NZ’s Housing Minister Proposes Zoning Changes, Infrastructure Funding, and Incentives to Tackle Housing Crisis

Date Published: 28 February 2024

Key Facts

• Housing Minister Chris Bishop is advocating for more land to be rezoned in order to increase the number of homes in New Zealand.
• The “housing trifecta” policy proposal aims to change restrictive zoning rules, providing alternative infrastructure funding tools and additional financial incentives.
• BNZ economists suggest a need for as many as 50,000 new residential dwellings to be built within a year to accommodate the country’s population growth.
• Bishop’s housing plan includes making the Medium Density Residential Standards (MDRS) optional for councils, prompting them to instantly zone housing growth for up to 30 years.
• According to the research, housing affordability remains a major issue in New Zealand, with nearly half of renting households spending over 30% of their disposable income on rent in 2022.
• A Ministerial working group has been established by Bishop to ensure cohesion with other policy areas.

Article Summary

Housing Minister Chris Bishop is urging councils to expedite zoning more land to help adress the housing crisis, aiming to make significant progress with his “trifecta” of policies. The proposed measures look to fix the restrictive zoning rules keeping pace with demand for homes, supplemented by new infrastructure funding tools and financial incentives. According to a recent research by BNZ economists, New Zealand’s housing market demand continues to exceed supply due to significant post-pandemic population growth. The economists recommend constructing around 50,000 residences within the next year to foster adequate accommodation.

Bishop’s plan embraces flexibility in zoning rules by making the Medium Density Residential Standards (MDRS) optional for councils. Those opting out will be required to zone for 30 years’ worth of housing growth swiftly. Housing affordability persists to be a critical matter across New Zealand, with the increase in property prices outpacing the growth in median household income and causing households to spend a significant proportion of their disposable income on rent.

Stuart Donovan from Motu Economic and Public Policy Research views Bishop’s plan as demonstrating good intent and a massive understanding of the present issues. However, there are concerns the plan’s effectiveness may hinge on the yet-to-be-announced policies and their ability to deliver quick wins. To facilitate this, Bishop has assembled a ministerial working group to coordinate housing policy with other portfolios.

The majority of overdue construction to overcome the housing shortage is expected to originate from densification in existing urban areas, constituting up to 80% for geographically constrained cities like Wellington and Auckland. Bishop affirms that upzoning, coupled with new builds in periphery areas could help control urban land prices. Regardless of the government’s proposed policy appearing impartial about locations for zoning new housing, Bishop emphasises the productivity benefits of urban density.

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