Lower Hutt

Background

Lower Hutt is the sixth most populous city in New Zealand, with an estimated population of 114,000 as of June 2023. It is one of four major cities within the Wellington metropolitan region, along with Wellington City, Porirua and Upper Hutt. Lower Hutt is located around 20 kilometres from the Wellington CBD, meaning that many of its residents commute to jobs in Wellington City.

Like many largely suburban cities across the developed world, Lower Hutt has historically been zoned for low density housing. In 2017, 83% of the city’s housing stock was situated in the General Residential Activity Area, which generally allowed for detached houses up to two storeys, subject to other requirements. From the late 2010s, Hutt City Council began adopting a series of policies to make it easier to build medium density housing.

• Plan Change 39 (‘Transport’): reduced the parking requirement for new residential dwellings from generally two spaces per unit to one. Notification late 2016, approval and operationalisation 2018.

• Plan Change 43 (‘Residential and Suburban Mixed Use’), which was proposed to “provide for greater housing capacity and a wider range of options for housing styles and sizes at medium densities within the existing urban area of the district”. Plan Change 43 was notified in late 2017, was approved in November 2019. It was partially operative from April 2020 and was fully operative from February 20210. It introduced two new zones:

  • The Suburban Mixed Use Activity Area, which introduced a building height restriction of 12 metres (three to four storeys), and allowed for mixed use developments, including for apartments above shops or cafes.

  • The Medium Density Residential Area, with a building height restriction of ten metres, allowing for dwellings such as terraced and clustered houses.

  These zones were concentrated in eight areas throughout the city, chosen for “their proximity to shops schools, public transport, and access to parks” Plan Change 43 also relaxed land use regulations in existing residential zones to allow greater density. Specifically, the General Residential Activity Area was altered to allow for medium density housing on sites larger than 1400 square metres, thereby permitting terraced and clustered houses on suitably large parcels in this otherwise low density zone. In this sense, the zoning changes were widespread, as they allowed for medium density housing even in the zone traditionally designated for low density, detached housing.

• In September 2020, Lower Hutt became the first city in New Zealand to remove minimum car parking spaces as required under the NPS-UD, superseding the impacts of Plan Change 39. McCracken (2022) notes that these parking reforms had an immediate impact in Lower Hutt, with parking falling from an average of 1 space per dwelling in 2020 to 0.4 per dwelling in 2022.

• Plan Change 56 (‘Enabling Intensification in Residential and Commercial Areas’) created a new high density zone, which allows for up to six storeys, covers much of the flat land in the urbanised area of the city. Plan Change 56 was notified in August 2022 before becoming operational in September 2023

  Together, these zoning reforms serve as a widespread upzoning ‘package’ consisting of four sequential policy changes implemented within a relatively short time frame: a reduction in parking minimums; a targeted medium density upzoning in central areas with a weaker but more widespread upzoning throughout remaining residential areas; an abolition of parking minimums; and a more recent blanket high- and medium- density upzoning that supersedes the previous reforms.

The Impact on Supply

Following the upzoning, Lower Hutt witnessed a significant uptick in dwelling consents, marking a period of rapid construction growth. During the initial notification but pending approval of Plan Change 43 from 2017 to 2019, the policy had a noticeable, albeit partial, impact on housing development decisions. Its full implementation in 2020 heralded a dramatic increase in dwelling starts. From 2018 to 2022, Lower Hutt consistently surpassed its annual records for new dwelling starts, escalating from 494 in 2018 to 1,369 in 2022. This period saw the annual consent rate per thousand residents soar from 2.3 to a peak of 12.2 by 2022, representing a more than fivefold increase. However, a downturn occurred in 2023 due to the contraction of New Zealand's economy.

The surge in housing supply predominantly consisted of townhouses, the newly legalized housing type, which constituted 61% of the new supply in 2022, and featured heavily in areas designated under new zoning laws, resulting in a higher construction density.

Assessing the policy's direct influence on this growth trajectory is intricate and necessitates a nuanced counterfactual analysis. Maltman and Greenaway-McGrevy (2024) addressed this challenge by developing a ‘synthetic counterfactual’ based on comparable New Zealand urban areas that shared pre-reform similarities with Lower Hutt. Their method suggests that the policy facilitated the consent of approximately 3,260 additional units between 2018 and 2023, accounting for 66% of the 4,867 consents issued during this timeframe. This indicates that the reforms effectively tripled housing starts over the six years following the announcement of Plan Change 43.

However, considering Lower Hutt's role within the broader Wellington Region, it's conceivable that the reforms might have diverted construction activities from adjacent areas. To explore this, the paper constructed a synthetic counterfactual for these areas as well, ultimately estimating that the reforms boosted housing starts across the wider metropolitan area by 12 to 17%. This analysis underscores the potential for localised upzoning policies to increase housing supply, even within a larger metropolitan context.