Housing Minister Chris Bishop has told Cabinet he wants to ※flood urban housing markets with land for development§ in our biggest cities and regional towns - but to do that he’s run into problems of zoning, financing, and the eye-watering cost of securing the land for transport corridors and housing.

A Cabinet paper, published this week, says he will?direct officials to investigate land protection options to lower infrastructure costs.

It’s a response to pleas from the Infrastructure Commission and Auckland Council’s?Development Programme Office, which have highlighted a Catch 22: to be allowed to buy properties for development, they must first get the land designated for development. But once it’s designated, landowners know they have a guaranteed buyer and can pretty much name their price.

Bishop cites one example:?Land for the opaheke North-South Arterial Road in Auckland, a 3km link in the longterm project to open up Drury and southern Auckland to development, would cost $78 million if purchased today.

But the land is projected to cost $1 billion if it can’t be purchased for another 10 or 20 years, when construction is ready to start.

In that case, Auckland Transport and Waki Kotahi, as leading players in Te Tupu Ngatahi Supporting Growth Alliance, have gone out on a limb and managed last year to get the route designated for the next 15 to 20 years.

That’s despite having neither funding nor a timeframe to complete it. As the Cabinet paper says, getting such a designation is difficult.

※Land protection was once common in New Zealand but has declined in recent decades,§ it says. ※Under the Resource Management Act, land protection uses designations which require specific details about project design, timing, need and effects. In most cases, this information is unavailable years before a development occurs.§

There are still older designations in place, like the longstanding heavy rail route across Auckland from Avondale to Southdown; the Government designated that route and started acquiring land back in the 1940s, and now KiwiRail owns all the land along the route. But since the Resource Management Act was passed in 1991, it’s been difficult to get such sweeping designations.

The problem is not just getting the route secured; the transport organisations are also working around the lack of funding - the projects that the Supporting Growth Programme got designated in 2022 and 2023 do not yet have any funding approved.

That said, different projects are at different stages. Newsroom has discovered that in the Takanini-to-Drury area, Auckland Transport has already begun quietly purchasing one or two properties, where owners say the sale value has been undermined by the designation of a new transport corridor.

These are cases where the owners plead ※serious hardship§ under the terms of the Resource Management Act, because the route designation has undercut the market value of their property.

One such property is an overgrown two-bedroom house on the corner of Walters Rd in Takanini. It’s in the path of a new road and pedestrian bridge over the main railway line south. The bridge will replace the level crossing whose barrier arm is down nearly 40 percent of the hour during peak times.

The overpass was notified in November last year, submissions closed on December 14 - and the very next day, the family that had owned the property for 60 years sold it to Auckland Transport for $1,225,000.

Harcourts real estate agent Alex Dunn made the sale. ※When we actually met with the guy at Auckland Transport who does the final sign-off on acquisition of properties, he said they can’t even get their timeframes approved.

※They said, we’re going to acquire the land in the next eight to 30 years. ＆We don’t know when, in that period of time, we’re going to acquire the land’. So we’re having those conversations with them to say, okay, when are you actually planning to do this work?§

The overpass is one of several land designations around Takanini, Papakura and Drury as the city’s transport agency prepares to build new road and rail connections to the big new developments in the area. According to Kiwirail, an extra 100,000 people are projected to move into southern Auckland in the next 30 years.

Just south of Takanini, opaheke is the most sought-after neighbourhood in the area, according to Dunn. ※There are a lot of family homes, a lot of people living on big sections, people who have been there 20 to 30 years, people who grew up in the area.§

For some, the designation of an arterial road route through their community is bad news. For others, it will make their properties more accessible and thus more valuable. And for a few, whose properties lie directly in the route of the new road, it may be an opportunity to demand a premium price.

※There will be some people who won’t like it, there always is,§ Dunn says. ※And some people will be happy to move on. The off-streets will probably become a little bit more sought-after because of the new access.§

What that means is the later Auckland Transport and Waka Kotahi leave it to make their move, the more they face paying to acquire land along their route.

But land-owners can’t hold out too long, assuming they have the transport agencies over a barrel - or the authorities can and will turn to the Public Works Act to compulsorily acquire the last properties at an independently-assessed market rate.

Jane Small, group manager of strategic development, programmes and property at Auckland Transport, says that in her six years in the role, she’s issued about four s26 notices to compulsorily acquire property.

Among those were the last two hold-outs of the 400-plus properties purchased to build the Eastern Busway. ※To be honest, they’re generally individual property owners. In my experience you tend to reach agreement around value with the more commercial owners.§

She agrees it’s difficult to protect a route now. ※As we’ve moved more into the Resource Management Act, there’s a greater requirement for far more detail. It’s got more and more. So what Supporting Growth has done is actually tested that. The Drury Arterials were a real test case, in terms of getting route protection.§

opaheke and the other Drury arterial roads are groundbreaking as the first to be approved; other designations in the North and Northwest are still to be heard and decided by an Auckland Council panel.

Once a corridor is protected, she says, it constrains land-owners from developing their property in ways that would be at odds with the new road corridors.

The Auckland authorities had been working to persuade the Infrastructure Commission of the importance of route protection, in the face of landowners who perceived it to be ※a blight on their land§.

That attempt to influence Wellington policymakers had come to fruition. An Infrastructure Commission report last year found it was important to secure land early, even when there was no certainty about a project going ahead, or what route it might take.

House price v construction cost growth (% increase)

And now, Chris Bishop has picked it up and run with it in his Cabinet paper. ※My goal is to flood urban housing markets for Tier 1 and 2 councils with land for development,§ he argues.

※Abundant zoned and serviced land within and at the edge of our cities for housing will moderate land prices and increase competition among land-owners to stop land banking. As the scale of development opportunities increase, developers will have the confidence to build up their capacity.§

The paper says finding ways to make infrastructure more affordable will offer councils incentives for growth, rather than them trying to obstruct development that threatens to be a drain on ratepayers.

That was the case in Drury, where Auckland Council dugs in its heels and refused to allow big housing developments, until it was eventually able to push through a levy that will collect $1.1 billion from developers over the next 30 years. That money is expected to go towards $2.3b of infrastructure costs.

※Land protection can dramatically lower infrastructure costs by purchasing options to buy land years before developments begin,§ the Cabinet paper says.

It’s the same for building schools: without land protection for education infrastructure, more than half of the schools needed to support urban growth would not be financially viable, it says.

In Australia, land protection saved an estimated A$10.8b (NZ $11.45b) for seven transport projects.

Bishop told ministers he intended to direct officials to investigate land protection options to lower infrastructure costs.

He declined to say much more. ※Work is at an early stage on this,§ he told Newsroom this week. ※As work develops I will make further announcements.§