The number of new homes being completed in Auckland is almost a third higher than it was pre-Covid.
The latest figures from Auckland Council show that an average of 1122 new homes a month were completed and issued with a Code Compliance Certificate over the 12 months to October this year, compared to an average of 852 a month over the 12 months to October 2019, before the Covid pandemic took hold.
That's means average new home completions in Auckland are running 32% higher than they were pre-Covid.
As the graph below shows, the number of new homes being completed in Auckland peaked in the middle of last year then dropped back slightly, but has started rising again since the middle of this year.
The figures also show that construction started on most of the new homes being completed well after the initial Covid outbreak and the imposition of lockdown restrictions.
Eighty six per cent of the Code Compliance Certificates (CCCs) issued for new new dwellings by Auckland Council in October, were issued within two years of the projects receiving their building consents.
That figure was above 90% for all of 2019, suggesting builders are still experiencing some delays in completing projects due to issues such as supply chain disruptions, but those pressures appear to be easing.
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50 Comments
And a good majority of these houses will now be valued lower than what they were bought for.
Hope the majority of the buyers have foreseen this scenario and saved the extra cash to fund the short fall of the valuation when it comes to settlement times. Also Hope their incomes have risen substantially to offset the rise in interest rate.
lol, who am i kidding?
Hope the majority of the buyers have foreseen this scenario and saved the extra cash to fund the short fall of the valuation when it comes to settlement times
This. Yeah, this could be a real concern. The major banks' economists have all now publicly expressed acknowledgement that there has been a substantial drop in valuation...the underwriting teams can't be far behind.
We could very easily find ourselves in a spot where off-the-plan buyers simply can't settle with the banks unwilling to loan enough to cover the outstanding settlement amount.
Eesh.
I wonder how those sunset clauses are working out now for delayed builds due to supplies issues in a turned market?
That's a good point. Up until last year, sunset clauses were primarily triggered by developers when they realised they could achieve a higher price on the current market than the buyer had signed up for. Now...it could easily be the reverse.
I wonder - have sunset clauses been worded to specifically benefit the vendor? Or has it simply been the market conditions? Any lawyers on here?
Not a lawyer, but have come across sunset clauses in my area, Bay of Plenty, were they are usually for the sole benefit of the purchaser. That was for land development. Would imagine that for housing development both vendor and purchaser would have the benefit if the contract sunset? Couldn’t imagine a lawyer allowing a vendor to sign up to a building project without a sunset clause that favours them.
Don't worry. I'm sure there will be plenty of friendly second tier lenders able to help them out.
And some of those buyers might end up better off walking away from the 5% deposit they put down and purchasing at the new market price if they can raise the finance.
I think the good news is that we may have fixed the inability to build homes fast enough for the population change. In simple terms the Auckland population has dropped slightly in the last three years - but we built 45,000 homes in Auckland - enough for 100,000 people.
That won't mean that we have a surplus of housing - but that the kids staying at home with their parents or the first home buyers taking in a flatmate will ease.
My very strong belief is that the issue has now moved to the regions, who have yet to find ways to build in volume. I also suspect that Ashley Churchs 'house prices doubling in 10 years' will become doubling in 20 years - with a real fall in value over the next ten years.
ACT and National plan to bring in at least 100,000 per year so our hard won dent in the housing shortage will probably take a year to disappear.
I agree that National seeks election success if the middle class seeing their house prices rise. And ACT, against any thought of open market-led solutions, want to restrict house development in 'leafy suburbs' because they are dependent on Epsom votes.
Ashley Church: "house prices double every 10 years, except when they don't"
"Its actually an educated guess that house prices double every 10 years, I am 90% sure they will!"
Not sure most regions have housing shortages there are three times the listing here than “normal” and very few sales. I think it’s an affordability problem, that people just can’t afford to rent or buy the houses at the moment. Hopefully plenty of excess volume will help solve this problem.
The already banked 15-20%+ increase in wages due to inflation will start to reflect on rents and then prices in the mid-term as interest rates stabilize and then drop back and the already unfolding crash in construction forward orders will mean this new supply gets absorbed within 3 years.
We are headed into a massive recession.
Landlords may be able to squeeze a little more rent from their tenants by forcing a decrease in their standard of living (which is a dick move, frankly) but the scope for rent rises in a recession is limited.
Inflation has already absorbed those pay rises, and then some.
Yes probably.
Rather than these sort of depressing, slow grind issues, the stuff that keeps me up at night is a major bing bong overseas tripling fuel prices for NZ (assuming we can still buy the stuff) and/or making our export shipping way harder. If NZ grinds to a halt it will hardly matter to anyone except us.
The increase in wages I think is lower, and I think rentals will not increase that much in Auckland. They are pretty static at the moment. I also suspect that there is around 20,000 building consents which have yet to be turned into homes in Auckland - and that supply will continue because the cost of a building consent is too high to shelve. What we may see is a number of sites with building consent in place and started developments selling at a price which makes their completion viable.
Some see this at 30% off CV. These sales may also be to builder/developers, who are somewhat confident that they can at least break even on these levels and need to keep small teams of builders busy over the next 1-2 years. If you lay off your workers and they goto Aussie you have no company for the rebound in a few years time. Its a gamble.
On the ground, even with a BC, developers can not proceed. Mums and dads may be able too if they own the land but many others who paid high land prices just can't do it. The BC will be shelved and refreshed at a later date. Many trades are still quoting ridiculous prices. Can't build a house for more than the sale price especially where finance is a high cost and risks high. Developers are putting projects on hold and licking their wounds for now, if they can hold they will, if they can't it is a gift for someone cashed up. The whole in-fill property development industry is badly run and oosing poor workmanship. Those who know how it works and can get quality trades will survive. Meanwhile, we will continue to race to the bottom of quality hill. Thanks Labour!
Net migration to Calendar YE 2019 + 70000
Net migration Jun 21 to Jun 22 - 6900
The free for all on converting single home sites into multi unit townhouses has been great for housing supply. But how many of those small scale developers are going to be solvent in a few months time?
We have built it. But will they come?
I think they will. Recent stats show a big turnaround in recent months.
there was net of almost +90k in October and November alone.
https://www.customs.govt.nz/globalassets/documents/oia/oia-response-air…
15 Nov update
There was a provisional net migration loss of 8,400 in the September 2022 year, Stats NZ said today. This was made up of 69,100 migrant arrivals and 77,500 migrant departures.
The best data is border crossings, people flooding into the country in the last three months
They already came.
Long way to go till I'd be worried about a surplus of houses.
There needs to be a breakdown in the TYPE of homes being completed. I suspect a huge uptick in shoebox terraced houses, not the stand alone type on a decent sized section as there are now just to expensive for the majority of people to buy now. Houses of this type also risk being in the same area as social housing. Long term they just turn into slums, the build quality, the fact many get rented and trashed just ends up making them a poor investment. New builds across the board are about to fall off a cliff, in 3 to 6 months time its tools down.
Already seeing that in the area where we live. All standalone new builds but with pocket sized sections and no real fences allowed. It is already turning slummy with the first wave of tenancies. In 10 years this place will be unliveable. You'd think we would have learned more about good town planning by now.
"Houses of this type also risk being in the same area as social housing." Don't think so, shoe box townhouses are permitted, and are being built in, almost everywhere in Aucckland, even under the 2016 unitary plan, including high end suburbs. Agree with your view on how they might end up as slums though.
Its not the style of house that creates a slum, its just the area. There won't be slums in the good areas, there are plenty of normal people that don't want a big section, particularly as they get older. I know a lot of young educated renters who much prefer the terraces over the equivalent old uninsulated house on big section, I actually think its the places that don't get new builds that could become slums.
You just have to look at some of South Auckland (rewind 20 years if you like) to see traditional houses on big sections that are slums.
I think we too often assume that the new houses are going to deteriorate. In realtity they are built to a far higher standard that the previous generation - double glzing, better insulation, extraction fans, tiles and stone benches. And a 100 year old workers cottage in Wellington - where what was once an outside laundry is over a 100 years becomes a bedroom.
We also need to acknowledge that younger generation don't want the things we did - I was surprised while house hunting by a daughter that car parking wasn't on the agenda
Construction-wise? Yes. Legal framework? Ask me in five years. I see a lot of people indicating that there's a Christchurch-style ticking time-bomb when it comes to insurance on some non-bodycorp townhouse blocks once they make up enough of our housing stock.
Which is a shame. I'd be quite happy to live in a three-level townhouse with a workshop on the bottom floor.
A massive problem now is that access roads to houses are to narrow and there is no provision for off street parking so when all the houses get rented,, you suddenly have 4 cars for every place and no parking in the garage so there are cars all over the grass verges. Council planning is really hopeless, houses should not even be allowed unless there is also at least 2 car parks available outside the garage on the concrete. We just don't learn in this country and continue to make the same mistakes over and over.
So everyone should be forced to pay for carparks even if they don't want them? Imagine if they had that policy in Tokyo or New York! But NZ is duffrent.
I think you will find that minimum parking policies (recently removed by some Councils) got us into this car dependent, high house cost, mess.
A much easier fix is to just fine people that park on grass verges. If you want 4 cars, don't rent a terrace with no parking.
So because some people who don't want car parks apparently have guns to their heads when it comes to not buying something with a car park if they don't want it, we end up with no car parking at an affordable level and everyone just parks on the street anyway. Where, I should point out *everyone* still pays for parking. You don't have some inalienable right to the space in front of your house.
What you have here is actually a public subsidy for developers that ends up being an ongoing headache for new and existing residents.
Isn't it just the free market? If people want car parks, they will be prepared to pay for them, and developers will build them. They don't come cheap, the land under them is very expensive. If they don't want carparks they can park on the street if they like, but if there aren't enough parks then tough shit, use the bus instead.
Its not a subsidy for developers, they would pass on the cost of building carparks if they had to.
Cars, hahahaha. They won't be in the average persons future for much longer, they are bad for the environment you know.
Cars will be as rare as an Auckland rail service.
is the rail closure going to kick in just before the election? oh dear how sad...
That's the point. The land under the park on the street is 'free' but it isn't. It's a cost the developers get away with not bearing for houses that are essentially unusable without access to them. In that regard, they're selling a public good they don't own as part of their dwelling instead of the dwelling being fit for purpose and actually having space for a car.
It's all well and good saying 'take the bus instead' but the reality is you actually get a bunch of garbage dangerous parking that directly impacts on road users who are using roads as roads, and not for socialised private property storage.
"garbage dangerous parking" should be ticketed, simple as that.
I think it is a big assumption to say a house is unusable without a car park. That would make almost every house in Tokyo unusable. Sure Auckland isn't Tokyo, but if we have rules like "every dwelling must have 2 carparks" then we will end up being more like LA than Tokyo, and LA has big issues.
Maybe the answer is actually allowing carless developments in the places that have the services to support them, instead of entrenching zoning rules that forced low-quality developments out into areas where non-car options aren't realistically usable.
For the inner city suburbs, that might mean they have to put up with the kind of intensification other places like Massey or Te Atatu have been shouldering for years. Like I get what you're saying, and in theory it should work, but the reality if every street triples the number of houses and expects on-street parking to provide the rest then we're not going to have a fun time.
He's not talking about forcing 2 carpRks, it's 2 in addition to the garage so that's 3 or 4 total. 4 person household here, one car parked on street. Bus and bike are fine. What would I do with 3 off street car parks? Put a caravan there and rent it out?
Yeah the no-garage/parking blows my mind.
- Where do they store all the gear?
- new vehicles exposed to the elements curb side.
- street appeal is in the negatives with vehicles parked everywhere.
What train?! I don’t see a train coming…
Exactly what we wanted, so this is an increase in supply and a stabilisation of sale prices. I remember back in the good old days......screaming that we need to free up land to build more houses in order to stabilise prices for FHB. That we were freezing a generation out of the market.... so we must be very happy now. Job done. Goal achieved.
Not sure people still trying to flog 2 bedroom townhouses at $800k+ is 'job done'. But we're closer than we were before.
Unsure if what they are building in Auckland these days can be classified as "homes".
But they are building an awful lot of incredibly overpriced rabbit hutches.
I wouldn't mind living in one of those rabbit hutches if it was located in Ponsonby. What really depresses me is seeing 100s of those things being built in Silverdale / Dairy Flat. Talk about a lifestyle that combines the worst of both worlds.
💯
Or Westgate or Kumeu...
Yes, the inside out city. I’m sure that is some great planning at work and not an ounce of corruption.
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