Amid increasing debate over whether Auckland can build enough houses, new Statistics New Zealand projections suggest the city's population is growing even faster than was thought

By David Hargreaves

As the debate heats up about whether Auckland can build enough houses, new population projections show the demand for accommodation is set to continue exploding.

Statistics New Zealand has put out its latest 'Subnational Population Projections', updating the last ones that were released in February 2015.

The projections series uses the population statistics from 2013 as a base and then projects out a series of figures to 2043.

Three different scenarios - 'high', 'medium' and 'low' - are outlined depending on assumptions about things such as birth rates, death rates and migration rates.

Auckland region population projections
    June 2018 June 2023 Av Ann % change
Feb 2015 projections High 1,670,100 1,820,700 1.6
Medium 1,646,500 1,767,500 1.3
Low 1,622,500 1,713,900 1.0
         
Feb 2017 projections High 1,736,200 1,936,500 1.9
Medium 1,699,900 1,859,300 1.5
Low 1,663,300 1,781,400 1.1

For the sake of argument the 'medium' projection can be taken as the projection assumed most likely.

Remarkably the latest projections show that taking this 'medium' scenario, the Auckland population by June next year is forecast to be just a touch under 1.7 million.

That new 1.7 million projection is over 50,000 higher than the Stats projections just two years ago.

Remarkably also, the new 'medium' projected figure for the Auckland population by June next year is actually higher than the old 'high' forecast from two years ago. In other words, the population growth of Auckland is overshooting the most bullish of forecasts.

Stats NZ estimates that the Auckland population broke the 1.5 million barrier as at June 2014.

If the 1.7 million figure for June 2018 comes to pass it means the Auckland population will have grown something in the region of 200,000 - or over 13% - in four years.

Putting another 200,000 people in Auckland would, based on three people per home, require over 66,500 new homes.

Between mid 2014 and the end of 2016 Auckland builders got consents to put up just 23,500 new houses in Auckland.

This means another 43,000 would be needed - over the next 18 months - just to play catch up with the population growth. Such a heroic achievement would be way more than Auckland has ever achieved historically.

Auckland consented under 10,000 new homes last year.

Stats NZ says that deriving the new projections involved a review of all projection assumptions for each area, as well as being consistent with the latest national population projections, which based on the 'medium' estimate see New Zealand's population standing at 5.16 million by June 2023.

Stats NZ said the new projections assumed higher levels of immigration and lower fertility rates than the previus ones.

Nationally, the median annual net migration gain is now assumed to be 276,700 for 2014–18, 129,000 for 2019–23, and 75,000 for each subsequent five-year period.

This compares with 149,300 for 2014–18 and 60,000 for each subsequent five-year period from the previous 2013-base projections.

Whether Stats NZ proves correct even with its now slightly higher long term assumptions of immigration will be a point for debate.

Stats NZ is suggesting long-run annual migration gains of 15,000, while the current annualised rate is well in excess of 70,000.

At the moment around 60% of new migrants are settling in Auckland, which suggests a net annualised gain of over 40,000 migrants for the city.

As far as Auckland is concerned, the perceived need to increase building of houses is running up against much tighter lending criteria from banks probably increasingly unnerved by the high debt-to-income ratios being taken on by Auckland home owners, while also trying to combat rates of deposit growth that are sluggish when set against the demand for borrowing.

Ratings agency Standard & Poor's said in a new report that it thought Auckland was short of 30,000 to 40,000 homes. 

S&P said the tightening lending standards, including for property development, meant new construction could slow despite the aims of the Auckland Unitary Plan to promote more building activity. Such a slowing of construction activity could put renewed upward pressure on house prices.

Earlier, ANZ economists in a detailed update on the housing market said they saw "growth headwinds" intensifying for the supply of new Auckland dwellings as escalating costs and capital constraints start to squeeze the market.

"In fact, there is a risk that the above pressures actually result in a slower rate of dwelling construction over coming months.

"At a time when net migration inflows are showing few signs of turning, a weaker supply story certainly doesn’t paint a picture of Auckland housing imbalances and affordability challenges being corrected any time soon..."

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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55 Comments

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27

It is time to drastically reduce immigration to New Zealand! There needs to be further tightening of the skilled work categories and zero intake of family members.

Some immigration makes sense, but the deliberate juicing of New Zealand's bubble economy needs to stop.

If National could catch up on infrastructure and transport investment, house building (and have lower prices), health funding, education funding, police funding (probably still too little) AND then demonstrate the economic advantages of skilled migration (still hasn't been done) - THEN I think a modest level of skilled immigration would be fine. But they can't and won't do these things.

We need a new Government!

If they don't crank back on immigration to a sense-making level, then I suppose the next best option is to let people get on with building a shanty-town of shacks in Cornwall Park. It's probably already in the planning, ground-breaking and cardboard-scavenging stage.

they are already trying to do this in point england reserve see here https://www.change.org/p/save-point-england-reserve and here http://savepe.org.nz/ which is a shame.

Question to experts.

Is it due to immigration policy.

No - it is all sign of prosperity as per national government.

Funny, how they get away with anything and everything but for how long. Election soon.

Did you know that under our residency rules, an immigrant needs to hold on to a job for 2 years to gain residency if they have prior "work experience" and a level 7 or higher NZ qualification. It could be a cart-pushing job for all you know after a retail management diploma and a few years on an Indian retail shop floor.
Check it yourself, requires simple math.
Age 21-30 - 30 points
Job for more than 12 months in NZ - 60 points
Level 6, 7 or 8 qualification (9 or 10) - 50 points (60)
Work experience in same field - 20 points

That brings it to 160, the current threshold. Are we really that desperate for foreign workers that our government needs neither a good reason or nor a population plan to hand out indefinite visas to unskilled labour? Does the Nat government assume the price of becoming a Kiwi is that low?

Apparently, we are.
The Govt is keen to collect the 20k - 60k of international fees as well, don't forget.
The addition of another 'worker' also adds a superficial boost to the economy, without any additional real industry underneath.

Yes, all of NZ is for sale to those with the cash globally and the desire to buy (and live?) here. NZ property is the best money laundering tool after the Casino.

Yep, sell it out from under the next generations for a quick buck.

Worked well when it was muskets and blankets. Guess it will work just as well this time around.

100% correct and it is a fact and everybody knows it specially from communist country where if caught the result will be drastic.

Auckland is definitely growing and growing because DGZ is attracting a lot of home buyers, and they're paying through the roof!
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1180...

Yes “Home buyers” indeed. Foreign, mainly Chinese speculators are the only ones able to pay 2 million per house.

It is not all Chinese. The couple who paid $3m for the house at the end of our street are from Christchurch. And the guy who bought the plaster townhouse for $1.8m last year is from West Virginia. And yes the people who bought the brick & tile for $2.6m a few months ago are Chinese but they've moved here from Howick having lived there for over 20 years.
Also, rumour has it that our 7-Sharp celebrity Mike Hosking upgraded his mansion from Shore Rd to Arney Rd about a year ago for over $5m and I don't think he looks like a Chinese.

When average Auckland suburban housing becomes the purview of the uber wealthy, then something is very wrong.

Just goes to show that when there's enough foreign money to disconnect houses from the local income fundamental, the very rich are unaffected and are indeed prepared to "pay through the roof" as you describe it, with the expectation foreign money will keep flooding in and keep houses disconnected from local market fundamentals.

Time to correct this disconnect. We need a government with balls.

Unfortunately there is no alternative govt. waiting.
Labour is more of the same.
If you want a true disruptor you will need a true opposition.
So NZ Govts will keep the money flowing in via several channels.

Put into law that immigrants/foreign buyers can only buy newly built houses, it will stop upward pressure on existing houses and increase demand for new houses = more new builds

Like so many commentators, you think if you say the same thing over and over again it will become true.

Under the unitary plan, the majority of developable land is through density rezoning. So, your assertion that restricting to new builds only will remove upward pressure on prices is just plain wrong. It will increase aggregate prices in the near term, not decrease them.

*assuming prices are related to demand for dwellings, not speculation, money laundering, and too great an attraction to foreign buyers.

Big assumption.

If you limit it to new builds, add a 20% stamp duty etc. you limit the attraction of it as a place to park money. You can also consider a tax on unimproved land banking to discourage the buying and holding of land for capital gains.

Take away the attractions for speculation, land banking, foreign money, and suddenly "it's all about supply" might not look quite so realistic.

The importance of DGZ will decrease with prices so high. An estate agent told me a DGZ house typically adds 300k to a house value. I personally have no wish to live in the DGZ as it has become a urban congestion zone. If I was looking to give my children the best education I would pay up and sent my kids to St Kents or Kings.

Hahaha obviously for many people (most of my neighbours) who live here the goal is to have a sought after DGZ address (even more prestigious with a 1050 postcode). The fact is that we send our kids to private schools nearby. You mentioned St Kents and Kings...yes their primary start in DGZ even though they're private! St Kents (Shore Rd & Ranui Rd), Kings School (Portland Rd), St Cuth (Market Rd), Dio blah blah....in essence, buying into DGZ is a brand and a luxury, but DGZ'ners are more than likely to send their kids to private schools.

Living in Remmers would drive me mad with all the traffic. It's the Bays for me!

Yes the Bays are nice :-)

That's why we have retained our property in the Bays. When I am sick of Remmers DGZ one day and kids have flown the nest, I might renovate the rental and move back there.

After years overseas there was no doubt in our mind it had to be 1071 for us on our return. DGZ or 1050 has some very nice properties but is not unique in this world. Walking a short distance to an inner city beach is, a fact I think people are waking up to. I suspect that and the boomer drift to the Bays when empty nesting is a reason 1071 featured on the top 20 suburb price growth for 2016. The subdividers are starting to spruik their wares post UP approval but it will be a long time before they can destroy the vibe.

I have a property in 1071 also :-)

I guess if you care deeply about superficial things like prestige then sure.
There are plenty of people who don't give a hoot about plastic materialism.
Each to their own

The right postcode can give someone a sense of meaning, I guess...?

It's a brand to buy into postcode 1050. These were the exact words from the auctioneer's mouth :-)

And after that one learns how to properly pronounce "Oh, darling!" :)

Sounds like a severe case of status anxiety.

Be right back, just rushing to put an Audi on monthly payments!

This entire conversation is less "postcode 1050", more "timecode 1987".

Stats NZ are all over the place!
Projections can be untrustworthy at the best of times.
These are linear methods that simply do not account for the underlying complexities, of which there are many

Inflation 1% - building supply prices up 5% to 13% - one of the building supply companies conveyed these February increases in a letter to their client base. Increases like this may see more construction projects cancelled and land banking the preferred option:

Framing timber 5% to 8%
Other timbers also increase 5% to 8% ( these increases are due to cost of logs to the mills)
PInk Batts $0.125 to $0.55 per m2 increase plus install cost increases
Steel and Tube products
Structural sections 12%
Reinforcing bar 13%
Merchant bar 8%
Mesh 13%

Yes.
Yet another reason why much stronger demand side measures required.

Wrong.
Again, this is not a demand side issue; it is a blatant supply side issue.

The key problem being that no government is ever going to touch Fletchers.

Funny, though - you can tax land banks to break them up. It has a track record of success in NZ.

Sounds like Auckland property prices are currently a bargain. If the population growth carries on prices can only go up. Surely high immigration is going to be the biggest election issue? Surely once policeman, nurses and school teachers can't afford to live in Auckland or be bothered living in a traffic jam the city will become so dysfunctional that it will not be considered as a desirable outcome to live there? It sounds like a nightmare now. Why do so many people want to live there?

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Well, the government has this great plan.

1. Flood the lower end with unskilled immigrants via the PTE sector. This keeps restaurant meal prices low for the investor-voters, and heck, these immigrants are happy to live 10 to a 40 sqm apartment. And as they get jobs it increases competition for renting investor-voters' rental houses.

2. Open the floodgates to foreign buyers at the high end, up to and including purchasing citizenship. This drives up values in the "nice" suburbs by disconnecting their ceiling from local incomes. On the back of this, everyone starts buying anything they can as an investment because the supply of money from overseas is much larger than the capacity of the NZ markets. Unfortunately, this doesn't help infrastructure because these buyers don't have high local incomes, so don't pay much tax.

3. Get everyone to "Repeat the mantra after me: 'It's all about supply!', 'It's all about supply!', 'It's all about supply!'"

Vancouver is already starting to correct things via a foreign purchase stamp duty, tightening up on money laundering etc.

NZ is still largely at step three of the above.

And who gives a stuff about the 70,000 kiwi working age kids chucked on the welfare dependency heap because most traditionally starter level jobs are snapped up by foreign 'students' ? We'll just pass to following generations, the social consequence cost of abdicating our moral responsibilities.

Well, yeah...I mean, investor-voters won't be around by then. Not their or National's problem.

Same reason John Key was happy to kick the pension affordability can down the road for someone else to pick up, despite the urging of many (including Treasury).

A government of the boomers, for the boomers, and by the boomers.

Pretty much. NZ is on it's way to being a airport terminal where young Kiwis finish secondary school, get a tertiary education then go overseas for higher paying jobs and never come back.

Yeah...what sense does it make for young Kiwis to stay in Auckland?

RickStrauss, 1, 2 ,3
Correct.
When will a journalist do a full feature series on this?
With photos of Queen St, with the 37 PTEs, as well as every Uni & Poly in NZ,

Try counting the number of ethnic operated hole-in-the-wall money-changers up and down Queen Street and along Customs Street

The true problem with Auckland is that it's pretty much terminal. Impossible to traverse, horrendously expensive, high crime, zero caring. Immigration to the point that entire suburbs look like Chinese or Indian towns, started with Labour and continued under National. No party any better than the other. An election (barring Winston's bleating) isn't going to make any difference.

A friend who works in central Auckland a few weeks ago, wanted to attend a funeral in South Auckland around lunchtime, he left with the best part of an hour to do the trip. He failed to make the funeral.

I don't think there is anything wrong with 'entire suburbs look like Chinese or Indian towns'. In fact it is actually more comforting for Chinese people to see more Chinese faces [ whoa! no casual racism smears thank you. You know better than that. Final warning. Ed.] where they live.

Our son boarded at Kings while we were in Asia. He reported similar words were said in the dorms. Our second son declined the option to go to Kings based on his brothers description of the culture there.

Nothing wrong except it leads to a large reduction in social capital for both the suburb and the country and helps fuel racism and xenophobia.

You have an ugly personality DGZ - surprised the ed has let this comment stand.

I think it's useful to have it there.

It shows an age demographic (i.e. back in the days when "ching chong eyes" was a term in use) and along with that, a gut level of comfort / discomfort that might arise should the housing crisis effects start to him them in their own back yard "too much"...

We shouldn't forget that the original voters on the basis of the "Asian invasion" were grey power folks, rallied behind Winston Peters. Followed by grey power folks rallied by Don Brash. Although funnily enough once in power this completely disappeared from National's talk when the power of foreign money inflows spoke louder.

It's an interesting juxtaposition to watch play out - on the one hand you have NIMBYism, a desire to see their own living conditions not change (including the racial element within this), and on the other hand you have the urgent desire for gold, property prices disconnected from NZ incomes and driven instead by money flowing in from overseas (and changing their backyards).

Is the subtext really "It's better if they're all in one particular suburbs - it's not my suburb!"

We shouldn't forget that the original voters on the basis of the "Asian invasion" were grey power folks, rallied behind Winston Peters
......
Parr (2000) writes “[T]he views of New Zealanders are not conducive to the population of New Zealanders becoming more diversified globally.”

From localism to globalism? New Zealand Sociology, 15(2), 304-. 335

Anti racism is based on the notion that you musn't discriminate on race or ethnicity, but in full-filling that requirement you get out comes that may not suit the locals. Previously migrations were in both directions, today they are concentrated in a "handful of prime destination countries". The race -relations officer's job is to jump on anyone who objects. If it didn't suit the property developers the race- relations office would be gone by lunch time.

This portion of the comment thread dealing with race and ethnic issues is fraught with trouble. Be civil and sensible in here. No cheap smears and throwaway racism please. I am not trying to stop discussion of serious issues, but some of you seem to have trouble with boundaries and basic human morality. We will be tough on oversteppers.