Posts by Philip Hayward

  • Speaker: The plan against the rebuild, in reply to Kumara Republic,

    Mind you, Liverpool's been around a whole lot longer than Detroit.

    Thanks for a constructive response, DeepRed.

    There is quite a correlation between how long a city has been around, and its likely overall density in the modern era.

    Is there any example of a high density city that has largely come into existence in the automobile era at a time when automobile ownership was an option to a significant proportion of the population? The level of economic development and real local incomes matters, hence third-world cities that are still de facto equivalents to Victorian-era "first world" cities.

    Even the few Anglo New World cities with a dense urban core, like New York and Philadelphia, have sufficient pre-automobile history to make this a decisive factor. And even NY and Philly have had so much low-density sprawl that their overall urban area density falls to below that of several other Anglo New World cities - the densest of which are actually Toronto, Auckland and Los Angeles, in that order - and as Alain Bertaud points out, these cities densities are a match for many European cities.

    And even the few relatively dense New World urban areas like those, do not manage to retrospectively recreate a "pre-automobile" city's urban core. There seems to be some inevitable forces of economic evolution at work in this. I would like to know if there is any counter-example. I don't say it can't be done, but it can't be done under current Anglo institutional frameworks.

    New Zealand • Since Sep 2014 • 7 posts Report Reply

  • Speaker: The plan against the rebuild, in reply to Moz,

    I will endeavour to be completely civil and avoid the appearance of snideness. But I think advocates of housing affordability, like myself, have grounds to be somewhat testy with the obfuscators, given the real life evidence.

    You've read the source material and don't agree with its "assumptions"?

    What have "assumptions" got to do with a statistic like median house price divided by median household income, and what is more, a time series of this statistic that reveals the trend consequent on adopting a particular course of policy?

    On what grounds do you say that "unconstrained areal growth doesn't work over the long term" (and only works over the short term in specific circumstances)?

    Do the UK's cities, fringe-contained as they have been for 6 decades, with the result that they are the highest density in the OECD for a national data set of cities of their population levels, represent superior outcomes economically and socially and even environmentally?

    "Many New Zealanders want to avoid those circumstances - mostly the wealth inequality"

    Wherever do you get the idea that there is greater wealth inequality in a city with a median multiple of 3 and the median home is a 2000 sq ft McMansion on a 1/4 acre, compared to a city with a median multiple of 6 to 9 and a median home that is an 800 sq ft row-house with no section at all?

    This question of "rich enclaves" is an interesting one, given that the price of housing in "rich enclaves" in a median multiple 3 city, is still well below the median house price in a median multiple 9 city like Auckland is now (roughly in the company of Vancouver and Sydney and London). I really don't see the moral consistency in condemning the "rich enclaves" in the systemically affordable city and defending policies that make an entire city more expensive than those "rich enclaves". It is also rich seeing the same people as make the arguments you do (I am careful not to assume this is your position) often argue that the high price of housing in cities like Vancouver and London is evidence of how these cities policies turn them into hives of creativity and wealth, therefore all cities should emulate them. Now, how is this different to arguing that exclusionary suburbs policies should be emulated because they too have successful people living in them?

    I greatly appreciate your description of locales "full of disproportionately wealthy people who draw their wealth from the surrounding areas", as I use this frequently to describe the cities that advocates of public-transport oriented urban form love to use as their models, like London, Manhattan, and Hong Kong. Cities in the modern era that have high-density, high-income "industries" are almost invariably based on parasitic global capitalism. There are almost no examples of high-density, high-income urban "industries" that are true wealth creators like, say, manufacturing exporters are; the "industries" on which the model modern developed high-density city is based are virtually by definition, economic-rent-extractive, parasitic industries that the national and global economy would be better off without.

    Yes, Christchurch would work far better with Houston as its model, or any one of Nashville, Charlotte, Raleigh, or many other "opportunity urbanism" cities, rather than cities whose utopian "form" and transport systems are based on parasitism and lucky historical evolution, and which cities will always be a lucky minority anyway. Only one city in the UK is as successful as London, and the Planning system has nothing to do with this success and has everything to do with the many failures.

    There is no evidence that allowing free markets to work in urban land and location decisions by the myriads of actors in an urban economy, leads to everyone in every "automobile dependent" new development at and beyond the fringe, streaming down the road every day to their job in the region's primary centrally-located CBD. The modern direction of inevitable urban evolution and success for most cities, most of the time, involves continually-dispersing employment and increasing sorting into efficient co-locations.

    Given the facts outlined above about the UK's cities, why would you see their successful achievement of outlier-high urban densities as actually achieving any of the functional outcomes you seem to be assuming, given reports like this:

    “British commuters have the longest journeys to work in Europe with the average trip taking 45 minutes, according to a study. That is almost twice as long as the commute faced by Italians and seven minutes more than the European Union average (i.e. 38 minutes)…..”

    The US average is 26 minutes……

    The correlation between urban densities and commuting efficiency runs the opposite way to that assumed by most people, who also mostly don't take the trouble to look for real-world evidence.

    I am glad that in this forum, I am unlikely to have evidence-based comments removed by a moderator who finds them distasteful on ideological grounds, as happens to me on "NZ Transport Forum". That forum's credibility can be judged accordingly.

    New Zealand • Since Sep 2014 • 7 posts Report Reply


    Despite Paveltich's optimism, I predict that if they were built they'd be yet more enclaves of overpriced, covenanted mcmansions.

    Pavletich has been pointing out all along, and numerous people obviously have a comprehension problem, that there are cities that are systemically affordable, i.e. a median multiple of 3; because they allow conversion of land beyond the fringe, to housing developments, with the development indeed paying its own way for the local infrastructure. And no matter how much of the urban area has ended up covenanted low density, the median multiple remains at around 3.

    The price of land per square foot is an extremely flexible variable that fluctuates according to the "rationing" of land in the urban economy. The real world evidence is that there are cities with an average section size in new developments of 2/3 of an acre, and an overall density of 800 people per square km, with a median multiple of 3, and cities with an average section size in new developments of 1/20 of an acre, and an overall density of 5000+ people per square km, and a median multiple of 7+.

    See also my reply to DeepRed, just posted. Glaeser, Ward and Schuetz (2006) did manage to calculate that every additional 1/4 acre of lot size mandated, increased the end price of the housing by 4%, at least in the city of Boston, which is growth-contained. In non-growth-contained cities the percentage is probably lower.

    New Zealand • Since Sep 2014 • 7 posts Report Reply


    the very cheapest houses in America also happen to be areas of industrial decline and high crime rates, such as Detroit.

    But if Detroit had a UGB/green belt around it, it could be more like Liverpool - industrial decline, high unemployment and crime rates, loss of population (very similar), STILL-HIGH urban density, AND unaffordable house prices!!!!!!

    It is impossible to be too strong about how diabolical UGB's are in their effect. Enemy agents could hardly devise a better economic and socio-economic WMD to insinuate into a nation by way of subversives in Academia and bureaucracy and media.

    Few people realise that "Detroit", the bankrupt municipality, is surrounded by fiscally viable and economically sound suburban municipalities. It is untrue that inter-jurisdictional competition like this, is the "cause" of net overall decline; it is a means of "keeping municipalities honest". It is better to have an occasional Detroit, than to have 100% sclerotic, groupthink-run cities like the UK has. The UK has a productivity gap relative to most comparable nations, and one of the world's smartest urban economists, Alan W. Evans (University of Reading) says that the failure to identify the Town and Country Planning system as the CAUSE, is a classic case of the mainstream "looking under the lamp-post where the light is good, instead of in the dark alley where they actually lost the wallet".

    New Zealand • Since Sep 2014 • 7 posts Report Reply


    DeepRed, I agree with you that NZ's house price bubble has vested interests that make it impossible to do effective reform. The foremost manifestation of this is the never-ending fabricated opposition to effective reform of urban land supply regulations.

    The smart people in the vested interests, which includes the finance sector, KNOW that this is what would work, which is why it is the thing politicians are most scared of doing.

    The longer that growth-containment policies are pursued, the more people become hostages to the racket. Developers are the first, because every site they own for work in progress and future developments, has cost them around 10 times too much. Developers are often blamed for "land banking", but in fact it is seldom developers themselves who are reaping the capital gains on land holdings - generally it is the vendors they are having to buy sites off simply to stay in business.

    Hugh Pavletich is a rare example of a developer who got out of the business rather than become a hostage and possibly go bust in the inevitable downturn. Bear in mind that the volatility in SITE values is many times higher than the volatility in "house prices". NZ experienced a 15% decline in real house prices in 2007 and 2008, and numerous developers went bust, and the epidemic of finance companies going bust was related closely to the finance of SITES. When "house prices fall 15%", that means that SITES have more than halved in "value".

    The UK, after several decades of this nonsense, illustrates how entrenched the vested interests become. When housing is systemically unaffordable even with an average section size of 1/16 of an acre, and urban land prices per square foot are HUNDREDS of times higher than benchmark non-growth-contained cities, reform would mean far greater price collapses and losses of "equity" by literally everyone, than reform in a country like NZ that is young to the price inflation. There is of course NO-ONE in the UK who is old enough to have got on the home ownership ladder when land prices were sensible, so EVERYONE is a hostage to the racket, not just those who bought since 2000.

    David Parker needs to wise up about the difference between free market fringe greenfields land supply, and over-riding of LOCAL unanimously agreed-upon covenants. Free markets mean affordability, regardless of how many local communities adopt covenants to preserve their local wishes re the form of their community. This is still "the free market". Every median-multiple-3 city in the Demographia reports (which are also stable markets that do not bubble and bust), has plenty of covenanted low-density suburbs, and this has no effect on the median multiple, which remains stuck at around 3.


    FOUR PERCENT. Bring on the violins. We are talking about markets being inflated 100% + no matter how much smaller their "housing" gets. The single determinant of whether a housing market will be affordable or not, is the freedom to convert land from other uses, to housing, of POTENTIALLY super-abundant quantities.

    I don't dismiss the possibility that David Parker and some of his colleagues are capable of understanding all this (in fact I know some of the Labour people are reasonably sound). But generally the further you go to the "red/green" end of the political spectrum, the less basic economic intuition and ability to interpret real life outcomes, you will find there. The smarter people in Labour are probably secretly horrified at the mess they will be held responsible for should they end up in a coalition government with policy dictated by loony Greens and Mana-Internet types (and even the leftier members of their own caucus). I credit Shane Jones with being one of these smarter ones.

    New Zealand • Since Sep 2014 • 7 posts Report Reply


    Earlier, DeepRed, you said "even Houston is taking steps to encourage building upwards".

    Actually, in the locations it is happening in Houston, it was never discouraged. Houston has no centrally imposed zoning. All the zoning is by "covenant" or a local form of it. In most of the central commercial district and other commercial nodes, there is no prohibitions at all on building "up".

    Houston is indeed building "up" and is well up the rankings of cities globally for number of tall buildings relative to population. But all this building "up" is strictly functional, none of it is forced by "compact city" boundaries necessitating cramming, and none of it is speculative, because in a city with a land rent curve as low and flat as Houston's, it is impossible to lift site rent (in the economic sense of the term) by upzoning.

    The many advocates of upzoning and building "up", are 100% wrong that this will restore "affordability" in the face of a UGB imposed at the fringe. Building "up" ONLY lowers "floor rents" in cities like Houston. In fringe-growth-contained cities, "floor rents" remain constant (or rather tend to rise forever), and adding floors increases site rent. This is why the vested interests pushing UGB's always push upzoning as well - their gains are magnified. In a city with a UGB and mandated low density, the price of land per square foot never goes anything like as high. You get unaffordable large-section housing; upzoning merely delivers equally unaffordable housing on whatever smaller size of section is permitted. Housing is approximately the same unaffordability in Boston as it is in Manchester in spite of the fact that the average section size is around 10 times smaller in Manchester. Hong Kong is not density-restricted and is 2.5 times as built "up" as Manhattan is, yet its apartments are smaller on average and cost a lot more.

    Ironically, lovers of vibrant inner city living who cannot afford it in a city with a UGB, would be staggered at how cheap apartments and townhouses are in central Houston or indeed any US city that is surrounded by continual free-market fringe growth. Even New York was affordable for decades for this reason - the inhibitions to growth at the VERY expansive urban area fringe have only recently started to really bite, leading to knock-on effects on location value everywhere from there in to the centre of NYC. NYC even now is easily the most affordable "global city", for the simple reason that every other global city does NOT have housing of similar value and standard 30 minutes subway ride away. For example, a standard house in this location in New Jersey would cost something like 1/6 of the equivalent in the London urban area.

    Also, businesses "priced out" of Manhattan have plenty of places to go just across the Hudson, or a bit further afield, at a fraction of the rent that ANYTHING in the London urban area would be. One of the best things you can read to get an understanding of urban evolution, is Robert Fishman's "Megalopolis Unbound" (Google it, there is a downloadable Word Doc out there). He points out which industries left city centres first (and indeed some industries commenced "suburban" in the first place), and by the 1970's, it was "offices" that were nevertheless lower down the income scale than the big operators in finance and advertising and law and so on.

    Hugh Kelly and Matthew Drennan (2011) “Measuring Urban Agglomeration Economies with Office Rents", could only find evidence of agglomeration effects in the few largest CBD's in the USA (NY, Chicago, SF, Washington and a couple of others). In all other US cities, these effects were indistinguishable from those of the urban area as a whole.

    New Zealand • Since Sep 2014 • 7 posts Report Reply

  • Speaker: The plan against the rebuild,

    Great assessment, Eric, I hope it is recognised everywhere right up to the top in NZ. Hugh Pavletich's intuitions were correct right back when these earthquakes happened, I think he correctly predicted what a total shambles was likely to follow, and that hopefully it would lead to a much-needed revolution in politics in NZ.

    I love the term "Tragedy of the Anti-Commons", I never heard that before. Did you see Bob Jones' last Herald column?

    Sir Bob also wrote some pretty good op-eds on ChCh in the last 3 years. I presume you have them.

    Re your "Sim City" analogy, I have been using the term "Second Life Fallacy" for some years, to describe the mental approach many planners have. This relates not just to planners thinking they can order myriads of individuals lives better than those individuals can, but to their absurd belief that the "correct" urban forms as they exist somewhere else already (Hong Kong is always a favourite) can be replicated by planning fiat without any regard to centuries of path-dependent evolution in the local economy and in society itself. I also like to call this the "Cargo Cult" fallacy, and refer them to this video:

    You make a very good point here:

    ".....we have been in the worst of all possible worlds here. A well-run government rebuild would have been better than what we’ve had. An unhampered market approach led by developers and property owners would have been far better than what we’ve had....."

    I have become so cynical about Kiwis mistrust of true free markets in urban development, that I have even said that I wish that if they really accept that certain approaches are necessary to save the planet (they elect people like Len Brown and Celia Wade-Brown, after all), then we should go the whole hog and use wholesale compulsory acquisitions and direct government operation in the urban land market, which is the essence of what makes subway systems fiscally viable in HK and Japan. The absence of any sort of advocacy of this nature among the "save the planet" activists, does stink of deliberate service of the vested interests in site rent.

    I also recently discovered, after using the term "regulatory givings" for several years on my own insight, that there is in fact a small literature on this subject. The way UGB's and zonings are working tend in our own era to provide regulatory givings. It is all very well to have an Anglo tradition of property rights, but you violate that tradition by withholding the rights of potential competitors in the supply of urban land, to convert its use; and the result is a bad as any Latin "extractive" culture (to use Acemoglu and Robinson's term from "Why Nations Fail").

    I am also cynical enough to propose a law at the national level, that a local populace that gives a Mayor and Council a mandate to impose a UGB, immediately automatically forfeit all rights of NIMBY objection to any intensification whatsoever. I say this in the belief that they would come to their senses pretty quickly. We like to think ourselves more sophisticated than the typical red-neck bible-bashin' gun-totin' types in the libertarian-growth US cities, but they worked out decades ago that if you don't want an apartment block in your street, you need to let development happen "somewhere else" where NOBODY's backyard already is. Kiwis are actually stupid enough to think, in contrast, that all the sacrifices will be made by "other people", who will ride the Light Rail and leave the roads clearer for Numero Uno, and who will tolerate apartment blocks in THEIR backyards. DUH!

    I will try to make it to your events, tomorrow in Wellington, and on 14 Oct.

    New Zealand • Since Sep 2014 • 7 posts Report Reply