Whisper it, but is Westminster finally awake to how regulation stifles the housing supply? I ask as Rishi Sunak’s government announced this week a relaxation of European Union nutrient laws that it reckons will result in 100,000 additional homes by 2030. Instead of a knee-jerk cry of environmental doom, Labour surprised me — by slamming the Tories for not building enough!

It’s not a consensus for serious planning reform, but it’s a start. And if you glance globally, the power of bipartisanship on housing can be a game-changer. Look at New Zealand, which has struggled with rising housing costs since the financial crisis, made worse by insufficient housebuilding. In recent years, its political class has taken drastic action, with big reforms to densify their largest cities already spurring new housing supply and dampening rents.

The turning point came in Auckland, where the median house price-to-income ratio of 10.7 makes even London look affordable. In 2010, its scattered local authorities consolidated into one supercharged city council. This change granted a unique opportunity to reset policy and develop a fresh approach.

After extensive negotiations, including input from the National Party in government, officials hashed out an audacious plan. Three quarters of the residential land was “upzoned”, meaning that new semi-detached and small apartment buildings could be built on land that previously permitted only detached houses. Although still subject to safety and design regulations, this assumed permission raised the city’s theoretical dwelling capacity by a jaw-dropping 300 percent.

This is driving new supply and reducing rents. Approvals for dwellings have doubled since 2016, adjusted for population. Ryan Greenaway-McGrevy, a University of Auckland economist, estimates that by 2021, 27,000 additional dwellings received consent thanks to the reforms. Given the dwelling stocks, that rise was equivalent to an extra 184,000 homes in Greater London. And the kicker? Auckland’s real rents didn’t merely stabilise, they fell by 2.2 percent from 2016 to 2022, defying national trends. Since then, reform efforts have gone national. The Labour Party won an unexpected election victory under Jacinda Ardern in 2017. In office, it has pushed densification on to cities. First, it mandated that councils must allow at least six-storey buildings near big transport stops, a reform that urban economists demand for London. Then, in a genuinely bipartisan piece of 2021 legislation, it mandated that up to three three-storey houses be allowed on most existing urban housing lots in five big cities. This is predicted to add another 75,000 dwellings within eight years — equivalent to a million being added in England. Would our parties ever be so bold?

To be clear: New Zealand is not an international exemplar on housing policy. It’s improving from a mess. When Labour came to office, Phil Twyford, Ardern’s first housing minister, dreamt of tackling the country’s “urban growth boundaries”, the Kiwi equivalent of our green belts. Botched efforts since then have meant that these important efforts to build outwards as well as upwards have gone nowhere.

Moreover, Eric Crampton, chief economist at the New Zealand Initiative, the think tank, told me that Labour’s own failures had shaped this densification push. Many on the left were convinced that housing affordability woes partially reflected the market’s unwillingness to build and that government building therefore was required to overcome land-banking. Sound familiar? Labour’s Kiwibuild promised 100,000 new state-built homes within ten years; fewer than 2,000 have been completed.

This woeful performance confirmed what experts already knew: the real supply problem was because of rules and bad incentives, not developers’ unwillingness to build. Councils did not want to give the green light even to central government homes, as local authorities shouldered the burdens of new development without being able to fund the necessary infrastructure or to reap tax revenue. Densification thus became the default priority, creating tensions with cities.

“Locking in the positive reform we’ve seen is important,” Crampton says, “but the underlying incentives for councils to expand their housing supplies haven’t changed much. When the central government beats councils over the head to densify, councils are still incentivised to look for other ways to thwart growth.” That includes exploiting exemptions to the laws or using new powers to block homes over carbon emissions.

As a result, the Kiwi consensus is starting to crack. Crampton believes that maintaining it required both upward and outward building; the failure to do the latter broke the cross-party pact. Urban economists must worry that densification will produce a burst of building, but eventually the need to expand cities outwards will become overwhelming.

For Britain, any market-led building sounds positive. The problem is that our planning system is discretionary, rather than grounded in zoning rules. We can’t simply flick one switch to allow intensive building on each plot. Even replicating New Zealand’s policies would require fundamentally changing the system to a more predictable, rules-based regime.

Yet, despite its imperfections and those different circumstances, Ant Breach, of the Centre for Cities think tank, is right to highlight that the Kiwi experience provides valuable lessons. Their deregulatory efforts confirm that restrictions on development do reduce supply and make housing more expensive, whatever contrarians might say. With green belts seemingly a third rail in British politics, the Kiwi example also highlights the potential gains from building upwards, at least as one part of a reform strategy. Perhaps the big lesson, however, is that even a fleeting, incomplete consensus can deliver stark progress quickly. Let’s hope this week’s maturity on nutrient laws is only the beginning.