The 2015 report, Using Land for Housing, disagrees with protecting land for food security, saying artificially suppressing the price of land next to cities to protect food-producing land will not contribute to greater prosperity.
The report dismisses as exaggerated the need to preserve fertile agricultural land.
It quotes a Shlomo Angle, a city planning professor from New York University’s Marron Institute as saying “Reserves of cultivatable land are available to feed the planet in perpetuity.
“Unless urban fringe restrictions are relaxed enough to restore the competitive market for land, housing affordability is likely to worsen even more.”
The report describes restricting the conversion of agricultural land to residential as an extremely clumsy and indirect way of keeping produce prices down.
Better food interventions are greater competition and improved logistics while growing food on cheaper, larger blocks of land further away from cities will keep costs down.
It said key reasons for expensive houses and limited choice, especially in fast-growing centres, are insufficient land and rules limiting how land can be used for housing.
It also found council planning to be too slow responding to demand for housing with decisions often skewed towards existing residents and ratepayers.
To change land zoning is complex and delayed further by the time required to install utilities.
Councils’ processes are too slow responding to growing demand for housing despite land use authorities having a responsibility to provide capacity to house a growing population while delivering a choice of quality, affordable dwellings of the type demanded, it said.
Most high-growth cities have goals and policies such as urban limits, large minimum lot sizes, strict subdivision rules and specification of areas with high amounts of elite soils in their resource management plans to stop urban sprawl and protect high-class agricultural land.
The commission said that is inefficient, adding that artificial surfaces, including cities, covered 220,500ha or just 0.8% of NZ’s land in 2002.
It quoted a 2013 report that 29% of new urban development since 1990 has occurred on high class soils, saying that represents 0.5% of all high-class land.
“By comparison, lifestyle blocks occupy 873,000ha or about 5% of NZ’s non-reserved land. One-sixth (17%) of these are located on high-class land.”
It proposed a review of minimum lifestyle lot sizes, saying while lifestyle blocks are valued it questions whether councils used them to create a buffer to avoid reverse sensitivity issues between urban housing and farms and to also reduce the burden of extending utilities.
That proposal was criticised by councils as not protecting nationally significant assets.
In submissions to the commission councils justified larger lots as more productive for food and fibre, making it easier to consolidate land for housing development, avoiding reverse sensitivity in existing rural areas and maintaining a strong rural economy.
The commission in turn rejected the last concern saying resources should flow to their most valued use.
“If agriculture is a higher-value land use than housing this will be reflected in the price of land and there will be no incentive to convert that land to residential use.
“Planning rules that restrict the ability to convert agricultural land to residential use can inflate prices for existing residential land and artificially suppress the price of neighbouring land.”
Where land prices for housing are high there will be pressure to convert agricultural land to residential.
It cited a Western Bay of Plenty District Council submission that residential growth in Katikati and Te Puke is being strangled by the high price of neighbouring kiwifruit orchards.
The commission proposes the supply of greenfield land should be automatically expanded when housing affordability targets are not met.
“Where large discontinuities emerge between the price of land that can be developed for housing and land that cannot be developed, this is indicative of the inadequacy of development capacity being supplied within a city.”
Commission chairman Murray Sherwin calculated the lack of suitably zoned land made Auckland land five times more expensive than 20 years ago.
More land has to be released for housing because the shortage means land makes up 50% of property value in many high-growth cities but 60% in Auckland.
That also encourages developers to build more expensive dwellings.
“Our urban planning systems are not set up to respond to the information provided by market prices. The sharp increase in house prices that has occurred in recent years is a clear indication that rising demand for housing is not being met with rising supply. This needs to change.”
