The post-earthquake rebuild provides a much-needed case study on addressing housing availability and affordability across the country
WELLINGTON, New Zealand, 7 March 2024 – Despite significant losses during the 2011 earthquake, Canterbury is outperforming other regions around New Zealand when it comes to housing stock and affordability. New research from the New Zealand Institute of Economic Research (NZIER) shows the unusually collaborative approach taken to planning and funding both before and after the quakes has made Canterbury a leader, providing lessons to other parts of the country experiencing housing shortages and high prices.
Given New Zealand experienced its largest-ever population increase in the year to December 2023, it’s particularly urgent to assess how Canterbury has succeeded in turning around a significant deficit in less than 15 years. Each year since 2011, there have been more than 500 new dwellings consented in Canterbury for every 1,000 additional people, while prices are lower than in the other major centres.
“Although Canterbury lost over 9,000 homes during the earthquake, it has built itself back and is well along the path out of a housing shortage. Our research shows that although house prices and rents initially rose between 2011 and 2015, they relatively flatlined between 2016 and 2019 once the destroyed housing stock had been replaced. The price gap between Canterbury and New Zealand as a whole has widened since the last year of the earthquake rebuild,” says Ting Huang, Senior Economist at NZIER.
The reasons are rooted in Canterbury’s tradition of region-wide planning. Even prior to the earthquakes, there was a history of local government, central government and tangata whenua working together on urban development. Several organisations came together in 2007 to develop the Greater Christchurch Urban Development Strategy – a shared plan for how the city would develop over 35 years, providing a foundation for the post-earthquake recovery.
The establishment of the Canterbury Earthquake Recovery Authority (CERA) created a partnership between the central government, local councils and iwi to coordinate efforts and decision-making post-2011. Its centralised leadership role helped to provide certainty over the earthquake rebuild and fast-track consents, using specific powers included in the Canterbury Earthquake Recovery Act 2011 to expedite the rebuild.
Examples include providing owners of damaged properties and land certainty over insurance coverage, to help incentivise repair and rebuilding of the affected stock, as well as forming cross-agency alliances with construction companies to fast-track infrastructure and opening up more greenfield land to enable more residential development. Direct funding was also provided by central government for housing and infrastructure.
More controversially, CERA was also able to override local councils to bring forward the rezoning of residential land to allow for greater housing density and speed up consenting processes, reducing the scope for appeal.
“We know that the model has not been without its problems. For example, after the Christchurch City Council developed a draft Central City Plan in 2011 and gained widespread community support, central government intervened and gave CERA responsibility for leading the central city recovery. This led to a perception that central government had interfered with a local initiative,” says Huang.
This NZIER Insight also notes that the development of greenfield areas (e.g. in the eastern suburbs) has led to more peripheral development than was intended under the original Urban Development Strategy, which could lead to greater infrastructure costs down the line.
However, the most important lesson to take away from Canterbury’s experience is that addressing the housing shortage and improving affordability isn’t impossible. It requires two ingredients: a shared plan for development, and the political will to make it happen.
“There is a strong need for a true partnership between central and local government, where governance and decision-making are aligned, and local authorities are fully involved in shaping their cities,” Huang says.
About NZIER Public Good Programme
As a not-for-profit incorporated society, each year, NZIER undertakes economic research and thinking in the public interest aimed at promoting a better understanding of New Zealand’s important economic challenges.
We regularly publish think pieces, offer presentations and webinars on topical issues. We sponsor the biennial NZIER Early Career Economics Leader Award and the annual Prime Minister’s Summer Reading List aimed at promoting discourse on a broad range of policy and economics issues.
NZIER's Public Good Fund is also used to inform young learners, visiting diplomats and officials from international bodies about the New Zealand economy as part of a global network of economics and policy think tanks.
For more information, contact:
Ting, Huang, Senior Economist
ting.huang@nzier.org.nz
Ph: 027 266 0969
or
Andrea Jutson, on behalf of NZIER
ajutson@acumennz.com
Ph: 021 0843 0782
