Falls in migration & rising building consents mean Auckland's housing shortage could be on the verge of receding, but there's still a big backlog of pent up demand to overcome

By Greg Ninness

New building consents in Auckland are almost keeping up with the region's population growth, according to the latest figures from Statistics NZ.

Provisional estimates from Statistics NZ show Auckland's population increased by 38,600 in the 12 months to June.

Auckland has an average household occupancy of three people per dwelling according to the 2013 census, which suggests an additional 12,867 homes would be needed to keep pace with the region's population growth.

But in the year to June 12,369 new dwellings were consented in Auckland, giving an estimated housing shortfall of just 498 homes.

That compares to a housing shortfall of 3869 in the year to June 2017, and 5115 in the year to June 2016. If the trend continues the number of new homes being consented in the region will overtake annual demand from population growth sometime in the next 12 months.

A backlog remains

However as the chart below shows, an accumulated shortfall of nearly 25,000 homes has built up in the Auckland region over the last six years and that will take many years to overcome.

But what the figures do suggest is that Auckland's housing shortage is probably not getting any worse at the moment as new builds ramp up and almost match population growth.

The improvement is housing supply compared to demand has come about through a reduction in the natural increase in Auckland's population, - the excess of births over deaths. This declined from 13,800 in the year to June 2017 to 13,000 in the year to June this year (-5.8%), and there was an 11.1% reduction in net migration into Auckland, both from overseas and from within New Zealand, to 25,700 in the year to June compared to 28,900 in the previous 12 months.

That brought total population growth down from 42,700 in the 12 months to June last year to 38,600 in the 12 months to June this year (-9.6%).

Over the same periods, new dwelling consents in Auckland were up 19.3% to 12,369 in the year to June compared to 10,364 in the previous 12 months.

The figures suggest Auckland's housing crisis has reached, or is at least is very close to reaching, it's high water mark.

The latest monthly migration figures show that net population growth from migration is continuing to decline and the new building consent figures have been robust for several months.

If those trends continue, then the pressures that have built up in Auckland's housing market over the last six years should slowly start to dissipate, and that could have a gradual flow-on effect on prices and rents.

However much will also depend on other factors such as the overall economy and what happens with mortgage interest rates. But for the time being at least the figures suggest a steadily improving picture as supply and demand for housing in Auckland start to get back into balance.

Auckland's Growing Housing Shortage
Year to June *Natural increase in population *Increase from net migration *Total Increase in population Estimated no. of new dwellings needed *No. of new dwellings consented Annual housing shortfall Cumulative housing shortfall
2012  15,200 6500 21,700 7233 4,197 3,036 3,036
2013 14,700 7000 21,700 7233 5,343 1,890 4,926
2014 14,200 19,600 33,800 11,266 6,873 4,393 9,319
2015 13,900 29,100 43,000 14,333 8,300 6,033 15,352
2016 13,500 30,800 44,300 14,766 9,651 5,115 20,467
2017 13,800 28,900 42,700 14,233 10,364 3,869 24,336
2018 13,000 25,600** 38,600 12,867 12,369 498 24,864
*Source: Statistics NZ  **Adjusted for rounding.            

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45 Comments

Interesting article. Does anyone know what percentage of consents aren’t followed through with?

Also how long on average does a consent take to become an occupiable property? Unless this study is totally based on the assumption that people can occupy building consents instead of tangible homes.

Yes. An offical Auckland Council review showed that almost all dwelling consents end up being built (in the high +90%s).

Thanks David, I thought it might have been lower but happy to be corrected.

Yes. However, my understanding is that quite a few consents are to replace existing dwellings that will be demolished, so don’t contribute to the net increase. I think Core Logic says only 70% of building consents result in net additional units (may be wrong on the %).

https://www.corelogic.co.nz/news/nz-property-market-developers-perspecti...

What would be the occupancy amongst the migrant community? The vast majority are single people living in house share situations. Anectodal information and casual observation of the saturated on-street parking in suburban Auckland would suggest it is probably 4-6 people per dwelling. In that case, the 2017 consents (assume they are coming onto the market 2018) were OK to cope. The consents for 2018 will see an oversupply. Houses aren't exactly selling themselves these days. From the ones, I am watching for entertainment. All I can see are long times to sell with price drops to chase interest from a small pool of buyers.

Could be on the verge of a classic oversupply scenario. Happens all too often in many markets...

I don't think so its going to take years to catch up. Immigration needs to crash 75% for a few years to get on top of demand and then we may see some price drops but only in the outer suburbs or new developments.

Perhaps migration drops 20% and we underestimate the number of people living per house by 1 person and kiwi build kicks in creating more supply. Could create the same scenario. Lots of variables.

Less people arriving will contribute, but I also think we're underestimating how many people will be looking to leave NZ in the coming weeks/months/years.

Kiwibuild is a joke.

What a meaningless comment. You might be right, or might be wrong. But unless you want to elaborate into something tangible how is anyone meant to do anything other than roll their eyes and carry on. Please make your comments something other than “ I don’t like labor” or “I don’t like national”

Its a comment in reference to widely acknowledged problem that KiwiBuild almost by necessity builds houses at the cost of other houses getting built as there is only so much building capacity in NZ. Some extra productivity may pull from overseas given the 'certainty' that KiwiBuild provides but Labor itself acknowledged that KiwiBuild had failed before it even launched.

He's not wrong. They are being very quiet about the results of the first lot of ballots for the Papakura houses.
They haven't updated their progress page, so I emailed and asked a few questions... *crickets*.
They have emailed earlier today about the Mt Albert apartments, and closing of the application period for the Wanaka homes, but not a dickie-bird about whats happened with the Papakura homes in the email.

I think Twyford is going to be running for cover shortly.

What a meaningless comment. You might be right, or might be wrong. But unless you want to elaborate into something tangible how is anyone meant to do anything other than roll their eyes and carry on. Please make your comments something other than “ I don’t like labor” or “I don’t like national”

You mean like it did 6 years ago? When it fell over 100%. That's right. There was a net outflow of people ( mainly to Aussie of course). So it can, and does happen and there's no way of knowing how long that can go on!
https://www.interest.co.nz/charts/population/net-long-term-migration

Most Kiwis go to Australia. They are about to pass a bill stopping the 150 refugees from Nauru. What is the possibility they take the opportunity to tidy up immigration from NZ? Easier to pass laws against us than to stop boat people arriving and at present Australian govt shows little affection for Kiwis who they arbitrarily define as of bad character.

Lapun

I think the Aussies will be quite happy to welcome kiwi's with open arms. They have so many empty properties coming on stream that kiwi cash will be an invaluable commodity to slow down their property bust (possible banking crisis). The exodus however could place us in a similar predicament. The Australasian housing beauty parade is about to begin. Lots of Aussies major cities, particularly Perth and Brisbane look better value than most cities in NZ and the jewels in the crown of Melbourne and Sydney are getting cheaper by the day.... It will be tempting for many.

dont be surprised if they restrict NZ residents and citizens (under 5 years since they became one) from being able to gain the general visa to move to Australia and have to apply for one.
the aussies will use this opportunity to close the back door

Sharetrader

Restriction of Kiwis in Australia is far less likely if they smell a banking crisis on the horizon....... and the odour of that event is becoming quite pungent with every weeks house sale data!

https://www.youtube.com/watch?v=chajnlZyYCc&t=0s

Sharetrader

Restriction of Kiwis in Australia is far less likely if they smell a banking crisis on the horizon....... and the odour of that event is becoming quite pungent with every weeks house sale data!

If prices have been pushed higher because of under supply, then surely prices begin to drop as soon as you start reducing that under supply, and by the time you have the 'correct' supply they have dropped back to their earlier levels?

Otherwise, either the under supply premium simply sticks around even after the issue is gone, or prices just fall off a cliff when the correct level of supply is reached.

Are the majority of our recent migrants rooted in New Zealand? In the vernacular yes but in the traditional sense no. If they see a better future for themselves somewhere else. They will move out as quickly as they moved in. Not as big of an emotional decision when you have already moved once.

I don't blame them for moving out of the country as soon as the first opportunity comes knocking. Most people moving to NZ expect to be a part of an advanced economy but struggle to find career opportunities to speed up their professional growth. Add to the mix the rapidly falling living standards in our major cities over the past 5 years or so.
We probably wouldn't have a problem of high net migration in NZ, if Aussie allowed visa-free entry to NZ permanent residents like we do to their PR holders.

When I attended citizenship ceremony in North Shore 8 years ago it was obvious that some of the Asians had turned up scruffy and crossed the stage as fast as possible - probably rushing to the travel agents and other who I suspect were originally South African were dressed to the nines and stopped mid-stage to wave to their enthusiastic audience.
Some immigrants are in NZ for the welfare state. I speak of some family members - they work hard, pay taxes, obey the law and quite like NZ but would be happier back in their country of origin if it provided a career, free health service and free education. Having children makes the difference. What applies to some of my family almost certainly applies to others from non-welfare states. For example the flood of elderly Niueans returning home now NZ superannuation is paid in Niue.

Admiring my own comment when I realised it may be interpreted as pro-white anti-Asian and that would be way wrong. Some of the most enthusiastically pro-Kiwi at the citzenship ceremony were Indians from Zimbabwe.
From my too frequent comments you can deduce I class immigrants into categories: from richer/poorer countries and from welfare/non-welfare states (usually much the same countries). An immigrant from a wealthier country with a welfare state is here because they like New Zealand or a fugitive. The others may or may not like NZ. All who take low paid jobs are bad for New Zealand.

Lapun

You're just a bloody good Dad who thinks beyond himself and considers the next generation and their kids too.... I admire those thoughts and your comments...

Like Christchurch. There was huge demand for post-earthquake builds, anyone with a bit of land in the bank saw this as a great opportunity to develop. The problem is in the time it takes from someone applying for resource consent to actually having serviced sections ready to sell they could be in a very different market.

If anyone is ever driving past the Groynes Park and seen the progress there.......They started selling sections in 2013, supposedly 60% sold in Stage 1. I think there's a handful of houses now built.

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The tide is never still. And when you get to the wrinkled stage in life, you've seen one or two. Come & go. My issue is that over the past 30 years we have fundamentally changed the culture of Auckland city by importing 400,000 Chinese. You're never going to have a decent rugby team with those stats. And although this comment may about to become out of date, let's see if it translates through to the Blues.

You don't like ping pong or badminton? Well start watching and pay some attention into those sports, it will help you long term!

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Lets say the housing shortfall is real.
Where are these 75,000 people sleeping now (at 3/house) ? Multiple families have lived in single houses probably since the end of WW2, so thats not a new phenomenon, for some its the norm.
I think the whole shortage story is a really nice way of covering up the foreign buyers/empty home issue.

There should be official figures for numbers in emergency housing and also for accommodation allowance being paid.

There are whole families living in garages. And or sleepouts.

That didn't happen after WW2.

Yes and I have seen it in Tauranga in a new subdivision. The garage door up and there were couches and a bed in the double garage with no room for cars. This must now be really common and it would have been unheard of 20 or 30 years ago. Sure it could have been just another bedroom but now there are families living in garages so this is just one step away from third world stuff.

One of my Banker Tellers, tells me just left their rental (Just in from Asia a year or two ago), has now just bought a house in my street with her Hubby and will meet the hefty mortgage by letting out the garage as per above scenario.

Ya cannot lose with houses.....apparently?..

so how does that meet bank servicing rules? Officially a bank will not accept renting out the garage as income. maybe some "boarder" income but not much.
Unless uncle is the loans officer.
Otherwise on great salary/wage income and the rent is just a bonus.

Thats bollocks. My wife is Samoan, as a kid in the 60's they always had at least one other family living with them. These were new immigrants her family was helping out. She is from a family of 6 kids, 3 bedroom house with a garage, ill let you do the maths.

Because we are all so cotton wool wrapped it is less acceptable today. It has always happened. For some it is the norm.

60 years ago my aunt and uncle raised their 3 children in a Stockport house that had been condemned as a slum for over 20 years. Small, two bedroom, outside loo, metal bath that was carried into the kitchen. All the kids went to university and that was in the days about 3% of the English went to uni. Not that impressive but I remember my aunt saying that the family who lived in the house before them (this would be just pre-WW2) had 17 children.
Thing really have improved but a society must be judged by those at the bottom - NZ is doing badly.

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Now to educate that we need not popn growth but reductions.

Consents are not a net plus.
If I buy a section with an existing house on it, remove that house and build three units on that site there are three consents issued but the net increase in the number of housing units is two, not three.

So we go from housing crisis to no crisis and probably back to crisis next week. Media just creating noise for click bait advertisments.

So we go from housing crisis to no crisis and probably back to crisis next week. Media just creating noise for click bait advertisments.

Using consents as a proxy for supply and therefore as a measure of how well you are meeting demand is not a good measure for achieving housing affordability, which is what the assumption is about, ie high consents, more houses built, more affordable homes, or at least as the article states, prices not going up/more stable market.

And the reason is, that for supply to be relevant to demand, it has to meet/be responsive to demand in real time. EG if you are starving to death today, it is meaning less to having a measure that says you will have a surplus of food in 12 months time, and then for that excess food to go to waste in 12 months due to the over supply.

In jurisdictions that have systems that allow housing to be supplied in developer real time, the houses are affordable at approx. 3x medium multiple income, and just as importantly is stable over time.

There is no boom or bust, no high price one year, and then an over build where prices crash the next.

Developer real time in these jurisdictions is approx. 6 months from demand signal to supply completion, from someone wanting to buy a house to them moving in.

All the consent numbers in NZ highlight is the very long time lag we have in NZ between demand and supply, and therefore why our housing is unaffordable.

Our supply methodology is out of sync. with demand and along with out building code, is not fit for purpose to achieve housing that is warm, dry, healthy and affordable.

The two other questions that need to be considered as well, and are just as important to answer are:
1) How long does it take from demand signal to consent?
2) How long from consent to house/project completion?

Although the answer to both these questions is self evident ie it's too long and is the reason for why we will continue to have a boom and bust housing supply, and why housing will be too costly for most.

So I hear that there is now a growing cohort of tinytots at school up to the age of 11 who are still wearing nappies. I then heard that the possible explanation is their parents are having to work every waking hour to afford accommodation etc hence their offspring dont get the benefit of potty training. Lets hope Kiwibuild will rectify this so all our kids can soil themselves right up to university without fear of condemnation and we can breed an entire new generation of wards of the estate