Auckland's housing shortage has underpinned the rapid escalation of house prices

Auckland's housing shortage continues to worsen by the month, with current consent rates suggesting the shortage is increasing by nearly four thousand homes a year.

In December 2012 Auckland Council estimated the City had a shortfall of 20,000 to 30,000 homes and would need at least another 13,000 a year just to keep up with the current demand that was being fuelled by the city's rapid population growth.

On average that would require 3250 new homes to be built every three months, just to keep up with population growth before making any headway into reducing the 20,000 to 30,000 shortfall that existed prior to 2013.

Since the Council made those estimates the number of new homes being consented in Auckland increased by 83%, from 1238 in the first quarter of 2013 to 2267 in the second quarter of this year (see accompanying table).

Unfortunately while the increase is impressive, it's not nearly enough.

The 2267 homes that were consented in the second quarter of this year was still nearly 1000 homes short of the 3250 that would be required to meet the target of 13,000 a year.

And things will get worse before they get better, because as long as Auckland's population is growing faster than the supply of homes, the shortfall will keep getting bigger.

The accompanying table compares the number of Auckland dwelling consents that have been issued in each quarter since the beginning of 2013 and the size of the shortfall from what is required to meet the target of 13,000 new homes a year.

It shows there was an accumulated shortfall of 14,525 homes over that 18 month period alone.

That is on top of the 20,000 to 30,000 shortfall that already existed when Auckland Council made its forecasts back in December 2012, so the total shortfall would have ballooned out to between 34,545 and 44,525 homes by the end of June.

The number of new dwelling consents being issued will need to increase by 43% from the 2257 issued in the June quarter if it is to hit the Council's estimate of 13,000 additional homes that are needed just to keep up with population growth, without putting any sort of dent in the growing shortfall.

Whether the Auckland Council and the government's efforts to increase the supply of new homes in Auckland will get them up to 13,000 a year is uncertain, although they've come close in the past.

From 2002 to 2004, 35,604 new dwelling consents were issued in Auckland which was an average of 11,868 a year, although that was during the last apartment building boom and over the same three years almost 10,000 of the consents issued were for apartments and many of those would have been the tiny shoebox apartments designed as student accommodation rather than long term housing.

Getting the number of new homes being built in Auckland back up to those levels and more, will be no small task.

When demand for a product exceeds supply the price usually goes up and Auckland housing is no exception.

Between June 2012 and June 2015 The REINZ Auckland median price jumped from $500,000 to $755,000, an increase of 51% in just three years.

Although other factors would have helped push up prices, such as the enthusiasm of Chinese investors for Auckland properties, I believe the primary driver has been the failure of supply to meet demand and the resulting shortage of homes.

By most of the commonly used measures, such as comparing house prices to household incomes and the rental yields being achieved on residential investment properties, Auckland housing is expensive and probably overpriced.

The longer that situation persists and the higher and more quickly price rise, the greater the likelihood that they will fall back to earth at some stage.

But as long as a housing shortage persists, it will likely mitigate the extent of any market correction.

This article was first published in The Property Line Quarterly Report which is published by and sent to subscribers of our regular Property Newsletter. Both the newsletter and the Quarterly Report are free, we do not share subscribers' details with third parties and you can unsubscribe at any time. To subscribe to The Property Newsletter and receive the Quarterly Report and all of's other property-related stories delivered free to you inbox, enter your details in the subscription box below:

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Yes and unless they address the problems far more meaningfully now, it is going to get to a point where there will be one hell of a back lash. It would be far wiser to bite the bullet now than face an even bigger mess latter on.


Key doesn't care. He will just move to Hawaii in 2017 when he is biffed out.

NZ is being wrecked for short term gains. Our focus has gone from building up things that earn NZ foreign income, to just building houses and infrastructure to keep up with unsustainable population growth.

We need change.

Complete failure on Nationals part, Central Government involvement is the only way to provide affordable housing to their citizens.

"apartments and many of those would have been the tiny shoebox apartments designed as student accommodation rather than long term housing."

The thing is half the ppl coming into auck are students any way are proving that they are more than happy to live in a 'shoe box' even though the nimby's look at them in disgust.

Now these small practical (but unattractive) apartments are outlawed, so you only get min 40 sq m (I think) new builds starting at 400k plus.

Auckland needs to get over street apeal and appearance and focus more on providing shelter for its people

'Auckland needs to get over street appeal and appearance and focus more on providing shelter for its people'. Yep, agree. Urban design aesthetics have gone way too far. Bring back 'sausage flats' but make them slightly sexier. Get 6 x 65 sq m flats on 800 sq m sites, sell for circa 400K each. Done. But can't be done (planning controls)

Greg Ninness

Consents are a derivative of applications to build new houses

In your article of 20 August 2015 entitled
Migration's rising tide floods the housing market, and
Flood of student migrants wanting their own homes has implications for housing market

You acknowledge migrant numbers are a substantial driving force in the demand for housing

The question you should ask yourself is - how many of these newcomers will be a direct source of "new-build" customers

The probability is most if not all migrants will seek and demand established housing rather than enter the long lead-time process of building-new

If you remove migrants from the "new" supply-drive-equation who is left to fill that supply-gap

See here - 12 August 2015

Australia's rule restricting non-residents to buying new-builds goes some way to solving that problem

Why can't New Zealanders build new houses?


(1) too expensive
(2) too complex
(3) process and system is set to discourage customers, not help them - many of those doing "design & build" public services have gone broke because of low custom - due to the high costs of achieving the process (vs professional specialist developers). Those who can afford the process, can afford high-end services. But since there aren't many of them it's quite a small niche market.
(4) Doing big cheap builds is still too expensive for most Kiwis due to costs
(5) Collapse of pre-sold spec units market, cleaned out a lot of kiwis; developer and investor alike.

The subtext to this comment - If it was too oblique

Any assessment should be based on applications to build - not consents

I would think a consent is "impossible" without an application. The number of consents issued is only meaningful if there is a "backlog" of applications sitting in the pipeline. Of course council could be right up to date with no backlog to consent, in which case it then becomes a question of why people aren't building and thus "who will do the building?" and why aren't they building?

Of course there could be a backlog of 50,000 applications in the pipeline - who knows?

....I guess I'm a bit slow, but I know believe the Auck outcome is is what the govt wants. It wants the markets to 'take care of it', by tipping the froth from Auckland down to Hamilton, across to Tauranga, up to Whangarei and so on. The theory being that these masses of migrants are delivering economic growth which will disperse across the regions, fund new roads, cities and their corporate buddies. They have no intention of reducing migration or tackling house prices as they think it is a good thing.

Can't they see that higher populations are a curse, not a solution?

higher population = more ratepayers and more taxpayers. Looks sweet from their seat on the pig.

The government's response to this issue is one of absolute and intentional dishonesty. Their threadbare line is that this is a supply issue.

Supply pressure in this case is based squarely on excess of demand. And the reason for excess demand? It stares everybody in the face. It's unconstrained immigration.

Why will no interviewer hold Key to account on this?

The answer that existing homeowners are radically asset wealthy via immigration serves just one group of citizens and residents. It condones - indeed encourages - theft of opportunity from non-home owners and from future generations. This indeed is government for the benefit of a few.

If the idea is a trickle down of asset wealth, from Auckland to provincial cities, rising house prices here tear the possibility of home-ownership away from increasing numbers of lower income provincial residents.

Again, why is Key never required to justify this social recklessness?

oh, I can think of a couple of reasons....
The media has been gagged and declawed. Systematically and since he came to power (think TVNZ7, shows like Campbell live, promoting of Hosking and henry etc)
Which makes the remaining reporters reluctant (after what happened to Nicky Hager, who can blame them?)
it is starting to make me think of the cult of personality politics, like Stalin and Mao. Where a 'Big Man" is revered as political party head, who banks on charisma and being popular, rather than on nous, intelligence, and ability.
I mean, Key was made leader of the Nats without having to climb through the ranks....just picked on the basis of what, exactly?

My answer, DFTBA, is that Key was picked for his casual geniality - as a useful, non-threatening front man. He has an ability to persuade people that there's nothing to think about. If you don't want to think or can't think, this is pretty reassuring. And judging by the polls there are plenty of people happy to leave their brains in neutral.

One possible reason why migrants should stop coming to Auckland

This one guy could possibly do a King Canute and stop the tsunami where others couldn't
The Nats have provoked this and brought it down upon themselves and on everyone's head
They couldn't leave well alone

..good on him. I am bemused why Maori have been so quiet on the whole housing/immigration issue, they have more to loose than most and I'd imagine could frame something around the Treaty. Creativity has never been in short supply in this respect.

that might scare off a few overseas investors

A prescient Evelyn Waugh wrote what could be a guide to NZ and the "Treaty" in 1932: Black Mischief. I recommend it.

Yep, those absurdly high house prices have become too tempting a target. How ironic if it is successful and all those house wealthy braggarts are striped of their paper profits. And the RE agents who contribute to the mess can go to ....

Is there really a shortage ? Maybe I live at the wrong end of the spectrum! Because i dont see it physically, statisticly I'm sure it looks that way. there is a difference between stupidly expensive and a shortage.

Some of the shortage will no doubt be artificially created - by a number of means. Immigration is a heavy influence too.

22,000 empty, unrented houses being held for equity gains doesn't help.

If there was truly an accommodation shortage (housing shortage) in Auckland then would rents not be sky rocketing along with house prices as people compete tooth and nail for a roof over their heads? It seems that it is only capital values that are ballooning under speculative demand and the fear of missing out helped along by frothing media hype?

It is probably more a case of you can't get blood out of a stone