IMPLICATIONS FOR THE HOUSING MARKET
If the home is our most important asset , how we choose to travel to and from it becomes a critical lifestyle factor . Congestion pricing has the potential to impact residential property development and housing preferences profoundly .
By alleviating traffic congestion and improving travel times , congestion pricing can make peripheral areas and satellite cities even more attractive to new residents .
This has implications for the development of affordable new housing options , particularly at a time when the Government has directed new energy to ‘ flood the market with opportunities for development , and over time , drive down land prices and the cost of housing ’ - Housing Minister Chris Bishop in a speech to the Real Estate Institute of New Zealand ( REINZ ) on 4th July 2024 .
The Government has emphasised the role of cities in enhancing productivity and urban growth . Congestion charging could be introduced as a measure to manage traffic and incentivise more efficient use of urban infrastructure while supporting its goal of enabling cities to grow ‘ up ’ and ‘ out ’.
Furthermore , the model could stimulate the decentralisation of businesses and employment , encouraging companies to relocate to less congested , more affordable regions . It could also catalyse more mixed-use development by reducing reliance on private vehicles , contributing to denser , more walkable neighbourhoods near transit hubs . Such initiatives could relieve strain on major urban centres and promote more balanced regional development .
A core objective of this and previous Governments has been to increase housing affordability by easing regulatory barriers and boosting supply . Congestion charging , by managing urban sprawl and encouraging compact development , can indirectly contribute to lowering housing costs by reducing the pressure on land prices in urban areas .
While the benefits of congestion charging are clear , implementation in New Zealand has been a long and fractured process , made challenging by public opposition and the necessity of supportive legislation .
The recent commitment by the Auckland Council and Central Government to explore detailed options is a promising step forward .
The real-time data generated by congestion pricing schemes also has the potential to provide valuable information for urban planners , developers and advisors to development agencies . For instance , variable charges for using key routes , like Wellington ’ s Mount Victoria tunnel , can inform decisions about future infrastructure investments – which have long been a bone of contention for the city . If commuters are willing to pay higher fees to travel the route , it indicates a strong demand that justifies expansion .
Policymakers have noted a need to improve infrastructure funding and financing to address New Zealand ’ s housing supply issues . Congestion charging revenues have the potential to be used for infrastructure investments that better facilitate housing developments and improve connectivity , aligning with the Government ’ s agenda .
At the same time , it has been suggested that a portion of this revenue could be reinvested in housing initiatives , such as social housing or infrastructure projects directly benefitting new communities .
Dr Crampton says that because a congestion charge should have only one job , trying to make it also serve other goals , like equity , would be a mistake .
“ Government should instead rebate collected congestion charges back to drivers in ways unrelated to the time that they drive , potentially with higher ‘ congestion dividends ’ for households with community services cards .
“ People then have a strong incentive to shift driving away from peak times , when it makes sense , and equity issues are dealt with without undermining the work that pricing needs to do .
“ Even better , congestion charges can start informing infrastructure investment . If it only takes a $ 0.50 charge at peak times to clear traffic at Wellington ’ s Mt Victoria tunnel , a second tunnel makes no sense . If it takes a $ 20 charge to clear that congestion , the case for a second tunnel becomes much stronger .”
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