.69

9.89

Central Hawke's Bay

-0.28

-592.52

733.32

-763.09

624.81

97.48

8.56

58.32

37.82

39.66

-33.69

-2.11

Stratford

-0.32

-322.35

474.47

-287.77

210.10

25.56

South Taranaki

-0.54

-537.37

859.11

-447.79

189.99

36.06

Ruapehu

-2.09

-103.17

355.93

-160.57

-46.83

54.64

Wanganui

2.37

149.29

-183.33

131.04

6.12

-3.12

Rangitikei

0.28

649.12

-1412.66

700.45

269.72

-106.63

Manawatu

3.04

49.20

-4.23

37.03

11.54

6.46

Palmerston North

13.22

37.83

0.78

22.90

29.66

8.83

Tararua

-0.94

-204.38

390.64

-252.00

135.23

30.51

Horowhenua

-1.04

-258.99

-5.51

-298.18

547.56

115.13

Kapiti Coast

9.97

37.23

111.24

21.43

-50.74

-19.15

Kaipara
Auckland

Matamata-Piako

Waitomo
Taupo

Kawerau

New Plymouth

NZIER public discussion paper – Growing up in Auckland?

14

 Territorial authority

Land
growth

New Zealand
population

Regional
Population

Household
size

Land per
household

Interaction

Porirua

5.47

51.92

54.65

38.57

-40.26

-4.88

Upper Hutt

9.82

28.26

0.00

17.81

43.02

10.91

Lower Hutt

6.28

114.17

-31.09

32.84

-16.70

0.78

Wellington

12.60

59.97

107.78

0.71

-51.40

-17.06

Masterton

1.22

138.75

-81.89

127.99

-78.23

-6.62

Carterton

0.01

4569.08

3481.01

3121.36

-8955.14

-2116.31

South Wairarapa

1.94

53.36

-23.77

42.32

21.66

6.44

Tasman

12.93

36.45

54.69

17.52

-10.12

1.46

Nelson

18.63

16.02

17.63

6.97

43.77

15.61

Marlborough

5.47

55.00

33.70

50.65

-37.09

-2.26

Kaikoura

0.66

47.33

-41.25

56.66

31.34

5.91

Buller

-0.97

-136.47

106.30

-126.77

228.22

28.72

Grey

-1.02

-177.55

203.03

-133.44

191.99

15.96

Westland

-0.63

-175.80

154.32

-225.01

298.95

47.54

Hurunui

2.81

41.80

45.28

28.86

-17.11

1.16

Waimakariri

17.55

17.06

71.27

4.61

2.52

4.55

Christchurch

30.72

58.47

30.05

4.87

4.81

1.81

Selwyn

28.24

5.74

44.33

2.32

21.10

26.51

Ashburton

5.68

30.52

43.69

8.45

11.16

6.18

Timaru

1.19

260.77

-129.38

155.92

-173.13

-14.17

Mackenzie

0.42

116.15

-60.83

60.78

-17.41

1.32

Waimate

0.47

89.18

-62.64

85.69

-13.23

1.00

Waitaki

1.36

165.64

-160.43

119.63

-23.18

-1.65

Central Otago

5.65

31.64

31.97

26.36

2.70

7.33

Queenstown-Lakes

22.31

7.17

68.23

0.67

10.11

13.82

Dunedin

11.99

79.30

-28.12

36.04

8.81

3.98

1.98

100.86

-148.14

64.74

84.78

-2.24

-0.28

-976.53

1188.27

-921.09

724.59

84.76

Gore

0.72

192.51

-334.86

193.59

64.51

-15.76

Invercargill

1.24

366.03

-363.01

279.72

-167.52

-15.22

Clutha
Southland

Source: NZIER

NZIER public discussion paper – Growing up in Auckland?

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 3. Accommodating Auckland’s
future population growth
Unlike the mid-2000s, house prices have pushed higher in Auckland than most other
regions. House prices have reached ten times average income in parts of Auckland
and with house price inflation showing few signs of abating, the differences between
the experience in Auckland and many other regions in New Zealand is striking.
But there are many more people that will need to be accommodated in Auckland in
the future. Figure 11 shows Statistics New Zealand’s low, medium and high
population estimates for Auckland’s regional population. The forecasts use the 2013
population as a base but national population growth has been double the rate of
growth embedded in the subnational population projections so the numbers are
likely to undercook the task of accommodating future population growth.9
Just how many is in part be determined by the extent the market adjusts and local
and central government policies promote cheaper housing than they do currently.
The number of households also influences the need for more residential land. Figure
12 shows that the number of households is also set to increase although household
size will be partly determined by demographics and the price of land and housing.
Figure 11 Expect many more people

Figure 12 Expect more households

Low, medium, high population forecasts, 2013-2038

Low, medium, high household forecasts, 2013-2038

millions

millions

Low

3.0

Medium

High

2.4

0.8

1.8

0.6

1.2

Low

1.0

Medium

High

0.4

2013

2018

2023

Source: Statistics New Zealand

9

2028

2033

2038

2013 2018 2023 2028 2033 2038
Source: Statistics New Zealand

Tasking Statistics New Zealand to provide forecasts (rather than statistics) probably made sense before computers reduced
the intensity of calculating forecasts. Today, procuring forecasts from the private sector is likely to provide more innovation
and reduce cost. NZIER (2014) provides some insights on how to improve population forecasting. The 013 Expert Working
Group (2015) shows just how fraught planning for growth can be.

NZIER public discussion paper – Growing up in Auckland?

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 3.2. Moving out?
Without change much more land will be required for residential
purposes
With no change in household size (Statistics New Zealand expects a small decline) or
reduction in land use per household (land use per household reduced the amount of
residential land required by 19 square kilometres between 1993 and 2013) the only
margin for growth is increasing the use of residential land one-for-one – an additional
293 square kilometres is required.
Out not up is the theme of the past. In Auckland, population growth has tended to
expand the footprint of Auckland city with much growth focussed to the west and
south of the city (see Figure 13). With the exception of the downtown, the
population in Auckland’s outer suburbs has grown faster than in the inner suburbs
(see Figure 14) on the isthmus.
Figure 13 Our metric shows city growth in the west of Auckland
Residential land foot print, Auckland 1996 and 2013

Source: NZIER

NZIER public discussion paper – Growing up in Auckland?

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 Figure 14 Outskirts and downtown housed past population growth
Population growth by area unit, (%)

Source: Statistics New Zealand

Indeed, as shown in Figure 15, Wellington has had much greater increases in
population density than has Auckland.
Figure 15 Wellington increased density between 1996 and 2013
change in
density (%)
15

11.3

10
3.6

5

1.4

0.4

0
-0.7

-5

-1.6

-2.0
-6.4

-10

-8.8

-15
-14.8

Palmerston
North

Tauranga

Dunedin

Christchurch

Lower Hutt

New Plymouth

Whangarei

Hamilton

Auckland

Wellington

-20

Source: NZIER

NZIER public discussion paper – Growing up in Auckland?

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 3.3. Moving up?
Moving out instead of up is not likely to be ideal. It would be better if Auckland’s
growth involved a combination of growing up and growing out. This would best
contain house price growth and allow families to take advantage of local amenities or
productivity opportunities by either moving to Auckland or remaining within the city
limit.
To illustrate what intensification might entail, if land supply does not expand
population growth would demand an average 50 percent increase in population in
each suburb.
Based on the experience of the past 16 years a move up of this magnitude looks
unlikely. While there are some spots in Auckland that lend empirical support to
intensification, including downtown apartments,10 the majority of Auckland’s suburbs
failed to accommodate even a quarter of the population growth required for a
‘moving up’ scenario.
There are some ‘solutions’ in view, however. For example, the limited changes we
have seen in density plus house price increases are consistent with material
constraints of land use regulation. That constraints on residential development at
either the city boundary (see for example, Turner et al. 2014 and Grimes 2009 that
shows the impacts for Auckland) or within the city boundary (see for example,
Glaeser and Gyourko 2009) can have large impacts on land values and the cost of
housing is well known. So, relaxing regulation could help increase intensification.
The importance of relaxing regulation is perhaps more important in Auckland than
elsewhere. Auckland’s tight geography – with twin harbours on both sides of the city
– fundamentally limits land supply and raises the costs of land use regulation that
limits use of existing well-located land close to the city centre. That is, relative to
other cities with similar populations, tight geography means high costs of setting
aside land for heritage, the amenity benefit of volcanic viewshafts, or providing space
for land intensive activities, like golf, that are only taken up by a fraction of residents.

10

Many point to a growing number of residents from Asia and suggest these residents are used to living in apartments and will
favour downtown living over a family home with a backyard in the suburbs. This misses the point that many of these
residents live in cities that are extremely dense and backyard space is incredibly expensive. These residents may well prefer
homes in the suburbs given the price of land is (at least for now) relatively cheap compared to many Asian cities.

NZIER public discussion paper – Growing up in Auckland?

19

 Figure 16 Auckland’s suburbs intensified but not enough to
accommodate much growth
Distribution of density by suburb, Auckland 1996 and 2013

1996

2013

5800

5500

5200

4900

4600

4300

4000

3700

3400

3100

2800

2500

2200

1900

1600

1300

1000

700

400

100

Higher density

Density (people per km2)
Source: NZIER

There are many ways to achieve growth within suburbs.

NZIER public discussion paper – Growing up in Auckland?

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 4. Conclusion
In four short years, the average value of a house in Auckland has increased 70
percent from $555,573 in April 2012 to $942,760 in 2016. Supply has simply been too
tight and regulation too inflexible to accommodate people that want to live in
Auckland.
Much of the current debate centres on the extent to which Auckland will need to
grow up or grow out. Auckland will need to use many levers if house prices are to
stabilise rather than move higher. That means growing out and growing up.
But using the past as a guide to the future suggests Auckland will grow out much
more than it will grow up. Our measure of residential land shows Auckland grew up
only a little between 1996 and 2013 – reduced land use per household decreased the
size of the city by 19.6 square kilometres. But over the same period, national
population growth and internal migration towards Auckland grew the city out by 229
square kilometres.
The past does not determine the future. But the past does act as a guide to what will
transpire without material changes. Growing up will require far more growth
accommodative policies. And Auckland’s tight geographical constraints make the cost
of setting aside well-located land for heritage, the amenity from volcanic viewshafts
and land-intensive recreation activities close to the city centre high. Growing out
requires resolving how to fund the infrastructure to make urban land development
ready.
Moreover, the number of New Zealand cities and suburbs that have grown up rather
than out is small. While Auckland’s density has increased a little there are precious
few examples of suburbs that have accommodated growth sufficient to limit the
need of the city to expand. While apartments in the downtown area have intensified,
only a handful of suburbs in the isthmus have accommodated much population
growth.
Our analysis using residential land growth suggests it will be very difficult for
Auckland to intensify. But regardless of the relative preferences of growing up versus
growing out, our simply method could be used as a guide for councils that want to
move out and move up. Combining our simple method for determining the change in
residential land with our simple decompositions can easily be used by councils to
track progress on both moving out and moving up. Our decompositions would also
show any confounding factors – such as unexpected regional migration – that impact
on the amount of residential land that needs to be made available.

NZIER public discussion paper – Growing up in Auckland?

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 5. References
013 Expert Group (2015) “Residential Developable Capacity for Auckland: A Report
on the 013 Topic Urban Growth for the AUP Independent Hearing Panel”,
Auckland Council, July.
Cooper, Geoff (2014) “Radical planning shift needed for Auckland to prosper”, op-ed,
New Zealand Herald, Thursday July 10, 2014, accessed 16 July 2015.
Demographia (2015) World Urban Areas (Built-Up Urban Areas or Urban
Agglomerations) 11th Annual Edition: January 2015.
Glaeser, EL, and J. Gyourko (2003) “The impact of zoning on housing affordability.”
Economic Policy Review 9 (2), pages 21‐39.
Grimes, Arthur and Yun Liang (2009) “Spatial Determinants of Land Prices: Does
Auckland’s Metropolitan Urban Limit Have an Effect?” Applied Spatial
Analysis and Policy, Volume 2, Issue 1, pages 23-45.
Lees, Kirdan, (2014) “Big city life? Challenges and trade-offs for Auckland city”, NZIER
Working Paper 2014/2, New Zealand Institute of Economic Research.
Lees, Kirdan (2015) “Moving on up Relaxing land use restrictions can lift Auckland
city”, NZIER report to Auckland Council, 13 February 2015.
New Zealand Productivity Commission (2012) “Housing Affordability inquiry”,
Wellington, New Zealand.
Nunns, Peter (2014) “Population-weighted densities in New Zealand and Australian
cities: A new comparative dataset”, MRCagney Working Paper 14 September.
NZIER (2014) “Costly investment decisions require improved population forecasts”,
Kirdan Lees and John Stephenson, NZIER 27-2014.
Overman, Henry G., Diego Puga and Matthew A. Turner (2008) “Decomposing the
growth in residential land in the United States”, Regional Science and Urban
Economics 38, pages 487-497.
Pesaresi M. and D. Ehrlich (2009) “A methodology to quantify built-up structures
from optical VHR imagery”. In: Gamba P, Herold M, editors. Global Mapping
of Human Settlement: Experiences, Datasets, and Prospects. CRC Press,
Taylor and Francis Group; pages 27-58. JRC55126
Turner, Matthew A., Andrew Haughwout and Wilbert van der Klaauw, (2014) “Land
Use Regulation and Welfare”, Econometrica, Econometric Society, vol. 82(4),
pages 1341-1403.

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