Mobilising Land for Affordable Housing: Policy Options for Private Development in Dunedin City

Abstract

The growing demand in New Zealand for suitable affordable housing options is at present a regular feature of media articles and state-of-the-nation reports. It is routinely claimed that the national housing market is in ‘crisis’. While the accuracy of this statement largely depends on how that term is defined, we do know that housing affordability has been declining over recent years and that housing in New Zealand is now significantly more unaffordable than in many comparable nations. Dunedin City is no exception to this changing landscape, with one recent international study rating the region as being severely unaffordable. Factors such as population growth, reducing household sizes, and a lack of sufficient housing construction are all contributing to an increased level of stress in the housing market. Household incomes have not been rising as quickly as house prices. Consequently, housing in Dunedin City is becoming less affordable for a growing number of people. This study explores a range of issues related to affordable housing and affordable land. It examines the local setting and the existing policy landscape to better understand why housing is becoming more unaffordable. Evaluation is undertaken of a range of measures which might contribute to reversing the present situation. In particular, the study considers whether there is an opportunity to better enable the mobilisation of land for affordable housing purposes as a component of private land development activities. The study is informed by a mixed method approach, making use of qualitative and quantitative data from primary and secondary sources. The findings confirm that housing in Dunedin City is currently severely unaffordable and that it is likely to worsen over the foreseeable future unless steps are taken to implement an effective response. The findings also show that housing is significantly less affordable for households which occupy the lower income bands. One method that has been identified in the study as having potential to provide a meaningful response to the problem of declining affordability is the implementation of an inclusionary zoning policy. Such a policy could be utilised as a means of mobilising an affordable housing resource from ordinary land development activities, thereby allowing the policy to be applied at a reasonably broad scale within the local environment. Research shows that an inclusionary zoning policy, if designed carefully, may be able to deliver several favourable outcomes, including expanding the City’s housing capacity, stimulating land development activities, and allocating affordable housing outcomes in a targeted manner toward where they are most needed within the community. Further to the study’s findings in relation to the potential for an inclusionary zoning policy response, the research also suggests that an overarching affordable housing strategy should, in order to produce effective outcomes, include a range of implementation mechanisms that are able to function in a compatible and coordinated manner. To achieve this, the detailed design of an affordable housing strategy for Dunedin City, including its method of delivery, would best be undertaken as a collaborative endeavour with each of the local stakeholder groups invited to actively participate in, and contribute to, the initiative.