The number of new residential building consents issued dropped 7% in June compared to May, but remained up by 4.1% compared to June last year.
According to Statistics NZ, consents were issued for 2560 new dwellings in June, compared to 2794 in May and 2752 in June last year.
There was little to cheer about in the figures for the Auckland market where there is a growing housing shortage, with 906 consents issued for the Auckland region in June which was up slightly on the 885 issued in May but down on the 921 issued in June last year.
At least 1230 new homes need to built in Auckland each month just to keep pace with its surging, migration-fuelled population growth.
But with June's consents running at just under three quarters of what is required and net population growth from migration at record levels, the region's housing shortage is worsening by the month.
"Annual new home numbers are nearing those last seen in 2004, although they remain well below the all time peak of the mid-1970s when consents reached about 39,000 a year," Statistics NZ prices and construction manager Jason Atwell said.
On an annual basis, 30,453 new dwelling consents were issued in the 12 months to June, compared to 29,097 in the year to June 2016.
Outside of Auckland, the numbers were pretty lacklustre in most major centres.
In the Waikato, 263 new homes were consented in June, which was well down on the 376 consented in May and the 335 consented in June last year.
In the Bay of Plenty 226 new homes were consented in June compared to 220 in May and 246 in June last year.
In Wellington 269 homes were consented in June compared to 227 in May and 275 in June last year.
And numbers were well down in Canterbury, where 342 homes were consented in June compared to 477 in May and 467 In June last year.
Significantly the total value of new dwelling consents issued was also down, dropping to $917 million in June compared to $1.034 billion in May (-1.3%) and $929 million in June last year (-1.3%), suggesting the residential building boom may be taking a breather, if it hasn't already peaked.
There was also a big drop in the value of residential alterations and additions consented, which declined to $133 million in June from $195 million in May and $152 million in June last year.
Of the 2560 new homes consented in June, 1691 were stand alone houses, 268 were apartments, 222 were retirement village units and 379 were townhouses or units.
The commercial building sector fared no better, with the value of non-residential building consents dropping to $451 million in June from $605 million in May and $739 million in June last year.
"In Auckland, where there is the greatest need for new homes, we're seeing only gradual increases," Westpac senior economist Satish Ranchhod said in a Westpac IQ newsletter on the consent figures.
"Just over 10,300 new dwellings were consented in Auckland over the past year.
"While that does include a trend increase in multi-unit consents (such as apartments), it is still below what is needed to keep up with population growth," he said.
Building consents - residential
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72 Comments
Clearly its just not working , the issue of land banking is problematic, as is the opportunity cost of holding vs selling , because as long as the value of land goes up faster than holding costs , its tantamount a huge windfall in the long run .
Unless, of course , we have another GFC ...............
I think we can bank on the fact National will NOT address land banking. The best way to address land banking is by disincentivising it, e.g. via tax. National has only shown appetite to increase taxes on working taxpayers (GST increase, then taking a third of their Kiwisaver employer contribution - a very mean-spirited tax indeed).
"this is about issuing permits , NOT supply measures or land banking"
You don't think the three factors are related?
Ya know, the supply of consentable land, at an appropriate price point, has an impact on the number of consents given?
Sure, the permit process is stupidly inefficient and represents a huge implicit cost.
But to say that is the only issue, is extremely short sighted.
Yeah. And we want to target land banking by being effective and targeting the problem.
A blanket tax on land is ineffective at targeting land bankers. Most land will not be developed and most housing is merely lived in. Auckland should add about 40 housing units per existing 1000 per year (it currently adds about 20). 96% of land owners in a city have no way of developing their land and a land tax is 96% ineffective.
Opening up land supply is so much more effective, because it just targets the thing you want to target. It is land that's only usefulness is in development.
There is no general credit crunch affected funding, right? This is just banks seeing that this is at or beyond top of the cycle and not wanting to be left holdng the baby when (not if) prices fall. Even they don't believe the hype about a "housing crisis" and fundamentals supporting current prces. They are clearly v nervous about the market. Classic pro cyclical behaviour from lenders at the peak of a credit bubble. This could all become self fulfilling and self perpetuating.
Sorry Bobster - but there's virtually no prospect of a major fall in NZ house prices.
In the short-term, prices may edge back a little more - but medium/long term prices will trend upward.
Domestic and offshore demand for NZ housing (particularly Auckland and Wellington) will almost certainly be sustained at reasonably high levels looking to the future.
A structural shift has been evident for quite some time now. This will likely impact over and above any short-term and/or cyclical factors that might appear negative.
As I've said before, I believe those who aspire to property ownership/investment in NZ need to develop their own strategies........ Government's simply can't be relied upon to provide quality, affordable houses for all in need. (Judge them by their track record.)
Hi, a bit of an update from my neck of the woods to support your argument above:-
Quality houses have gone up in price and there are buyers for them -
Trashed, old , do ups, and Manicured pigs are not selling even @ 15% discount - no one seem to want them anymore (the chinese - and speculators - were buying these at some stage, now they are gone) -
There are many discounted New built homes ( Tough cashed negotiators can snitched at almost 15-20% discount of its listed prices ) and some developers are very negotiable - builder and developers want to clear stock - banks are not lending for unsold new development !! so there are fire sales off the plans ( which banks are reluctant to lend on !) a real vicious circle
RE agents are steady and still selling, good stock is rare and expensive. Owners of good properties are very confidant and there is no sign of desperate sales out there.
Wait, what?
You above "update" contradicts @tothepoint assertion that "there's virtually no prospect of a major fall in NZ house prices"
It may well be true that quality houses always have buyers for them - but the fact is, the majority of Auckland housing stock is "old do ups" .. and it is precisely this segment that escalated dramatically in prices and drove market sentiment up. Add to the the "discounted New Build homes" and you've got all the ingredients for a reasonable price correction.
That this is the case is evident in the anemic sales figures coming out and credit growth some 40% lower year on year.
Tell me, if stock cannot sell at 15%-20% discount (arguably already a major fall), doesn't that indicate that prices have much further to drop?
I am genuinely interested in how you forsee the good desirable stock holding up prices on the Auckland market?
Prices in Auckland are 10x income. Yields are pitiful @ 3% or so, at which level any return on investment is entirely dependent on perpetual capital gains. The increase in prices have largely been the result of the biggest credit bubble in nz history. Nonresident investors will be the first heading for the door when things sour. Our major banks are already restricting credit and are themselves completely exposed to the biggest credit bubble in history aka the Australian property market.
I think the view that it's "onwards and upwards" from here is just completely deluded and downright dangerous.
"This time is different"
Would you say this is part of the housing crisis?? 'Grandmother kicked out of her own home' http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11885697
That article has nothing necessarily to do with housing crisis (is that your point?).
No more than people stealing someones wallet is an indication of a wallet shortage. It's about greed, pure and simple. Which is something it has in common with the housing crisis, of course.
A builder neighbour cited the same problem. His bank was not interested in financing his plan to move his old house and construct two houses on the same site. They apparently want mid scale developments with pre sales. With the market tailing off and lack of funding I think the Unitary Plan will be a slow burn.
Eh!? there is nothign wrong with their funding. The Aussie parents had a small downgrade but that was very limited. It's not that they can't lend, they don't WANT to lend. Because they can see the whole market is just a house of cards, ready to fall over. Classic bubble behaviour.
The Aussie parent banks have also been recapitalising so I'm sure they've been extracting money from their NZ branches. It's entirely possible they just don't want to lend and end up holding the bag. Which if that's what they're doing I can understand not wanting to end up like the US where they ended up owning a lot of worthless properties.
And this reflects a comment I have previously made. When the Aussie market finally implodes, the Aussie banks will suck capital out of their nz subs. Mortgage credit here will wither. If the Aussie banks get under serious stress, the effect on mortgage credit will be severe, regardless of what our fundamentals are
I agree what happens in Australia will have a serious effect on us. Even if NZ and the NZ bank branches are in good condition the money extraction and orders from the head offices will impact us.
I don't think we're heading for massive Ireland style housing over supply but I think Australia is and the consequences will be staggering.
I suspect next years census will show that the average household size in Auckland (and elsewhere) is increasing, therefore the number of homes being built ARE the number necessary to accommodate NZ's burgeoning population. This is due to a number of factors (cultural norms of new immigrants, lack of affordability etc). It would be interesting to compare average household size of many of NZs immigrant source countries.
Valid point. All the greenfield houses in East Auckland are 7 bedroom behemoths with granny flats. One of those is worth in terms of # of housing needs met than 2 consents for flats.
Probably make sense for developer, with high land costs and high cost for good dense housing (apartments) ... so they build $1.5m cookie cutter houses.
Behemoth - 1309 sq metre newly renovated house
There is a huge economic danger in building large houses for the purpose of accommodating multiple families. If circumstances change or the children leave the nest and the principals move on to another place, the potential market is limited to similar families or people with with similar needs
Check this house out in Tamahere in the Waikato. Originally built by an Asian family in 1992 who have quit and gone elsewhere it has changed hands multiple times since and fallen into disrepair then picked up by a couple of developers who have just spent over $1 million returning it to its former glory
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=118…
The gated property, built in 1992, boasts five bedrooms and bathrooms, two kitchens, four living areas plus a theatre room, library and bar, office, gym, sauna, heated indoor swimming pool, two dining rooms and spans over three levels, and sits on a 8425 sq metre section
Interesting History
It was a leaker and involved Fletcher Building and Firth Concrete - house sold for $850,000
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=309…
Good point.
If the average occupancy increased from say 2.5 to 3, then the shortage may not be as great as commonly thought.
As I have said on these fair pages before, my Indian friend has told me a lot of Indian students do homestays.
Also don't have stats to hand but it seems much more twenty somethings are staying at home these days. Given there is a baby boomer bulge then the impact of baby boomers' children in their 20s staying at home could be having a real material effect.
I vaguely recall reading that if average occupancy increased from 2.5 to 3, there is no shortage.
Roughly 500,000+ Auckland properties ... x2.5 = 1.25m, a shortage; x3 = 1.5m, no shortage.
Given no one can afford to have kids anyway.... there's some extra rooms around.
The Auckland housing market is capitulating . Who decided that not enough homes are being built, when fewer and fewer are actually buying them, let alone want them .Prices have risen so far , driven by speculation and debt that any reason will be put forth to push the last gullible lemmings to the cliff edge. Its over , two decades of incessant property pushing .
When will the idea finally penetrate our government's thick skulls that the market will not and cannot build the housing required, based on current population growth????
Options:
- Do nothing, keep providing for high population growth and relying largely on the private sector to respond, and acting as if meaningful things are being done (National Party policy)
- Pull back on immigration a bit, and get the govt more active in building homes (Labour Party Policy)
- Pull back on immigration a lot (NZ First)
I'm not Labour's biggest fan, but they are way ahead of National on this critical issue.
If we continue with a National government, this problem is just going to get a whole lot uglier
Mmmm, I'm on the fence with this.
On the one hand, the market is broken due to government policy. I will agree.
On the other, 90% of government/public departments/projects are grossly incompetent due to being rife with bureacracy, internal staffing delinquency, and blatant cronyism/corruption.
Anyone who disagrees with that, need only to look as far as Auckland Council or Auckland Transport.
I genuinely think the best option would be to just stop subsidising Auckland. Redistribute funding to better substitutes; Hamilton and Tauranga.
Make Auckland pay for it's growth, if it wants it.
The council would soon get its act together, if that were the case.
I don't believe political promises, but rather look at what politicians do.
The Labour Party are useless, both Len Brown and Phil Goff have short supplied land to Auckland - thus incentivised land banking ahead of building. Labour are so bad at housing that both Tauranga and Hamilton, with a fraction of the economy of scale, build faster than Auckland.
Promises are worthless.
John Banks? No, not that I can recall.
Barry Curtis however, that was a different story. Barry Curtis and Dick Hubbard managed to get twice as many apartments built as we do now, 11 years ago Auckland was the fastest building location in NZ. Manukau was developing Flatbush/Botany to keep land-banking unprofitable and Auckland liberalising building rules of the CBD.
But then John Banks went anti-apartments and Len Brown cut off land supply. And here we are. Screwed.
No. But the reality is:
1. Senior bureaucracy and executive has a lot of sway on planning, after all they are the 'experts'. Auckland's plans have been over complex and heavy handed for more than 25 years.
2. Councils with a 'right' sway are not automatically inclined to reduce red tape, if it suits their conservative supporters not to do so.
You see the elite generally want their leafy suburbs to remain the same whilst the legal fraternity (pure establishment) does very well out of red tape, ambiguity, conflict.
I look at what politicians do too. John Key and National -Bill English, Steven Joyce, Nick Smith all promised back in 2007 that they knew how to fix the housing market and they were going to do it because it was important to the party....
https://www.youtube.com/watch?v=cWPgoAI1cLE
If people want to live in Auckland let them pay for the privilege. Increase rates by 10%, put a 2 dollar toll on motorways, etc. Businesses will decide it is too expensive and move. Then give tax incentives to businesses setting up in towns like Wanganui or Kaikohe. Carrot and stick.
Shortage of new housing stock for the foreseeable future, combined with a surging population (the DEMOGRAPHIC factor) means that Auckland house prices are likely to hold up well in the medium/long term.
I certainly wouldn't rely on the next Government (whatever it might be) to sort out Auckland's housing issues. It's hard to stop a rhinoceros that's fallen off a cliff.
Nonetheless, in my view, National's a safer pair of hands than Labour and The Greens. (Labour is clearly dealing with a major internal (leadership) problem just 8 weeks out from the General Election.)
Of course Auckland is slowing you can't get all of nz have a property boom from mass amounts of Aucklands without Aucklanders leaving Auckland , it's a wonder anyone's left, lucky immigration is up to replace them, be 100% oversea people living in Auckland soon, what is it now 45%, doesnt really matter the Aucklanders moving out seem to have skills, win win
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