Hamilton’s Traffic change last 3 years

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From: Council meeting Wed 6th Dec 2017 – 2018-28 10-year Plan – page 69, line 37

Drivers of significant expenditure variances include “Over the last three years we have seen a 15% traffic growth on main routes, Hamilton is now the “busiest” Council traffic network in the country (based on VKT/km)”

It is true that traffic volumes are growing, but when this is mapped the growth decreases along main routes through Hamilton.

Another way to see change in growth is to graph traffic counts; (you can find data here –  Link) It is presented as a pdf not as live Excel, so after a bit of copying and typing , we have a graph that shows a trend line of traffic growth on State Highways, which are central government funded, and reducing traffic on local roads, which are partly funded from local rates.

Traffic counts are not the only way to measure changes in traffic volumes. At the same Council meeting Wed 6th Dec 2017  – page 69, line 37

“Hamilton is now the busiest council traffic network in the country (based on VKT/km)”

When asked, the very helpful staff at council added a bit more detail to this VKT/km.

‘The busiest Council traffic network information is from the One Network Road Classification tool which has been developed for Road Controlling Authorities. Hamilton City measures 1,272 VKT/km compared to Auckland at 1,136 VKT/km and Tauranga City 1,066 VKT/km.’

There seem to be numbers that support the idea traffic volumes are growing, but the opposite may also be true; looking back to past post on  Parking evidence, vehicle counts in Hamilton central appeared to be decreasing.

 

Limiting land supply refer from DC policy

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This post focuses on “failure by stakeholders, such as the Council, to provide adequate land” from the DC report

Likely developer reactions to increased DC charges by Insight Economics LTD – page28 (my emphasis)

“According to MBIE, a price-cost ratio of less than 1.5 indicates that land markets are operating well, but higher values indicate the likelihood that developable land supply is scarce relative to demand. The price-cost ratio for Hamilton stayed below 1.5 for most of the past 20 years, but rose sharply between 2014 and 2016. In 2017, the price-cost ratio was 1.66, which suggests that a shortage of suitable land is having an inflationary effect on dwelling prices. More importantly, these high land prices are likely to be reducing the supply of new dwellings coming onto the market.

Unfortunately, the price-cost ratio does not identify the cause of land shortages, and instead provides only a blunt indicator of likely scarcity. Accordingly, it should not be interpreted as a failure by stakeholders, such as the Council, to provide adequate land.

Conversely, land shortages are just as likely – if not more likely – to reflect strategic behaviour by major land owners, with new supply slowly drip-fed to maximise returns. In addition, some land parcels are bought and sold several times before development even occurs, because of speculative “flipping.” Using Council-supplied data, we found more than 1,000 vacant residential sections that have been bought and sold multiple times prior to development occurring. Coupled with strategic land-banking, this speculative behaviour is likely to be a driver of perceived current land shortages.

Two key numbers above

  1. “A price-cost ratio of less than 1.5 reflects that land markets are operating well”
  2. “1,000 vacant residential sections”

Here the 1.5 value for the ratio is the point of under-supply and a buffer of 1,000 vacant residential sections maybe too small a number to meet demand.

The rules for supply of land come first from the District Plan (DP), which limits the size of sections to 400m2  ‘permitted’ for most of the city. In the DP 2012 submissions from the Property Council NZ, PRS Planning Services Ltd, and in the 1990 review of the District Scheme, the Waikato Master Builders Association, the NZ Institute of Architects, and the NZ Institute of Surveyors (Waikato Branch), asked for a reduction in the minimum site area from 400m2 to between 350m2 and 375m2. As an example, dividing a 6,000m2 parcel of land by 400m2 gives 15 sections; if this is changed to 375m2 or 350m2 the 6,000m2 parcel of land allows for 16 or 17 dwellings respectively, giving a 6% to 13% larger buffer.

Third key statement

  1.  “Speculative behaviour is likely to be a driver of perceived current land shortages.”

This could be largely about the number of players in the property market. Again this stems from a political decision to reduce the areas zoned for higher density housing in each review of the DP. In the 1960s, 10% (278ha) of Hamilton city was zoned Residential High Density.

Hamilton District Scheme 1960s

The latest DP has it down to 2% (208ha), which means the number of smaller infill developments is reduced, leaving growth provision to major land owner-developers, and the city at the mercy of a reduced number of land owners/speculators. The outcome is totally predictable.

To conclude, it is fair to say the price-cost ratio graph above does show the rapid pace of change. In hindsight the spikes are predictable. The council’s focus on numbers of sections missed the question of how many land owners are in the land supply market. This means you could have a buffer of 2,000 sections, but if the number of speculators doesn’t increase and the influence of controlling major land owners/speculators doesn’t reduce, the price-cost ratio is not owned by the city council.

Category: Economics, Planning