Three houses of up to three stories, and a supermarket

Dr Eric Crampton
Insights Newsletter
19 November, 2021

When land use planning is wrong, it is hard for anything to be right – from housing to supermarkets.

Labour and National jointly support legislation allowing people to build more housing. In every major centre, building up to three houses of up to three stories on your property that meet the building code will simply be allowed.

It is a shame that this kind of legislation is necessary.

The legislation forces councils to allow building in places where a lot of people want to live. But even better would be changing councils’ incentives so that they would not want to use zoning and consenting to block growth in the first place.

If urban growth were a benefit to be welcomed, rather than a cost to be mitigated, zoning and consenting would be very different.

A housing shortage caused by a lack of suitably zoned land is just one symptom of bad zoning. A less-than-competitive grocery sector is another.

The Commerce Commission’s draft grocery retail report highlighted the lack of land zoned for use in larger-footprint grocery retail. If councils allow very few places to be supermarkets, government should not be surprised if the sector is less competitive than government would like.

Sadly, during two weeks of hearings, the Commission was more interested in hearing about just about anything other than the problems caused by government.

But the new planning legislation brings opportunity.

When three times as many people are allowed to live in a neighbourhood, they will also need places to eat, places to get a coffee, bookshops and more.

Far more retail can be supported when more people live within walking distance.

But the legislation does not make provision for more pie shops, dairies, grocers and pubs.

Our submission on the legislation suggested broadening things a bit. The legislation could allow three houses of up to three stories on a property, or a supermarket, or both. Apartments could easily sit above a supermarket in a mixed-use residential area, as they often do overseas.

The supermarket suggestion was a bit cheeky. Few residential lots would be big enough on their own – but they could be merged for larger footprints.

Setting mixed-use zoning as a national default standard would have advantages. Until councils can be encouraged to welcome growth, this kind of legislation would help make land use planning a lot less wrong.

Stay in the loop: Subscribe to updates