There are tentative signs that Auckland's residential building industry may be starting to build more homes at the affordable end of the market.
The latest Statistics NZ figures show that the average value of new dwelling consents issued in Auckland dropped to $349,101 in April compared to $389,101 in March.
That was the lowest it has been since November 2011 and it appears especially significant because in 10 of the last 18 months the average value of new dwelling consents issued in Auckland has been above $400,000 (this includes construction costs but not the cost of the land or additional costs such as marketing and legal expenses).
A closer look at the figures reveals that the fall in the average value of new dwellings was mainly driven by a reduction in the average size of stand alone houses, townhouses and home units being consented.
In April, the average size of townhouses/home units that were consented dropped from 142 square metres in each of the previous two months to 112 square metres.
That saw the average value of those consents fall from $349,517 in March to $256,898 in April.
A similar trend was evident for stand alone houses, with the average size of houses consented in April dropping to 215 square metres, which was the lowest it has been since January 2011.
That saw the average value of new houses consented drop to $444,183 in April from $500,409 in March.
Significantly there was little change in the average cost per square metre of new houses consented in April, suggesting houses are still being built to the same high standards, but costs are being saved by building smaller.
This suggests that developers may be paying more attention to the more affordable end of the market and not as much as they were on the top end.
The other factor which will be helping to make housing more affordable in Auckland is the changing mix of what is being built.
The number of new homes consented in Auckland has risen steadily in each of the last six years, rising from 3282 in the 12 months to April 2011 to 11,629 in the 12 months to April this year.
But the mix of homes being built is changing.
In 2011 stand alone houses accounted for 82% of new dwelling consents, while apartments were 5%, townhouses and home units 8% and retirements village units 5%.
But in the 12 months to April this year stand alone houses accounted for just 48% of new dwellings consented, apartments 22%, townhouses and units 22% and retirement village units 8%.
In April the average value of new consents issued for stand alone houses was $444,183 compared to $$339,985 for apartments and $256,898 for townhouses/home units.
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34 Comments
Not quite, Not everyone has stopped having kids, in fact there are some who keep having them although they have no place to stay and no money to feed them ... families with 6 kids and on the DOL living in a motel or shared accomodation is becoming common stuff and news items...these guys are not stopping anytime soon ..lol
So, smaller unit will suit FHB couples who can also afford to rent but will not suit a small or young family at all ... Not the kiwi way of life !
Social engineering is On again ...
"The value of new dwelling consents issued... (this includes construction costs but not the cost of the land or additional costs such as marketing and legal expenses)"
Does generally also not include :
- Architect fees and engineers and surveyor if neeed
- the consent fees, including any resource consents if required
- can exclude finishing items like carpet and curtains
- landscaping including paving, driveway, retaining walls if any, plants, lawns
Finally the value of consents is generally undervalued compared to the actual cost because of 1) budget overruns 2) variations 3) to minimize the cost of the consent itself
Is our future really to live like this http://www.scmp.com/news/hong-kong/economy/article/2142000/hong-kongs-s…
I looked at new house recently in Melbourne and the building cost per sq meter there is between $1000 - $1600 ($1600 will be with double glazing and top brand appliances). In Auckland a friend told me his cost was roughly $3200 per sq meter! Even though labour cost is higher in Australia, someone is making a killing!
I think everyone is making a killing. Building supplies are expensive, then the tradies add a big markup on that, the regulation is expensive, there is an under supply of good tradies so they can basically charge whatever they want especially for small jobs, council is going expensive, connections ar expensive, everything.
Yes, we've been looking into it. With architect, costs are definitely no lower than $3000-$3500 per metre, excluding council fees etc. One option is certainly to make it as small as possible, but to say that is the only answer is pretending there is not a serious issue with construction costs in NZ at the moment. I have a feeling if the market tanks, construction costs will also go down. Funny that.
Market tanks, why would anyone build then. I seriously think people need to stop building as we continually accepting these ffd up prices. Now the bloody govt building these apartments at these ridiculous prices. The ferry's wheel for builders and material suppliers will keep going. Seriously no end in sight
Making the “average” 215 square metre house around $700k to build! Yikes. Plus architects and landscaping etc. there’s a new 600m2 house down the road from us where guy was happy he got it done for “just” 3k per m2 - that’s 1.8 million just in build cost!
With small sections generally slopeing, dodgy clay or volcanic rock underneath, and all the height to boundary and other unitary plan rules, almost everything needs to be architecturally designed these days. Not many places where you can slap on a signature home these days.
Great caution needs to be exercised on building consent numbers and values. They don't equate to dwellings being built.
Many consented schemes are not advancing, or have been delayed, especially apartments for example:
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
There is real market failure at play, and Kiwibuild needs to be successful to address this.
Will be Good if this CoLs focuses on getting its priorities right ... they should work on solving immediate housing problems and needs of the homeless and folks in desperate need first and worry about KB numbers in other projects ( which so far do not exist !!).
Immediate need is for 3,4,5 bedroom homes of 90+ m2 with a bit of room to move and park cars etc. These are the $800K+ houses in Auckland
Pushing for smaller units and cutting corners because of a price target ( line in the sand) is a hallmark of the shortsightedness and incompetent management of the crisis. Not only it will not address most of the needs, but it will also engage and distract the available building manpower in building smaller and smaller Boxes.
These Units are already available for sale today at the same "affordable" prices (
Look at these two different sized A1 homes
http://www.a1homes.co.nz/plans/4/EH148 148 m2 and costs $242,000
and this
http://www.a1homes.co.nz/plans/4/EH80 80 m2 and costs $183,000
In other words it is very much a law of diminishing returns . Almost half the size and only 25% cheaper.
This is a miserable misguided line of thought and we should be addressing the real issues.
A Crooked building material supply sector and
A rigged land supply market that takes farmland and inflates it by something close to two orders of magnitude.
Both these things could be readily addressed by the government if they wanted an open honest market. If they did this then houses would be far more affordable and need for ever higher wages, welfare benefits and a whole bunch of consequences of this corruptly distorted market would be significantly reduced.
That and you are looking at the A1 homes site (they are heavily tied into products and suppliers, not for the benefit of the customer). It gets worse if you actually intend to live in your home long term and need to have say an accessible design or even one that can handle the site and perhaps a bit of a storm one year.
The main difference between those houses is a double garage and an extra bedroom. Neither cost much. But most Auckland sections these days would barely fit the bigger house. So you are left with the choice of putting a cheap off the shelf two bedder on your $600k section or an expensive architectural two story.
Of course they're getting smaller! AC says 700,000 more people will live here, requiring 313,000 new homes and 263,000 new jobs - according to the new 30-year plan. https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12065030
Can of beans used to be priced acc to 440g. They cut it to 400.No price cut.
Red Beach 4 bed townhouses with no garden now $800,000 range. Millwater: $1.15m average.
It is suburb competition.
Areas where most housing is under $800k are increasing sales by about 5% compared to 2017 first quarter (mostly Waitakere and Manakau.) Rest of market, other than section sales, is flat to falling.
Another matter is: do we as a SOCIETY (sorry, not saying economy or country - society refers to how we live and interact - i.e. quality of life) want to continue with less house owning pa, not just in Auckland but all of NZ? Because when census comes out, the is what it will show. 74% of new builds are RENTED out. In Auckland the 2013 census showed 54% home "ownership" (outright or indebted). What do you think it is now when prices have risen 100%? When a FHB does get a mortgage their average period for repayment is 35 years in Auckland, or worse. Twenty years ago it was 25 years. They start paying later also. Possibilities like wanting a wife or partner to have a child (read, less earning power) or someone losing a job, are ignored. The market has topped and all those who bought in last 3 years, from April 2015 onwards, will be in negative equity if they are borrowed to max. This is context in which we are meant to be "rah-rah-ing" about FHB % of purchasing on rise.
400gm butter...90gm coffee.....drop the size...sell for same price....People may never notice.
Even HP is dropping saucy source costs......
https://www.reuters.com/article/us-hp-layoffs/hp-sees-up-to-5000-job-cu…
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