The number of new homes being completed in Auckland kicked back up into high gear in January.
The latest figures from Auckland Council show it issued 845 Code Compliance Certificates (CCCs) for new dwellings in January.
That's up 23% compared to January last year, and was the most CCCs issued by the Council for new dwellings in the month of January since it began collating the figures in their current format in 2013.
That pushed the rolling monthly average of new homes being completed, over a 12 month period, to 1168 in January, which was the fourth highest ever.
The only time average monthly completions have been higher was the three month period from June to August 2021 when completions briefly nudged 1200 a month. The chart below shows the monthly trend.
However there was also a sharp decline in the number of projects being completed and receiving their CCCs within two years of receiving their building consent, suggesting projects are taking longer to complete.
In 2019, it was usual for 95% or more of projects to be completed and receive their CCC within two years of being issued with a building consent, but that timeframe steadily stretched out over the following three years as Covid lockdowns, supply chain disruptions and a tight labour market took their toll, delaying completion dates.
By the middle of last year the number of new dwellings receiving their CCC within two years of receiving their building consent had declined to 85%, then in December it dived to 71% and in January plunged further to 66%.
That suggests the full extent of the building industry disruptions that occurred post 2019 is only now becoming apparent.
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80 Comments
The construction industry is pumping into a market that's already flooded. What could possibly go wrong? This fortune maker of yesteryear is fast turning into a complicated nightmare that could soon become uncontainable. A lot of incomes are connected and geared to construction that's too big to fail. It has to remain prosperous. Currently it appears more over-extended than anything....
Many of the multi-unit houses finishing up now would have been sold off-plan for a 10% deposit at least 18-24 months ago near the peak of the market.
Imagine the plight on those young families having to chose between: taking on a stressful mortgage, walking away from their deposit or completing the purchase only to sell the overpriced box in a declining market.
And it can be more than the Deposit they forfeit. The Vendor can come after them for the difference between eventual sale price and contract price, and that can be far more than their deposit.
Can liquidators do that?
Yes just like they did in the Ross Ponzi, The liquidator takes over the role of the company to recover funds for creditors...... They are worse Spruikers.
Hm, but the argument with the RAM clawback was the investors either knew, or should've know, that it was a Ponzi, and therefore should be forced to share the same loss as everyone else.
This is one reason why I said it was to our shame that FHBs were forced to take the more expensive/higher risk option of off-the-plans because it was the only category they could out-bid speculators in.
The procedure is:
1) follow the agreement and settle in full on the day agreed.
2) Can't/won't settle. You are in default, penalties kick in, and the developer can either A) Sue you for specific performance to settle the full amount and if you can't then, you lose your deposit, and the developer can resell in the open market for enough to cover the outstanding balance plus costs, and if sells for less then sue you for the deficit.
In this type of falling market, then you just can't walk away from the deposit.
The only fair thing to do would be take back some of the money that NZ business were given by the government during covid, and give it to these purchasers to help soften the blow they are lined up to take from an unstable and unpredictable market, fueled by bad decision making from the government.
If business and self employed people got handed free money (even when they didn't need it), why shouldn't these purchasers?
Not sure if you are taking the micky or not...
Why stop there though. What about compensating savers for loss of buying power, or for conservative folk who didn't dive into the market and therefore missed out on those magical capital gains? Can I get compensated for any dip in my KiwiSaver balance?
At what point do we let people own their own decisions and suck-up the respective risks and rewards?
Fair point. In which case the RBNZ should never have been out there pumping the market when hard times hit in the first place. Risk should've been allowed to apply in hard times, and personal responsibility been accepted.
Policy welfarism for property via monetary, tax, welfare subsidies and restrictive zoning has far earlier already turned property from more an investment into more a welfare scheme for the wealthy.
Just seems like they lost control of it recently.
100% agree.
I agree, people should own their own decisions and face the risk. However, the gov didn't see it that way and gave out BILLIONs to all sorts of people and businesses so they didn't suffer any hardship during the lockdowns etc, when in reality if there was ever a time a business should have failed or there was hardship, it was during lockdowns. Should they not have just sucked it up?
They should have given the business owners the option, take it or leave it AS A LOAN
It should never have been a handout, I know food processing businesses that took it but never stopped as a essential business......
The last thing an overheated* market needs right now is free money dumped on it
* I know the market is free-falling as we speak, but if we zoom out and look at it long term it's still at unsustainable heights at the moment
How is a property bubble unpredictable. If I put all my savings in a pokie machine and lost it would you be happy for the govt to bail me out?
Indeed. Investors take RISK. Going backwards is clearly a risk many forgot.
Unpredictable as it was pumped by the Government/RB who made out they would never let it fail - then after the biggest pump of all time, they decided to let it fail
I must have missed the memo from the govt and RB telling me I have to buy into the housing Ponzi. I could however name a few companies who encouraged people to do so.
"Unpredictable as it was pumped by the Government/RB who made out they would never let it fail"
I think you were hearing what you wanted to hear. I've listened to the press conference where Jacinda allegedly said she wanted house prices to increase and the government wanted house prices to increase, I didn't hear her say that. I listened several times. People hear what they want to hear.
You’re definitely mixing up “the government” with main stream media articles and property ponzi investment companies.
come on mate…..
In the last 2-3 years, I don't remember many property owners/investors crowing how unfair it was that their asset was appreciating to the moon..
Presumably that was all spoils of hard work and astute business acumen.... "Being bold, backing themselves" etc etc
100% agree.
Just join any of the Facebook Property Investor groups for an endless supply of positive affirmations......
I can't seem to find the original Property Investors Chat Group. I've found Property Investors Chat Group NZ 2.0.
Only admins can make posts at the moment, and it's filled with posts from this "Life Bricks" fella who is getting burnt by the fall in the market.
https://www.youtube.com/watch?v=X0jTNpgcCLE
Bought section for $1m, financed. Total sales $1.875m. That's before you take out the cost for his complete renovations of the 4 units.
- https://homes.co.nz/address/new-plymouth/moturoa/38a-breakwater-road/WL… Sold $520k
- https://homes.co.nz/address/new-plymouth/moturoa/38b-breakwater-road/DZ… Sold $440k
- https://homes.co.nz/address/new-plymouth/moturoa/38c-breakwater-road/bY… Sold $425k
- https://homes.co.nz/address/new-plymouth/moturoa/38d-breakwater-road/PK… Sold $490k.
Original listing: https://www.bayleys.co.nz/2600820
Construction companies and real estate agents and architects all took the free money
Pumped up the market
Mummy and daddy listened to those who knew more
They purchased
They got bullied by developers and gave up some of their gains in 'cost adjustments'
Now they fall down
All of the others with more 'smarts' got to bank their money
Where is the civic responsibility in our society?
And because they were new then many could use a minimum deposit of 5% or 10%
I think thirty percent of fhb in the last year used less than 20%
and today I hear the anz bank economist suggesting living with 5% inflation isn’t a bad solution
- Rising completions which then sit in a market that isn't moving.
- Higher interest rates constraining buyers and increasing holding costs for the developers.
- An undersupply of housing turned to an oversupply as population fell and building rose.
Stop me if you've heard this one before.
It does sound like the Hillsborough tragedy
That's UP 23% compared to January last year,
That can't be right, it must be a typo. Emphasis added
https://www.interest.co.nz/property/114773/residential-construction-auc…
689 issued last January, not a typo.
Its sarc mate. Don't take me seriously on topics like that
Don't limit yourself.....
As the last remaining head spruiker on this platform HW2, at what point do you just say yourself, you know what, the data doesn’t lie and I’m not influencing anyone and nobody is buying the FOMO I’m trying to sell as the market nose dives.
Even TTP barely shows his presence these days and the green shoot, seeds of doubt are not working anymore 😬
the data doesn’t lie
That statement applies both ways. The data is in this article
I’m not influencing anyone
Why would I want to. I make more out of DGMs than go getters. Of course you won't believe that and somebody is bound to come with a critical response.
Do you prefer I leave and don't come back. You will have your echo chamber all to yourself
On a good day, a decent DGM comment will garner about 30 up votes. It isn't thousands or tens of thousands unfortunately
by HW2 | 8th Mar 23, 10:42am - "Don't take me seriously"
These days, I for one don't 🤡
I wouldn't make any sentiment conclusions from data that is so lagged:
"By the middle of last year the number of new dwellings receiving their CCC within two years of receiving their building consent had declined to 85%, then in December it dived to 71% and in January plunged further to 66%."
You could draw some conclusions on future price action given the increasing supply.
Falling market.
And if you drive around to the correct places in auck you'll see with your own eyes, gigantic plots of land preparing to erect a bunch more residential dwellings.
Milldale, and behind it.
I remember seeing a 2-brm townhouse in Milldale (35km from the city) on the market for $1.15 million at the peak. WTF. Even my cousins in California were flabbergasted at Auckland pricing.
And there are just as many empty plots out there where the developer has obviously crunched the numbers in the current market and had second thoughts about even starting the earthworks.
Not only Auckland. Drive down the Waikato Expressway and look at the mass of stuff starting and reaching completion there.
Around me there are a few full sections just getting started with construction. Open homes on new developments that are finished have been fairly lightly attended. I suspect some people may be selling them at a loss.
I do wonder who will be buying these places as they are 1.5M plus. Last year fetching closer to 2M.
$650/week rent at 6.5% over 30 years gives $450k borrowing power.
I suspect no one will be buying these places, until the developer goes belly up.
Exactly. Why would anyone pay twice as much per week to take on a mortgage when there is also a strong likelihood of also losing the depost in 6 months. This is the power of leverage in reverse. Again, i dont know why people (public commentators) cant understand this. Most have never lived through it I guess.
Yep, plus rates, insurance and maintenance, plus deposit spent so no longer getting a return, plus capital loss.
There is a huge premium on owning. Takes serious commitment.
The developer needs the margin to start the next one, the loss will close the business..... They are waiting and hoping for a miracle that will not come. Those that will force the issue are creditors and IRD. What a wonderfull time to be alive.
You are one of the very few around here that clearly understands development dynamics.
In the last couple of weeks I have seen several consultancies linked strongly with residential development close their doors (and websites closed down ). And in some respects, good riddance - so much dross has sprung up during the boom times.
https://www.stuff.co.nz/business/better-business/131427521/townhouse-de…
If they had half a brain they would have not bought the luxury cars or the jet in the first instance. Now they're making gullible investors wait a further six months to redeem their funds. Surely the promised 10% return was a red flag. These people all deserve each other - priceless!
They are full of BS, snd trying their best to spruik a crashing development sector.
The ultimate hubris - swapping the two hilux’s for a McLaren and Bentley.
Not much use for a building company with their ear to the ground.
Of the 976 dwellings under construction, only 571 have been pre-sold. Well there's a problem right there. And of that 571, how many will still qualify for finance by the time of settlement and will be able to complete? Tick Tock ....
I follow the guy on Instagram, no doubt he works hard on himself, and is very committed to the cause. Apparently launching a Williams University, online business school type thing shortly. I just feel there's a bit too much self belief in the room.
They also work hard to sell off shore hence the Singapore office. Hope it survives for the sake of the investors, but it has all those signs I've seen before in small and large dev companies...
"I just feel there's a bit too much self belief in the room"
Perhaps its more a pyramid of belief...
There’s obviously big lags at play in this space, as I have said many times before.
By the end of this year the amount of residential housing development in progress will be much lower than it is right now.
Guaranteed.
Spot on @HouseMouse. CCC's & Building Consents issued are lag indicators as many dwellings will have been bought off the plans 18 - 24 months ago when FOMO was in play & the banks still handing out mortgage lending like lollies.
Plus......part of the reason for the jump in homes completed right now is going to be related to the plasterboard shortage mid-to late 2022. Many new builds were boarded up awaiting GIB so that the interior could be completed.......unless you were Fletcher Living of course;)
Sales of dwellings off the plans & of new sections, has been trending down for the past 12 - 18 months where I am, really accelerating down once interest rates, etc rose. Anecdotally, I've observed a number of sections appearing for sale as "resale" properties including some with consented plans - owner not able to fund their build. Property investors have all but disappeared.
With the new build sales slowdown, tradies will progressively have less & less work/forward work in the pipeline as this year progresses - unless they are in the North Island areas impacted by Cyclone Gabrielle.
I'm in the industry so I get to see this happening in real-time. The data, analysis & opinions will not tell the full story - not just in residential construction either.
Great comment. This website benefits immensely from such informed and nuanced comments, which are often absent from the articles.
Most of these CCCs are government funded homes for the useless oops I mean homeless.
They cost an arm and a leg kindly payed for by the tax payer.
They are rented by beneficiary's kindly paid for by the taxpayer
They are repaired with money kindly ....
Just remind me what the bet gain to NZs economy is?.... Oh that's right social cohesion!?!?..... Yeah right!... How's crime going these days 🙂
IS there any data about how many of these are Kiwibuild/Kianga Ora or other govt/council developments? would certainly be interesting if 50% of the in the pipeline construction work was govt funded/backed.
There are also the secret developer deals KO is doing, where the private developer gets resource consent for a housing development in the most expensive areas of a town; neighbours don't object, council doesnt object, then KO just buys the whole development when its finished and turns it into emergency housing. https://www.oneroof.co.nz/news/kainga-ora-revealed-as-buyer-of-20m-plus…
Well, in Auckland it’s only about 5-10%.
What do you propose as the solution Hemi?
Most of these homeless ( that have jumped onto the band wagon since Cindy's be kind " welcome to the Hotel Rotorua.. such a lovely place" free housing scheme started) have WHANAU ...
Send them back to there, or build basic accomodation in huge blocks in Gisbornes outer regions and give them spades to move sludge ..
In other words make so difficult and hards that they want to get a normal job and save for a house
At the moment they leave home, they drive to Rotorua, for example, and sleep in their car until they are given a motel/ then a free house .....
To easy to be a bludger in NZ
.
Right, so you're literally offering no solutions at all.
Too many hangers on.
Crime doesn't pay or does it
DP
Who on earth would buy a new build. The designs are horrible, locations terrible, no existing space and material quality horrendous.
Edit: forgot to mention the price completely out of whack.
House price’s are falling fast if people paid 10% deposit 18 months ago and price’s have crash by 20% and another 30% to come, this is a shit the fan moment who will lose money developers or speculators.
Electricity Authority data shows a net decrease of 169 connections for residential in the Auckland region,being the effect of the anniversary floods,and scheduled demolition for infill etc.
Its weird that it seems to have taken the developers so long time to realise that they are building into a falling market. Anyone know why, given that knowing the market must be one of the most important aspects of their job?
Same reason cockroaches keep walking without a head. Its a simple machine and its all their bodies are designed to do.
When your income and whole world revolves around an industry being successful, it’s easy to become blind to anything that would negatively impact that industry. From an outside perspective, clear as day. (Also clear in the comments here lol)
I don't buy that. That's a clear personality disorder situation generally driven by ego maintenance and hopium. People choose not to see things in business and themselves in the hope it will come right.
Take a Good look at yourself in the mirror is a Good start. Read stuff that isn't supportive of your wishes isn't a bad number 2.
Many projects started in late ‘21/ early ‘22, before things really started to look a bit ugly.
And because most developers are irrationally exuberant, many of them bought the kool aid that the likes of Tony Alexander was spruiking, about house price falls being minor, and then recovering.
So many plowed on, believing that the market slump would have resolved itself by the end of the building process…..whoops
Much more stock arriving. Govt working with Fletcher's to build more houses..a lot more. Prices in free fall. Debt rising and a real possibility of hitting 8-10%. Feb talking higher faster and for longer. No tax rinse unless new. Banks tightening credit. Australia about to loosen immigration requirements.
Its all point to a sticky end for the speculative...
NZD tanking inflation is staying high so are rates, over leveraged people speculators must see the debt tsunami on the way.
The US will show a slowdown and the wheels will fall off the USD. Someone will pop up saying they want me to specify when lol
What amazes me is that that was for January. The council is normally on holiday in January. In fact from about December the 15th to about February the 15th, you normally can't get a council person in the consenting area to do anything.
So, credit where credit is due Auckland City Council, keep up the output please.
There will be many a first time wanna be developer who was projected to make $2M on a 6-7 terrace homes
Now they will be shitting themselves
They can rent it out but yield is so crap. So rent it out and hoping to absorb costs , all their savings and other gains wiped out just like that.
For some this will be once in alife time opportunity to make money by buying bargains and holding on till the next cycle
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