Inclusionary zoning (the rules that require affordable housing in new developments) raises fears of a negative impact on neighbouring properties.
We analysed detailed house price data from Queenstown for 2008-2016 and found no significant negative impact on house price changes. The difference in house price gains between 2008 and 2016 of properties neighbouring affordable houses varied from the rest of the area by -0.1%pa to +0.4%.
Inclusionary zoning – used with care – can be a short-term salve when there is:
- a shortage of affordable housing; and
- a backdrop of strong population growth, and
- housing supply is slow to respond
Inclusionary zoning policies should be self-limiting: triggered only on the back of formal housing assessments of inadequate affordable housing supply, measured against objective definitions agreed by the local community, or national standards.
The long-term solution is to ensure that infrastructure ready land supply is responsive to demand – this requires much better use of planning regulations, infrastructure investment and deterring land banking.
Regulators should pay heed to other concerns from neighbours of affordable housing, particularly around the impact of design and density on neighbourhoods, and not to overly concentrate affordable housing in one location.