The number of new homes completed in Auckland in January dropped sharply as the number of new homes being built appears to be settling at a level slightly below last year's peak.
The latest figures from Auckland Council show it issued 689 Code Compliance Certificates for new dwellings in January, down from the 822 that were issued in January last year, but still up from the 642 issued in January 2020.
Code Compliance Certificates (CCCs) are issued when a building is completed and are therefore the best indicator of new housing supply, unlike building consents, which are issued before construction commences.
The number of CCCs issued each month has been in decline since July last year, with the number of CCCs issued each month from July 2021 to January 2022, with the exception of December 2021, being below the same month of the previous year.
However, a better indication of the trend probably comes from looking at the monthly figures on a rolling 12 month average basis, which are displayed in the graph below.
This clearly shows the number of new homes being completed in Auckland peaked in June/July last year and then slowly but steadily declined before beginning to flatten out at the end of 2021.
These figures suggest the number of new homes being completed in Auckland each month has eased back from around 1200 a month in the middle of last year and is now settling at around 1100 a month.
Given that building consent numbers for new dwellings in Auckland remain high and the construction industry continues to work at or near peak capacity, there is nothing to suggest that a major downturn in new dwellings completions is likely in the near future and completions appear likely to continue at or near current levels well into the remainder of this year.
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26 Comments
Delays and shortages of building materials, add bad weather/political climate...........
...and still overbuilding!
Even with high house prices, developers go under liquidation.
Only 1100 houses a month to accomodate the 15k people we lost in the last two months!
Borders are now open for returning NZers without MIQ, that is going to change the flow significantly
It may not be what many spruikers are hoping for.
The on-going shortage of houses continues. NZ’s housing stock is insufficient - especially in Wellington and Auckland.
The more GOOD-QUALITY new-builds the better - to help get houses prices down. Keep them rolling!
TTP
2 years ago at the beginning at the pandemic, i remember property ppl expecting a surge of nz expat coming back to lift up house prices.
funnily we are in the revers situation now where border is reopening yet the same ppl have the same argument that nz border is reopening and nz expat will come back to buy houses.
There was an announcement from the government in 2019 about another upcoming announcement in 2020 on prefab construction that would take the industry by storm.
Hopefully these reforms come before the sector hits a brick wall and those needed to physically erect prefabs on site haven't already left NZ for greener pastures.
Yet another broken promise.
Its tough for developers out there at the moment. One site I've got going up in Wellington is delayed 6 months, with $20k holding costs a month that bites. Another section I'm settling on in a few months, was planning 10 townhouses but think I'll get the resource consent and then maybe wait it out for a while.
Its one thing to be losing 20k a month in holding fees, its even more frightening how much the property market is tanking per month.
Sorry, 2022, but the property market is not “tanking”. That’s emotive language.
What we’re seeing is a much-anticipated correction, after a lengthy period of buoyant trading conditions.
TTP
Sorry Tim Mordaunt , What we are seeing is the owner of Property Brokers Reality desperately trying to control the narrative to keep the market buoyant.
Sorry, 2022, but I have no connection with the person you mention above.
I understand that person was prosecuted for breaching the law for anti-competitive trading practices - namely price-fixing. Subsequently, I understand the person was found guilty of the charges and fined - as well as receiving a great deal of adverse media publicity.
Since you have no idea of my identity, your message above is churlish.
TTP
Nice try Tim. But you dont fool me, or others. You forgot to mention Property Brokers Reality has a Red Flag flying above it. I do agree that it should be avoided by all means. And we do. How is Paul Whitaker getting on these days, shame what happened there. I guess blood runs thicker than water they say, but that was harsh.
Another churlish comment by 2022.
TTP
To The Point of sounding like a broken record
Tanking is an understatement.
When Tony Alexander starts his newsletter with advice on how to sell with a 20% discount from the peak... you know the markets tanking.
"For the overwhelming majority of people even a 20% decline in prices will be meaningless. It would still leave average prices 13% above March 2020 levels"
Pity he forgot to include any helpful tips for those victims who bought in late 2021 on the back of his "25 reasons house prices are going up" FOMO inducing advice.
http://tonyalexander.nz/resources/Tony's%20View%2010%20March%202022.pdf
Yes exactly Tony Alexander is the most pro-property economist in the country. He may be 'independent' now, but he's still tied up a lot with the property sector in the work he does.
If he's signaling significant price drops, then you know that probably means things are tanking.
Yes, does he even write about anything but property? At the back he lists the 6 property organisations that he creates 'unbiased' property content for.
To be fair to him, at least he's calling the market straight.
Unlike ol' Ashley C who is quoting and channelling Roosevelt in the Great Depression which really only proves how bad he thinks it's going to get.
"In 1932, as part of his inaugural address as incoming US President, Franklin Delano Roosevelt declared that “the only thing we have to fear is fear itself”. Roosevelt was referring to the impact of the Great Depression which had started in 1929 and which was ravaging the US economy and he made the statement to reassure the American people that they would come through the crisis stronger – a prediction which proved to be correct in the fullness of time"
Shame he fails to mention exactly what the passage of time was, but history tells us that Manhattan property prices were still down 67% from their peak a decade later... and that it took a world war and the birth of an empire for them to eventually recover.
Good article there DDDDebt.
When the king of property spruikers Tony Alexander is talking 20% discounts you know its tanking. I think my prediction of a 30% decline in prices from peak to December this year is starting to look modest.
Just looked at his newsletter, gee it's full of property / RE advertisements. He really is 'The Property Guy', if ever that was in doubt.
I actually think some of his analysis can be quite good, but gee there's several things in that article that are questionable.
Those developers well underway, and with sale and purchase agreements locked in, should be OK. Pity the buyers though who will likely be collecting the keys to a property that is worth significantly less than what they paid.
It's more at the front end where things will start freezing. Off the plan sales will freeze up, so developers won't be be able to start projects.
That's why I have consistently said completions won't start slumping till late this year / early next.
The leading indicator to watch for will be a drop away in building consents over the next few months. That will take time to work through to a slump in completions.
Those developers can still get caught out if their purchasers can not settle on the due date because the bank wont lend due to negative equity problems. They can pocket that deposit and go after the off the plans buyer, but you still cant get blood out of a stone. If the market only falls 10% then the developer may recover, if he can find another buyer. But we are on track for a 30% crash by December this year. Scary times for developers.
Yes, another decent risk for sure.
How likely though are banks to decline a mortgage based on negative equity?
Scenario:
Bank gives pre-approval to Bob in May 2021 for an off the plan townhouse purchase (sales price 850k)
Bob pays the 10% deposit- 85k and signs the Sale and Purchase agreement.
Come October 2022 and the townhouse is nearing completion. Property prices have slumped, the townhouse on completion is valued at 730k.
The pre-approval is never a guarantee of final approval, but my understanding is banks usually try their best to honour it.
How often do you think they will honour it in this scenario, which could be quite common?
Given the amount of work that has already started, completions will stay fairly high for much of this year - unless things get really bad and we see lots of abandoned, half-finished projects (unlikely, but possible - occurred in the 1970s).
But we can expect a significant drop-away in building consent numbers starting over coming months. That will then translate in to a slump in completions starting late this year / early next.
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