We should follow New Zealand on housing and free up more land for growth

[Thiel]

To be clear, unsustainably high annual immigration levels are the main culprit causing a housing shortage. But,urban land use restrictions is a contributing factor.

Not so long ago, house prices tended to be around three times household incomes in most housing markets in Canada, the U.S., the U.K., Ireland, Australia and New Zealand. But over the past half-century, many local and provincial governments have tried to stop the expansion of urban areas (so-called "sprawl") by means of urban growth boundaries, greenbelts and other containment strategies.

Though pleasing to planners, the results have been disastrous for middle- and lower-income households, sending housing prices through the roof, lowering living standards and even increasing poverty. International research has associated urban containment with escalating the underlying price of land, not only on the urban fringe where the city meets rural areas, but also throughout the contained area.
Canada's current housing affordability crisis is centred in "census metropolitan areas" that have tried containment. Vancouver, which routinely places second or third least affordable of 94 major metropolitan areas in the annual Demographia International Housing Affordability report, has experienced a tripling of house prices compared to incomes. In the third quarter of last year, the median house price was 12.3 times median household income. In less than two decades, the Toronto CMA has experienced a doubling of its house price/income ratio, to 9.3.

Like Canada, New Zealand has seen its house prices grow much faster than household incomes, also mainly because of urban containment policies. Auckland routinely ranks as one of the world's least affordable markets. But in what may be a watershed moment for housing policy worldwide, New Zealand's recently elected coalition government is giving up on densification and instead, with its Going for Housing Growth program, is aiming at the heart of the issue by addressing the cost of land.

Under new proposals, local governments will be required to zone enough land for 30 years of projected growth and make it available for immediate development. According to the government, local governments' deliberate decision to restrain growth on their fringes has "driven up the price of land, which has flowed through to house prices," and it cites research indicating that "urban growth boundaries add NZ$600,000 (C$500,000) to the cost of land for houses in Auckland's fringes."

New Zealand's government believes guaranteeing plentiful access to land will result in an increased supply "inside and at the edge of our cities ... so that land prices are not inflated by artificial planning restrictions." The same strategy could help here. Unlike most urban planners, most Canadians do not want higher population density. A 2019 survey of younger Canadian households by the Mustel Group and Sotheby's found that on average across four metropolitan areas (Toronto, Montreal, Vancouver and Calgary) 83 per cent of such families preferred detached houses, though only 56 per cent had actually bought one.

Households that move from the big city to Kitchener-Waterloo, say, or Chilliwack not only want to save money, they also want more house and probably a yard. Detached housing predominates in these affordability sanctuaries, compared to the Vancouver and Toronto CMAs.

Urban planners continue to complain about urban expansion , but that is how organic urban growth occurs. Toronto and Vancouver show that the cost of taming expansion is unacceptably high: inflated house prices, higher rents and, for increasing numbers of people, poverty. It is time to prioritize the well-being of Canadian households, not urban planners.

https://finance.yahoo.com/news/opinion-zealand-housing-free-more-100043001.html?fr=yhssrp_catchall