The National Policy Statement on Urban Development Capacity: An effective tool to improve housing affordability in New Zealand?

Abstract

The National Policy Statement on Urban Development Capacity (NPS-UDC) provides national direction from Government on planning for urban growth in New Zealand. It requires that local authorities and decision-makers ensure that sufficient development capacity is provided for new housing and business premises in urban environments. Developed as a policy response to increasing concern over declining housing affordability, it sets out to improve the key contributor to the problem as identified by two Government-initiated inquiries: planning constraints on the supply of housing.

Within the international literature on housing affordability and policy responses to it, an argument has developed that suggests that planning-focussed policy responses to housing affordability are based on unsound evidence. Given that the New Zealand Treasury identifies that effective regulation should first be based on the proper identification of the problem it sets out to address, supported by evidence, this raises the question of whether the NPS-UDC will indeed be effective in improving housing affordability. This study sought to address this question by examining the evidence base on which the NPS-UDC was founded, including Government-initiated inquiries and evaluation reports produced during the NPS-UDC’s development. Further assessment of this evidence base was also sought through interviewing territorial authority planners involved in planning for urban development across New Zealand.

The results showed that the approach to the evidence on the causes of decreasing housing affordability in New Zealand was biased and that the evidence itself was critically flawed. Consequently, the link between loosening planning constraints and improving housing affordability was found to be tenuous and the NPS-UDC was determined to be unlikely to be effective in improving housing affordability in New Zealand. Reasons for this outcome that became apparent during the research included the influence of neoliberal ideology and political pressures on the way housing affordability problems and solutions were framed leading up to the NPS-UDC. The study found that other variables were more likely to have significantly influenced housing affordability in New Zealand than planning constraints, and were consequently better targets for effective policy responses in the future. Despite the likely ineffectiveness of the NPS-UDC in improving housing affordability, it was found to provide other benefits for urban planning practice.