How congestion pricing could drive the housing market forward
Ray White New Zealand
WHAT IS CONGESTION PRICING ?
Congestion pricing is a ‘ user pays ’ transport model , which charges road users a fee for travelling specific routes at peak times to encourage the use of alternative routes , travel times , and modes of transport . The approach is not new and has been successfully implemented in cities like Singapore , London , and Stockholm , delivering significant reductions in traffic volumes and transit times for residents .
The concept is gaining traction in New Zealand , with discussions underway to introduce such a scheme by December 2025 . Auckland Council ’ s recent vote to implement time-of-use charging highlights the urgency and potential of this strategy . Mayor Wayne Brown ’ s proposed charges of between $ 3.50 and $ 5.00 per journey aim to nudge motorists towards off-peak travel and public transport .
At a time when traffic congestion costs the global economy more than $ 1 trillion annually in lost productivity and robs the average New Zealander of 150 hours each year , the need for immediate and effective urban planning has never been more pressing . As businesses and infrastructure grapple with these challenges , congestion pricing proposes a promising solution , offering significant implications for the housing market .
Dr Eric Crampton
Chief Economist The New Zealand Initiative
Dr Eric Crampton , the chief economist at public policy think tank The New Zealand Initiative , encapsulates the frustration many feel ; “ congestion doesn ’ t just waste commuters ’ time and worsen air pollution . It also distorts how our cities grow when planners block new subdivisions because of potential congestion .”
Government forecasts indicate a potential 66 per cent increase in total vehicle kilometres travelled by 2040 . Addressing this requires bold policy measures , including congestion pricing strategies that benefit personal wellbeing , environmental health , and informed urban development .
LESSONS FROM ABROAD
The scheme ’ s effectiveness is well-documented in our global counterparts . Singapore ’ s Area Licensing Scheme , launched in 1975 , reduced traffic volume by 44 per cent . London ’ s congestion charge , introduced in 2003 , initially cut traffic by 15 per cent , significantly improving air quality and road safety . In Stockholm , the cordon charging system and Dubai ’ s corridor charging scheme further demonstrate the versatility and success of congestion pricing in various urban environments .
Variable pricing is already integrated into various sectors of daily life , from energy consumption to hospitality . Kiwis ’ familiarity with this concept suggests that applying similar principles to road usage is a natural extension .
Modern geolocation technology , already used for collecting electronic road user charges on vehicles in New Zealand , provides a ready-made platform for implementing congestion charging , experts say . However , public support remains critical . Dr Crampton emphasises the need for transparency and bipartisan consensus to strengthen public trust .
“ If people think that a congestion charge is a revenue-grab , or is aimed at punishing drivers , it won ’ t work . A congestion charge should have only one job : maximising the number of trips that the roading network can support by reducing the congestion that holds everyone up .”
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