Auckland, New Zealand
A ground-breaking blueprint for significantly expanding housing supply and consequently improving affordability in British Columbia may not be found within provincial borders but rather in an international success story. A recent economic report from the BC Real Estate Association (BCREA), released on September 26, highlights crucial findings from Auckland, New Zealand, demonstrating that a substantial shift in housing policy can dramatically increase housing permits and offer tangible relief from spiralling housing costs within a decade.
Auckland’s Transformative Housing Policy: A Model for Success
Auckland’s innovative housing policy, officially known as the Auckland Unitary Plan (AUP), was a landmark initiative implemented in 2016. This comprehensive plan marked a pivotal moment in the city’s approach to urban development, fundamentally revolving around several key strategies designed to address its burgeoning housing crisis. At its core, the AUP championed widespread upzoning, a powerful regulatory tool that reclassifies land to allow for higher density residential development. This meant moving away from restrictive single-family zoning in many areas, paving the way for more diverse housing types.
Beyond upzoning, the AUP also relaxed stringent floor-to-area ratios (FAR) on residential land. FAR regulations dictate the maximum allowable gross floor area of a building in relation to the size of the plot it occupies. By easing these restrictions, the AUP effectively enabled developers to construct larger buildings and, crucially, a greater number of housing units on existing parcels of land. This combination of upzoning and relaxed FAR directly facilitated the construction of multi-unit dwellings, townhouses, and apartments, increasing the overall housing stock significantly within the city’s footprint.
The impact of the Auckland Unitary Plan has been nothing short of remarkable, according to BCREA’s analysis. Within a decade of its implementation, the AUP contributed to an astounding 50 per cent increase in housing permits, effectively doubling the rate of new housing construction across Auckland. This surge in development activity wasn’t just a statistical anomaly; researchers meticulously observed that the amplified permitting and construction efforts translated into a substantial 5.1 per cent boost in the city’s total housing stock by 2021. This rapid expansion of housing options led to a twofold increase in overall construction activity, injecting vitality into the local economy.
More importantly for residents, the increased supply began to temper the relentless rise in rental costs. Reports indicated that rents for both three-bedroom and two-bedroom units in Auckland were noticeably lower than they would have been without the AUP, providing much-needed relief to a strained rental market. BCREA economists are optimistic that British Columbia’s eagerly anticipated forthcoming housing plan, if executed with similar boldness and commitment, possesses the potential to ignite a construction boom of a comparable magnitude, ushering in a new era of housing accessibility.
However, BCREA Chief Economist Brendon Ogmundson offers a vital cautionary note: “While it is promising to see that steps can be taken, affordability in B.C. deteriorated due to chronic underbuilding for decades and will not be swiftly remedied.” He underscores that the challenges are deep-seated and require sustained effort. Yet, he also provides a glimmer of hope: “Nonetheless, if policymakers can rapidly and comprehensively increase housing supply through a combination of measures, there is hope that affordability can improve in the province once again.” This sentiment highlights the critical need for political will and a multi-faceted approach to tackle a complex issue.
Profound Implications for British Columbia’s Housing Crisis
The lessons gleaned from Auckland resonate deeply with the urgent challenges facing British Columbia. The B.C. government has recently unveiled its own ambitious “Homes for People” plan, a strategic initiative that bears striking resemblances to Auckland’s successful AUP. This alignment suggests that policymakers in B.C. are looking to proven models to tackle their provincial housing woes. The “Homes for People” plan incorporates several key policy changes aimed at increasing density and streamlining development.
Among its core tenets, the plan includes provisions that will allow for multiple homes to be built on what were traditionally single-family lots, a significant departure from conventional zoning practices that often limit density. This move mirrors Auckland’s upzoning efforts, aiming to make more efficient use of urban land. Furthermore, the plan seeks to legalize secondary suites province-wide, a measure that will unlock thousands of potential rental units by simplifying the process for homeowners to create additional dwelling spaces within their properties. Crucially, the plan also focuses on expediting permitting processes, addressing a long-standing bottleneck in housing development that often adds significant time and cost to projects.
Adding another layer of impetus, the government’s Housing Supply Act is designed to incentivize municipalities to actively bolster housing supply. This legislative framework encourages local governments to meet housing targets and rewards those that do, fostering collaboration and accountability across different levels of governance. By aligning provincial objectives with municipal action, the B.C. government hopes to create a cohesive strategy for increasing housing stock.
BCREA’s detailed economic modelling projects a significant positive impact if British Columbia can successfully emulate Auckland’s housing construction boom. Their estimates suggest that such an acceleration could result in a remarkable 50 per cent increase in housing starts by the end of the current decade. This surge in construction activity is anticipated to lead to a 4.0 per cent reduction in home prices across the province compared to a baseline scenario where current trends continue. Additionally, the province’s housing stock is projected to see a 2.0 per cent increase, providing more choices for prospective homeowners and renters alike.
While a full return to historical affordability levels will take time, BCREA predicts that affordability would experience a modest yet tangible improvement as household incomes gradually catch up to adjusted property prices. Furthermore, the report anticipates a decline in speculative real estate activities, with more buyers shifting their focus towards income-generating properties rather than purely speculative investments. This fundamental shift could contribute to a healthier, more stable housing market.
Despite these encouraging projections, Brendon Ogmundson wisely cautions, “These results are encouraging, but the scale and immediacy of the problem are considerable.” His words serve as a vital reminder that while the path forward is clearer, the journey will be challenging and require sustained commitment. The housing crisis in British Columbia has indeed reached alarming proportions, becoming one of the most pressing socio-economic issues facing the province. Home prices have surged by nearly 40 per cent since the onset of the pandemic, exerting immense pressure on household budgets and exacerbating affordability gaps.
The scarcity of available listings has only compounded the problem, creating fierce competition among buyers and renters and driving prices further upwards. Many prospective homeowners and renters are grappling with the immense challenge of finding suitable and affordable housing, leading to significant social and economic consequences. The lack of attainable housing impacts labor mobility, economic growth, and the overall quality of life for residents.
Addressing Decades of Underbuilding: A Long-Term Vision for BC
The core of British Columbia’s housing dilemma, as identified by BCREA, lies in chronic underbuilding over several decades. For too long, the rate of new housing construction has failed to keep pace with population growth and demand, leading to the severe supply-demand imbalance evident today. This cumulative deficit cannot be resolved overnight but requires a consistent, long-term strategy inspired by successful models like Auckland’s. BCREA emphasizes that by “bringing per capita starts back to a more historically normal level, the affordability ratio can gradually be bent in the right direction.” This statement underscores the importance of not just a temporary surge but a sustained commitment to increasing housing production to meet the needs of a growing population.
Implementing such a comprehensive strategy in British Columbia, however, will undoubtedly come with its own unique set of challenges. The province’s diverse geography, ranging from dense urban centers to rural communities, requires nuanced policy applications. Differences in municipal capacities, public sentiment towards new development, and the need for corresponding infrastructure investments (such as transit, utilities, and community facilities) must all be carefully managed. Overcoming potential public resistance to increased density, often termed “Not In My Backyard” (NIMBYism), will require effective communication, transparent planning, and a clear demonstration of the broader benefits for the community.
The success of the “Homes for People” plan, much like the AUP, will hinge on sustained political will and the effective collaboration of all stakeholders, from provincial and municipal governments to developers and community groups. It’s a marathon, not a sprint, and the initial steps, while encouraging, are just the beginning of a long but potentially rewarding journey towards a more affordable and accessible housing market for all British Columbians. The Auckland model offers not just a playbook, but a beacon of hope, proving that with bold policy action, a persistent housing crisis can indeed be turned around.
For a deeper dive into these insights, read BCREA’s Market Intelligence report.