Hugh Pavletich Response to Blair Dickie, Resource Management Law Assoction of New Zealand- 20 November 2007

Dear Blair,

Many thanks for your email below. My letter response is attached (below Blair Dickie's Letter). Please feel free to distribute it as you wish. This email (with letter) has been widely distributed.

With best regards,
Hugh

Hugh Pavletich
Co author –Annual Demographia International Housing Affordability Survey
www.demographia.com
Christchurch

Dear Hugh

RMLA National Roadshow Series: Opportunity for Mr Joel Kotkin to visit New Zealand

Thank you for your suggestion for Mr Joel Kotkin to visit New Zealand and his possible inclusion as part of the Association's 2007 Travelling Roadshow series. Your suggestion was forwarded to me by Mr Dave Serjeant in November 2006. My initial contact with Mr Kotkin's agent (Jackie Green) at that time ruled out the opportunity of beginning the 2007 Roadshow series with a visit from Mr Kotkin as part of an extension to his visit to Australia in March of 2007. I was advised his time was tight for that visit but the door was left open as he was scheduled to come to Australia (east coast cities) later on in the year. I tentatively scheduled Mr Kotkin for an August / September 2007 visit to Branches with major urban centres, Auckland, Wellington, Waikato/BoP and Canterbury.

In July Mr Kotkin took up a new position (teaching at Chapman University, Orange CA) which required him to teach on Mondays so a visit to both Australia and NZ was not possible in the current year with this commitment. I investigated the possibility of bringing Mr Kotkin out directly from the US as opposed to a trans-Tasman extension, however, this would have cost the Association significantly more (even with the favourable exchange rates last month), for his business class flights, multiple appearance fees as well as internal travel and accommodation. I therefore recommended to the National Committee at its July meeting that we do not pursue the opportunity of presentations by Mr Kotkin, but that we should revisit the situation should circumstances change in the future.

A copy of my communication to Jackie Green is attached for your information.

"...We held our July Cttee meeting last week and considered the Roadshow programme for the remainder of this year. We have decided not to invite Mr Kotkin to address our Branch members at this stage, primarily on the grounds that his area of expertise is very closely aligned to the theme of our most recent national conference, and that we were looking to provide a different range of subjects for the branch meetings. Having said that we also recognised the benefits of extending an invitation to Joel if he was already in the Australasian region.

We remain very interested in Joel's field and his views on cities and urban matters and would welcome the opportunity of inviting him in the future, perhaps this time as an extension to a southern hemisphere visit to Australia.

Please retain my contact details and if the opportunity comes up of a visit to this part of the world we could try again.

I trust this decision has not inconvenienced Mr Kotkin or indeed yourself unduly, and I apologise if this is the case."

Thank you once again for your initiative and this suggestion for the Roadshow series. The success of the national roadshows over the years has been dependent not only upon the willingness of speakers to provide their perspectives on issues of interest to the membership, but also upon members alerting the Committee on what issues they wish to hear about. Unfortunately this initiative did not come off in the current year, but the committee would be very receptive to hear of any other speakers or subjects you consider would have national interest and would be applicable for roadshow presentations in the future.

I do note that the original communication was addressed to Mr Owen McShane and this response is copied to him as well.

Kind regards

Blair Dickie
RMLA National Roadshow co-ordinator 2006 -2007

Blair Dickie
Programme Manager: Policy and Strategy Group
Environment Waikato

Pavletich Properties Limited
PO Box 13 439
Christchurch
New Zealand

20 November 2007

Mr Blair Dickie
Secretary & RMLA National Road show Co-ordinator
Resource Management Law Association of New Zealand
C/o Environment Waikato
P O Box 4010
HAMILTON EAST
Email: blair.dickie@ew.govt.nz .

Dear Blair,

HOUSING AFFORDABILITY – AN UPDATE

INTRODUCTION

Many thanks for your email of August 24 – received whilst I was overseas between mid July and mid September. It is heartening to see the excellent work New Zealand’s lead professional land use regulatory organisation - the Resource Management Law Association (RMLA) is doing in encouraging and organizing education programmes, conferences and seminars to ensure that its diverse professional membership is kept adequately informed of current issues. I am sorry to learn that after every effort being made, it proved impossible to bring Joel Kotkin out to New Zealand at this stage. As you no doubt appreciate, I know Joel well and am aware that he is very keen to visit New Zealand at the earliest opportunity. He is a wonderful guy, with a deep understanding of broad urban issues.

Whilst the purpose of your August 24 email was to advise me of the situation with respect to the efforts to bring Joel to New Zealand – and kindly asking me for further suggestions with regard to potential speakers – I will cover this further on within this letter. I needed to delay responding, so that following a couple of months overseas, I had some time to “come up to speed” with the housing issue both here in New Zealand and elsewhere – and reflect – so that hopefully, the comments and suggestions I make are more relevant. This issue is progressing rather quickly.

NZ PARLIAMENT COMMERCE COMMITTEE HOUSING AFFORDABILITY INQUIRY

As the co author (with Wendell Cox of St Louis, Illinois, USA) of the Annual Demographia International Housing Affordability Surveys . I am also grateful to Dr Michael Gunder, National President and his people at the New Zealand Planning Institute for their support of Demographias work with respect to the housing issue and the Planning Institutes contribution to the Parliaments Commerce Committee Housing Affordability Inquiry . Demographia participated as well of course ( here , here and here ) and there were also particularly carefully considered submissions from the Reserve Bank of New Zealand . The New Zealand Council of Trade Unions , The Property Council of NZ (and here ), The Registered Master Builders Federation and the Centre for Resource Management Studies (and here ).

PROGRESS AT CENTRAL GOVERNMENT LEVEL

Special mention must be made of the politicians at Central Government level - Phil Heatley MP (National Party Housing Spokesman) and Gordon Copeland MP (Deputy Chair of the Commerce Committee) in getting underway the important Housing Affordability Inquiry. The National Party people have made tremendous progress with this issue, as its Leader John Keys speech to the Auckland Division of the NZ Contractors Federation illustrates and another one (NZ Herald Report) at the National Party Conference during the same month. Around this time, there was a flurry of media releases by the Party’s Housing Spokesman Phil Heatley ( here , here , here and here . I am heartened too - with the new Minister of Housing Hon Maryan Street’s answers to Questions in the House 14 November. Just prior to being appointed to this position, Ms Street participated at the Commerce Committee hearing I spoke at late October as well. I was most impressed with the quality of the questions asked by the politicians on the hearing panel. It seems to me that there is a growing convergence in thinking on this issue – both at Central Government level and throughout the country as well.

THE UNUSUAL BRITISH EXPERT ADVICE

I was somewhat surprised however in reading a 17 November NZ Herald article Good Housekeeping by Geoff Cumming outlining the advice being provided to the New Zealand Government by a Professor Glen Bramley (who I had never heard of) of Herlot Watt University in Edinburgh, advocating more smart growth and demand interventions for this country. The theory being obviously – that if you fail, keep failing until you (hopefully) succeed. Professor Bramley should know that forced urban consolidation / smart growth is no longer accepted within reputable academic circles internationally.

It reminds me very much of some American academic wit after the fall of communism saying “the nightmare is over – but let the dream continue”, Unfortunately we are still living with the smart growth / forced urban consolidation nightmare and the article graphically illustrates the severity of the problem in Auckland – where the reality is – that if the vast majority of existing home owners had to turn around today to purchase the homes they are currently living in – they simply could not afford to live in them. The article suggests (using Quotable data) that housing around many parts of Auckland, is now an astronomical ten times local annual household earnings. This is simply a public policy disgrace.

Professor Bramley makes the extraordinary comment (refer New Zealand Herald article via link above) that housing in Britain is not considered “unaffordable” until it is at least 5 to 6 times household annual earnings, whereas the reality is that these levels are “severely unaffordable”. Normal growing housing markets should move between 2.5 to 3.0 times gross annual household earnings through the building cycle. It is interesting Professor Bramley’s recent address to the UK National Housing Federation Conference seems to differ significantly to the advice he is offering in New Zealand.

The 1st Labour Government in 1938 led by Michael Joseph Savage with Bob Semple as Housing Minister and John A Lee as his understudy, rejected the “British housing model” outright – being of the view that New Zealanders did not deserve to live in British style dense conditions. Professor Bramley’s slides are useful to the extent of illustrating the severe housing crisis Britain faces – and in my view - sadly will not be able to solve - politically. It will likely take a “social crisis” there to precipitate change.

THE REAL SITUATION IN THE UNITED KINGDOM

The new British Prime Minister Gordon Brown, is deeply worried about Britains appalling housing situation ( compare this with Germany as this Finfacts article incorporating YouTube BBC documentary illustrates ) - and already has legislation at the Bill stage, in an endeavour to solve the problem (again – in my view – sadly he will fail – as these considered comments from the National Housing and Planning Advice Unit illustrate). These initiatives follow on from the two major HM Treasury Kate Barker Reviews, which clearly illustrated “insufficient land supply’ is the core problem – something interestingly Professor Bramley did not touch on within the NZ Herald article. The UK build rate is the worst in the Western World. In fact they put in place around the same numbers as the Australians on an annual basis – with three times the population. And Australia itself is currently under building by 40,000 to 50,000 residential units annually!

In my view – Britain is the last place in the world one should be seeking housing advice from – unless we wish to learn what not to do. One can only suspect that the public officials, who arranged this visit, had an ideological agenda. I am concerned that the new Housing Minister may not be getting rigorously researched, sound and balanced advice. We shall know the answer to this within the next few weeks.

WE NEED TO SUPPORT CENTRAL GOVERNMENT POLITICIANS TOO

The major thrust of this letter though (as an international researcher on the housing issue) is to attempt to provide a general overview of the issue and some suggestions in how all of us can possibly participate more effectively. As I see it – politicians at central government level are doing a fine job in working through this issue – but there is scope for “citizens” such as myself, industry and professional groups, researchers, local government and others as well - to participate more effectively. Both Wendell Cox and I are strongly of the view that this “change process” with respect to housing affordability, should be an educative evolutionary one and carried out on a phased basis over a reasonable time.

Housing Affordability crosses political boundaries and at its core is about “human decency” – in that everyone should have the right to the opportunity of the best housing possible – whether renting or owning – and anything that interferes with this “basic human right”, should always be treated with the utmost importance - and dealt with accordingly.

THE UNITED NATIONS PROVIDES US WITH A GUIDE

The recently released United Nations 2007 World Population Report is particularly direct on this issue and extremely harsh on policy makers who act irresponsibly - in denying people their rights to the opportunity of affordable housing. There is of course a raft of United Nations Declarations and Conventions on this issue – which no doubt New Zealand is a signatory to. And there are the United Nations and World Bank Housing Indicator Programmes ( here , here and here ) – something we all need to focus on now.

Put another way – the housing market should not be seen as a casino.

THE “UNHOLY ALLIANCE” AND “POLITICAL CAPTURE” PROBLEM

The housing affordability crisis has been a “political failure” – in the widest sense of the term and I cover many (but not all) of the political pressures within the Demographia submission (with supplements here and here ). Mainly – the ill-informed ideologues and elitists of the left and the protectionist fraternity of the right – acting as their “cheerleaders”. The “unholy alliance” if you like. An interesting perspective regarding the “capture problem” is provided in this recent interview with Randal O’Toole – who is of the view that urban planning, should be done away with completely. Whilst I agree entirely with Randal’s assessment of the “capture problems” – I am of the view that we simply need to move from “muddling and meddling planning” towards “performance based planning” – with clearly understood environmental standards driven via the Resource Management Act and social and economic ones through the Local Government Act.

CENTRAL GOVERNMENT – THREE MAJOR AREAS TO FOCUS ON

My view with this issue, is that Central Government needs to FOCUS ON THREE MAJOR AREAS, being –

(A) Incorporating Housing Performance Standards in to the Local Government Act.

As a guide - the United Nations and World Banks Housing Indicators Programmes (note earlier hyperlinks) should be referred to. The work by one of the architects (with the late Steve Mayo) of these programmes Professor Shlomo (Solly) Angel (further information here , here , here and here ) - as suggested within the Demographia Submission to the Commerce Committee Housing Inquiry. Professor Angel’s book Housing Policy Matters - A Global Analysis ( Google e book major portion here ) also needs to be read closely. Local Authorities must be required to restore affordability to the internationally accepted Median Multiple of at or below three – on a phased basis and over a reasonable time frame.

(B) Require Local Authorities to phase out fringe urban land pricing scarcities as soon as possible.

It should be apparent by now that there are no benefits whatsoever in environmental, social and economic terms of strangling urban land supply. Even the most elementary analysis - clearly proves that New Zealand has abundant land (just 0.67% of our land area currently urbanized –just 0.20% required to urbanize a further one million people at current densities) and that artificially created scarcities simply inflate land costs, seriously degrading the productivity and pricing performance of the residential construction sector and create a multitude of compounding distortions and negative consequences along the way. Fringe development must be allowed to occur - to act as the necessary (there is simply no other way) “supply vent” or “inflation vent” of urban markets. Local Authorities should clearly and responsibly identify land from the fringes, that for rigorously researched environmental or heritage reasons are “out of bounds” for urban expansion – and allow development to occur on land not deserving of protection.

(C) Require Local Authorities and other infrastructure providers on a phased basis to appropriately debt finance infrastructure.

Those who own the infrastructure - should for obvious reasons of economic efficiency and intergenerational equity be required to debt finance new infrastructure - reflecting its functional life. The current practice of financing with “development levies” is inappropriate and misleading as these are in reality “new home buyer levies”. The subdividers and builders are simply intermediaries who pass these costs (with their compounding margins) on to new home buyers. In turn the new home buyers (often struggling) are forced to take on an excessive mortgage load at a higher interest rate, likely repayable over a short period of 20 to 30 years. This short term additional household debt financing does not reflect the useful life of the infrastructure and appropriately, this should be debt financed (at a much lower interest rate) by the infrastructure owner and amortized over a substantially longer period of time.

MAJOR RESPONSIBILITY FOR RESTORING AFFORDABILTY – LOCAL GOVERNMENT

As I see it – the major responsibility for restoring housing affordability is a Local Government one – and the most important contribution Central Government can make, is clearly articulating and enforcing reasonable phased performance standards on Local Government. It is understood of course, that even as housing becomes more affordable over a reasonable time – that there will always be housing needs the market cannot meet, without both Central and Local Government support. This “social need” (and the costs involved) however will lessen as Local Government takes the necessary steps to start on the path of restoring affordability.

STOP MUDDLING AND MEDDLING PLANNING – START PERFORMANCE BASED PLANNING

Hopefully – Central Government will resist the temptation to prolong the “muddling and meddling planning solutions” of “inclusionary zoning” (robbing Peter to pay Paul), flawed and risky equity schemes (poor deal for buyers) and throwing hard earned taxpayer money (current income) at what should be an appropriate long term debt financing issue. The setting of sound governance standards must start at the top. “Clarity” is an important component of leadership. Local Government is quite capable of adding “confusion” – and it is most important Central Government is focused and clear in providing direction with this important issue.

No doubt our Housing Minister, Hon Maryan Street, will be mindful of the Labour Party’s proud history on housing – in particular - the work of the 1st Labour Government and the inspiring and principled leadership of Rt Hon Michael Joseph Savage, Hon Robert (Bob) Semple and John A Lee.

We have an enormous amount of work to do restoring housing affordability in New Zealand – that will in my view likely take at least ten to fifteen years (depending on the severity of housing stress of individual urban markets). Historically, nearly all the urban markets of the Anglo world were affordable as this Harvard University 1980 - 2006 US Median Multiple data with respect to the United States and the Annual Demographia Surveys clearly illustrate.

KEY PERFORMANCE INDICATOR – MEDIAN MULTIPLES

We know from the Annual Demographia Surveys, that soundly governed and growing urban markets move between 2.5 and 3.0 Median Multiple (times annual gross household income) through the building cycle. As housing activity quickens, new construction is stimulated and as the market heads toward the 3.0 Multiple, new housing supply exceeds demand. As house prices overall begin to ease, new construction eases as well - as the affordability levels fall to 2.5 Median Multiple. With current productivity and pricing levels within the residential production building industry, they cannot fall below this, simply because it is not possible to get acceptable new housing around the fringes in place at below the 2.4 to 2.5 Median Multiple,

I refer to the former as the “Ceiling Multiple”, the latter as the “Floor Multiple” and around the 2.7 Median Multiple as the “Swing Multiple”. I tend ti think in terms of the “Swing Multiple” of 2.7 as the “base” for assessing – firstly - if an open urban market is under or over valued within the normal building cycle – and secondly – again as a base for assessing the degree of housing stress in strangled urban markets.

FRINGE DEVELOPMENT – THE “SUPPLY VENT” AND “INFLATION VENT”

Fringe development plays a critically important role in acting as a “supply vent” or “inflation vent” of an urban market. It is the only way (there is simply no other) to ensure urban markets do not inflate – but instead allow property prices to reflect the underlying household incomes that support them. Interfering with this necessary “vent” simply leads to persistent and escalating inflationary pressures. Sadly – this critically important issue, is something the earlier advocates (a dying breed) of forced urban consolidation (politically peddled as “smart growth”) studiously avoided discussing. With no research to back it up – they “sold” Smart Growth to gullible politicians and civil servants, as a way to save on infrastructure costs – whereas in reality it does not.

As you will be aware – the Median Multiple is the recommended measure of housing affordability / stress recommended by the United Nations and World Bank Indicator Programmes – and the one employed by Demographia.

LEARNING FROM HISTORY – BILL LEVITT AND LEVITTOWN

Something I’m rather fascinated about at the moment is – how did William (Bill) J Levitt the “Father of Affordable Suburban Housing” in 1947 (60th Anniversary of Levittown this year) manage to put in new starter housing of 80 square metres on 600 square meter blocks for $US7, 500 when household incomes were $3,500 (wives and mothers rarely worked outside the home then – it was seen as “deviant behaviour”!)? In other words – just 2.14 times the annual household income. It was seen at the time by Banking Regulatory Authorities that it was “imprudent” to lend any more than 2.1 times gross annual household income. We all need to learn more (sadly for too many – re learn) about Bill Levit and Levittown and a good place to start would be Dr Barbara Kelly’s excellent book Expanding the American Dream ( Google e books major portion here ), The 1950 Time magazine article is well worthwhile reading. Just recently, the well known Australian broadcaster and opinion writer Michael Duffy of the Sydney Morning Herald wrote an article about Bill Levitt as well.

OUR DISTORTED URBAN MARKETS – A PROCESS OF FEUDALIZATION

Normal building markets are sadly at present “a thing of the past” within our inflated and dysfunctional urban markets of Australia and New Zealand – because essentially - they are “bubbles” with “pauses” that persist in inflating through the multiples. Growing urban markets will persist inflating through to Californian levels of at least 10 and 11 Median Multiple and beyond (irrespective of interest rates) – until sufficient fringe land supply is released. This process could be referred to as the “feudalization of urban markets” – as progressively higher market price bands are acquired by the landlord sector – as housing becomes unattainable for more and more people. The “landlord sector” has a near infinite capacity to constantly debt leverage off the back of inflating equity and regularly acquire more properties over time – even through the generations. We in the property industry call this “stacking”. This “landlord sector” understandably hates open competitive markets where sufficient affordable housing supply can be put in place. They hate competition and better quality housing stock competing with them – and capitalize on the opportunity to act as “cheerleaders” to the ill informed smart growth advocates within both central and local government.

THE 2008 4TH EDITION DEMOGRAPHIA SURVEY – FOCUS ON STARTER FRINGE HOUSING

The 2008 4th Edition Demographia International Housing Affordability Survey (due for release around 20 January 2008) will very much focus on what new starter housing should be costing on the urban fringes. I discussed earlier how normal urban markets move between 2.5 to 3.0 Median Multiple (times gross annual household incomes) through the building cycle – and the floor (2.5 median multiple), ceiling (3.0 mm) and swing (2.7 mm) multiples. And to ensure that urban markets do stay “normal” or “affordable” – that there must be no impediments to allowing new starter homes of 200 square meters on 500 square metre lots / sections at 2.4 to 2.5 Median Multiple. If we create artificial fringe land scarcities and inevitably degrade the performance of the construction sector as well (as has happened) before long the new fringe stock is going in at Median Multiples of 4, 5, 6, 7 and beyond – which in turn simply ripples through to the rest of the urban market.

COMPARING SYDNEY TO DALLAS FORT WORTH

As outlined above, I am of the view that Central Government needs to focus on three key areas (a – local government performance standards – b – fringe land supply and – c - appropriate infrastructure debt financing) – and we need to gradually get more affordable housing stock in around the urban fringes – with the objective, that within a reasonable time, this new fringe housing stock is going in at 2.4 to 2.5 Median Multiple. The Demographia Sydney - Dallas Fort Worth Fringe New Starter Housing Comparative Study is an excellent guide in this regard. Note the 13 links within the Study, through to the Dallas Fort Wirth production builder’s websites – and that on average, they are putting in place 200 square metre new starter housing with land (house & land packages) for $US139,000 or $US695 per square metre building area (within the Study this last figure is converted to Australian dollars). Read also the specifications (or “special features” as the Americans call them) for these new starter homes – within the production builders websites. You will be rather surprised with the high standards – for what we would consider to be “starter homes”.

The Dallas Fort Worth fringe starter homes are going in at around $US700 per square metre - $US150 for the land - $US550 for the actual building construction. With a 200 square metre house, this means that the house construction costs $US110,000 – and the lot / section of around 500 square metres just $US30,000. Compare this “lot / section cost” to those around our New Zealand cities.

THE IMPORTANCE OF “DEVELOPMENT RATIOS”

It needs to be noted at this point – the hugely important issue of “development ratios” (something again – the smart growth fraternity never bothered to mention in the past to politicians and the wider public). The Dallas Fort Worth fringe new starter housing is being put in place – with the lot / section component is 21.42% ($US150 of $US700) - the building component 78.58% ($US550 of $US700). Around 20% for the section / lot component and 80% for the actual building. If the land price is inflated, so that it progressively takes up 30% - 40% - 50% (where New Zealand is generally at the moment), 60% (sadly Auckland) or 70% (the Sydney Shambles) – all that’s happening is that substantially less is left over to go in to the actual housing construction.

SMART GROWTH DEGRADES THE CONSTRUCTION SECTOR PERFORMANCE

Compounding this – Smart Growth / forced urban consolidation also severely “degrades” the construction per square metre building performance – as it wrecks the finely honed organizational structures within this sector (remember the waves of New Zealand builders who left these shores in the 80’s and 90’s – never to return). This explains why – in the affordable North American markets new fringe starter housing is put in place for $US550 per square metre – Australia $A650 - $800 per square metre (poor planning has degraded its performance since the 1990 McKinseys international construction productivity study – refer William (Bill) Lewis The Power of Productivity , Google e book version and Amazon here ) – and New Zealand $NZ900 to $1,200 per square metre. Put simply – New Zealand’s residential production sectors productivity performance will only persist in worsening until affordable land is released.

MARKETS CANT RESPOND WITH “SMART GROWTH”

And if that’s not bad enough –smart growth induced inflated markets cannot respond quickly enough to ever changing market demand. Currently our construction activity is falling ( Building consents issued - Statistics New Zealand ) as is Australia’s ( Australian Bureau of Statistics - Building ). In my view – Australia is currently under building by 40 – 50,000 units annually – New Zealand around 10,000.

It is interesting to read a recent Dallas Morning News article by its Property Reporter Steve Brown DFW apartment market is profiting from housing crunch - where DFW with Houston – because they are open and affordable urban markets have the capacity to rapidly meet ever changing market needs. The (overblown) sub prime issue in the United States has temporarily (unless the Federal Government does something foolish) dried up the lower end of the mortgage market, assisting in (there are other factors too) increasing demand for apartment type accommodation. It only took a 2% annual rise in rental rates and for residential apartment vacancies to fall below the 6% level – to trigger this apartment supply response.

THE “TRIPLE WHAMMY” - DEVELOPMENT RATIOS – PERFORMANCE - RESPONSE

So this degradation is a “triple whammy” – grossly distorted development ratios causing poor construction performance – where the new home buyer is the loser. There are around another 50 “whammy’s” I could mention and expand on – but will refrain from doing so, otherwise this letter would be excessively long.

Whilst further research will be required prior to the 2008 Demographia Survey being released mid January – I am currently of the view that it should be possible to get 200 square metre new homes on 500 square metre lots / sections at a multiple of 2.45 around the fringes of all the 159 urban markets of the 6 countries surveyed annually by Demographia. Although New Zealand is the poorest of the 6 countries surveyed, it is my view that this should still be achievable in New Zealand (one needs to keep in mind the “Levittown lesson” – getting new housing in at 2.14 multiple in 1947). The major adjustment will be to building specifications – in that New Zealanders (because we are the poorest of the six Anglo countries surveyed) cannot realistically expect as high a standard of fit -out – as would be possible in Australia, Canada and particularly the United States.

The sooner we start on the road to restoring internationally acceptable standards of housing affordability in New Zealand – the better.

SUGGESTED INTERNATIONAL SPEAKERS

SOLLY ANGEL

Let’s turn now to the matter of “speakers” you raised within your August email.

You will note that I covered in some depth New York University Planning Professor Shlomo (Solly) Angel (who I communicate with occasionally – he is on my general email list as well). Professor Angel is an extremely busy man – particularly with his current heavy workload in South America for the World Bank and United Nations. In my view – with respect to New Zealand – much will depend on the direction provided by our new Housing Minister Hon Maryan Street in coming weeks. If she decides to go down the destructive British type demand interventionist path – then we are better not to waste Professor Angels and our own time in following up on this – and simply wait for “sunnier days”. If however, she makes what I see as responsible decisions in working on performance measures and standards for Local Government, as recommended by the United Nations and World Bank – then there would be much merit in exploring the possibility.

I have spoken with the Chief Executive of a major Australian property industry association (and a New Zealand one as well) – who is also very keen to ask Professor Angel to this part of the world. I would suggest – we await Ms Streets announcement in the next few weeks.

BOB BRUEGMANN

Robert (Bob) Bruegmann , Professor of Art History, Architecture and Urban Planning at the University of Illinois at Chicago and the author of numerous articles and books including the widely acclaimed Sprawl: A Compact History . I have communicated with Bob for quite some time now. He had a most successful tour in Australia last year.

AND OLIVER MARC HARTWICH

Now with Wendell Cox, Bob Bruegmann, Joel Kotkin and Solly Angel – we need to ensure we don’t “overdose” Kiwis with Americans – and to add a little “balance to our information diet” – I would also strongly suggest Dr Oliver Marc Hartwich (who I know) of Policy Exchange in the United Kingdom. You will note I referred to Oliver much earlier within this letter and provided the hyperlink to the Finfacts (an excellent Irish business / property website owned by Michael Hennigan – who I also communicate with). Here again is the hyperlink to the excellent Finfacts article which incorporates the superb YouTube BBC documentary comparing the British and the German housing situations. You will note Oliver appears on that programme.

No doubt you would have detected that I have a certain “allergy” to British Housing Experts (just joking – there are many fine people there doing enormously important work with these issues – such as Ian Abley, James Heartfield and others at Audacity , Kate Barker and her comprehensive HM Treasury Reports and many others). Oliver is a German from Essen (where segments of the BBC documentary were filmed) and is married to a Malaysian whose family live in South Australia. So he does visit this part of the world from time to time. Oliver and his team at Policy Exchange have completed numerous important papers - such as Best Laid Plans , Unaffordable Housing . Better Bigger Faster More , Better Homes , Greener Cities and The Rising Tax Burden for First Home Buyers .

In my view, since New Zealand is a “young country” – like Australia, Canada and the United States, we should be learning (remember the Japanese going to Detroit to learn how to build cars?!) from the affordable North American markets – to see what we can adopt or adapt for our own conditions – and indeed (like the Japanese with respect to cars) see if we can innovate with further improvements with respect to the affordable North American examples (one point - infrastructure financing comes to mind here). But there is much to learn about the “performance diversity” of Europe as well – and I can’t think of anyone better than Dr Oliver Marc Hartwich to provide us with the lessons we could learn from that part of the world.

SUGGESTED MEETING

At some stage – there would be merit in the key groups having an initial meeting (which can be expanded over time as participants think appropriate) – to discuss working together on research and bringing speakers to this country. May I suggest in the first instance – the Resource Management Law Association. Planning Institute, Property Council, Master Builders and Real Estate Institute. I would be happy to attend – if thought appropriate.

If however – the Housing Minister goes down the “same old, same old” track – then a meeting such as this would be a waste of time – and it would in my view be better then to wait for “sunnier days” politically. I sincerely hope she does not let the country down though – and I would be the first to support her, should she provide sound leadership with this issue.

CONCLUSION

The most important thing as I see it Blair – is that your organisation, the Resource Management Law Association (RMLA) and the good people of the NZ Planning Institute (NZPI), distribute and discuss amongst yourselves the content of this letter and the extensive national and international research that has been carried out on theses issues over the past few years (links to much of this are provided on the Demographia website), It is sometimes just too easy to expect the people at Central Government level to take all the initiatives. But as I said earlier – there are currently very real efforts being made at central government level – and we all need to play our part as well. Particularly the RMLA and the NZPI – as the representative organisations for the land use regulatory people in this country.

With best regards,
Yours sincerely,
Hugh Pavletich FDIA
Co author – Annual Demographia International Housing Affordability Survey
www.demographia.com
Christchurch
New Zealand

Please Note – This letter has been sent out to my national and international General Email List – to assist in encouraging greater discussion of these important issues.

Words – 5341 approx.

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