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ANZ economists say even with the housing accord working as intended it could take 15 years to remedy Auckland's housing shortage

Property
ANZ economists say even with the housing accord working as intended it could take 15 years to remedy Auckland's housing shortage
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Even with the new proposed Auckland Housing Accord working as intended it could take till 2028 to resolve Auckland's shortage of housing, according to ANZ economists.

In their monthly property focus the economists have examined various scenarios for how the Auckland housing market might pan out and conclude that the city's housing issues will take "a long time to resolve".

"Auckland’s housing needs are a moving as opposed to a static target. With Auckland projected to account for more than 60% of the population growth in New Zealand over coming years it could take until 2028 to clear the shortage," they say.

Auckland has a perceived shortage at the moment of about 30,000 houses and in recent years has been averaging less than 4000 new homes a year. While the figures are now growing again after the shocks of the 2008 global financial crisis, latest figures from Statistics New Zealand show that Auckland had consents issued for only 1669 new houses in the first four months of this year.

The Government and the Auckland Council recently agreed a housing accord that would target 39,000 houses over the next three years. See all our housing accord-related stories here. New legislation has been rushed into Parliament to enable this accord and perhaps future accords in other local government areas. However, the Auckland council has not been pleased with what's in the legislation and is indicating it won't sign the accord till the legislation is changed.

Deputy Mayor Penny Hulse told Radio New Zealand this morning that the council's current focus is on the new Unitary Plan, on which public feedback closes today, and “Until the Government change the [housing accords] legislation to better reflect the intent of the housing accord the accord remains on the backburner”.

The ANZ economists note that "a multi-pronged attack on the Auckland property market has been launched".

"The RBNZ is set to curtail exuberant demand via leaning on prudential policy initiatives, including loan-to-value ratio restrictions. Meanwhile supply side initiatives include the Housing Accord and Unitary Plan, which aims to build 13,000 units per year in Auckland, an enquiry into construction costs, and changes in the delivery of social housing.

"We wouldn’t be surprised to see more talk of changes to the tax system too. It’s a potent combination, but how do the numbers stack up? While this analysis is sensitive to the assumptions used, the bottom line is that Auckland’s housing issues will take a long time to resolve."

The economists analysed four dwelling construction scenarios for Auckland, these being:

  1. A “low construction” scenario, where the number of dwellings constructed in Auckland stays at post-2009 averages (around 4,000 dwellings per annum). Under this scenario the net shortage climbs above 150,000 dwellings by 2031;
  2.  A “historical averages” scenario, where the number of dwellings constructed in Auckland is equal to its 20- year average of around 7,500 dwellings. Housing shortages still climb towards 80,000 dwellings by 2031;
  3. A “10,000 per annum” scenario. The housing shortage remains around 30,000 dwellings over the next 20 years; and
  4. The “implementation of the Accord and Unitary Plan” scenario, with an average of 13,000 dwellings constructed over the next 30 years. In this instance housing shortages peak at closer to 40,000 by 2014, but then steadily decline thereafter, with no net shortages by 2028. These estimates provide some allowance for depreciation of the existing dwelling stock.

"These various scenarios highlight quite marked differences in projected housing demand and supply balances," the economists say.

"Based on the estimated demand of 10,000 dwellings per annum, the range of housing balances becomes wide. Reasonably small annual differences can cumulate up to large gaps with the passage of time.

"What they also show is that even if construction proceeds as outlined in the Accord and Unitary Plans it will not be until 2028 that housing shortages are eliminated altogether. That’s a long way off."

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16 Comments

Mass emigration would be a much quicker solution to the shortage. 

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Would the ANZ economists be prepared to venture a house price prediction on the bak of that forecast?

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The problem  big picture, Kleefer is  Auckland business hub wise is N.Z......with a few other main centers dotted across the landscape....it is the birth of a bustling Metropolis geographically convenient that would ease the pressure on Auckland...

 In a nutshell the thinking is one massive blob upward or outward that almost everyone (relatively speaking) works and lives in,with all thought to servicing that concept.   

 How many would be happy to live elsewhere if they thought they could conduct their business in a time efficient manner and earn the same bottom line...

 a lot I'd guess.

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Penny Hulse is not in touch with reality and nor is Len Brown, and we need to rid ourselves of these incompetents .

Just Let Auckland grow in an orderly fashion  for goodness sake. There is no shortage of land for Greenfiled development South or North of Auckland

The Auckland council's Unitary Plan on which Brown and Hulse are  hanging their hats ,  has more holes than  a kitchen sieve.

The Unitary plan envisages high rise . Going up is not the solution . Earthquake -proof  High- rise contruction  is ridiculously expensive to build,  and lifts in buildings  are horrendously expensive to maintain , so going up to 10 or 20 storeys for residential is never going to solve low or middle income housing needs , and its not a winner.

Densification without decent roads is also not a winner ( Imagine the impact on Lake Rd  of doubling the density of Devonport ?) , and forcing people to use public tranpsort when it does not cover the city comprehensivley ,  means the idea is dea in the water .

 

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The preceding was a party political broadcast.

 

Densification: The description of the cranial matter required to believe in endless growth.

 

so dea.

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ha.! .....dat'll do for the funny today.... PDK cheers.!

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Free speech - you two should respect that rights.

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Force peach - (comes after free speech, right?) I've never respected rights, whether they be that or those or essless. And -  for almost as long a time, haven't respected lefts, given that they're opposite sides of the same nonsense. Lately, I've stopped respecting hues too. Hues can make of that what you will.

 

 

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OK PDK whatever you are into rightnow, it's bad for you..you should stop

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I absolutely respect free speech Chairman ...I was amused by the anecdote not the target thereof. 

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The purpose of the plan is to grow the city in an orderly fashion.

 

Avoiding sprawl for africa.

 

Get it?

 

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More ferrys from Dport connecting to rail loop.

Get it?

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Barb wired fence around the place isn't going to work.  But why do we incentivise people to live in Auckland with rules giving much more accommodation benefit than in other areas of the country.  Quite the wrong encouragement.

You can't stop in people coming in. But paying people extra to do so is just crazy.

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Shows, dunnit, what the application of known data (build and pop growth rates; consent times for subdivs, builds; labour and tradie availability, yada yada), into a proper data structure will do.

 

When the model recalculates, and the shortages, costs and times implicit in any given mix (scenario) of inputs are spat out into the cold light of day, there are three quite inevitable results. 

 

  • The dreams and pronouncements of politicians are shown up for the fertiliser they are
  • The raw facts which are the assumptions are available for comment and inspection, and in an ideal world would feed back into the pollies' next open-mouth operation, but of course will not
  • The assumptions will include some hitherto overlooked factors (including, no doubt, Interest on Capital Committed/Cash-flowed) which, like the Dark Matter of the Universe, turn out to be the critical factors....
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  1. A “low construction” scenario, where the number of dwellings constructed in Auckland stays at post-2009 averages (around 4,000 dwellings per annum). Under this scenario the net shortage climbs above 150,000 dwellings by 2031;

It's a lot more complex than that I'm afraid ANZ, involving all sorts of feedback loops.

If shortages get as bad as assumed under this scenario, then prices / rents will increase to the extent that migration into Auckland slows (and places like Hamilton / Australia gain at Auckland's expense), and the shortage will not be nearly as great as 150,000. If shortages lead to even sillier prices, then Auckland will become even less desirable for national / international migrants. Just look to Sydney as to how population growth has slowed a lot due largely to expensive housing.  

OR....Prices shoot higher and then crash, in which case the assumptions go in different directions   

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I am all for the most stringent possible restrictions on mortgage credit meanwhile until the supply side liberalisations start working.

“Home ownership” policy that does not address the supply of houses and the price at which they will be supplied, is NOT “home ownership” policy at all. This is the big mistake of the past couple of decades.

Subsidies to "demand" is “big property” and “finance sector” profit maximising policy.

As long as "supply" remains inelastic, roughly the same size cohort will miss out on home ownership anyway; all that demand side subsidies will do is determine the size of debt taken on by those that DO become home owners.

Obviously, therefore, “big property” and finance are going to support the most generous possible subsidies to the demand side, and oppose freeing up the supply side.

But tough restrictions on mortgage credit, will help to stop prices rising any more, while not locking out of home ownership anyone that was not going to be locked out anyway by the prices rising faster than the credit they could get.

"Home ownership" increases will come about when the "supply" reforms are bedded in and prices are affordable again. Everybody wins except "big property" and "big finance", how SAAAAAD for them, boo hoo......

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