New Report: Auckland Council’s Development Fee Hike Will Stifle Construction of Affordable Housing.
April 2, 2025
A report from Urban Economics claims that Auckland Council's proposed fee increases could result in developers being overcharged by up to 60%. The new report highlights concerns that the rising costs would have a greater impact on affordable housing, potentially pushing developers toward building higher-end homes to maintain profitability.
Auckland Council is reviewing a proposal to raise development contributions (DCs), which are fees levied on developers and/or home owners via possibly increased rates to fund local infrastructure and community projects.
At the crux of the issue is a new proposed timeframe for which these fees are calculated. Currently calculated at a 10-year scope, the new proposal seeks to extend this to a 30-year period, a change that dramatically increasing the cost of these contributions by more than 3x CPI.
This new research, commissioned by Subdivision Advocacy NZ (Sanz) has found key inconsistencies with Auckland Councils proposal.
The report found a discrepancy in how costs were calculated—while construction expenses and land values were projected using future inflated figures, development contributions were assessed in present-day dollars. This inconsistency results in earlier developers shouldering a higher financial burden, whereas those who build later pay comparatively less while still gaining access to the same infrastructure. According to the report, this pricing model leads to overcharges of 50% to 60% in development contributions.
The report also highlighted a discrepancy between Auckland Council’s housing projections and actual growth trends. Between 2018 and 2023, Manurewa/Papakura expanded by 750 households annually, yet the council predicts only 75 new households per year over the next decade. Likewise, Flatbush experienced an average yearly increase of 570 households, while council estimates project just 100. In contrast, the council significantly overestimated infill housing growth in the central city by 155%.
Finally, the report highlighted that this increase in DCs will disproportionately impact lower-priced homes. For instance, a $50,000 increase in development contributions amounts to roughly 7% of a $700,000 section’s price but jumps to 14% for a $350,000 section.
Auckland Developer Troy Patchett of Subdivide Simplified says that these proposed fee hikes would make such affordable housing projects unfeasible. "Developers can’t add $50,000 to $100,000 to the price of these new homes when this equates to more than their entire margin”.
“If these changes were to go through, developers would have little choice but to pivot to higher-end homes or look outside of Auckland, which could ultimately create a shortfall for affordable, healthy homes”.
Auckland Council is set to release the consultation findings next month.