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The latest figures suggest the number of new homes being completed in Auckland could be levelling off

The latest figures suggest the number of new homes being completed in Auckland could be levelling off

There was a sharp drop in the number of new homes completed in Auckland in July, with Auckland council issuing 1147 Code Compliance Certificates for new dwellings, down from the record high of 1532 in June (-25%).

The 1147 new dwellings completed in July this year was also down slightly compared to the 1187 completed in July last year.

Code Compliance Certificates (CCCs) are issued when a building is completed, so are a measure of the actual supply of new housing becoming available, unlike building consents which are issued before building work commences and are an indicator of future supply.

However the monthly CCC figures can be quite volatile, particularly in Auckland where they can be affected by the timing of the completion of large apartment projects.

A look at the longer term trends suggests the number of new homes being completed in Auckland may be flattening out after a strong run of sustained growth, rather than declining.

The number of CCCs issued between the 12 months to the end of May this year and the 12 months to the end of July this year has remained within a fairly narrow band of 13,957 to 14,381, suggesting the number of new homes being completed in Auckland each year could be levelling off at somewhere around 14,500.

That likelihood is further reinforced by the rolling monthly average figures, which have ranged from 1163 to 1202 a month between May and July this year.

That suggests a levelling off at around 1200 new dwellings a month in Auckland (the chart below shows the rolling monthly averages from December 2013 to July 2021, with the steady increase over that period clearly evident).

However the Level 4 lockdown restrictions have likely thrown a spanner in the works over August and September., Combined with capacity constraints already evident before the restrictions were introduced which may linger after restrictions have been eased, could mean we may be well into the summer months before a clearer picture emerges on the long term trend in Auckland's new housing supply.

However the latest building consent figures suggest it should remain strong.

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12 Comments

Need to keep the volume of new dwellings as high as possible, in order to slow the increase in house prices.

We need far more houses in a number of cities - including Auckland, Wellington and Palmerston North.

Land suitable for development will remain highly sought-after.

TTP

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5

The desirable locations are already gone. Your now left with developers buying old existing properties on large enough bits of land to build 3 boxes for exorbitant amounts of money, essentially up to $2million just for the land which will then be passed through to the new build."Green Field" building locations are now coming with very long commute times to the city.

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I think we will over the years come to realise just how undesirable some of these areas are. Just with the flood the other week in Kumeu, Auckland sections that were ready to go for development were considerably under water. Recently surveyed and approved sections that plan to be sold at hefty 'non-flooding' prices...

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What we actually need to do is choke off the over-supply of credit.

The speculative bubble has little to do with the physical supply of houses anymore.

New Zealand will learn the hard way.

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9

Wellington not really accelerating. In fact I think its slowing. The Hutt has a few sites.

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I called it.

I said a significant slowdown was on it's way.

One of the big reasons is developers can't deliver within the Homestart price caps anymore.

Over the last few years Homestart approvals have been running around 4k per annum, that's a decent chunk of demand for new homes.

The government will probably lift the caps again, and then there might be a bit of a bump back up, until.....

And on it goes...but like cutting the OCR, the ammo is slowly but surely running out.

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Doesn't surprise me, inflation has been intense in building materials...if you can even find any to buy: https://www.rnz.co.nz/news/business/451081/new-builds-absolutely-not-re…

This makes me laugh, you have RBNZ talking about moderating house prices while the costs associated with building materials and labour are rising rapidly. Then you have the slowdown in building rates caused by Covid-19 lockdowns...

 

Every factor is perfectly aligned to drive house prices past the moon and to the outer planets.

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Yes, it's not rocket science. Soaring land prices, rising building costs = developers can't build to Homestart  / FHB price points.

Having said that, I don't know whether anyone other than myself has  called this. Certainly none of the 'economists' have been talking about it.

A cooling construction sector might limit the likelihood of significant OCR increases. 

 

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And any increase in HomeStart acts as a Universal Pricing Signal.  After all, why build anything for Less????

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4

yes, all the signals the Govt. sends the market increase the price. They are clueless.

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All that have gone before finally get to realise that you cannot regulate natural market forces. For example back in the 80s the ill fated meat board regulated by setting minimum CIF prices  in the markets which simply became the maximum price wherever relative. 

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Sales will continue though, expect to see three year sunset clause soon, I guess.

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