What is the Housing Supply Bill About?

Date Published: 1 November 2021

Recently Labour and National shocked New Zealand by not only agreeing on something but also working together on a new housing bill: the Resource Management (Enabling Housing Supply and Other Matters) Amendment Bill. For a moment the country stopped in wonder, we all held hands and whispered “It is possible!” 

Housing has been an issue for a looooong time. For fun check out “house prices ridiculous” from 2012. Ah the good old days, if we had only known what was in store. Given how long this has gone on it was nothing less than shocking to see some decisive and collaborative changes being proposed. Whether you agree with the changes or not, the parties still deserve an icecream for playing so nicely together.

This article is current as at 29 October 2021

So, what is in the Resource Management Amendment Bill?

The Bill proposes amendments to the Resource Management Act 1991. The changes are to accelerate implementation of the National Policy Statement on Urban Development 2020 (NPS-UD). The purpose is to improve housing supply in Aotearoa. 

The basic premise of the bill is this: barriers to medium density development in New Zealand’s five largest cities will be removed. These cities are referred to as “tier 1 urban environments” and comprises Auckland, Hamilton, Tauranga, Wellington and Christchurch.

Medium Density Residential Standards

The Medium Density Residential Standards (MDRS) part of the bill is of most interest. Tier 1 councils won’t be able to decide which areas/sites can and can’t be built up to become medium density – to a point. Councils will be able to have restrictions in areas where there are certain features. This means areas with “nationally significant infrastructure, natural hazards, open space provided for public use, heritage, and consistency with iwi participation legislation”.

Where MDRS does apply, three homes of up to three stories on up to 50% of a site will be allowed to be built without requiring resource consent. There is a deadline of August 2022 for the councils to implement processes to support this law change. Check out this fact sheet for all the details, including the minimum standards a site must meet in order to be developed under MDRS.

The new Intensification Streamlined Planning Process

As part of implementing MDRS, tier 1 councils will be also required to follow a new streamlined planning process. Because (as you’ll have discovered above) the Government loves long titles and acronyms, they are referring to the new process as the new Intensification Streamlined Planning Process (ISPP). 

Does the Resource Management Amendment Bill affect other areas?

Any tier 2 cities/towns could be required to adopt the MDRS and the new planning process if they are ever considered to be in acute need of more housing. Tier 2 is made up of Whangārei, Rotorua, New Plymouth, Napier Hastings, Palmerston North, Nelson Tasman, Queenstown and Dunedin.

What’s the expected impact of the Resource Management Amendment Bill?

It’s been reported that PWC consultants estimate both the Amendment Bill and the implementation of the National Policy Statement on Urban Development 2020 (NPS-UD) will mean between 48,000 to 105,000 new builds in the next 5-8 years. Taking a guess, we’re thinking the wide ranging number is allowing for likely labour and material supply issues, as well as big infrastructure challenges in areas such as Auckland where a large amount of the new builds will be located. These challenges could all result in slowing the number of new homes.

Will the housing supply issue be fixed by these changes?

Let’s say all these changes result in the creation of 100,000 new builds within the next decade. Would it solve the housing shortage? 

It’s a surprisingly hard question to answer. Experts struggle to identify the actual housing shortage number. Some estimate the current housing shortage to be around 40,000, others put it closer to 70,000. Some say that there are enough houses, it just comes down to a higher amount of investment properties versus owner occupied than anytime previously. Others say the issue is regional; some regions have an undersupply, some have an oversupply and they balance each other out at a national level. Which, of course, is a bit besides the point when you can’t get a home in the city you live in. 

Then there’s the population growth to take into account. Over 10 years the population is expected to increase by anywhere between 100,000 to 850,000. This means it is hard to say whether the housing shortage would be solved even with 100,000 new builds.

So the true impact of these changes isn’t known. But there is little doubt that they will significantly accelerate the creation of new homes.

Given this housing supply bill, should I wait to buy a house?

For the first time in a long while there is the possibility of the housing shortage easing or even disappearing entirely in some places. Given this, those looking to buy now in a very hot market may be wondering whether to wait.

When you look at the long term, the answer to “when should I buy a house?” has always been “yesterday”. There’s been fluctuations and stagnations in the market, but over time property has always gone up. Of course, previous performance isn’t an indicator of future performance. But even with the projected acceleration of new builds, industry leaders aren’t forecasting a big dip in property prices. So as a long term investment you should feel relatively confident about the benefits of purchasing a property now.

Another aspect to consider is the features of the homes you may be in the market to buy now. The law changes allow for higher density buildings within suburbs. This means over time there will be a lot more smaller properties, with little outdoor space. A property bought now with a decent bit of garden is likely to become much more rare, valuable and sought after in the future.

If you’re looking for professional advice on what is feasible in your current situation, contact a mortgage broker.

Now if the major political parties could continue to play nicely, we’ll happily invite them both to our birthday party.

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