New dwelling consents issued in Auckland take a dive ramping up pressure on the region's over-stretched housing market

New dwelling consents issued in Auckland take a dive ramping up pressure on the region's over-stretched housing market

Auckland's housing crisis got a whole lot worse in April, with consents for just 699 new dwelling issued in the region, down from 788 in March, 787 in February and 912 in April last year. 

The number is also lamentably short of the estimated minimum of 1200 new homes that need to be built in the Auckland region each month just to keep pace with its surging, migration-fuelled population growth.

Nationally, consents were issued for 2361 new homes in April, which was largely flat compared to the 2315 issued in March and the 2379 issued in February, but up on the 2112 issued in April last year, according to Statistics NZ.

The figures have little good news in them for the Government and Housing Minister Nick Smith as they face increasing pressure over the growing shortage of homes in Auckland.

Excluding the January numbers which are traditionally very low, the number of new consents issued in Auckland in April was the lowest since September last year and suggests the housing crisis in the region will continue to worsen for some time to come, in spite of the introduction of initiatives such the introduction of Special Housing Areas to speed up the approval of new developments.

The sluggish pace of new development will maintain upward pressure on rents and house prices, even as the Reserve Bank tries to contain high risk mortgage lending because of the risk a housing bubble would pose to the banking system.

The number of new consents issued in April also dropped in the Waikato and Bay of Plenty, both of which were well down from form a recent peak in new consents that occurred late last year.

However the Wellington and Canterbury regions were more buoyant, with consents in both regions rising strongly in April compared to earlier this year (see the interactive chart below to see how many consents were issued each month in each region of the country).

Stand alone houses remain the most common form of new dwellings by far, accounting for 1742 of the 2361 new dwelling consents issued throughout the country in April, followed by 335 townhouses, flats and home units, 259 retirement village units and just 25 apartments.

The total value of new dwelling consents issued in April $802 million, compared to $857 million in March, $926 million in February and $632 million in April last year.

On top of that consents worth another $146 million were issued for structural additions and alterations to existing homes.

Consents were also issued for another $459 million of non-residential building work in April, with retail premises accounting for the biggest chunk at $90 million, followed by storage buildings such as warehouses at $86 million, and education buildings at $78 million.

In a First Impressions newsletter on the figures, Westpac economist David Norman expressed concern about the decline in consents in Auckland.

"This second month of weakness does cause us to feel a little unease about the longer term track of consents in Auckland," he said.

 "A third weak month in May would be a real worry."

Building consents - residential

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48 Comments

12
up

All the builders I know are busy until mid 2017 (assuming the world continues as it has over the past month) with enquiries coming in every day. Is it actually possible to build any more houses than are already getting built? Where is the supply side focus on the skills of the people needed for construction?

Excellent questions! Auckland has a dire skill shortage and is already at capacity in terms of labour. The good news is, Christchurch has come of the boil and there is a big labour force down there that can increase supply in Auckland, if we can get them up here!

To make it work we need the right environment for mass housing construction. Over to you Auckland Council...

Yes a shortage of labour for construction but nowhere for them to live/sleep if they move to Auckland!

Will they come though? I'm not sure a kiwi tradesman could afford to live in Auckland and even have a modestly decent life unless the other half was earning good coin or they had a lot of capital behind them.

Maybe we could import cheap workers from overseas and house them in dormitories?

I remember reading on this website that even builder's labourers were getting $50 an hour. Two of them sharing a unit could pay the rent by lunchtime on Monday.

Are they getting that or is that what their masters are charging them out at? Google tells me the average wage of a carpenter in Auckland is $25 per hour gross ($48000 per year = $40580 gross = $21 per hour net. Median rent is $520 per week or 25 hours of labour). Maybe someone can enlighten us as to the accuracy of those figures?

Also, I wouldn't trust most of the stuff written in the comments section of this website e.g. impending housing market crashes etc. ...

My son, 21, just got his construction degree. 3 offers received. Starts working for a residential building company 7th June with a $65k annual salary.

Is that to work as a carpenter? That is considered a good salary for an engineering graduate from the top university in the country.

Its to be a junior project manager. I was gobsmacked. With no experience as well!

Construction degree?

No chance a labouror is getting $50 p/hr. That's well over $100k per annum. Most carpenters are not even getting this. I think the going rate is around $35 p/hr for an employee-carpenter. The better they are the higher it will go.

That $65k will work out at about $27 p/hr which is not bad for someone starting out.

From very recent experience, a labourer will get about 15 an hour, experienced builders about 35 (if working for someone else, an apprentice around 18 an hour.
These figures are paid as contractors, so deduct ACC levies, no holiday pay, no stats etc... The money is crap in my opinion, this is part of the problem, the whole industry needs a boot in the nuts. The apprenticeship scheme is a disaster, most tradesman know how to build a house but not a business.

I am completing the contract for a building project in a smaller city... here are the rates -
Project Manager $80.00
Site Foreman $65.00
Licensed Carpenters $60.00
Carpenters $55.00
Apprentice $40.00
I'd assume 25% to administer, ACC, accounting for holidays/sick days, tool allowance and the like. I'd also assume the Construction Company is taking a margin. I guess they are getting @ half...

Not at all sure about accuracy of those figures although we need to keep in mind that a young construction worker only needs to be a flatmate somewhere so rent needn't be $520 per week. There must be quite a few opportunities for someone willing to wield a hammer or paintbrush in Auckland.

The caliber of those available and the (lack of) work ethic leaves plenty to be desired. You'll go through about 5 people before you get to one good one.

Local people just hand it on a plate to newly arrived immigrants. It surprises me that so many people don't think ahead when they get a foot in the door with employment. It's like they want to fail.

Christchurch has not come off the boil! Consents are UP 53% April 15 to April 16.........as shown in the above graphs. Commercial construction is also at a very high level so I'm afraid Auckland is out of luck looking to pull resource from Canterbury.

I know the answer; lets swop the homeless in Auckland with the builders from Christchurch lol

Bad news for the Goverment? Not sure about that... their utter failure on housing has done them quite well in the polls for eight years and counting... why change a winning formula?

National is almost assured of another term , even with a housing crisis . The alternative is just too ghastly to contemplate

How about a three month rolling average to smooth the data rather than this month by month noise?

Anyway, Nick Smith said everything is fine, building more houses than ever, just keep pouring in the "skilled" migrants New Zealand so desperately needs.

12
up

Immigrants building houses for immigrants building houses for immigrants building ........
National's economic plan in a nutshell - Ponzi anyone?

Kiwis so dumb lah!

Auckland may be down but overall New Zealand building consents are up MoM:
.http://www.investing.com/economic-calendar/building-consents-23

Did anyone see Bill English interviewed on The Nation? Was it just me, or did his repeated references to "Auckland City Council" make you wonder if he even knows how the city is run? Next he'll be talking about Manukau and North Shore City Councils...

Auckland median household income up 16% from March 2008(,single income up 21 %) median rent Auckland for 3 bed up 33 % since March 2008, median Auckland house price up 90 % since March 2008. There is no housing shortage in Auckland , as new households are simply not forming at historical rates, because they are financially unable to do so and will put less and less pressure on this powder keg. .Additionally rents should be rising much quicker, particularly that investors and speculators have taken over and account for a much larger portion of the market than any previous historical period. The notion that there is a shortage of homes or whether we are building sufficient is not corroborated by rental yields or nominal rents . Simply a story of the greater fool with acess to easy credit , and in particular, interest only loans. Now where is the RBNZ with the data on interest only loans..

There are 2 houses withing 200m of my house which have had "for rent" signs on them for about a month now...

Wow Canterbury is growing almost as fast as Auckland -soon Christchurch will be a Super City too!

Canterbury's build rate per capita must be two to three times as fast as Auckland's, given the relative sizes!

The solution is obvious. Spend on infrastructure down in Canterbury because it can handle the needed high rate of residential construction.

That will take the immigration pressure off Auckland.

To get the story straight.
Auckland's consents fell because there was a fall mainly in apartment consents.
This is entirely logical as building apartments is an extremely complex exercise and big variations can occur from month to month.
From the same source as the article above:
"The region with the largest decrease was Auckland – down 213 (23 percent) to 699, due to a decrease in apartments".
Let's see if this is a oncer or a continuing trend.

there are only so many financiers around now with the ability to fund property developers. they have their hands full. unless the banks take on the full level of risk can volumes be ramped up above the current levels?

This will be another cause of concern for the rbnz as it is a specialised form of finance that was largely wiped out after the gfc

Really interesting Podcast on money laundering and property. It seems this is whats happening in Auckland with these empty houses in some of our most desired suburbs.
See Episode # 703 How To Hide A Million Dollars In Plain Sight at http://www.npr.org/podcasts/510289/planet-money/

Seriously have a listen

Yes "Money Laundering" it really makes my blood boil !! And it's rife in Auckland and our Government is prepared to do nothing to stop it, and it's killing us, along with the New Zealand dream.

But it's not just the Auckland, it's ALL large successful cities; London, Vancouver, etc.... And it has to stop!

Well at least the UK and US are taking a stand against money laundering, even Oz is prepared to get involved, so why shouldn't we take a stand against corruption?

http://www.telegraph.co.uk/news/2016/05/11/corrupt-foreigners-who-launde...

BTW; I'd really love to see a similar map of Auckland which highlights all the ghost houses which is very obviously money laundered property.

I can't agree more CJ. Vancouver is the worst by far. It has always had a shady side. The Vancouver Stock Exchange used to have the worst reputation in the financial markets. As it is stuck the other side of the Rockies the rest of Canada doesn't care. I would think that any money launderers buying Auckland property now are taking a fairly big risk in case their property is frozen in the future.
I know National aren't exactly rushing to clamp down on the issue but I am fairly sure they will continue to be bullied into tightening up on things through the global initiative.

I hope you're right Penguin. Though I think we all need to shame National and which ever government takes their place in the future, in to doing the right thing and stopping this type of corruption. It destroys the very fabric of our society on a vital core level.

At least theirs hope for Vancouver, in that some of their Politicians are willing to speak out. I wish I could say the same for NZ.

BBC article; Vancouver's 'freak show' property market
http://www.bbc.com/news/business-36369108

Really interesting Podcast on money laundering and property. It seems this is whats happening in Auckland with these empty houses in some of our most desired suburbs.
See Episode # 703 How To Hide A Million Dollars In Plain Sight at http://www.npr.org/podcasts/510289/planet-money/

Seriously have a listen

Just curious - The Herald reported this with the screaming headline - "Building consents rise as housing intentions jump" No mention of any downturn in AKL

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1164...

"The numbers dropped but the value went up".
Yeah. So what!!!!

Much as I think it would be healthy to have a correction in Auckland house prices with such a low number of properties currently on the market I can't see it happening this year.

This comes as no surprise. Development is so marginal. The govt should cut gst on new house building for 3 years. That would be a big help in boosting construction.
Rather than empty rhetoric

Hefty stamp duty rates are the new way for Goverments controlling the housing markets. Has been very effective in HK and Singapore.

http://www.bloomberg.com/news/articles/2016-05-30/hong-kong-property-see...

The use of the word "crisis" in regard to housing is a cliche' for what is actually a consequence. A consequence of bad planning, bad management, and negligent execution and foresight over many successive councils who listened and were guided by loonies. Lefty NIMBYs who strangled the city with their ideals of urban design. In the Oxford dictionary a "crisis" is a turning point........leading to a decisive change. I don't see any evidence of either.

Yes. well the ARC and the various legacy Councils with their inept inaction and infighting between 2000 and 2010 must shoulder much of the blame.
It is that hopeless inaction which is responsible for much of this mess.
And the Mayor and deputy of course were a big part of that mess with their respective roles as Manukau and Waitakere - so funny isn't that they still have so much trouble working it all out?

First the Govt denies there is an Auckland housing crisis, then they blame the council, now they realise the NZ public expect them to fix the problem. This must be very confusing for them, as they are unable to take action on ideological grounds and it would involve facing/admitting the truth about immigration, and foreign demand. Not to mention money laundering and the trail of offshore/onshore trusts being used to buy NZ property.

I can't believe there are so many posts that blame the council and even suggest bringing in more immigrants to build Auckland houses. The government thinks 68,000 immigrants in just one year is a celebration. The Auckland Council wants to know who is paying for the infrastructure for this population growth.

How many of these immigrants create new industry and create new productivity? how many end up driving taxis, selling real estate, welding steel and doing other such jobs that compete with the locals? We need immigrants like Kim.Com.

Even Treasury is warning of the consequences of the immigration deluge
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1164...

At $2,700 per square metre for a new build , its little wonder developers are going on strike .

Add to that the astonishing increase in a water connection fee by that august body of bureaucrats called Watercare

2011 connection fees $7,000
2013 connection fees $9,000
2015 connection fees $14,000

And in this time inflation was 2% , wages were stagnant , the due to the high Kiwi$ the price of imported piping and meters came DOWN !

Go figure ?

Confusing

To me anyway

All discussions about freeing up land use exactly that term - "Freeing up Land"

but

what does freeing up land mean exactly?

When I read and listen to the news I get the impression that Councils can magic sections into existence by simply freeing up land. Bare undeveloped land has to be "developed" by a developer

Are Councils in the business of developing bare land into saleable sections including services - roading, footpaths, water, power, sewerage etc?

Or

Do councils free up land by re-zoning land and then seek "developers" to acquire the land and then develop the sections and provide services

And then

Who builds the houses? Councils? Land Developers?

In my limited knowledge I imagine the working capital required to acquire land, develop it, put in the services, would be large, and that would be a business decision they would need to take that they could then sell them at a price that covers their costs

In the current climate I have difficulty seeing a land developer taking on the financial risk of buying the land and establishing new sections in outer fringe areas and tying up capital for a number of years, by which time there could be a risk that they cant sell above cost

Lot of talk by people who don't have to put their money where their mouth is - they make it sound so easy

Spot on iconoclast. Land development is a mugs game as by the time you have a saleable product the economy can change. Northlands coast still has a glut of sections developed prior to the GFC

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