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A decline in the number of new homes being completed in Auckland may not be the start of an expected downturn in housing supply

Property / news
A decline in the number of new homes being completed in Auckland may not be the start of an expected downturn in housing supply
Apartment construction

December saw a sharp drop in the number of new homes completed in Auckland.

According to Auckland Council figures, Code Compliance Certificates were issued for 1327 new Auckland dwellings in December last year, down by almost a third from the record of more than 1900 a month in each of the previous three months from September to November.

Code Compliance Certificates (CCCs) are issued when a building is completed and are the best indicator of new housing supply, unlike building consents which are issued before construction commences.

Currently there is a widespread expectation that building completions will start trending downwards sharply at some stage, because that is what building consents have done, which means there will be fewer new housing projects getting underway. This will eventually flow through to fewer homes being completed.

However, the sharp decline in CCCs issued in December was not necessarily a sign that the expected long term downturn in new dwelling completions had commenced. That's because the number of CCCs issued usually drops away in December as it's a short month as builders start their Christmas/New Year break.

Although the number of CCCs issued in December dropped by a third compared to the three previous months, the 1327 that were issued was still the highest for the month of December since Auckland Council started collating the figures in 2013.

That means dwelling completions in Auckland are still running at a record high. That's showing up in both the rolling 12 month total of 18,103 for the 12 months December, and the rolling monthly average (over the previous 12 months) of 1509 in December, both of which were all time highs.

So for the the time being at least, record numbers of new homes are being completed in Auckland and the much anticipated downturn in new housing supply remains just over the horizon.

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23 Comments

I voted for Luxon that one day I'd be able to buy a house, that dream seems to be getting further away 

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Luxon will help you get your 7th, 8th and 9th house, but definitely not your first.

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Yes you're just a low priority bottom feeder when you're trying to get your first house. 

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Who eats too much smashed avocado (T. Alexander)

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The first 12 months of most new Govts. is dealing with the momentum, good or bad, (mainly bad, otherwise they wouldn't have been voted out), from the previous Govt.

What we need to see is at least a market signal from them that doesn't stop any pre-election momentum in the system that was going to result in more houses being built, while the mechanics of any policy decisions post-election to actually increase truly affordable supply kick in.

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Honestly, I'm pretty interested to know what made you think Chris "7-Houses" Luxon was going to make it any easier for you to buy a house?

I thought his agenda was the exact opposite, e.g. promising 'relief to landlords' through the return of interest deductibility, scrapping the CCFA (which he is now no longer eager to do), allowing foreign buyers to buy again, etc.

Or are you a landlord wanting to buy a house?  In that case, sure, that would make sense.

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Those are reasons why I voted against National. Also:

Reducing the bright line test.

Not supporting higher density housing. 

Telling RBNZ to not consider sustainable house prices.

Using Kiwisaver for rental bonds enabling even higher rents.

They will be loving the rate of immigration at the moment also. 

The writing is on the wall for young people to leave, not stay and try to buy a house.

 

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The irony is when National voters complain that their kids are all in Australia "due to the way Labour stuffed up the country". Meantime, those same 'kids' say they're leaving due to being unable to afford a house to raise their kids in.  Seriously, you can't make this stuff up.

And then you have those National voters who thought Luxon would make housing more affordable! Unbelievable. 

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Currently only Australians and Singaporean Buyers can buy freely in NZ. 

The policy was to have Houses valued over $2m available to foreign buyers but the coalition talks killed that.

I couldn't see a first home buyer competing with a foreign buyer on $2m plus houses.. 

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I couldn't see a first home buyer competing with a foreign buyer on $2m plus houses.. 

- Houses that would have sold for 1.8 or 1.9 million during the foreign buyer ban would have been priced at 2 million so a foreign buyer would be allowed to buy it.

- NZ buyers that would have bought for 2 million, would then buy houses that would have sold for 1.6 million before the ban, but they'd probably pay 1.8 or 1.9 million. This would in turn push up prices for less ridiculously expensive houses in the lower quintiles.

And remember, first-home buyers are no longer kids of 23 who are working in their first job.  They have an average age of 37 and are couples with a few kids (hopefully, considering the needs of society..). 

Question:  What do you think is the cost of a suitable first home for a professional couple, let's say 38 and 36 years old, with a few young kids in Auckland? 

So, considering the scenarios above, how would such couples not be impacted by foreign buyers?

 

 

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I see your argument ,, so lets then slide the scale up $4m ... so no chance of encroachment..

 

Having a complete ban just turns NZ off to High Net Worths ... I have Family in Australia and many of the new Uber Rich moving in up Noosa way have multiple house staff, Gardeners etc  Buyers pouring in from Europe and they like to buy a business as well.... many are just Holiday Homes...

Sunshine Coast Real Estate Agents reckon NZ has done them the biggest favour in decades.... turning off the access to NZ has given Australia a Commercial advantage ,,, no slow down in building there... plenty of Real Competition 

 

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I agree with your sentiment, but yes, let's keep foreign buying for High Net Worths only.  Slide the scale to $5m and I'm starting to feel better about the idea.  

However, allowing foreign buyers to buy in Australia seems to be pushing up their house prices.  If yes, is that a good thing?  I can believe that their Real Estate Agents are happy as pigs in manure about selling to foreign buyers, but I'm not convinced that gleeful REAs is a good outcome for society.  

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Edit….

As I have been saying, new build completions still booming. Another headwind for prices, and good for rental supply.

But will start to see completions plummet later this year

 

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Greg, I don’t think your assertion that CCCs drop away in December is really an accurate one at all, and if one looks at the graph that assertion is not backed up.

It’s a shorter month but there is usually a very concerted push to get sign offs before Xmas

January has much more of a drop off, typically 

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Pretty much all of November and the first half of December is spent racing to get the house ready for council final inspection so CCC can be issued prior to Christmas, last half of January is spent fixing the stuff ups that occurred in the rush, so I  agree that the drop off is usually after Christmas. This and new home sales falling through the floor will see consents and completions fall further off the cliff in the coming months

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Hi HM,

The article states "the number of CCCs issued usually drops away in December," which is true. It usually does. For example in 2022 CCCs issued dropped from 1431 in Nov to 1226 in Dec, in 2020 it dropped from 1581 in Nov to 830 in Dec and in 2019 it went from 1120 in Nov to 844 in Dec. That is a normal seasonal effect. But usually is not the same as always, and sometimes December's figures go against the trend, such as in 2021, when December's figures increased slightly to 1167 from 1136 in November. You are correct when you say there is usually a bigger decline in January, but of course the figures for January this year won't be available for a few weeks, so we'll have a look then.

 

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the number of CCCs issued in December dropped by a third compared to the three previous months

The previous 3 months have 30/31 days, December has 21/22 days before holidays.  Not a a good comparison

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More like 27/28 before holidays. Although I guess 25/12 to 31-12 largely functions as a holiday in the construction sector

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The easiest way to see what lays ahead is to separate actual building consents from fireplaces and decks. Why no one has produced a building starts index in this country is beyond me.

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Hi Mike,

Separate classes of building consents are issued for new builds and alterations. The building consent figures we usually refer to in our articles on interest.co.nz are for new builds only. However we occasionally do an article on consents issued for structural alterations as well, like we did last week. I hope this helps.

 

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I had been developing Greenfields Developments for over a decade , getting ready to move over to the Sunshine Coast.

The Regulatory machine has increased 3 fold , Council Contributions for newly Titled sections has climbed over 1000% in 15 years , this is to supply them with new Ratepayers. (Rate slaves as council refer to them)

The resistance is ridiculous , every time you walk in the Council you would think you were the first Residential Development they have ever seen..usually their opening line is "well the problem we see here is..." 

Bulk builders are even feeling the pinch at present , with Tin, Concrete, Timber , Glass and labour costs all still rising.

Houses will never become cheaper , it's a fallacy , everyday it costs more to actually build than it did the day before... 

By not seeding young Kiwis into their first Home ( first homebuyers grant which is actually a GST Rebate on the build) NZ Govt better be ready to house an entire generation in a Social House and if you think Kianga Ora are going to help ,,think again , their back end is so heavy with admin add $250k to every house they build in backroom wages..

Ironically I was one of the youngest large scale developers (late 50's) the older guys are all retiring so who's going to stump up several million to enter a hornets nest?  the RMA has been a disaster causing exhaustive delays and costing $$$ in holding finance which all gets passed on to the end buyer ..

My understanding is 1/3 of all New Build residential Consents never get started so the metric NZ needs to measure Housing on is Granted Code of Compliances signed off...not  Consents... 

NZ is a stunning Country but the regulatory boffins and cubicle dwellers have taken over ,, so maybe they will build the New Zealand suburbs of tomorrow  ?? don't hold your breathe ,, if you think it's expensive to build a house today ,, just wait until tomorrow .. MCNZ 

 

 

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Just had advance notice of building product price rises for the next 3 months, between 5 and 18% on a range of products, it's still getting more expensive. Notable was Gib adding another 5.5%

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