Big drop in the number of new homes completed in Auckland in September

Property / news

The number of new homes completed in Auckland in September was the lowest in any month since May last year

6th Nov 21, 9:05am by Greg Ninness

There was a big drop in the number of new homes completed in Auckland in September, but it's too early to say if it signals a slowing in residential construction in the city.

Auckland Council issued 776 Code Compliance Certificates (CCCs) for new dwellings in September, down from 1173 in August and 1137 in September last year.

It was also the lowest number of CCCs issued in any month since May last year.

Code Compliance Certificates are issued when a building is completed, so are a better indication of housing supply than building consents, which are issued before construction commences.

Over the 12 months to the end of September an average of 1151 CCCs a month were issued in Auckland, so September's figures were well down from that.

However it's too early to say if the drop was a one off or part of a longer term trend.

Auckland's monthly figures can be volatile because of the relatively high number of large, multi-unit developments being built in the city, and the timing of their completion can have a significant impact, either up or down, on the monthly figures.

September was also the first full month in which lockdown restrictions were in place in Auckland this year, which may also have affected the numbers.

The chart below shows the monthly dwelling completions in Auckland since September last year.

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46 Comments

by HouseMouse | 6th Nov 21, 9:19am 1636143547

Yep, too early to call on one month of data, but it's going to trend down.

There is a very strong historic relationship between rising interest rates, slowing house price growth and rates of housing construction.

by Foxglove. | 6th Nov 21, 9:27am 1636144051

Stuff article today. Supplies running out. Truss, framing, steel mesh etc orders simply being cancelled. Fixed price contracts impossible. There it is. Builders can’t build if ain’t got anything to build out of can they.

by HouseMouse | 6th Nov 21, 9:39am 1636144797

Lots of headwinds converging for construction. Challenging times now and looking ahead.

by Carlos67 | 6th Nov 21, 9:42am 1636144934

Its also demand=supply so the build rate is self regulating anyway. People seem to think we are going to end up with a housing glut and prices will crash, its never going to happen. If building materials only keep getting more expensive, the finished house prices are only going one way. If its not one thing its something else, house prices will continue to rise.

by tothepoint | 6th Nov 21, 1:11pm 1636157493

A huge number of building projects across the country are being thwarted by shortages of building materials and skilled tradespeople.

Most building projects are being delayed - and being completed well outside anticipated completion dates.

It's a major concern to builders and their clients - especially because delays cost big $$$.

TTP

by Brock Landers | 6th Nov 21, 1:17pm 1636157865

The disruptions are "transitory".

What's really going to scupper the building industry is the incoming credit crunch colliding with their bloated price expectations.

by HouseMouse | 6th Nov 21, 1:21pm 1636158098

Hit the nail on the head.

by WellingtonInvestor | 6th Nov 21, 3:28pm 1636165713

I was speaking to a builder a few weeks ago and he wasn't having any problems with supply. But he said that the key is planning. Many builders don't plan and expect materials just to be avaliable.

by Sluggy | 7th Nov 21, 8:11am 1636225915

Having worked on the supply side of this for 30 years, I can tell you a large percentage of tradies are ridiculously disorganised. Great trades people but not great business people.

by Lord Dowding | 7th Nov 21, 8:04pm 1636268667

Well not surprising really as the trades don’t exactly attract the sharpest tools.

Having said that if you’re reasonably smart you can rise to the top with your own business and do very well quite quickly.

by Rob Reid | 7th Nov 21, 12:13pm 1636240382

Same here - spoke to AKL builder friend 2 weeks ago and he said they are managing to get enough materials for now.

by Small Kev | 6th Nov 21, 5:17pm 1636172230

Supply shortage and raising rates, not really fun trying to build in this environment, just spend time and do something else enjoyable .

by ozzzy2 | 8th Nov 21, 1:45pm 1636332301

https://www.perthnow.com.au/lifestyle/real-estate/homes-are-selling-hal…

by tomjones_04 | 6th Nov 21, 9:48am 1636145283

As the price of new builds creep up due to building costs ie lack of materials and high land costs….

Renters appear to be pretty much tapped out. Do the numbers still make sense for investors on new builds? I’d say it’s a risky one to buy at the moment unless you are mortgage free on the investment.

by HouseMouse | 6th Nov 21, 10:01am 1636146080

Lucky if you get a gross yield on new build townhouses of more than 4%. That will be even less attractive as interest rates rise.

by tothepoint | 6th Nov 21, 2:15pm 1636161310

NZ'ers enthusiasm for property will rage on.

The housing market will cool off for a while - but don't expect any crash in house prices.

As tough as things might become, people will fight to hold onto their houses - and the vast majority will succeed.

TTP

by Brock Landers | 6th Nov 21, 5:19pm 1636172351

People "holding on" and prices dropping are not mutually exclusive.

by james108 | 6th Nov 21, 10:08am 1636146503

Surely the level 4 lockdown just the prior month has something to do with this…… no construction happens during level 4.

Any talk of a trend is extremely premature given the above.

by Neonlights | 6th Nov 21, 10:39am 1636148397

Surely that’s a massive part of it - weren’t we in Level 3 (with no building) for 60% of September? I would have expected this.

Edit: Auckland was in Level 3 until last week of September.

by kiwiana02 | 6th Nov 21, 3:11pm 1636164677

Auckland was in level 4 - no building- until last week of September. Shifted to level 3 on 22 Sept.

by CWBW | 6th Nov 21, 10:16am 1636147001

This is good news for house prices.

Inflationary pressures and dwindling incentives will ensure supply is constrained. This may be the start of another long term cycle of upward valuation for existing properties.

Be quick.

by james108 | 6th Nov 21, 10:17am 1636147055

Sure thing bud

by HouseMouse | 6th Nov 21, 10:30am 1636147817

Nice spruik!

Of course you are *partly* right. Escalating build costs and slowing supply will not help affordability.

But you have forgotten to mention dwindling demand, the other side of the equation.

by CWBW | 6th Nov 21, 10:44am 1636148665

The theatre of aggregate demand- it's not all just about FHBs and investors.

by northman46 | 6th Nov 21, 11:13am 1636150413

This is good news for people who own multiple houses only.

by CWBW | 6th Nov 21, 11:33am 1636151608

That's why people should learn to be part of the good news.

Owning only 1 house is not only risky when the market is moving up, it's also risky on the way down.

You never just own 1 and everyone should have at least 2.

by northman46 | 6th Nov 21, 11:40am 1636152023

Not everyone has that opportunity. As you've said before, the door is closing, "be quick", etc. Youth born without the luxury of landlord parents aren't so fortunate.

by Smudge02 | 6th Nov 21, 3:23pm 1636165419

"Everyone should have at least 2", what planet do you live on mate! Ridiculous comment.

Some people on here simply like the sound of their own voices, with zero consideration for anyone else's situation.

by HouseMouse | 6th Nov 21, 4:31pm 1636169511

Ignore him, he's a troll

by Dale Smith | 6th Nov 21, 4:37pm 1636169830

'everyone should have at least 2.'

It's worse than that. If everyone owned 1, then there would be no rental market and any extra would be sitting empty.

It's hard to know whether he is being intentionally funny or is just funny.

by Ebisu | 6th Nov 21, 5:38pm 1636173481

Many people have have just two houses. Three or four is preferable.

By the way, be sure to take no mercy on your tenants. Squeeze the peasant class on rent till it hurts as can’t ever have them save enough money to become owners. Show them who the lord of the land is.

by tomjones_04 | 6th Nov 21, 11:41am 1636152064

CWBW.. I fear you may be right on the constraint of supply having upward pressure on existing homes. Hopefully the upward pressure will be short lived before some sanity returns. A lot of reasons to be cautious at the moment.

It all boils down to your reason for buying, if it’s for a quick dollar or a speculative punt… no

if it’s for a home to live in for years to come.. yes

by Brock Landers | 6th Nov 21, 1:08pm 1636157326

Why do you always want to be quick? Is it some kind of anxiety with being a coffin-dodger?

by CWBW | 6th Nov 21, 3:47pm 1636166846

Look at where being slow gets you Brock. That's a valuable lesson for everyone.

by Brock Landers | 6th Nov 21, 5:23pm 1636172610

Being slow for what? Where does it get you?

Speaking in riddles is a sign of cognitive impairment.

by Rob Reid | 7th Nov 21, 12:31pm 1636241491

Remember this? A couple thinking they need to defend their mansion with guns:

https://www.bbc.com/news/world-us-canada-57521756

The more the "winners" win, the more "losers", paranoia and anger. This is the direction Be Quick is taking us.

Grow some veggies or do something else worthwhile, CWBW, rather than trolling for fun.

by HouseMouse | 6th Nov 21, 12:14pm 1636154073

Even Darcy Ungaro over at Granny Herald is sounding bearish on house prices, at least in the short term.

by Pa1nter | 6th Nov 21, 12:26pm 1636154781

Since covid I'd say completion timeframes have easily doubled, and it's getting worse. Supplies are patchy, and there isn't the labour so everything is stretched super thin.

On the flipside, there's a crazy amount of work in the pipeline, I'd imagine anyone half decent will be run off their feet for the next 12-18 months easy.

Long story short, just reading raw stats cant give you a proper understanding.

by VTHO | 6th Nov 21, 12:55pm 1636156540

Just been out for a walk in Auckland. Looks like PLENTY of new houses being built and/or finished to me. Just an observation.

by 7jai | 6th Nov 21, 2:15pm 1636161358

Based on all the comments I read on the website, it's not a supply issue, but an interest rate issue. So now's the time to put it to the test. Interest rates are rising, construction is slowing. Let's see if their 'wish' of a housing price crash happens.

From my perspective, the slow down of residential builds will only mount to the pressure of prices and rent increases. Just wait until the borders open.

by Yvil | 6th Nov 21, 3:31pm 1636165878

September was also the first full month in which lockdown restrictions were in place in Auckland this year, which may also have affected the numbers.

"May have affected the number???" Lockdowns level 4 with no construction for 3 weeks in Sept did for sure have a big impact on the lower number of CCC

by Brock Landers | 6th Nov 21, 5:25pm 1636172708

Indeed. Smells like clickbait.

by MortgageBelt | 6th Nov 21, 4:07pm 1636168040

Building materials supply shortages of many different types. Steel parts, plumbing, timber types etc.

This will keep existing house prices buoyant.

by Wrong John | 6th Nov 21, 5:51pm 1636174270

In our extreme world we have lots of extreme issues & lots of extreme solutions it seems. Even extreme responses to the expected extreme issues [like RB guv LVR decision in May 2020] are appearing, which dismay's me somewhat. Sigh. Things are booming once again in Auckland, however. I have a good friend involved in the latter stages of new builds & he has been rushed off his little diggers, to the point were he needs new staff. Sound familiar? But once again, extreme, locked down & doing nothing [extreme] to back to work & rushed off his feet [also extreme]. Why can't we just cruise through this at a moderate pace while all doing well? Why does everything we do have to be extreme?

by HouseMouse | 6th Nov 21, 6:55pm 1636178123

Hope he's putting some $$ away for the rainy days that are coming.

by nktokyo | 7th Nov 21, 8:01am 1636225282

Silly headline because of the lockdowns. Oh look there are some ads.