Auckland's Rezoning Experiment is Working
Housing is complex, but the balance of evidence and results from New Zealand shows rezoning is one step towards more affordable homes.
In 2016, facing a serious housing shortage, Auckland rezoned 75% of its residential land to permit rowhouses, terraced houses, and apartment buildings.
And the result? More homes were built. More neighbours moved in.
Housing experts have long cited restrictive zoning as a major factor in housing shortages, and zoning reform as a potential solution. Auckland is one of the first places to have actually done this, making it a test case for evaluating what rezoning can do to housing supply and affordability. With several years of hard data, supply is up and rents are down in the city.
How is it, then, that this evidence could produce such a hot take from Ronald Goodfellow in a recent Calgary Herald op-ed?
Desperate to do something, elected officials and bureaucrats looked for fast and easy answers to a complex problem that was long in the making. In this case, they discovered a New Zealand academic who claimed that upzoning and eliminating “exclusionary zoning” was the answer to our affordable housing prayers. More circumspect analysis has since dismissed what was a flawed study, one that cherry-picked data to confirm a predetermined conclusion, but yet it persists.
Well, to paraphrase Francis Bacon: confirmation bias is a hell of a drug.
Goodfellow paints a misleading picture about Auckland. The New Zealand academic referred to here is actually two academics, Ryan Greenaway-McGrevy and Peter C.B. Phillips, whose peer-reviewed paper in the Journal of Urban Economics can be read for free here.
Of note: Greenway-McGrevy and Phillips do not claim zoning reform is the answer to everyone’s affordability problems, but they do find that it lead to increased dwelling construction and housing supply in Auckland. Increased supply means more options and more homes for more people, at lower prices.
The “more circumspect analysis” referred to by Goodfellow is a blog post by Australian economists Cameron Murray and Tim Helm, which challenges the methodology of the original paper, and ultimately dismisses its conclusions as myth. In response to their questions, Greenaway-McGrevy had published an extension paper that addressed the methodological gaps identified by Murray and Helm, with the conclusions holding. Despite the extension paper having been published before the Murray/Helm blog post they do not factor it into their criticism.
So who’s right, who’s wrong? For those of us not trained as economists, the above papers might as well be inkblots, and we’re free to pick the interpretation that suits our biases. To quote again from Goodfellow’s op-ed:
English philosopher Lord Francis Bacon in the 1600s wrote that having once adopted an opinion, the advocate is quite willing to consider “all things else to support and agree with it. And though there be a greater number and weight of instances to be found on the other side, yet these it either neglects (or) despises.”
The problem here is that there is in fact a “greater number and weight of instances to be found on the other side.” To summarize: The balance of evidence supports zoning reform helping with housing affordabilty.
Aside from the criticism by Murray and Helm, the original conclusions from the Auckland study are widely considered to be robust and valid. Here are a few articles to that end:
New Zealand's Building Boom—And What the World Must Learn From It
The heterogeneous impacts of widespread upzoning: Lessons from Auckland, New Zealand
Repeat after me: building any new homes reduces housing costs for all
The City of Calgary and Council are finally showing the political courage to do something about the housing crisis, but can hardly be accused of looking for fast and easy answers. The City’s Housing Strategy, which grew out of its Housing Affordability Task Force Report contains dozens of comprehensive recommendations, none of which can be credibly called fast or easy. Many of them are geared to expanding non-market affordable housing and dedicating land to do so.
The proposal to change the base zone in Calgary to R-CG is sound policy and follows the approach many municipalities are adopting to help address a dysfunctional housing market.
Our housing crisis is a massive, thorny, wicked problem. Enabling more homes to be built at a lower cost is one simple step in getting a grip on it.
Calgary’s proposal to broaden its base zone to incorporate semi-detached homes and rowhouses is far less ambitious than Auckland’s, but it is a necessary first step, opening up capacity for new units within our extremely low-density established communities. It’s not a silver bullet to our affordability woes, but is a crucial component of a comprehensive strategy – and one backed up by precedent and strong data.