Construction of new homes in Auckland is getting closer to keeping up with population growth

Property

More than a 1000 new homes a month were built in Auckland in the year to November and the numbers are rising

30th Jan 21, 9:02am by Greg Ninness

The number of new homes being built in Auckland continues to increase at a cracking pace.

The latest figures from Auckland Council show that it issued 1581 Code Compliance Certificates for new dwellings in November last year, up 41% compared to November 2019.

That brought the total number of new homes completed in Auckland to 12,054 in the 12 months to November, up 15% compared to the previous 12 months (see chart below for the monthly trend).

On average just over 1000 new homes a month were completed in Auckland in the year to November, although the increase in the region's total housing stock would have been slightly less than that because some existing homes would have been demolished to make way for the new dwellings.

Interest.co.nz estimates that just under 1300 homes need to be added to Auckland's housing stock every month to keep pace with the region's strong, migration-driven population growth.

Code Compliance Certificates are issued when a building is completed and the latest figures suggest that the number of new homes being completed in Auckland is starting to come close to keeping pace with population growth-driven demand.

Residential building consent figures suggest that the number of new homes likely to be built in Auckland will continue to rise over the next couple of years.

According to Statistics NZ, consents were issued for 1740 new dwellings in Auckland November and the number of consents issued has consistently been above 1300 a month since May.

Auckland Council figures show that most residential buildings are completed and issued with a Code Compliance Certificate within two years of receiving their building consent.

If present home building trends continue, the supply of new homes is likely to start keeping up with demand at some time in the next year or so, although the existing shortfall in housing supply that has built up over many years would mean Auckland's housing supply would probably remain tight for many more years.

Note: Late last year Auckland Council discovered there were serious errors in its reporting system which had the effect of significantly overstating the number of Code Compliance Certificates it was issuing for new dwellings. The errors have now been corrected, but their effect has been that earlier estimates of Auckland's new housing supply were overstated, which meant estimates of the region's housing shortfall were understated. The article above and the graph below are based on the corrected data.

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50 Comments

by tothepoint | 30th Jan 21, 9:20am 1611951654

On the face of it, this is encouraging news.......

But is it enough to stop the explosion in Auckland house prices?

TTP

by Carlos67 | 31st Jan 21, 11:51am 1612047101

The bigger problem is that there are now to many people in Auckland end of story. You can build as many houses as you like but the roading infrastructure is always 10 years behind and you cannot just keep adding more lanes. Traffic is now stuffed every day of the week in Auckland. It used to be just rush hour was bad, now its rush hour all day seven days a week.

by Flying high | 31st Jan 21, 2:54pm 1612058067

The problem is the immigrants dont notice and dont mind the traffic because where theyre from the traffic is far worse. Best solution move to the beach bach and work remotely

by Fritz | 30th Jan 21, 9:21am 1611951674

I am not surprised to hear of those errors. The proportion of dwellings consented through building consent then going on to code compliance certificate always seemed too high. That's something I always said.

by Fritz | 30th Jan 21, 1:47pm 1611967642

It would be interesting to know how out of whack they were. I just looked at publications on the Knowledge Auckland website and it looks like they corrected the data in the historic reports.
I will search Interest's articles on this matter and compare.

by Fritz | 30th Jan 21, 2:33pm 1611970392

Wow. They were massively inaccurate. The Interest article below has the following CCC's reported for July, August, September 2020:

July - 1884
August - 1574
September - 1737

https://www.interest.co.nz/property/107974/more-16000-new-homes-built-a…

Meanwhile the latest council report has the following amended data:

July - 1187
August - 1376
September - 1137

Those are big differences.

by Pragmatist | 30th Jan 21, 4:08pm 1611976097

Reflective of the average level of competence for a council employee anywhere higher in the pay scale than head librarian.

by Fritz | 30th Jan 21, 4:19pm 1611976754

Who's in charge of this? The 'Chief Economist'?

by Nzdan | 31st Jan 21, 4:12pm 1612062768

Maybe the same person doing Barfoot and Thompson's sales numbers did some creative "double counting" of the CCC's.

by Dale Smith | 30th Jan 21, 9:24am 1611951876

'Auckland Council discovered there were serious errors in its reporting system which had the effect of significantly overstating the number of Code Compliance Certificates it was issuing for new dwellings.'

Everyone else: 1+1=2
Auckland City Council 1+1= to infinity and beyond

by tothepoint | 30th Jan 21, 10:05am 1611954348

I wonder what sanctions were handed out to the bureaucrats who cocked up the counting of Code Compliance Certificates.......

Or were they given "performance" bonuses - as usual?

Certainly, there's a lot of malaise and incompetence within our local authorities - but not too much accountability.

TTP

by Hook | 30th Jan 21, 12:11pm 1611961866

Agreed TTP. The councillors can be replaced but the employees and CEs are untouchable (and in many cases lacking in competence)

by james108 | 30th Jan 21, 12:16pm 1611962210

I assume the 1300 homes a month is for ‘normal’ I.e non Covid population growth ?

by Fritz | 30th Jan 21, 12:30pm 1611963027

I would assume so.
So we will be getting some gains right now on the historic supply side shortfall.
Assuming immigration doesn't really open up for another year, then we would have got two whole years of catch up.
That will help.

by Hook | 30th Jan 21, 12:40pm 1611963615

If this build rate can be sustained and INZ takes the opportunity to go for quality(engineering, IT and trades) not quantity (Chinese chefs, Taiwanese masseuses and taxi drivers) it will hopefully help to at least moderate the rises in price. There will be a long lag though

by Fritz | 30th Jan 21, 2:00pm 1611968423

Yes exactly.

by Lapun | 30th Jan 21, 2:04pm 1611968668

Better written as ""... INZ takes the opportunity to go for quality (engineering, IT and trades) not quantity (chefs, masseuses and taxi drivers)"".

The increasing need for care workers can only be met by either drastically increasing pay or continuing to raid the third world of their trained nurses. It makes little difference to customers if engineers or chefs, masseuses or programmers, taxi drivers or tradesmen are foreign born so long as their english is competant. But an elderly kiwi with declining physical and mental abilities may prefer being cared for by people with a similar Kiwi cultural background.

by Fritz | 30th Jan 21, 2:25pm 1611969956

In terms of your last sentence, I am not so sure about that. Certainly some people will be like that, but from what I observed over several years visiting my mother in a dementia care home, many of the residents simply respond most positively to the approach and personality of the care worker, rather than their nationality or ethnicity.

by Lapun | 30th Jan 21, 4:40pm 1611978019

I'll accept that. The term 'care worker' is very wide - from cleaner to highly trained nurse. And of course NZ is now full of elderly people who arrived 30 years ago from many countries. Where ever they are from they deserve to be well paid.

by Fritz | 30th Jan 21, 6:29pm 1611984594

Angels as far as I have seen. Do amazing work, should be paid more.

by karl seastrand | 30th Jan 21, 8:12pm 1611990730

Lapun... in a way I don't think that is the point. IMO the main point is why the hell can't we attract enough Kiwis into care worker training and care worker jobs? Surely the pay for these types of jobs (where we don't have enough Kiwis willing to do them) should be increased until the point where there is no longer a shortage. Allowing greedy (mostly rich) employers to resort to foreign (slave) labour is wrong on so many levels.

by Lapun | 30th Jan 21, 10:12pm 1611997920

I so agree with your statement. How to get kiwis to become careworkers? Firstly many are but not paid and working in NZ. There are so many elderly Kiwis looking after their elderly partner (incidentally saving taxpayers a fortune). And Kiwi nurses and care workers are prized in other countries [my 1st NZ friend when I was still living in Lonodon was a live in companion] keeping such people in NZ means more money. Then there is the status - because care giving is filled with low paid foreigners and involves physical labour and unpleasant bodily functions it has a very low status. And another negative is the hours - care is required 24 hours per day, seven days a week. In our society money is the nearest equivalent to status so we must find a means of paying more and encouraging couples to stay together rather than have a tax and benefit system that rewards singles.

by boreddad | 30th Jan 21, 2:30pm 1611970216

Tough.

by nz-it-worker | 31st Jan 21, 10:12am 1612041153

Your first point may be more valid if we didn’t have such things as a Thai chef visa.

https://www.immigration.govt.nz/new-zealand-visas/apply-for-a-visa/abou…

by Lucky Basket | 30th Jan 21, 3:14pm 1611972875

It has to happen at some point banks will start saying no to finance applications for properties that just aren’t worth the asking price. Can they really go on loaning millions to every man and his dog for rotting heaps just on the strength of projected capital gains? Eventually there will be more sellers than buyers who can pay. It’s basic economics.

by Lord Dowding | 30th Jan 21, 4:09pm 1611976181

Doesn’t matter if the house is rotting it’s the land value that matters as there’s no more of it.

Freehold freehold freehold

by Lucky Basket | 30th Jan 21, 4:41pm 1611978081

Land is only worth what the market will sustain. If banks aren’t financing land isn’t selling. Not the way it is while banks are throwing silly money at anything and everything. If sellers want $5m for every scraggly scrap of dirt and banks won’t lend, that land doesn’t sell. Okay for a little while but eventually it becomes a buyer’s market, only there aren’t enough of those to go around, and that’s bloody bad news for all the people leveraged to the hilt on the promise of capital gains, because banks won’t bail them out.

Kiwis are still falling for the old fallacy about how if the bubble hasn’t burst yet it never will.

by live4ever | 30th Jan 21, 5:10pm 1611979856

"Kiwis are still falling for the old fallacy about how if the bubble hasn’t burst yet it never will." Comments like this baffle me. I've been in the NZ property market pretty much since I got my first job 20 years ago and I've never experienced the bubble bursting. Sure, some years prices have gone down a little but over the long term I'm up by many hundreds of thousands of dollars in the properties I own. Over that period I've met many people paralysed by fear of that 'bursting bubble' and the only thing it's done for them is prevented buying when they could and erode their potential gains and savings. Stop scaremongering.

by Lord Dowding | 30th Jan 21, 5:35pm 1611981314

Exactly right. Only the people desperate to buy scaremonger with the bubble bursting nonsense.

The fact is in NZ properties are never going to get cheaper than they are today in the longer term and the upside risk is far higher than the downside risk.

by Ahuhyeah | 31st Jan 21, 8:29am 1612034945

I'm about to buy. I think it's a bad time. I'm accepting risk. It can go down. Ireland.

https://fred.stlouisfed.org/series/QIEN628BIS

by Nzdan | 31st Jan 21, 6:04pm 1612069461

I think a bubble burst is a real possibility, and I've owned my first home for 3.5 years.

If you look at what has happened over the last 20 years to interest rates and lending terms, the bubble has been growing. Yes interest rates can fall further to keep the party going, maybe we'll see borrowing stretched out to 40 years? But eventually, as house price inflation continues to outpace wage growth, you start running out of people who can afford to buy. There's only so much supply that investors can soak up too, and what sort of yield will they receive if the market can only afford so much?

by Lord Dowding | 31st Jan 21, 9:47pm 1612082851

So then it goes sideways for a a while. Being a home owner for 3.5 years means you may not know how hard it is to get a rental in Auckland or Wellington right now and it’s only getting worse. Demand is massive and will go through the roof when our borders get opened up again. It’s the worst time ever to be stuck renting in my opinion because you are literally facing that for life if you can not scrape in on this current rally. The sooner anyone stops renting and pays for their own home and not the landlords the better. Or you can sit there paying your rent and watch that 1 Mil house turn into 1.1 by the end of the year.

by Nzdan | 1st Feb 21, 9:27am 1612124878

Well I did try get a rental in post-Earthquake Christchurch so I understand the queues out the street and rent bidding.

If it goes sideways, those who are holding for capital gains might decide it's time to liquidate?

by karl seastrand | 30th Jan 21, 8:26pm 1611991584

LB... I have lived through every day for the last 53 years but you would be calling for the men in the white coats if I was to proclaim (as Ashley does) that "based on the empirical evidence of the last 50 years" I am immortal and will undoubtedly live in a similar way for the next 50 years as I did in the last 50.

by Shoreman | 31st Jan 21, 8:02am 1612033371

LB - Sorry mate but waiting for the bubble to burst has not been a good strategy for many people over the last 40 years. What you think should happen and what does happen is very different. Right or wrong property today is cheaper than it will be in the future be part of it or become bitter.

by karl seastrand | 31st Jan 21, 2:34pm 1612056853

Shoreman... did you take note of the first 40 years of the graph LB posted? I am sure that between 2000 and 2008 many people in Ireland were also looking at the past 40 years and saying similar things to what you are saying now. And if property owners have been able to ride things out and hold onto their properties for the last 25 years they are still worth substantially less than they were in 2008. But NZ is duffrent eh.
As you said, what you think should happen and what does happen is (often) very different. The key is to position yourself so that you would be OK if, from 2020 - 2033, the NZ market mirrored the Irish market from 2007 to 2020.

by Shoreman | 31st Jan 21, 8:02am 1612033372

by twoturntablesa… | 31st Jan 21, 1:38pm 1612053505

Land exists; it's not being released.

by CWBW | 30th Jan 21, 3:24pm 1611973498

When building activities ramps up and is forecasted to remain that way for a sustainable period, it's a signal to deploy land banking strategies. Developments will run out of places to build very soon and come begging. Just make sure the new acquisition is sizable enough to build at least 2 townhouses to attract their attention. Windfall is coming and every thoughtful land acquisition is a winning Powerball ticket without gambling.

by Fritz | 30th Jan 21, 4:05pm 1611975943

If I had a lot of spare money I would have bought well located properties in Wellington to land bank. Their new plan will be up- zoning lots of properties and with that will come big value uplift.

by CWBW | 30th Jan 21, 4:14pm 1611976484

Thanks for the tip. Which part of Welly are you referring to?

by Fritz | 30th Jan 21, 4:25pm 1611977140

I think the opportunity has gone. They have already consulted on a draft plan.
The national policy statenent requires them to upzone around centers and train stations. A 400-800m radius. That's a lot of properties in a lot of suburban locations.
Same in Auckland, Hamilton, Tauranga etc.
In fact I wouldn't be at all surprised if the release of the policy statement mid last year has been a significant factor pushing prices higher in the last 6 months.
People are nowhere near aware of it as they should.
I gave my cousin some advice when it came out, all I will say is he has rewarded me for my advice which he thinks has seen large value uplift on several properties he bought.

by Dale Smith | 30th Jan 21, 4:33pm 1611977618

This is why you don't pre zone land. All it does is allow it to be land banked and held to ransom.

by mikekirk29 | 30th Jan 21, 4:18pm 1611976691

R we surprised by cock up re stats? We cannot even get census right for Christ-sake.
Apparently 500k people in NZ did not fill in the ownership status box re housing.
So, forget about stats pretending to show what OO is.
3 years consulting on bloody everything, + a Commission too followed by PC pleasings for all, and then MAYBE some action. Bring back DLO and get building done without all the BS contracting regime and quangos we acquired in 1980s as a great improvement on public sector (except more expensive of course)

by sunchap | 30th Jan 21, 9:34pm 1611995649

The greatest enemy of the poor in Auckland is Auckland Council? By maintaining a "Rural Urban Boundary" for forty years land has gone from 20% of total median home purchase price to about 70%...And now they lie about housing consents...

I believe we should double Auckland's land size to crash the price of land. This would probably reduce the median house price to median income ratio from 10 to 3 as it would release the amount of land that should have been zoned for residential use over the last thirty years. But the Green Gentry will never permit that to happen...

by nktokyo | 30th Jan 21, 9:51pm 1611996712

Fantastic news considering what many predicted would happen when lockdown hit.

by JustAParadox | 31st Jan 21, 10:06am 1612040772

Its not just about building houses. But building the "right" sort of houses in the "right" place. I would suggest we stop the sprawl and detached or semi-detached housing. And go up. Follow a Singapore type system, and do mass public (and quality) public housing, a ballot system and incentives for generational housing and overall ownership based on care and respect of the housing. Just a thought...and to be tailored for our own unique situation

by Camel's back | 31st Jan 21, 12:53pm 1612050815

Fascinating.. Its almost as if Housing and immigration were somehow linked.

by Hook | 31st Jan 21, 1:29pm 1612052999

Haha.. imagine that?

by Pusheen | 1st Feb 21, 3:03pm 1612145031

NZ can ramp up any supply numbers, Greg - in the end? how affordable is it? you should try to put that pictures from China, about couple of those ghost cities... more dwellings.. by why they are empty?
The real problem is NZ is just that: govt & RBNZ are too afraid to reign in the Banking cartel that allow this to happen. But hey, if you like me in OZ? - I'll do the same.