Purchasing land for infrastructure well in advance could make it cheaper and easier to build essential infrastructure, such as schools and public transport routes. Photo: RNZ / Dom Thomas
Earmarking land for future infrastructure years, or even decades in advance, may be essential for building cheaper and better public facilities, reports have found.
Two just-released reports from Te Waihanga, the New Zealand Infrastructure Commission, considered the need to earmark land for future infrastructure and the link between land prices and infrastructure.
The commission examined how the impact of rising land prices on infrastructure project delivery could be managed and found that designating or purchasing land for infrastructure well in advance could make it cheaper and easier to build essential infrastructure, such as schools and public transport routes.
General manager of strategy at Te Waihanga, Geoff Cooper, said the current "wait and see" approach often meant valuable infrastructure was not built, as that land would already be used or too expensive to purchase by the time it was needed.
"By the time we need a new school or a better transport route, the right sites for that infrastructure are gone - they've got houses built on them," he said.
"Planning ahead and protecting sites in advance can break that vicious cycle."
Setting aside land for future infrastructure would give developers more options and the land could always be sold if it was not needed down the line, Cooper said.
The research modelled different scenarios using case studies of advance site protection for small and large projects, such as a school or a major rail line extension, and modelled acquiring the land via advance purchase, obtaining an option to purchase, or taking and wait and see approach.
It found advance site protection could be beneficial, even if it was uncertain when the project would be built, and that advance site protection may need to happen decades before projects were built.
Conversely, taking a wait and see approach to land acquisition often meant the needed infrastructure would not be built.
Meanwhile, another report considering trends in urban land prices between 2010/11 and 2020/21 showed the difference between urban and rural land prices roughly doubled in nearly every large city in New Zealand, except Christchurch.
"For instance, in 2010, Auckland's urban land values were 2.1 times higher than the value of adjacent rural land," the report said.
"By 2021, this ratio had risen to 4.4."
In Christchurch, land remained more affordable, possibly due to changes to housing development and infrastructure after the 2011 Canterbury earthquake.
"Land prices are, in part, an infrastructure issue," Cooper said.
"On one hand, a shortage of infrastructure can limit development opportunities in cities, contributing to higher prices.
"On the other hand, high land prices can make it costly and difficult to build infrastructure where and when it is needed."
Cooper said progress had been made in addressing housing issues, but urban land prices remained high.
"In some places, infrastructure may now be the main constraint to homebuilding," he said.
"We know that the sector faces funding, financing, and workforce capacity challenges, and costs to subdivide and service residential land are rising."