Auckland will face pressures on land development capacity, significant increases in the number of house renters and rental properties required, as well as pressures on transport infrastructure due to strong population growth over the next 16 years, the Centre for Housing Research (CHRANZ) said in a report released today.
A smaller bulletin on the research is here.
Meanwhile, CHRANZ released a second report on the patterns and dynamics of housing demand among younger Auckland households.
It said the younger households age group (20-40 year olds) had experienced New Zealand’s biggest fall in home ownership rates between 1986 and 2006, with Auckland leading the national trend.
Between 1986 and 2006, the largest falls in home ownership nationally have been among younger age groups:
• 17.9 percent among 25–29 year olds;
• 17.7 percent among 30–34 years olds; and,
• 15.5 percent among 35–39 year olds.
The shorter bulletin for the second report is here.
Here is the release from the Centre for Housing Research on the first report:
The Centre for Housing Research, Aotearoa New Zealand (CHRANZ) has today released the research report “Auckland Region Housing Market Assessment” (November 2010) that assesses current and future housing demand and need (2006 to 2026) in the Auckland region, its distribution, composition and also its implications. This is the first such assessment using the New Zealand housing market assessment manual.
Undertaken by Darroch Limited, this research was funded by CHRANZ and the Auckland Regional Council.
Key findings:
• Strong population growth in Auckland will place stress on Auckland's dwelling capacity, infrastructure, transport, and city form as it shapes the housing market until 2026.
• Dwelling demand for the 14 defined housing market areas (HMAs) will increase by 39.6 percent - from 431,890 dwellings in 2006 to 601,420 by 2026.
• The Auckland region already has (June 2009) significant renter housing affordability issues - 49.9 percent of all private renter households are experiencing ‘financial housing stress’ – households spending more than 30 percent of that household's total gross income on housing costs.
• Demand for rental accommodation will continue to increase a significantly faster rate (63.5%) than demand for owner-occupier dwellings (26.2%).
• Home ownership has significantly reduced from 70.7 percent to 66.9 percent between 1996 and 2006.
• The absolute size of the ‘intermediate housing market’ (IHM) increased from 39,700 to 77,110 households between 2001 and 2009. ( IHM is the number of private renter households who have a least one member in paid employment and cannot afford to purchase a dwelling at the lower quartile sale price, assuming standard bank lending conditions.)
• Housing demand will be particularly shaped by the growth in older, couple-only and single person households and will increase demand for smaller one and two-bedroom dwellings.
• Auckland's residential development capacity under the existing Regional Growth Strategy (RGS) will be nearing full capacity by 2026.
• A mismatch between the location of dwelling capacity in the region and the location of projected employment growth (especially for higher skilled and high paid occupations in Auckland city). 51 percent of the employment growth in the region is projected to be located in Auckland City but this area only has 32 percent of regional dwelling capacity.
• The implications for Auckland and its new governance will include: pressures on land development capacity; significant increases in the number of renters and rental properties required; as well as pressures on transport infrastructure.
Here is the release for the younger households report:
The Centre for Housing Research, Aotearoa New Zealand (CHRANZ) has today released the research report “The Determinants of Tenure and Location Choices of 20-40 year old Households in the Auckland Region” (November 2010) that identifies the patterns and dynamics of housing demand (tenure and location choices) among younger households in the Auckland region. Environmental, social and economic implications on Auckland's spatial planning and urban growth are also examined.
Undertaken by Beacon Pathway Ltd, this research was funded by CHRANZ, the Ministry for the Environment and the Ministry of Economic Development with funding from the Ministry of Research, Science and Technology’s Cross-Departmental Research Pool.
Key Points:
• Location is critical. Once Auckland region’s younger householders have decided what locations best optimise their connections to places and people, their preferences are:
home ownership, especially for families;
a detached dwelling;
comfort and functionality (which involves dwelling size and warmth); and
homes and neighbourhoods that are safe for children.
• Quality of life, closeness to familial and social connections rates higher than closeness to work.• When younger households move within Auckland they are more likely to move another dwelling in the same suburb or neighbourhood. Lower income households particularly limit the distance they move.
• The younger households (25-39 years) age group has experienced NZ’s biggest fall in home ownership rates (1986 – 2006) with falls most pronounced in Auckland.
• The number of younger households in Auckland’s ‘intermediate housing market’ has more than doubled in five years - from 24,908 in 2001 to 51,866 in 2006. (Between 1986 and 2006, the largest falls in home ownership nationally have been among younger age groups: 17.9 percent among 25-29 year olds; 17.7 percent among 30-34 years olds; and15.5 percent among 35-39 year olds.)
• Rental tenure among younger households is concentrated especially in lower income households, and among Asian, Maori and Pacific younger households. ( IHM is the number of private renter households who have a least one member in paid employment and cannot afford to purchase a dwelling at the lower quartile sale price, assuming standard bank lending conditions.)
• Significant numbers of children in younger households live in rental dwellings.
• A burgeoning population and increased demand for rentals will place further strains on Auckland region's infrastructure – transport and amenities.
• Multi-pronged approaches are needed to support diverse housing choices of younger households, including recognition that housing is integral to city resilience and connectivity.
(Updates with second report)
47 Comments
I cannot understand why nobody asks the fundamental question to this problem. Why do we keep increasing immigration and population. If we didn't keep increasing the population via immigration we wouldn't have a housing and land problem. The only reason for increasing the population is to ensure economic growth. However surely everyone understands the end result of such a policy. Please read Prof. Albert Bartlett's views on the exponential function.
Andy ....correction ok...."the only reason for .....is to make it look like there is economic growth"
This is the underlying scam. Try explaining this to a population with the average reading age of 12 and you might as well talk to sheep.
Just accept the fact that the immigration game will carry on regardless and in time Auckland will be just like Bombay or Calcutta.............something to look forward to!
You are one of the professionals in that field, so I ask you politely again - why isn’t possible to build affordable houses ? What is the reason for it ?
..and I 100% agree with you affordable houses - a must.
..and I actually like your business philosophy – great – I read more about tonight – thanks.
Wolly is right. The sprawl will continue as long as Aucklanders continue to insist on living in bungalows up to the edge of the CBD. Anyone know of another city like that? By the way, the report says that infrastructure and transport are stressed - that's two separate issues, not the one this website's summariser has suggested. From recent experience, I can verify that the water supply and in particular the wastewater network have suffered gross underinvestment. The cost to rectify will fall to the new Water entity - no doubt they have a great new masterplan.
@ Hugh Pavletich
Your question "when is this Government going to start allowing affordable housing to be built?" is ambiguous in that it implies "affordable housing" is being dis-allowed by the Government. Could some-one please clarify .. is the Auckland City mentioned in the above report the new super-sized Auckland City or the old inner-central Auckland City. Either way, doesnt matter, where would you put them. Be specific. Thirty years ago Auckland and its immediate environs had a desperate shortage of recreational open space (discounting foreshores and coastlines) when the population was a lot less than it is now. About the only place is somewhere north of Helensville or Wellsford, or south between Drury and Hamilton.
Wow, what a big report! Someone made a buck writing that.
Olly was right!
Matt in Auckland...have a read on the Auckland CBD-appears to be a popular location ;)
Key point I got was: North Shore, Waitakere, Auckland South West and Manukau North West HMAs have the
highest levels of total housing need.
Auckland certainly is a seperate market from the overall NZ market.
Number of questionable statements in this report, including:
• Housing demand will be particularly shaped by the growth in older, couple-only and single person households and will increase demand for smaller one and two-bedroom dwellings.
I Know lots of older people who are either staying in 3/4 bedroom houses, or moving out of Auckland
• Auckland's residential development capacity under the existing Regional Growth Strategy (RGS) will be nearing full capacity by 2026.
So there is plenty of time to add additional capacity by freeing up greenfield land, which is what will be done
But I do agree that housing supply will come under pressure. In particular, with peak oil, the premium will become attached to more central living. So 28/29 yr old, I do agree that in the long term centrally located property will stand up well. But you need to be buyiing it as owner occupier, unless you are prepared, as an investor, to tolerate a 5-6% return for 6-7 years ie. if you are in it for the longer haul - 10 years plus - the wait might be worth it. But that takes out all the traditional short term ,capital gain infatuated investors
Matt the whole report is pedestrian as is your comment that housing will come under pressure.
Housing is always under pressure just like the price of a banana at your local market. The question is not weather the price of housing goes up or down over time or weather or not a return yields 5-6% because either and all events will definitely occur over extended periods of time for periods of time.
The question should be (as you mention peak oil), will the price of housing increase or decrease at the same rate as renewable energy during the same time frame and therefore are you wise to invest in housing or energy.
It is the relative trade of the goods you have invested in (commonly cash savings held in a bank), over time, to the good you intend to trade for that determines if you have invested wisely.
Personally, I think housing is over-valued because currently the cost of the land determines 70 - 80% of it's gross value. This is largely because the government and regional bodies charge at every stage through application to development.
Literally with swipe of a pen these costs could be halved in the future to make new housing cheaper and to develop the product to meet the needs of people like, well, people like me and many others who need a roof over our collective head but don't care about capital gains.
On the other hand there are over 2 Billion people in China and India who are never going to be able to purchase land in our country because we will continue to limit immigration. These people will continue to work for 10% of our wages supplying goods and services to us until we have no money left to maintain our current high and current falling standards of living. You can figure out where we are heading with housing prices by following Americas dilemma.
key findings addressed:
* Strong population growth in Auckland will place stress on Auckland's dwelling capacity, infrastructure, transport, and city form as it shapes the housing market until 2026.
so stop it growing.
• Dwelling demand for the 14 defined housing market areas (HMAs) will increase by 39.6 percent - from 431,890 dwellings in 2006 to 601,420 by 2026.
a guess - somebody extrapolated a line on a graph, no reference to energy supplies. So from a false premise. Projection not worth a knob of goat shit.
• The Auckland region already has (June 2009) significant renter housing affordability issues - 49.9 percent of all private renter households are experiencing ‘financial housing stress’ – households spending more than 30 percent of that household's total gross income on housing costs.
so control the amount the landlords can screw out of the tenants - actually, this will happen by default (see energy, above - less opportunity for income generation, less ability to pay rent).
*Demand for rental accommodation will continue to increase a significantly faster rate (63.5%) than demand for owner-occupier dwellings (26.2%).
see above
*Home ownership has significantly reduced from 70.7 percent to 66.9 percent between 1996 and 2006.
see above above
*The absolute size of the ‘intermediate housing market’ (IHM) increased from 39,700 to 77,110 households between 2001 and 2009. ( IHM is the number of private renter households who have a least one member in paid employment and cannot afford to purchase a dwelling at the lower quartile sale price, assuming standard bank lending conditions.)
see above above above - if everyone just owned one house the prices would be (much) lower, due to no rental-geared floor to the market. This is about greed, impact thereof on the margins.
*Housing demand will be particularly shaped by the growth in older, couple-only and single person households and will increase demand for smaller one and two-bedroom dwellings.
Agreed. Attention should also be given to multiple users/owners of the recent too-big housing stock
*Auckland's residential development capacity under the existing Regional Growth Strategy (RGS) will be nearing full capacity by 2026.
That's fine, that's well past Peak Oil, and all bets are off (probably have been for a decade) anyway.
*A mismatch between the location of dwelling capacity in the region and the location of projected employment growth (especially for higher skilled and high paid occupations in Auckland city). 51 percent of the employment growth in the region is projected to be located in Auckland City but this area only has 32 percent of regional dwelling capacity.
Given that it doesn't take into account Peak Energy (even the conservative IEA World Energy Outlook 2010 would do) this comment isn't worthy of consideration.
• The implications for Auckland and its new governance will include: pressures on land development capacity; significant increases in the number of renters and rental properties required; as well as pressures on transport infrastructure.
Aye, transport. There's the rub. Food to the people. Services. What will work look like during the long emergency / powerdown? Until you ascertain that, you don't know anything. Some folk partially 'get it', and talk of commuting by train rather than by car. First, define what will be 'work' in an energy-depleted world.
The deckchairs are sliding down the deck, folks - we need more deckchairs.
The report adds very little to what we already know, at significant expense.
So really it is one big "whoopdeedooo" - I agree with Hugh. CHRANZ have been handing out millions of dollars for years for such reports. Sure, they are good reports, but they are simply descriptive
We don't need more analysis, we want practical answers
And the answers aren't difficult AT ALL
The answers are simple in my opinion - zone anything within 10km of the city as high density. Get rid of these old villas taking up lots of land. Who gives a crap about 'heritage suberbs' - change is all part of an expanding city.
Increasing the city boundries would be plain stupidity IMO
Totally agree, Jimbo ( See! I am flexible). That way the villa market would collapse as all the amateur landbankers try to hit the market to cash in for re-development; land becomes cheaper, closer in, and we get that long anticipated fall in property prices. " But the villas wouldn't have to hit the market all at the same time". No? What's the point of changing the zoning ( the carrot) if there's no stick ( "Use it or we'll tax you to 'incetivise' you to develop it")
It is not complex as long as we do whatever Hugh thinks is right, even if a lot of people think he is completely wrong.
Hugh, any chance you stand to benefit if urban limits are removed? While everyone elses rates increase 10 fold to pay for new motorways and pipes and footpaths and streets and power and fibre and rail for these new middle of nowhere suburbs...
Build state houses in North Albany with close access to the North Shore bus lane, Waitakere with close access to the train station & Drury creating a new train station (on the already available railway line. This would mean less roads would need to be built & the people living in these area's have access to transport. These area's have services already available (maybe not as much for North Albany) & land is available to build modern version of the post WW2 state houses but on smaller sections. The tower block scenario doesn't work.
NZTA have in their sights an extension of the busway from Albany to Silverdale.
Most of this land could be urbanised, and if done well a significant proportion of commuting could be catered for by the busway. Have 2-3 town centes with higher density housing (3-4 level apartments, terrace housing) around them (walking distance to bus terminals in the centres that then distribute to the busway) then lower density (semi-detached, detached) that is still walking / cycling distance to the centre/ bus exchange
agree. What gets me with the whole "demand" situation is that in places like Albany there is TONNES of space, its just not set aside for housing. North Harbour industrial area is a massive expanse of land with primarily one / two storey office space. People dont mind high density office space, they dont like high density homes though. So isnt the sensible thing to go high density and build a 50 storey tower that uses a 100th of the space curently utilised, then turn the remainder into housing lots. My understandnig is a 500sqm block of residential land out in Albany would cost a LOT more than equivalent office land so conversion coudl be economical for local bodies. Maybe I'm being naive in respect to costs of converting existing office space, but last time I checked there was still more space being set aside for new 2 storey office developments - tehse should be looking to go very high density.
I reckon if you put in great infrastructure and efficient methods of reducing traffic into and out of the CBD, houses would not cost as much because the commute would be a lot less. To be honest, Auckland is over-rated, and is not a world class city by any measure, you want world class cities, look over the ditch. Houses are only expensive here because people don't know how to make money any other way. If I didn't have commitments in NZ I wouldn't even be here, way better places today, thankfully because of the internet its really easy to do business overseas without actually being there.
Hopefully with the new "Super City" now being a reality, the powers that be put something together that meshes all these issues together cohesively, otherwise urban sprawl will be just that.
You are all in lala land if you think housing affordability levels in Auckland will get any better. Pressure will continue to be applied to the housing market as growth continues to be applied through the demands of new and existing housing stock by immigrants. Do not be deluded into thinking the government will interject, or implement change policy sufficiently to change this situation as it wont happen. The only way this will work, is by being pragmatic about it, and plan accordingly for the future. Investment in infrastructure is critical otherwise, it will all and up as one big mess.
Enjoy the cahoticness of your existance, I am quite happy here on the Kapiti Coast - for the time being.
Churr churr
You guys are in lala land here (or smoked some serious stuffs) - everyone demands for more govt spending,better transport system, more afforable housing, more lands to build, pay less tax, pay less rates, don't sell lands for foreigners ...
Hello we only got just over 4 millions people and pay moderate amount of tax.. where do we get more money to do these stuffs? Oh yes and some even complained about having more people coming from other countries.. please don't compare us to some European countries with the smae population - they have a thing called EU and they subsidy each other.
I wish I had time to make my usual arguments.
But I am losing heart. The government doesn't need to do anything Hugh wants simply because the most voters are so blooming ignorant (some of the regular contributors on here are a good guide) and the media is such a bunch of incompetents and ideological sell-outs.
NZ is on its way to becoming the Cuba of the South Pacific and nothing is going to stop it now. The brightest people have all gone, and the remaining few are about to.
I am concentrating my efforts now, on international academic discussion groups where urban planning policies are fairly discussed and future directions are influenced. I have high hopes that the councils in more and more metros in the USA are now waking up to the fact that Texan planning is the future, not Californian or Oregonian planning. There are signs of academic awakening in Britain and Europe too - they've been doing this stuff the longest and have the longest evidence trail to analyse.
Look at the dreadful hovels in Pommyland that people pay hundreds of thousands of poonds for. That's our future. They might have "got it". But NZ is turning into the international loony Green poster child, where tourists will come to peer at the quaint, backward conditions we will all be living in in wonderful, "sustainable" poverty.
There was a time when NZ was sneeringly referred to as the " Polish shipyards " of the South Pacific . ................. But Lech Walesa and the lads complained , that that was in insult to them , and an undeserved compliment to us .
If Goofy / Klinger / & Cunny regain power next year , I'm off to the Warsaw docks , to live .
I won't deny being terribly dissappointed by Shon Key & Wild Bill ........... But the platform laid out by Goofy & Cunny for a lurch towards greater central planning and controls ; a complete ban on land sales to foreigners ; and more governmental selection of industrys to support , ought to send a shiver down the spine of any Kiwi who works or produces something .
Actually, Key's business experience was mostly in operating financial sector trading desks. How this has formed his opinions on real life stuff like house prices is anybody's guess.
I have no doubt that Don Brash would have been the better man for NZ in 2005, 2008, or 2011. "Of all sad words of tongue or pen, the saddest are these: what might have been".
Both don't add value to our most needed prodcutivity - the real factor of NZ's economic improvment.
Looks like even the Treasury in Aussie has started ringing alarm bells about THEIR housing bubble:
http://www.unconventionaleconomist.com/2010/11/australian-treasury-calls-housing.html
Better late than never I suppose, but there is such a thing as "too late".
Oh for some officials this awake over here.
But remember "PhilBest" said this, and this is not the first time I have said this. There will turn out to have been a lot of smart money "shorting" Aussie banks with big mortgage exposure, and if possible, the mortgage backed securities themselves. Things are not really all that different to what they were in California. We are just a whole lot more ignorant in this part of the world. We just don't call it "sub-prime", although our first home buyer households are paying around 70% of their incomes in mortgage servicing. I read something recently from the USA saying that anything over 30% represents "sub prime".
So many self-proclaimed expert prognosticators have been crawling out of the woodwork for the last year or so, insisting that they saw it all coming long ago. Yet these people were previously either dead silent about the things they are now claiming to have foreseen and foretold, or were avid fans of them.
As for me, I've been lurking here at interest.co.nz for years, but never posted until recently because I saw how so many those "expert prognosticators" were bashing the hell out of the people who were warning them and the rest of NZ that a dangerous and doomed bubble had formed.
So shove your "I told you so!" self-congraulatory and completely revisionist bollocks up your ar$e, Mr Best, because I for one don't want to hear it anymore. You and your ilk foresaw none of this. Shuttup and eat crow.
The "Tea Party" movement now has "Smart Growth" in its sights. Good for them.
http://motherjones.com/politics/2010/11/tea-party-agenda-21-un-sustaina…
Bear in mind that this is a typical nasty, sneering far-left comment on the Tea Party movement. In fact, the way I read it, the "Tea Party" movement is to be commended for getting "Smart Growth" on the agenda for some genuine public debate at long last. The unelected urban planners have had it their way for too long. I wish we had a conservative/free market political movement half as active, intelligent and well informed in this part of the world.
I am also coming to the conclusion that all those "Neanderthal" American conservatives have instincts that are what has made America a great nation; and leftwing liberalism is not going to wreck the USA that easily after all. They might need to cut California out of the Union, though. The strains to Union that are occurring between the likes of California and Texas are like those occurring between Greece and Germany in the EU, only worse in some ways, because California is so much bigger than Greece.
Read all about Texas HERE:
http://texanomics.blogspot.com/
Texas Added 19K More Jobs in the Past Year Than the Other 49 States Combined Texas' Private Sector Job Growth is Nearly 5x the National Rate Every Texas Metro Area has Added Private Sector Jobs in the Last Year Net Income Inflow for High Tax and Low Tax States 12 Month Employment Growth: Cap and Trade States vs. No Cap and Trade States 12 Month Employment Growth: No Tax Increase vs. Tax Increase States Texas Rebounds Faster than Other Large States Texas' Unemployment Rate Lower than US for 44 Straight Months Net Migration - Texas Welcomes Those Yearning to Breathe FreeEtc, etc, etc.
Visit the site and read it yourself. Texas - the living proof against failed leftist politics.
Hugh - no one has ever learnt anything from anyone else on bubbles, unfortunately.
I saw the aftermath of the Japanese bubble in the 1990s, and boy I was telling people back in 2006 that house prices CAN plummet and not to write it off here. Of course, they were enjoying the ponzi scheme so didn't have any time for what I said. I very clearly remember one English woman who told me where to go, dismissing my suggestion that actually, shock horror, prices COULD fall ! She had 3 investment properties in England. I wonder how she is going now....
human short term greed always seems to win out over looking at longer term consequence. Unfortunately, thats the human condition for you
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