Zoning Reform: Lessons From New Zealand

Responding to the rise in housing costs that has affected even remote corners of the world, New Zealand recently passed "sweeping zoning reform legislation" that encourages mid-density housing development. As Ryan Greenaway-McGrevy writes, these reforms provide some valuable lessons for other countries.

For decades, New Zealand's housing policy essentially omitted middle-density, multi-unit housing types like rowhouses or mid-rise apartment buildings, favoring single-family homes and high-rise apartment buildings in limited urban areas. But now, with significant population growth raising demand for the country's limited housing, lawmakers from across the political spectrum are seeking ways to slow the growth of housing costs. In addition to the new Medium Density Residential Standard, policies include "a capital gains tax targeted at housing speculation, a ban on foreign investment in residential housing, fast-tracked inclusive housing developments, and state-subsidized housing development projects." In 2020, as part of its National Policy Statement on Urban Development, the government mandated higher-density development near transit lines. 

Kiwis saw success with upzoning policies in Auckland, where the city's Auckland Unitary Plan (AUP) led to a sharp increase in permits for attached housing and more development in the city's inner suburbs. But although New Zealand's policy experiments show promising results in stimulating construction, it remains to be seen whether increased affordability will follow suit, and how long it will take for supply to meet demand.