Residential houses in Wellington, New Zealand on July 1, 2017. New Zealand is a country where the cost of housing has, in recent years, become detached from reality.DAVID GRAY/Reuters
Canada’s housing crisis resembles the world’s climate emergency in one central way: most are in favour of finding a solution as long as it doesn’t inconvenience them.
When it comes to housing, that often includes efforts by local governments to densify single-family neighbourhoods. Many who live in them, especially in cities where average house prices are obscene like Toronto and Vancouver, have no problem with multifamily dwellings – but just not in their backyard.
And local councils have long been acquiescing to this vocal minority at the expense of those desperately seeking a place to live.
New Zealand is another country where the cost of housing has, in recent years, become detached from reality. The culprit? Supply, of course. Like it is in this country, housing is often difficult to get built. The approval process is so complex and cumbersome it acts as a deterrent. Then there is NIMBYism on top of it.
There is no such thing as a panacea to our housing woes. But New Zealand has at least put forward an idea whose time may have come in this country as well.
The national government has effectively outlawed detached single-family home zoning in the country’s five largest cities. The legislation allows people to build three homes, three storeys tall, on 50 per cent of their property without consent of municipal authorities. Plans must meet certain requirements.
One analysis predicts the measure will result in as many as 75,000 new homes over eight years.
See what the national government has done here? It has taken decision-making on housing out of the hands of local governments – which are too often beholden to special interest groups and the loudest voices in the room – and given power to the people. Now when certain groups get angry that multifamily housing is “destroying the character of our neighbourhood,” local governments that previously caved to such cries of outrage can say: “Don’t look at us.”
In this regard I can’t help but think of a densification proposal recently featured in The Globe and Mail. An application by a Toronto developer to take two large, single-family lots in the city’s Deer Park neighbourhood and convert them into a 12-unit condo building has been mired in controversy and delay. After three years of trying, the project is no closer to getting approved. Why? Neighbourhood opposition.
New Zealand’s legislation would take care of that.
There is something else about what that country has done that is unique: the housing legislation was the result of a collaborative effort by the government and main Opposition party. This is important because it ensures the law doesn’t become a political football, undermining its effectiveness in the process.
Of course, in Canada, this type of legislation would be the domain of the provinces, not Ottawa. It would be no less significant if the partnership we witnessed in New Zealand occurred here. In most provinces, however, that’s difficult to imagine.
However, there is one potential downside to the New Zealand model: the effect on land prices.
“How do you prevent a land rush?” asks Andy Yan, director of the City Program at Simon Fraser University, in a conversation with me. “By that I mean a sudden, sharp increase in prices caused by speculators trying to get a piece of the action.”
“We already saw this happen in Vancouver when the Cambie Street corridor was zoned for multifamily homes. Suddenly, those old single-family homes that were going to be torn down shot up in value. Those properties were being flipped two or three times before the actual developer got their hands on it.”
And whatever a developer pays for the property is reflected in the cost of the housing that gets put up. Townhomes along the Cambie and Oak St. corridors in Vancouver that have been built in recent years are all starting around $1.7-million to $1.8 million – and rapidly ascending from there.
So yes, New Zealand-type legislation in cities like Toronto and Vancouver might help get a lot more homes built, but it’s not likely to do much for affordability.
“Sometimes the consequences of multifamily home legislation are unintended,” said Mr. Yan. “It can drive up cost. It can hard wire unaffordability into the whole concept. I think it’s just something you really need to study.”
It’s certainly one factor to weigh against the benefits of a lot more housing. Maybe the biggest takeaway from New Zealand, however, is a national government having the guts to do something unpopular in the name of the common good.
It’s betting those who might oppose the new law won’t find many allies.
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Gary Mason