Auckland set to approve 10,800 sections and dwellings in first year of Housing Accord, new report says

Auckland set to approve 10,800 sections and dwellings in first year of Housing Accord, new report says

The Government and Auckland Council say they are going to comfortably exceed a targeted 9000 new dwellings and sections approved during the first year of the Auckland Housing Accord.

Under the terms of the Auckland Housing Accord approved between the Government and the Auckland Council, a total of 39,000 new homes are targeted over the next three years using a fast-tracking consent process.

Specifically, 9000 were targeted for the first year, 13,000 for the second and 17,000 for the third. The accord took effect as of October last year, so the first year runs to September 2014.

One of the terms of the accord is for the regular monitoring of progress in achieving the targets. See here for earlier accord articles.

The first Auckland Housing Accord Monitoring Report produced jointly by the Ministry of Business, Innovation & Employment and the Auckland Council reveals that at the current rate of progress 10,800 sections and dwellings will be approved in the first 12 months, which is some 1800 ahead of the target.

The specific definitions used in monitoring progress against targets are:

•Dwellings =  The number of new dwellings that receive building consent, as recorded in the monthly building consent data available from Statistics New Zealand.
•Sections = The number of new residential sections of up to 5000 sq m that are legally created in the land register, as recorded weekly by Land Information New Zealand.

According to the report, in the four months since the Auckland Housing Accord took effect, a net total of 3600 new sections had been created and dwellings consented in Auckland.

"At this rate, the Year 1 target of 9000 dwellings and sections is likely to be exceeded by almost 1800 (20%)," the report said.

However, it said that "despite this good start", development activity would need to continue to accelerate in order to meet the "more ambitious targets" in the second and third years of the Accord, and to meet the long-run supply task identified in the Auckland Plan (of 10,000 dwellings per year in the first decade, rising after that).

"Capacity from land in the pipeline has increased. There is currently enough zoned, water-and-transport-enabled greenfield land for approximately 24,900 dwellings (up from 15,000 a year ago), or about 5.4 years’ worth of greenfield land supply. This is below the Auckland Plan target of an average of 7 years’ capacity, but above its minimum level of 5 years’ supply. Market factors will determine the speed with which this capacity is converted into new residential sections and dwellings," the report said.

Within the 22 special housing areas created so far, activity was increasing, but "as expected" this was "yet to impact the headline figures".

"The Housing Project Office [set up to support the accord] is working on over 50 pre-applications with customers (for over 2000 sites/dwellings), has approved 13 consents (for 120 sites/dwellings), and is facilitating master-planning of a further 15 developments."

However, the report said that despite the upturn in residential development activity the median house price had continued to increase in Auckland.

"This is partly the result of other factors that affect house prices, but is also because the recent surge in dwelling consents is still only half the previous peak and is really only addressing the current dwelling shortfall, rather than responding to the underlying demand from population growth."

Housing Minister Nick Smith said housing supply and affordability remained one of the biggest challenges for Auckland and the wider New Zealand economy.

"Good progress is being made with a significant increase in new sections, new houses and new apartments being consented in the first four months since the accord was signed. We’re on track to achieve the first year target but we must maintain momentum if we are to make a lasting change to the supply side of Auckland’s housing market."

Auckland's Mayor Len Brown said the first "quality homes" within the special housing areas would be ready for people to move into later this year,.

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Headline, the Housing Accord a Huge Success, more houses and more affordable houses. 
Campbell Live showed how successful this was when they looked at the latest offering at Hobsonville Point on the fringe of Auckland.
A 40m2 house on 111m2 of land for $340,000.
This is paper bag in the middle of the road stuff.
I was expecting to see john Cleese any moment. But no they were serious, - seriously deluded. 

Sorry, that's right, it's John Keys, not John Cleese, I keep getting the two confused the more affordable housing turns into a farce.

Hi Dale, are you sure that wasn't a apartment?  40sqm would be considered a small apartment in the CBD.  Maybe it covered 40sqm land but was two stories so more sqm of house space....

Ouch.  You can get a 50+sqm apartment, in the CBD, good building, communal pool-gym-spa-etc for that price.  If I were a FHB I can't see why I would buy less sqm, further from the CBD. 

They will only build them if someone wants to buy them. So if there is a demand for 40m2 houses on 110m2 sections, why not build some?

It's ridiculous that we have a bigger land area than Great Britain and a fraction of the population but "need" to build these shoe boxes. Why are we letting dumb legislation inflict this on us?

We might have lots of land but there is a limited amount within a reasonable commuting distance of Auckland CBD. I'm not sure what dumb legislation you are referring to.
These will only get built if there is a demand to live in them. Not everyone wants or needs to live in a big house on a big section - a lot of old people are prefering to live in small houses on small sections, and we have an ageing population. 

Slowly but surely getting there? Bring it on

Len Brown , that esteemed doyen of economics , law , pyschology , the guru of all things transport and property, with crystal balls to read markets , and the epidermis of an eel , who passes for Auckands Mayor , stated this morning that people should not buy Auckland houses  becasue:
This is typical of the delusional thinking of the looney left .
Just for the avoidance of any doubt , if Auckland house prices come down significantly , I will be buying three houses , one for each of my 3 offspring .
And I am sure I am not alone in this thinking .

Hi Boatman, whilst I agree that Len is a scoundrel, he is probably correct regarding the average price figure for Auckland.  If you flood the market with 360k 40sqm 'houses' then these sales become part of the 'average' price stat for the city.  Build and sell enough 360k 40sqm 'houses' and the average price figure comes down, that not to say existing stock will be cheaper (quite the opposite in my opinion). 
But technically he might be right, there are now FHB 'cheap' options so everyones happy, right?

 HAPPY 123 ... Fair enough I guess a 40m2 unit in Auckland at $360k is  better than a 19m2 bedsit in a Kowloon high rise  for over two million.
What I find surpirising is that the cheapest unit at Hobsonville Point seems to be around $600k , and thats  on former state land , so the land  profit motive is somewhat diminshed .
And my goodness are they packing them sardines in there , its looking like a CBD periphery
My daughter needs $120k down and an income of around $70k before tax to afford it .
Its simply out of the question for now

I understand that Massey is cheaper than Hobsonville, Flat Bush or some of the other FHB developments. 

Have you been to an IKEA store? they have a model apartment of not much than 30sqm and what you can do with clever design.  Not all bad, I would be quite happy to live in one if once the kids leave home

Meebee the kids have plans on ejecting you from your home , out into the IKEA 30 sq. metre model apartment , down to the back of the property , beyond the blackboy peach tree , down where the hedgehogs roam ....
.... best keep mum on the IKEA apartment , methinks ....

Well done I say.  Getting the houses built is a different story but well done for efforts thus far.
The first home we owned was a 50m2 ground level unit on about 100m2 of land. It was a great start for our family. 

Naturally I assume someone is putting the spin on here. What could be wrong with this picture?
1. The target includes what would have been consented anyway. The recent historic average would suggest 4,000 homes would have been consented anyway. So year 1's real target is only 5,000 that can be attributed to the Accord.
2. Development and building don't happen from a standing start. The Accord has possibly made it easier to consent proposals that were already languishing at Auckland Council's offices.
3. Interesting that we are keen to report the first four months when the existing pipeline has been cleaned out but before we have to look for new proposals to refill the same pipeline.
Can they continue the pace? Does anyone care about consenting when the only thing that will make a difference is actually building dwellings?

Kumbel – right on the money. The target council and Govt. will measure their success with is the ‘number’ of consents, ‘number’ of houses etc. They are confusing ‘number’ with affordability, and target with measure.
The target is affordable housing (not the number of houses), one of the measures of which maybe the number of houses built, but if the other measures like initial cost of land, council fees, time for consent etc. are not dealt to, then the all the measure of ‘number’ of houses built will result in is a large number of unaffordable housing, unless the house size is sacrificed to meet the new definition of ‘affordable.’  
The housing accord will never result in housing that is truly affordable while  the other measures are not dealt to.
It has to be remembered that the Govt. are receiving approx. $1,400,000 per ha for the raw land at Hobsonville Point. With this as the starting point how can the outcome be anything other than the exorbitant price for the size as shown on Campbell live?

The special housing areas each have an 'affordable' component required in the legislation. So a percentage of the houses will be affordable - for example:
(a) relation to 5% of the proposed dwellings, the price at which a dwelling may be sold would mean that the monthly mortgage payments for a household receiving the Auckland median household income (as published by Statistics New Zealand for the most recent June quarter before the relevant date) would not exceed 30% of the household's gross monthly income, based on the assumptions that—

  • (i)the dwelling is purchased with a 10% deposit; and
  • (ii)the balance of the purchase price is financed by a 30-year reducing loan, secured by a single mortgage over the property, at a mortgage interest rate equal to the most recent average 2-year fixed rate (in relation to the relevant date) published by the Reserve Bank of New Zealand as part of the data for its key graph on mortgage rates offered to new customers for residential home loans

...although, of course, the other houses will have to be more expensive to subsidize.

1. It's worse than that - they say above that 120 dwellings/sites are in accord areas. 
2. So true. Some of the big accord areas have been in Council for years with developers giving up  - like Belmont Pukekohe.
3. Abosolutely - they've picked the eyes out.

LINZ data is from consents issued months or years ago...
As for counting when sections are created and then counting houses built, this is surely an easy way to count everything twice and double the statistics!!!
Create a section, count it once.  Build a house, count it again!  What a bunch of nonsense.  This is spin on how to make the figures look good from a bunch of incompetent morons!!
If you are going to measure the number of dwellings built, you can only measure the number of dwellings built!! You can't start adding figures for the number of sections created!!!!
Look at Te Anau, Jacks Point near Queenstown or the Far North - sections created bear no resemblance to number of dwellings built...

It does say that  -
* The net total adjusts for any overlap between new sections created and the dwellings that are consented on those sections (i.e. it avoids double-counting). Where a section created during the Accord period has a dwelling consented on it during the Accord period, the section and dwelling are counted as one. If more than one dwelling is consented on the section, then the additional dwellings are also counted.
According to page 4 and 5 of monitoring report 'at this rate' they are actually only going to acheive 70% of the houses and 70% of the sections called for by the Auckland Plan (10,000 dwellings for which 7000 sections needed). 1712 sections and 2392 dwellings so far for a net 3600.

Bob – since you have an understanding of what they have written, are they saying they are counting consents as their measure of success, irrespective of whether that consent is for a section or a dwelling? And I understand they are not counting the same consent twice.
The article says many of the consents are for apartments, which are more of a one-step consent, ie there is normally no pre section consent for each apartment.
As we a have all pointed out, there is a long time lag between getting consent and a dwelling being built, if ever.
If this is the case, counting consents as a measure of success, has very little to do with achieving affordable housing.

It's not easy to understand what they write. True, getting a building consent doesn't mean project proceeds - although it's quite an investment so 90% likely. Getting a Resource Consent or Subdiv consent on the other hand doesn't neccessarily mean dwellings - many sites have had lots of unused Resource Consents or empty subdivisions. Depends on the market.
Lots of Building Consents is likely to mean lots of construction which surely has to help prices in competing segments of the market.
The Special Housing Areas do have legislation requiring them to have 'affordable' housing component (or subsidised housing really) and comply with Unitary Plan provisions - which also currently includes an affordable housing rule for 15+ units. Does nothing for affordability overall, but nice for the 5% that get one. Wonder how they will allocate them? Would be a bummer to live next to someone who got their house way cheaper and subsidised by yours.

AC and the government have backed themselves into a PR corner. The initial coverage talked about 39000 dwellings. When it was obvious that wasn't physically possible they switched to building  consents. Now they are tying themselves in knots reporting both metrics.

"At the Manukau golf course, they're counting a consented dwelling in a place where people are still playing golf as we speak. It's not a house. It's a line on the map."
"How do we know a consented section will turn into a dwelling? Says Labour housing spokesman Phil Twyford.
I think this whole idea comes from a confusion over what housing 'supply siders' want.
We are often characterised as saying there is a shortage of supply and the solution is to increase supply. Well that is not true, there is no absolute shortage in housing. The market is clearing, demand equals supply. The problem is the market clears at too high a price because supply is inelastic. What supply siders want is elastic supply for the whole market not a marginal increase in supply in the top third part of the market.
Does one housing accord in the whole of NZ make housing market elastic? Will an increase in demand now lead to a quantity supplied response rather than an increase in price response? I don't think so. I think the increased demand coming from the lower migration to Australia will continue to lead to higher house prices.
National have been 'too little too late'.
If National had done housing accords last year of the same size in all the high growth areas of NZ maybe it would be different. That would be Auckland, Hamilton, Tauranga, Christchurch and the Central lakes region. Then there would be genuine competition in the supply of affordable housing....
If National had given the 'right to build' to alternative house and transport types again the result could have been different. Say a right to build within walking distance of any school. A right to build a cycle centric development (communal parking, no garages, bike lanes and park like atmosphere) within cycle distance of any school and zero externality 'eco villages' having a 'right to build' on any rural zone area (anywhere a lifestyle block can go) then again there would be genuine competition in the supply of affordable housing.
National could have compulsory bought land at $50,000 a hectare rather than $1.4 millon per hectare in Hobsonville to build a Houten like  development. Tender out the build while keeping ownership before selling directly to the general public at cost price (including transport links). Put in a dedicated bus lane, 100km/h no stopping. Design the township using Houten model of promoting bike use.
The reason we have unaffordable housing is a lack of political will.....

This is confusing. I know we are getting a lot more consented, but this is nothing to do with housing accord - it's just from market demand, which is stabilizing.
The report summary says "In the four months since the Auckland Housing Accord took effect, a net total of 3,600 new sections have been created and dwellings consented...At this rate, the ... target of 9,000 dwellings and sections is likely to be exceeded by almost 1,800 (20%)." 

Sounds like the housing accord is amazing - but then it says further on "Within the 22 special housing areas created so far...The Housing Project Office...has approved 13 consents (for 120 sites/dwellings).

So actually 'at this rate' the housing accord is going to add 360 dwellings to the mix. With the rest provided outside housing accord areas.
The recent consenting frenzy outside the housing accord areas is slowing down.  The Housing Accord areas has picked off the easy sites and I'd expect a pick up in these areas as consents flow through - then it will get very hard and tail off. I bet they won't get 20% more than 9000 dwellings consented in first year and certainly won't get the next two years quotas without some signifigant changes to process.