By Greg Ninness
An accumulated housing shortage of more than 34,000 homes has built up in Auckland over the last five years, according to the latest calculations by interest.co.nz.
Every year interest.co.nz estimates the Auckland region's housing shortage by comparing its population growth from both the natural increase in the region's population (the excess of births over deaths) and the net gain from migration (from both overseas and within New Zealand), and estimates how many additional dwellings would be required to house the extra people, based on average household occupancy.
Until now, that figure has been compared to the number of new dwelling consents issued in the region to estimate the shortfall.
When those figures were last calculated in October, it suggested a shortfall of 19,908 dwellings had accumulated over the five years to June 2018.
We have now updated those figures and instead of using building consent figures to calculate the supply of new dwellings have replaced them with the number of Code Compliance Certificates (CCCs) issued for new dwellings by Auckland Council.
This gives a much more up to date picture of the supply of new housing because it is typically around one to two years from the time a building consent is issued until a new home is completed, but CCCs are generally issued about the time a dwelling becomes ready for occupation.
Those figures are displayed in the table below and they make for grim reading.
The CCC figures suggest a housing shortfall of just over 34,000 dwellings accumulated in Auckland over the five years to the end of June, an increase of 72% on the shortfall of 19,908 suggested by the building consent figures.
This would help explain why the Auckland housing market has remained reasonably resilient, both in terms of prices and rents, even though housing sales have declined and the market has cooled over the last couple of years.
However there is also some good news in the figures because they show that while Auckland's population is still growing at a faster rate than homes are being built to house the extra people, the rate at which new homes are being built is increasing while the rate of population growth is declining.
As the table below shows, over the five years to June 2018, Auckland's annual population growth peaked at 44,300 in the year to June 2016 and has since declined steadily to 38,600 in the 12 months to June this year.
Over the same period the number of CCCs issued each year has more than doubled, rising from 4322 in the 12 months to June 2014 to 9433 in the 12 months to June 2018.
That means that the housing shortfall being created each year peaked at 8919 homes in the 12 months to June 2015, and has declined sharply to 3434 in the 12 months to June this year.
So although Auckland's housing shortage is still increasing, the point at which supply starts to match demand is certainly on the horizon.
And that's where building consents become useful because they are a pointer to future housing supply, and they show that 12,369 new dwellings were consented in the 12 months to June this year, just shy of the estimated 12,867 needed to match population growth.
If present trends continue, and migration continues to slow and housing supply continues to increase, then it is possible that the supply of new homes in Auckland will start to outstrip population growth sometime in the next one to two years.
However there will still be a substantial shortfall to address before demand and supply get properly back into balance.
But in the meantime the numbers are certainly heading in the right direction.
|Auckland's Growing Housing Shortage - Year to June 2014-2018|
|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 completed (CCCs issued)
|Annual housing shortfall||Cumulative housing shortfall|
*Source: Provisional figures from Statistics NZ **Adjusted for rounding. CCCs = Code Compliance Certificates issued for new dwellings by Auckland Council