10,195 new homes added to Auckland's housing stock in April year

Property

The number of new homes being completed in Auckland could increase by about a third over the next two years

26th Jun 19, 7:39am by Greg Ninness

More than 10,000 new homes were added to Auckland's housing stock in the 12 months to the end of April, and that number could swell by a third over the next two years.

Auckland Council issued 10,195 Code Compliance Certificates (CCCs) for new residential dwellings in the year to April, up 12.9% on the previous 12 months.

CCCs are issued when a building is completed and are one of the most important indicators of construction activity because they show how many new housing units are actually being built, while building consents show how many housing units are intended to be built.

There is also substantial time delay between a new building being consented and receiving a CCC when it is completed.

The latest figures from Auckland Council show that 87% of the CCCs issued in April were for buildings that were consented within the previous two years.

The table below shows the number of CCCs issued by Auckland Council in the 12 month period ending April from 2014 to 2019, and the number of new dwelling consents issued in Auckland for the 12 month periods from April 2012 to April 2019.

The CCC numbers correlate quite closely with the consents numbers from two years previously.

For example, the 10,195 CCCs issued in the 12 months to April this year is a good match for the 10,226 consents issued in the year to April 2017.

The numbers show the very strong growth in the number of homes being built in Auckland, which have more than doubled over the last five years.

They also suggest that there is very little slippage, with most of the homes that are consented eventually getting built.

And the ongoing increase in the number of new dwelling consents that have been issued over the last two years suggests that the number of new homes that are completed and receive CCCs over over the next two years could rise to somewhere between 13,000 and 14,000 a year by 2021.

Interest.co.nz estimates that Auckland's housing stock needs to increase by around 10,500 homes a year for housing supply to match the demand generated by population growth.

If that is the case, supply of new housing has probably already caught up with migration-driven growth in demand for new housing, and ongoing increases will start to reduce the accumulated shortfall in housing that built up due to many years of under building.

However since Statistics NZ changed the way it measures migration it has been unable to provide estimates of regional migration patterns and that, coupled with problems from the last census, mean a reliable estimate of Auckland's population is not currently available.

However the latest figures suggest the pressures on Auckland's housing stock should be starting to ease, and may ease significantly over the next two years.

The comment stream on this story is now closed.

Code Compliance Certificates issued by Auckland Council, compared to new dwelling consents issued two years previously
Code Compliance Certificates Issued		New Dwelling Consents Issued
12 months to April		12 months to April
Apr-14	4106	4077	Apr-12
Apr-15	5269	4835	Apr-13
Apr-16	6131	6796	Apr-14
Apr-17	7412	8155	Apr-15
Apr-18	9030	9353	Apr-16
Apr-19	10,195	10,226	Apr-17
		11,629	Apr-18
		13,754	Apr-19

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

89 Comments

by house hunter | 26th Jun 19, 7:53am 1561492411

More good news for house hunters.

by tothepoint - d… | 26th Jun 19, 8:20am 1561494026

But will the transport infrastructure increase commensurately??

Took me 105 minutes to commute into the CBD this morning.......

Oh how I envy those lucky enough to reside in Auckland’s inner-city suburbs. Bliss!

TTP

by mfd | 26th Jun 19, 9:14am 1561497291

You should try moving to a more sensible city - 10 minute bike to work for me in central Christchurch today, same as every day. I've never understood why people give up so much of their lives to commuting.

by Mrs The Point | 26th Jun 19, 9:36am 1561498569

Did you skid on the ice?

by mfd | 26th Jun 19, 9:43am 1561499034

We don't really get ice here as we're on the coast. A little frost first thing but I've never had weather prevent me from cycling in my 5 years here. Hardly ever need the waterproof either.

by Yvil | 26th Jun 19, 10:02am 1561500176

I just spent a week in Timaru, biking in winter in Canterbury, no thanks, it's sooo freezing in the morning

by mfd | 26th Jun 19, 10:09am 1561500595

We have these things called 'clothes' to deal with that. Long sleeved merino layer, a mid-layer fleecy something, and a windbreaker and there's no problem. Legs don't get cold because they're moving, but a pair of good gloves goes a long way. I've done a little biking around Queenstown in winter, that was pretty chilly but once you get going there's no problem. Maybe life in the North Island makes you soft?

by Yvil | 26th Jun 19, 12:41pm 1561509713

Indeed, life in the North of the North island is much easier/more pleasant (I lived in Christchurch for 20 years)

by dmitri | 26th Jun 19, 10:21am 1561501280

bitterness or envy?

by Yvil | 26th Jun 19, 10:07am 1561500466

TTP, Some speak about a time mortgage, being the price you pay to commute to work daily. If you spend 45 minutes each way, 5 days a week, 48 weeks pa, that's 360 hours per annum stuck in traffic, that's the same as an additional 45 working days (8 hours /day) per annum spent in the car. A heavy price to pay indeed… we can't claim back lost time

by tothepoint - d… | 26th Jun 19, 10:42am 1561502558

Hi Yvil,

That's a very good point!

We're not all equal.

Those living in the inner-city suburbs have huge advantages in terms of convenience - especially if they work in the CBD.

TTP

by Chairman Moa | 26th Jun 19, 11:13am 1561504402

Not as cracked up to be. my last house in Auckland was in New market, my work place was at Albert st and the bus normally took 45 mins as there is no dedicated bus lane.. same amount of time as walking.

by Balanced Life | 26th Jun 19, 12:28pm 1561508931

That would be a Long March, Chairman Moa.

by Pietro | 27th Jun 19, 2:54pm 1561604098

Rush hour commuting isn't a simple matter of distance. We lived in Rothesay Bay and took at least 40 minutes to get to the CBD in 2002. Then we moved to Takapuna and spent the same amount of time getting there because of traffic lights and ramp metering. We now live 60ks north and can be in the CBD in an hour or so when we need to because we have a clear run on to the motorway at Puhoi, no ramp metering, traffic lights, or T2 lanes. I had to come in to the Shore last week for an 8.40 meeting, so left at 7am to be on the safe side and was in Milford at 7.45 with the best part of an hour to kill. It can all turn to custard if there's a shunt somewhere, though. You can stick inner city living. I don't want to hear my neighbour's toilet flush. We have it easy in Auckland re commuting. Try living in a real big city, like London. An hour is nothing by the time you've bussed walked or driven to a train or Tube station, got into the City and then bussed or walked to your workplace.

by Nzdan | 26th Jun 19, 10:34am 1561502080

Valid in my case, I spend 960 hours a working year commuting. But it makes sense for me, bought our first home a couple of years back. Our mortgage amortized at 23 years is currently less than 10% of our gross household income, my monthly rail ticket is $350, my family is very comfortable.

by Yvil | 26th Jun 19, 1:08pm 1561511283

That's indeed a lot of time but since you are in a train and not driving, you can either be productive or have fun on your device. Is there a way you can convince your boss you will beat least as productive working from home 1 day a week? (and deliver on that promise?). Or leave work earlier and finish your work while commuting?

by Nzdan | 26th Jun 19, 2:23pm 1561515831

I have a company phone + laptop so work is done on the commute. My current role does require me to be based in the branch each day, but they have discussed that potential.

by printer8 | 26th Jun 19, 11:04am 1561503873

Agreed Yvil.
For many buying in a less desirable location (distance from work or a lower social economic area) is a compromise that FHB especially have to make.
However, this is not a life sentence, rather usually the first step on the property ladder.
I am quite sure that for many of those in the inner city, that was not their first home.
In the mean time, those on the bottom rung of the ladder enjoy the day and the journey of life.

by rastus1 | 26th Jun 19, 10:54am 1561503256

I concur. Never used a car as a commute vehicle. 45 years later I'm still on me bike. After a nice long hot shower at work and my morning graze on IntCo I sometimes peep at the Auck traffic cameras and look at those poor commuters. That's not living..that to me is just terrifying. No wonder mental health is an issue.

by Joe Wilkes | 26th Jun 19, 11:41am 1561506076

Just received some really interesting stats for the Wellington region if anyone is interested in our beautiful little capital city and it's surrounds.
Sales so far this year Jan - June from REINZ
Sales above $2.9 million - Just one sale which was a livestock block at $6,020,000
Sales between $2 million - $2.85 million - Just 5 (less than one a month) NB. there are 30 houses on Trademe at present in this band (1/30 chance of selling this month at current rate of sales)
Sales between $1.5 million - $2 million - Just 6 NB. There are 37 houses in this price range on Trademe at present (1/37 chance of selling next month at current rate of sales)
Sales between $1 million - $1.5 million - 48 sales so far this year - There are 176 properties available on Trademe at present (8 sales per month average = 8/176 chance or 1/22 chance of selling next month at current rate of sales)
If anyone is interested I'll get my man to look a bit further and compare to the sales rates from last year.

by mikekirk29 | 27th Jun 19, 12:21pm 1561594893

by Joe Wilkes | 26th Jun 19, 12:20pm 1561508414

Fascinating data Mike. Not long until we hear on the cash rate decision, I don't think we really understood how much the housing market was being underpinned by foreign liquidity.

by Glitzy | 26th Jun 19, 4:34pm 1561523666

Excellent stats. Thanks for sharing.

by Pragmatist | 26th Jun 19, 8:28am 1561494534

Is there any breakdown on the type of dwellings? Even just a total number of bedrooms would be informative.
10,000 studio apartments is a very different outcome from 10,000 3 bedroom houses.

by Cowpat | 26th Jun 19, 8:35am 1561494938

Is this good, Auckland's housing shortage is now resolved. The crisis is gone. It was caused by Statistics NZ .

by tothepoint - d… | 26th Jun 19, 8:57am 1561496264

Indeed, Cowpat, my bovine friend.

Statistics NZ seems to be causing a number of problems these days...... The 2018 Census debacle is a real shocker.

TTP

by Cowpat | 26th Jun 19, 9:45am 1561499139

Toothy how was the walk this morning ?

by Voiceofreason | 26th Jun 19, 12:49pm 1561510198

More than that, the unreliable stats seem to be shifting to, oops we may be building too much. Surprise, surprise, similar to the Australian situation. They overbuilt in Sydney and Melbourne due to a fake housing shortage, and were left with way too many (shoddily built) apartments in the pipeline, and the market tanked.

by Balanced Life | 26th Jun 19, 1:18pm 1561511919

My word, that's scary what happened to those Australian buildings namely; Opal Tower and Mascot Tower. I pray we learn from that mistake and tighten Building regulations here too as emergency prevention rather than emergency evacuations.

by RickStrauss | 26th Jun 19, 2:44pm 1561517084

Regulations can't prevent the building industry from delivering a poor product. They can try, but very likely they cannot ever be successful.

Accountability for the products one makes and sells should be the requirement.

by Fritz | 26th Jun 19, 8:44am 1561495460

I am telling you now that the number of house completions will not be a third higher in two years unless the government steps up its house building programme.
This is rear view mirror stuff. These completions announced today will typically be for buildings consented 1-2 years ago.
I expect consents to drop away in the next few months. Then completions will also drop away
Also good luck in selling these completed homes. With the FBB and other factors it will be hard work. Only so many mugs willing or able to pay 650k for 2 bedroom boxes, or 950k for 3 bedroom boxes.
Lots of these places will struggle to sell, prices will be cut, adding further downwards pressure on house prices.
Btw for anyone who understands the HPI better than me - might the relatively high levels of new housing on the market be distorting that upwards a bit? A 800k new 3 bed townhouse in south Auckland is expensive compared to a 3 bedroom older home.

by Miguel | 26th Jun 19, 10:25am 1561501517

*edit* this is incorrect, see below comment from k_s.

HPI factors in age of the property.

“Our hedonic regression model focuses on a small set of property attributes where the quality is acceptable and records are reasonably complete: the number of bedrooms, floor area of the dwelling, property land area, and age of the structure.”

by k_s | 26th Jun 19, 9:21am 1561497670

The REINZ HPI is based on a SPAR approach. As far as I know they don't publish a hedonic version. Although they did toy with one a couple of years ago.

Fritz is talking about a new goods problem which isn't analogous to age - in the case of a hedonic HPI, this is no issue. In the case of a SPAR, they in fact need to be removed unless they have accurate valuation data that represents their current characteristics.
i.e. there is no issue with including a new build in the SPAR index if it has a valuation representing it's current condition. However, in the case that there is only valuation data for the vacant lot, it needs to be omitted in order to not put upwards bias on the index.

by Miguel | 26th Jun 19, 10:23am 1561501394

Good spotting. Sorry, I did a quick scan through the document and didn't notice I was reading from the wrong section. You are correct.

by Yvil | 26th Jun 19, 10:15am 1561500908

Fritz, why would it be "rear view vision stuff"??? You admit yourself that CCC'S follow Building Consents 1 -2 years later and recent Building Consents are up… so it's actually forward looking, and indeed likely to increase over the next 2 years.. Re-read Greg's article

by Fritz | 26th Jun 19, 10:31am 1561501889

Yes and no.
Recent consents are up, yes, but I see those dropping away.
Also, moving forward I see fewer building consents converting to CCCs. I think quite a few dwellings consented in the last 6 months won't go forward to completion, for a host of reasons.
But I could be wrong in my predictions, and if I am that will be great for housing supply and keeping downward pressure on prices. So I hope I am wrong....

by Yvil | 26th Jun 19, 1:16pm 1561511766

OK, I get it, it's your personal opinion. Your original post "I am telling you now that the number of house completions will not be a third higher in two years…" sounded a lot more like a statement

by Fritz | 26th Jun 19, 1:23pm 1561512192

Yep a statement, which is an opinion.
You disagree? You think house completions will be a third higher in 2 years?
Would be great for housing supply if they were.
BTW, since you are an architect, it would be nice to hear what you think could be done to address the housing issue.

by Yvil | 26th Jun 19, 1:49pm 1561513766

"statement" a definite or clear expression of something in speech or writing
"opinion" a view expressed about something, not necessarily based on fact or knowledge

Big difference

by Fritz | 26th Jun 19, 2:31pm 1561516282

A Statement CAN be opinion. A statement may also not be an opinion.
I will give you some slack since English isn't your first language.
But let's move on - I can't really recall you making suggestions on how to address the housing issue, since you are an architect I'd like to know your thoughts.

by Yvil | 26th Jun 19, 5:19pm 1561526387

I don't believe we can make houses significantly cheaper (that's why I never believed in Kiwibuild). A house is made up of:
1) the land; unless you're willing to live in a location where hardly anyone wants to live (west coast of South Island), land will get more expensive, population grows, land stays constant
2) the building; which itself is made out of a) labour, wages are not getting lower quite the opposite and b) materials which we always need to improve, like better insulation, double glazing, better heating, better plumbing, flasher light fittings, more appliances, more complex (read waterproof) cladding more compliance costs, better engineering (read earthquake proofing) etc...
I'm not trying to be a grinch but for the reasons above I truely don't believe cheaper houses are around the corner.

by Big_Data | 27th Jun 19, 2:29pm 1561602543

Hi Yvil

We may not be able to make houses much more cheaply however it's not unheard of for new construction to drag markets down. In Arizona (epicentre of the GFC) there was a boom followed by overbuilding. Once the market ended up with too many homes and not enough buyers, builders started to cut prices. The had to. They were sitting on liabilities they had to shift, due to cost of holding including maintenance, property taxes (rates) and loans. They were selling most likely at a decent loss in many cases. It started with 5% then 10% discounts from list. After a year or so of increasingly soft prices it was a fire sale. 30‰ off peak of new home prices probably not an exaggeration.

Then when loans reset, interest-only deals became P&I, and introductory rates went away, people who'd bought their new homes at full price couldn't sell to avoid the higher fees, nor could they refinance, as the values had declined. Negative equity and people unable to pay loans they thought they could escape if needed. So repos. Lots and lots of repos. Values eventually tanked by about 60% in some areas.

Not saying it will go that way here, but overbuilding in an overpriced market with overstretched mortgagors isn't a good look. I wouldn't bet the house on it, anyway.

by Yvil | 26th Jun 19, 5:25pm 1561526700

The only way I can really see accommodation getting more affordable is:

1) more people living in apartments (less land/dwelling required)
2) no population growth. I have been advocating for a while for a radical idea to sustain our world of no more than 2 kids per 2 parents.

Since 2) is not likely to happen, 1) will be the answer in the long term. (I grew up on the 5th floor of an apartment building in Switzerland and I was perfectly happy)

by Fritz | 26th Jun 19, 6:06pm 1561529214

How about the government building a lot more apartments like they do in Switzerland?

by Yvil | 27th Jun 19, 1:56pm 1561600587

Yep that works but people in NZ need to shift their house on a 1/4 acre block mentality

by Glitzy | 26th Jun 19, 9:28am 1561498130

Knowing how many of these are sold now would be very informative on the state of the Auckland market.

by Cowpat | 26th Jun 19, 9:36am 1561498605

Out of curiosity , any stats on number of retirement homes consented for Auckland only.

by Fritz | 26th Jun 19, 10:50am 1561503043

Go to section 4 of this report:

http://www.knowledgeauckland.org.nz/publication/?mid=2866&

Retirement village units are usually a pretty small % of total dwellings consented.

by Joe Wilkes | 26th Jun 19, 1:15pm 1561511717

Core blimey Greg. You picked a flattering construction image for that one - looks like a POW block. Similar design and construction materials to the ghost cities in China. Now I have a feeling that we are likely to see only 17,000 - 18,000 sales in Auckland this year (back to 2008 levels), developers generally need to sell so the secondary market for timber sheds could get quite competitive, leaving only 7000-8000 buyers for the houses in the secondary market. A few of which will be the loss making specu-purchases made over the last few years.

https://www.whatsonweibo.com/chinese-ghost-cities-coming-to-life/

by Nzdan | 26th Jun 19, 10:43am 1561502602

Have you seen the Selwyn District Council offices?

https://athfieldarchitects.co.nz/media/cache/eb/4d/eb4d25f5995989bd3725…

https://athfieldarchitects.co.nz/projects/civic-community/selwyn-distri…

by dictator | 26th Jun 19, 11:46am 1561506405

The guard tower is a nice feature.

by Davo36 | 26th Jun 19, 6:59pm 1561532379

The round drum bit is where you consents go. Round and round and round...

by mikekirk29 | 26th Jun 19, 10:28am 1561501723

Sorry but pop growth does not equate to demand growth. Supply is up a lot and buying is down. What is needed is reasonably priced places for rent. Are these being built and bought and rented out at reasonable rent? Answer is probably not but we do not know. Research base for planning urban dev is parlous in NZ

by unaha-closp | 26th Jun 19, 11:03am 1561503832

The numbers show the very strong growth in the number of homes being built in Auckland, which have more than doubled over the last five years.

The numbers show how abysmally awful Auckland City has been previously. The numbers show that Auckland is only now barely building at the same rate Sydney/Melbourne do today. Sydney/Melbourne have had a collapse of their building sectors and have now cratered to the level of Auckland's "peak".

by Chris-M | 26th Jun 19, 11:14am 1561504447

Here is an interesting link
https://www.scmp.com/news/china/money-wealth/article/3016074/unimpeacha…

by Fritz | 26th Jun 19, 11:32am 1561505556

Very interesting....but causation, or just correlation? Or a bit of both.
The places with higher foreign housing buying activity usually have strong demand regardless of the origin of that demand

by blobbles | 26th Jun 19, 9:07pm 1561540041

It is an analysis which displays the correlation coefficient. It analyses a cause (HAM) with a result and finds them to be near perfectly correlated. A 0.96 correlation efficient is about as good as you find anywhere. It means the things are near enough to being absolutely linked.
https://www.dummies.com/education/math/statistics/how-to-interpret-a-co…

by Davo36 | 26th Jun 19, 7:01pm 1561532479

And anyone who said this a few years ago was called a racist.

The fact is the Chinese government printed a bunch of money and it went around the globe looking for a home. Or many homes. Canada, US, Aussie, NZ, UK...

by printer8 | 26th Jun 19, 11:18am 1561504699

Interesting that during the property boom the number of new dwelling consents and CCC issued was relatively low compared to the flat market post boom.
I am mulling over a couple of questions from this:
- To what extent was the number of consents constrained by Auckland Council planning/consent process efficiencies?
- Given the number of consents and CCC now being issued, how significant was supply a factor in driving the boom?
- As supply over the past few years is at a high compared to the past 8 years, will this have a significant affect on the current market?

by Fritz | 26th Jun 19, 11:26am 1561505163

Printer8 - I think you will find that the Unitary Plan has had a big effect.
It wasn't 'operative' until late 2016, by then the house price boom in Auckland had ended.

by unaha-closp | 27th Jun 19, 11:10am 1561590635

The pre-2017 boom was in large part cost based price inflation driven:
- Pre-2017 the number of consents were highly constrained by Auckland Council restricting land supply to approximately 30% below requirements. This caused Auckland to build housing about 50% slower than Melbourne/Sydney/Brisbane were doing.
- The pre-2017 price boom in Auckland was larger than in comparable cities, because it was both cost & demand driven, and attracted speculative investment.
- In late 2016 Auckland Council increased land supply to about 50% above requirements (with added urban land supply to exurbs and removal of MUL for small settlements) causing the land price to decline while building supply increased.

What will happen next is interesting, because when there is a housing shortage any reduction in demand will impact pricing dramatically (inelastic markets - 101).

by Fritz | 26th Jun 19, 11:39am 1561505991

This from Infrastructure NZ is worth a read, just confirms what anyone close to the ground knows:

“Last week’s announcement of a 10 percent year-on-year decline in Auckland’s April dwelling consents and fall in the total number of new homes completed in the last quarter reinforces the importance of urgently implementing the Government’s Urban Growth Agenda,” says Stephen Selwood CEO of Infrastructure New Zealand.

“The 1043 homes consented in April 2019 was down from 1163 in April 2018, according to recent data released by the Auckland Council’s Research and Evaluation Unit.

“These numbers confirm strong anecdotal evidence coming from the infrastructure and development sector of a slowing in the market.

“The 1043 homes consented in April 2019 was down from 1163 in April 2018, according to recent data released by the Auckland Council’s Research and Evaluation Unit.

https://infrastructure.org.nz/media-releases/7642143

by Fritz | 26th Jun 19, 11:44am 1561506257

Goes on to say:

“Lack of competitively priced land supply means that it is almost impossible for housing to ever meet demand. Each time it comes close, house prices begin to flatten out and developers are forced to cut output or sell new homes below cost.'

There it is - inherent market failure. Development needs increasing prices to work, but increasing prices makes things unaffordable.

Of course Infrastructure NZ just falls back to the same old tired rhetoric of opening up more land supply to address this.

In fact, the only solution is for the government to build more housing, to get out of this cycle of market failure.

by Dale Smith | 26th Jun 19, 2:35pm 1561516544

It is only an inherent market failure due the systematic failure of affordable land supply due to restrictive zoning laws. The 'developer' as opposed to landbankers, only needs to have increases in prices, if they have increased input costs. The first input cost is the land, on which the overinflated prices were set many years earlier and cannot be discounted away unless the landbanker is going to sell at a loss.

In theory the Govt. on taxpayer land could discount the land back to any price they want, but this would mean a taxpayer subsidy, and also the Govt. being in direct competition with other higher leveraged land owners. The alternative solution is to remove restrictive zoning and let those that find they are now holding land in excess of its value bear the loss while truly affordable housing it build around them.

It doesn't matter which system you go for, it is nigh on impossible to achieve affordable housing without the overinflated land prices (and their owners) taking a hit.

by Fritz | 26th Jun 19, 2:56pm 1561517770

I understand the theory but I think the reality is a very different thing, especially in Auckland with its geography and physical constraints. Do you really think abolishing the RUB will pull land prices down significantly? I am not convinced.

by Dale Smith | 26th Jun 19, 4:55pm 1561524903

All the stats. show that jurisdictions with no/low restrictions have far more affordable housing.

And constraints in a more open market would normally be discounted back. ie a section with slope incurs more development costs so this cost is discounted back against the cost of a level site ie would be cheaper. But this slope might add value with a view so that gets added back on to get a final price, ie the value of land is its weighted comparative against the 'model' land. But the human artificial restriction of zoning adds a multiple of 2 or 3x the standard free market model.

I would also suggest that as Auckland grows away from the isthmus area it is breaking free somewhat of the physical boundaries it had, and it is only the fact people are trying to drive growth back into a restrictive area that is not helping.

As I said, the evidence shows, both in theory and practice, that removal of restrictive boundaries will result in lower land prices, and I'm talking about up as well, not just the RUB. The evidence also shows restrictions increase prices, which prove the present results we have, ie high priced housing.

BUT the main point to understand is about removing ALL restrictions, not just the zoning restrictions per se, so for example if you just removed the zoning restrictions but left the council with their monopoly power to restrict consents based on the councils in/ability to fund infrastructure, then this would be a land restriction still by default.

The key is to remove zoning restrictions, remove councils monopoly to provide consent and infrastructure roll out, and at the same time make infrastructure funding available to developers.

And if the only downside you can see is that you don't think (in spite of both the theoretical and practical evidence) it won't significantly lower prices, then what have we got to lose by trying it?

by Fritz | 26th Jun 19, 6:30pm 1561530626

But which jurisdictions? I know of Houston, of course, but that has a totally different geography much more suited to peri-urban development, not to mention a very different economy (huge economies of scale, low labour costs, different tax regime)
But sure, try removing the RUB and see what happens. As long as prime soils and ecological areas are protected, I don't care that much.
I just don't think, in Auckland, it would be a panacea.

by Dale Smith | 26th Jun 19, 10:23pm 1561544637

The Houston geography is not that different from say Christchurch, Melbourne etc yet the medium multiple in Houston is half that of Aussie, NZ, Canada and California. The Californian economy being very similar as you describe to Texas, yet Texas has medium income multiples half that of California. Australia should have some of the cheapest housing land in the world due to low density and geography and yet their prices were some of the highest in the world.

Until the early 1990's the medium multiple in NZ and Texas were the same ie 3x, it was only after this time that in NZ income decoupled from house prices.

But it won't happen in Auckland, because the council won't allow it to happen, and central Govt don't have the will power or support of the public service.

by unaha-closp | 27th Jun 19, 11:53am 1561593218

Fritz and Dale,

The thing you are arguing about has halfway already happened. Auckland Council opened up land when the AUP was modified in late 2016. There is now an oversupply of land in Auckland (achieved by partial removal of RUB restrictions).

The problem is, as Fritz described in the first comment, a slow price deflation in which builders are in the difficult position of needing to develop a property in a declining price environment.

And both of your suggested solutions are valid fixes for the problem. Fritz's idea of state intervention where the state takes the risk. (I like Fritz's solution because it will have less of a sudden impact on prices and hopefully will allow demand sentiment to stay high.) Dale's idea of removing the remaining RUBs so the land price crashes and the market finds the land price floor. (I like Dale's solution because it privatises the risk.)

by Dale Smith | 27th Jun 19, 2:56pm 1561604186

What the council opened up with the AUP was land that that had been bought at landbanker prices, so it was only opening up expensive land so the only thing that got built was expensive. I'm talking about opening up all land as a presumptive right to build (but with the likes of corridors, environmentally land set aside).

The only way houses get cheap in our type of system is because of the counter cyclical swing of the boom cycle, ie the bust cycle. Where as in truly affordable housing markets than use no/low zoning restrictions, their is no boom or bust in the property cycle, prices are affordable and stable over time irrespective of immigration, and interest rates.

This focus on 'x' number of houses that needs to be build is so shallow in its understanding, it is the very reason we are in the mess we are in, ie lots of very expensive houses of poor quality and of the wrong type being built in the wrong locations.

We already have the evidence that the Govt. does not know what they are doing. They were told this prior, and were given the solution, but of course know better how to spend our money than we do.

by Pragmatist | 27th Jun 19, 12:03pm 1561593830

What are the rare multiples and the well done (overcooked) multiples?

by Dale Smith | 27th Jun 19, 3:03pm 1561604616

Almost all multiples in NZ are overcooked, with the rarest being the median multiple.

by Davo36 | 26th Jun 19, 7:04pm 1561532655

Yep, flood the market with residential land and the price becomes much cheaper.

This has been done overseas.

But of course, we could just turn off the immigration tap and save our farmland.

by Voiceofreason | 26th Jun 19, 12:41pm 1561509666

Are we now shifting from a narrative in which a dire housing shortage (as reported everywhere in media) is being resolved quite quickly, due to there not really being much of one in the first place, because the stats were quite unreliable? But now there's a building boom, and a lot in the pipeline that will mean there's an overshoot? Funnily enough, that would be very similar to the Melbourne and Sydney situations, where they overbuilt apartments, and it also turns out, in the rush to build the apartment building regulations left a lot to be desired. Certainly something to think about in the upcoming NZ situation.

by Fritz | 26th Jun 19, 12:53pm 1561510380

Seen this movie before ey

by Voiceofreason | 26th Jun 19, 12:59pm 1561510783

Yep, the situation seems to repeat itself in numerous times and places around the world.

by unaha-closp | 27th Jun 19, 11:21am 1561591314

But not in Auckland. Auckland Council has constrained new apartment builds to less than 50% of the levels seen in Melbourne/Brisbane/Sydney.

by Miguel | 26th Jun 19, 1:45pm 1561513509

People often don't understand that during a bubble the actual demand for housing (i.e. a place to live) is not the same as the demand for "low risk" tax free capital gains. The expectation of increasing prices actually increases demand, while expectation of prices falling decreases demand.

I'm sure everyone can think of a fair few people they know who's kids moved out long ago, but are still living in great big 4-5 bedroom houses. Why downsize when the value of the property keeps going up? That mindset will quickly change if prices start going down and the value of their "retirement fund" starts to deflate.

by Glitzy | 26th Jun 19, 4:18pm 1561522700

The other point to add is that these new communities are going to be the acid test for where the lower end of the market is going.

I had a drive around Hobsonville today and it is a mighty construction site. I was told that the building is planned to continue for the next 4 - 5 years.

Now imagine you owned one of these first built places and you want to sell. As this market downturn continues you will be competing against a developer with a new build on his hands and bank debt. He has a margin of 30%+ he can discount before he is in the red. How likely are you to sell your place at this point ?

by Dale Smith | 26th Jun 19, 5:03pm 1561525403

Yup, and he can offer other incentives like delayed settlement, whereas the present owner is looking for earlier settlement.

It works both ways of course, if the earlier sales come back onto the market as resales in any great number, then they both drive the price down. Plus any resale by an owner is seen by the banks as the true value of similar property (not the initial price/value the developer sold it at). These reales can wipe equity of all existing owners and developers alike.

by Glitzy | 26th Jun 19, 6:21pm 1561530094

This is exactly what happened in HK in 1998 thru 2003 after the AFC. Biggest hits in value were the new builds about 1 hour+ from the CBD. They dropped 65~70% in value from the peak. The negative equity at that point was leading anyone who wanted to sell to simply handing the keys over the banks.

Not saying Auckland will get that bad but it has the potential to vet pretty ugly here.

by Fritz | 26th Jun 19, 6:39pm 1561531148

Milldale, Auranga look a bit 'dangerous' to me. Quite good master planning though, so maybe that will see them maintain value

by Dale Smith | 27th Jun 19, 3:07pm 1561604874

Agree, will be especially interesting to see how the 'extra' ratable levy that Milldale is charging will work. Since they are saying is it a capital and interest charge, I would expect them to show how their section prices are cheaper than they would have been otherwise.

by Davo36 | 26th Jun 19, 7:12pm 1561533120

So the government wants to build 100000 houses in 10 years. And they have built around 80 in 18 months.

But the private sector builds 10,000 per annum.

Perhaps the government should just get out of the way (and the councils especially) and let the private sector do it?

by powerdownkiwi | 27th Jun 19, 12:24pm 1561595084

"Interest.co.nz estimates that Auckland's housing stock needs to increase by around 10,500 homes a year for housing supply to match the demand generated by population growth"

Actually, Interest.co was sent something about this, eh Greg?

And Interest.co is sitting on a piece about cities, and their future issues. The question is: Why is it sitting on the piece, and why did it choose to make this projection instead?

My guessing is that we are looking at the divergence between journalism and click-requirement.

by Greg Ninness | 27th Jun 19, 1:35pm 1561599342

Actually PDK I'm unaware of the "piece " you are referring to. Perhaps you should direct your questions to whoever it was sent it to.

As for our estimate of 10,500 additional homes a year being needed, you will see this was a link to the article which contained that estimate, which also set out how it was calculated. That article was published in February, which is when we last updated those numbers. So the calculation wasn't made "instead" of figures contained in the mystery "piece" refer to.

My guess is that you need to spend more time outdoors getting some fresh air, instead of sitting around imagining media conspiracies behind every curtain.

by powerdownkiwi | 27th Jun 19, 7:21pm 1561620074

On 27/5, I sent a certain Mr Ninness a reasonably polite email. It included a fair bit of reference reading.

Did you receive it? Did you read it? Did you follow up on the listed references?

by John2 | 27th Jun 19, 10:24pm 1561631058

Anyone know whatever happened to the Most commented or read Section?

by John2 | 27th Jun 19, 10:24pm 1561631060

Anyone know whatever happened to the Most commented or read Section?