Auckland's new housing supply is continuing to increase at record levels.
The latest figures from Auckland Council show 1041 new dwellings were issued with Code Compliance Certificates in February, up 36% compared to the 764 issued in February last year. And that's up 79% compared to the 582 issued in February 2019.
Code Compliance Certificates (CCCs) are issued when a building is completed, providing a measure of actual supply, unlike building consents which are issued before construction commences and therefore indicate potential supply a year or two down the track.
Auckland Council has been compiling CCC figures since 2013 and they have been rising steadily throughout that period.
On a rolling 12 month basis, the average number of CCCs issued for new dwellings was just 325 per month in February 2014. That number had steadily increased to 1041 by February this year.
The monthly average passed 1000 per month for the first time in November last year and has remained there ever since, and is continuing to increase.
On an annual basis, 12,497 new dwellings received CCCs in the 12 months to February, up 16.5% compared to the previous 12 months. The number of new homes being completed in Auckland has almost doubled over the last five years.
The graph below shows the average number of new dwellings receiving a Code Compliance Certificate from Auckland Council each month (on a rolling 12 month basis), from February 2014 to February 2021.
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84 Comments
So remind me, why are we bagging the government?
Because this isn't enough, and the removal of interest being an expense for landlords looks like an ill-conceived knee-jerk reaction which they don't know what the outcome is going to be, but likely it'll result in rent increases for many renters.
Ha ha nope. A fine idea this interest change ... as evidenced by the hysterical reaction of the landlording mobsters.
Do you judge all your fine ideas by the hysterical reaction in others? I ask because it doesn't make sense to me. You could ask landlords to have to pay a tax of one finger every ten years and I am sure there would be an hysterical reaction. A really bad idea and a really fine idea could both, in theory, have an hysterical reaction. I don't think that this is evidence of a "fine idea". It tells you something about the person who thinks it's a fine idea rather than anything much about the idea itself.
Here's some more comment from a landlord spokesperson.
https://www.stuff.co.nz/life-style/homed/housing-affordability/30027350…
"In short, most private landlords add value to the NZ housing stock and generate significant positive financial activity"
I'm sure some do. And then some only did when legislated.
But once we finally bought our own home, we have updated a bathroom, relined an ex internal garage, installed a wood burner, installed a heat pump, recarpeted a few rooms, painted the outside and slapped a new roof on with some extra roofing insulation thrown in at the same time. Oh, and a new h/w cylinder and replaced all the plumbing after a leak. Not sure how much of that a landlord would have done to our place....
You probably did it with materials and workmanship that weren't the shoddiest possible either.
Property investors probably shaking their heads wondering why we would over capitalise our property. Especially without the ability to offset the mortgage interest against our 9-5 incomes.
'why we would over capitalise our property.' That is where houses are out of sync. with other asset classes.
Because we have a self-induced supply shortage, there is very little difference in price between new and old, well maintained, poorly maintained etc.
Whereas cars, due to good supply, there is a big difference in prices between use, age etc.
What should have happened when you bought your property, the value of it should be discounted back enough to account for the cost of the upgrade, including a margin for 'adding value', but in reality, if you got a valuation, the price would have gone up, but would have anyway with the real $ value of your contribution not being a great contributing factor.
If this was a property you had bought to rent out, would you have done all this?
No. And that's the (counter) point I'm making in this sample of 1.
The investor claims they add to the quality of building stock and economic activity. My counter point is that as FHB we have probably improved the quality of this house by more, and pushed more cash into the suppliers of materials and services we used than they would have.
We've done the same. New HWC, new carpet/vinyl, new heat pump, renovated the bathroom, renovated the laundry. That's in 3 years, and without deducting the expenses against taxable income, while also paying the principal amount on the mortgage.
"Rent is going to increase"
Housing is the only asset I've ever heard of where the income dropping, results in the income increasing, rather than the value dropping.
For all those who think rents will increase as a result, ponder this - the new laws target leverage in a linear fashion. Do you think everyone (even those without leverage) will increase their rent to offset the full cost of the changes as if they were fully leveraged? Or do they expect those who are fully leveraged to increase rents more, and still get paid that rent? Or do they accept leveraged investors will take an income hit.
Time will tell :)
Rents will increase, whether you like it or not
(ps I'm renting)
I personally aren't fussed.
But
- Do you think everyone (even those without leverage) will increase their rent to offset the full cost of the changes as if they were fully leveraged?
- Or do you expect those who are fully leveraged to increase rents more, and still get paid that rent?
- Or do they accept leveraged investors will take an income hit.
Overall, investors and renters are both going to take a hit. Investors will raise the rents but will struggle to raise them enough to cover their tax losses. Renters are going to take a hit because most rents will rise
Rents only rise to the ability of people to pay those rents, and that comes back to income and supply and demand, take queenstown rents have dropped why, incomes are roughly the same for those with a job but demand dropped as jobs and backpackers that filled those jobs disappeared , supply has not increased.
That is why I am against the accommodation supplement. It’s a subsidy that helps increase the cost of rents
"So remind me, why are we bagging the government?"
Because they were unable to build the 100'000 affordable homes promised and they have to rely on the private sector to supply houses
So you were a huge fan of Kiwibuild to begin with?
Never said I was a fan of Kiwibuild because I was always very doubtful the government could deliver on their promise but it was certainly a good idea
Yvil I think you will find it was the business community that couldn’t deliver....the industry
The government had its chequebook open...but no one stepped up and took any orders
The government can basically procure anything it needs... from defence equipment to nurses uniforms....but houses?... no
Why is that?
Are you serious? We struggle to procure PPE, vaccines (not just COVID, influenza and meningococcal too) and had business leaders flying in equipment prior to Lockdown 1. Government has also struggled to build and maintain critical infrastructure plus hospitals, schools and many others. This isn’t unique to this Government, but to suggest that industry meant Kiwibuild failed is certainly a unique perspective.
Because it is a trend that has been rolling since 2011. Fortunately they never knew about it and so they couldn't cock it up for us.
Property Industry and Real Estate Agents: "The issue is supply! The issue is supply! The issue is supply!"
Lest we forget the old “it’s high immigration driving prices up” adage. Covid has put that one to bed.
Don't know if one year of slowdown is enough to offset the effect of an additional 500k of people added previously.
Yep, blaming 10% of the population (27.4% if you want to go full-on) for the issues created by the majority is the way to go. When was the last time we looked in the mirror?
RickStrauss is not "blaming" 10% of the population. The people who allowed so many into the country in a very short time are to blame which is to some extent that person you see in the mirror.
No need to straw man.
I have not blamed the entirety of the housing crisis on added population. I have merely noted that 500k of added population that require housing will of course have an effect on the supply/demand equation of housing.
The bigger issues are clearly credit availability and overly supportive tax treatment and regulatory support, and monetary policy pumping of the market.
I don't follow, obviously the biggest issue is supply. Interest rates cant push prices up if there is more supply than demand.
Oh yes they can, it is all about perception, and if people believe house prices will always go up, they will do anything to get a house and if you give them money they will bid as much as they can afford, lowering the interest rate means they can afford more.
If you need proof of this just look at bitcoin, a currency that can't work as a currency, if scaled up the number of transactions currently happen in the world it would consume all of the worlds power, takes 10 minutes to an hour to clear, is so unstable that it actually being in paid in it would be very uncertain, and has high fees for small transactions. But it still goes up, because people just believe or don't want to miss out.
It’s a funny argument because an excessive supply response would be a worse situation for investors than taxes. If we build too many houses, rents and house prices could drop significantly. Imagine the rent that a million dollar do up in Otara would demand if there were many better houses in better locations needing tenants. And then what happens when that landlord has to sell that house?
If the supply starts increasing much more than current levels the result will definitely be a major crash.
And isn’t that exactly what we need?!
excess supply would not last forever, effectively we would find our way back to balance and that's good for everyone. Investors dont want boom-bust risks. Investors dont want to pay taxes on losses. Investors dont want the economy to go to shit. Normalising supply is win-win. Many investors just want normal returns over long periods of time.
Hi Tom
I am a REA and I do not say it is supply, as you may have gathered by my contributions.
price is the issue. The the question is why are prices so high, and its not due to lack of supply, PER SE.
It is due to lack of supply of what people really want to buy which is 3-4 beds in right area for work and priced under $950k in Auckland, or under $600k outside it.
So, yes Yvil, it is competition for THESE that drives up price.
You cant have prices climbing like this without a lack of supply. If there was sufficient supply people wouldn't need to compete as much on prices.
It turns out the problem wasn't as much the supply of housing as the oversupply of credit.
Indeed and also the cheap cost of it
It's not ONE thing. It's a group of things: Supply vs demand, immigration, lowered OCR, removal of LVRs, willingness of banks to lend, RBNZ lending banks money for basically free, $60B paid out to people during covid and so on.
You forgot housing being the best investment as no tax to pay.
Do you perceive supply vs demand imbalance changes to be a contributor to last 12 months price changes?
I see that balance as having got better in previous 12 months, so overall a price detractor, do you see different?
As long as you have a demand overhang prices will be set by interest rates. Supply is the fundamental problem, interest rates scale the problem.
It was kind of a "perfect fine weather" situation for landlords rather than a "perfect storm".
So Immigration is down 80% over the last year
New build of houses are at record levels
Yet house prices are rocketing up
Can we now put to bed the idea that the immigrants are the cause for our unaffordable house prices?
Yes, that is what happens in a system that allows supply to be less than demand, irrespective of the demand.
And part of that is rather than the supply cycle lying almost on top of the demand cycle, they have decoupled, and are running countercyclical to each other.
But there is always a point even in countercyclical cycles that as the lines cross, at that moment in time, it will look like they are balanced. Sort of like a stopped clock is at least right twice a day.
Another name for a countercyclical cycle is 'Speed Wobbles'
I generally agree with you Yvil on this, although it isn't going to be an immediate cause and effect relationship. Immigration has definitely had a significant impact on house prices along with falling interest rates/credit expansion. How long does it take for the low numbers of net migration to flow into prices? Who knows...months/years?
Nope.
For on thing, if it's down, but not zero, then we still have people coming in, so we still need some more houses. For another, you can't have mass immigration for 8-10 years and then a dip for one year and expect it to even out.
But the real point is that immigration is one of about half a dozen drivers of house prices. It's not the only one.
No - its not the only cause, but it has had a huge impact. Because over the last 7 years our immigration policies have seen approximately 250,000 additional people above the longer term migration averages. We were averaging net migration of around 15k per annum between 2000 - 2014. Since then its averaged closer to 60k per annum. There was no plan to house these people or increase supply, and its left us with not just spiralling house prices, but also a chronic homelessness and rental stress problems.
Do you actually believe that the impacts of 7 years of net immigration, at 4 times the normal rate, will be corrected after a year of flat net migration? We certainly haven't built enough homes in that time. That shortfall of homes could take 2-3 years to be addressed, but its likely we will see the impact on rents before the house prices are impacted.
The cognitive dissonance required to say the solution is we need to increase supply but at the same time claim the increasing total demand for housing (via immigration) has no impact. They are the both parts of the same supply / demand equation.
It's like people think it is xenophobic and morally reprehensible to blame the influx of migrants. It's just simple math. Too many new people, not enough houses and infrastructure to accommodate them plus an obvious and easy way to make money through borrowing and purchasing property.
The number of new builds and the lowering of immigration will likely smack us in the face but not immediately.
Let me see, supply up, demand (in terms of supposed driver by flood in of immigrants 2013-19) down and prices up.
So much for inelastic reliable supply and demand law.
Like so many "laws" in economics, it is in fact a model, not reality.
So when should we expect housing to get cheaper?
When interest rates go up. There you have it clear and simple.
You mean the 'Bust.'
I mean what I say, no more, no less. Bust is your word, not mine
me , I thought you meant "never" .
And credit tightens. Unless interest rates raise a lot.
Money has been deliberately and regularly pumped into the global finance since we left the gold standard. Overdrive since 2007. Houses in nz are just doing what lots of assets all round the world are also doing. It's just our flavour of this exposure. Honestly as to when it stops? Who knows. Central banks are essentially making it up as they go now.
For all govt nice words, they loosened monetary policy with the intent of flooding cash into the system. House prices are just the desired affect.
Changes to immigration do take some time to flow through into house prices. IMO the very high immigration over 2019/20 has probably been part of reason for post lockdown house price mania. The other reason is low interest rates. The dramatic drop in immigration since April 2020 will probably start to impact on prices over the coming year.
Kiwiana and one more thing to consider is why diamonds cost so much, it’s because certain companies horde it to increase demand and prices. Similarly we have investors hoarding empty properties for years just to sell for bumper capital gains and all those years probably on interest only term too.
I think Canada are looking to tax empty houses.
Same could go with land banking. In a city close by there are sections with no houses, the sub diversion sold out 8-10 years ago.
Auckland City council seem to be the only authority that is publishing the CCC's. Sure it is the biggest city but they are not the bulk of the country. The rest of NZ depend on Building consents and they are up everywhere.
Despite the ongoing increase of new builds the prices of new builds keep going up because of increasing standards and rules to be met along with even greater red tape getting land released through out the country. The new tax rip off will push up the cost of new builds due to abnormal demand being diverted from existing dwellings. House prices everywhere will keep going up because over 50% of all property purchases are made by owner occupiers who are moving. People with $700,000 cash from the sale of their old homes always beat NHB who have perhaps $50,000.
But after theses tax changes - a FHB / investor property is now worth 35k less to an investor, so the owner occupier mover has 175k less leverage for second home, and so on.
However, this will only start happening once the naive but frustrated current FHBers cotton on to the impact of these tax change on that segment of their buying competitors.
Sounds approximately correct, Auckland gains about 1900 people per month and you need about 1 house for every 2 people in a homestart situation.
Obviously this year the border situation has reduced pressure on housing so we'll need to wait until normal border operations resume to equilibrate the population.
Why would we be letting more people in when we have a housing crisis, and we can't house the people already in NZ? Many wouldn't be allowed in if they didn't have a job to come to, so why are they being let in when there aren't enough houses?
Lots of empty houses in NZ, so why isn't anything being done to get these houses back into action. eg vacant house or vacant undeveloped land taxes.
Because as Jacinda said a few years back 'housing is the NZ investment and people like the prices to keep going up'. So we do everything we can to ensure house prices keep going up because it would be politically and economically bad to do anything to create longer term stability and prosperity for future New Zealand. Instead its about 'how rich can i feel next week?'.
The music will stop at some point and the party will end. Then it may all end in tears for some people.
It appears we will not be happy until we have completely destroyed this country by turning it into the same overpopulated hole as the countries our ancestors came to escape. Apparently no corner of the earth will be safe from humanities desire to rape and pillage earths natural assets.
No number of EVs, vegans or reusable cups will save us if we cannot foremost control the number if humans that need to be fed, clothed and housed.
The problem is 'supply' being sold on the market. That doesn't mean NZ doesn't have enough total houses. There are only around 20k for sale on trademe, which seems really low. People are just not selling. What is it normally...about 30K? Many of these in Auckland will have likely already been sold. It takes such a long time to build in NZ, so there is a huge lag. Too much uncertainty and people are using houses as banks to store wealth.
Great news for the Auckland sewage system! 1000 houses occupied by 2 people each (understated) with 2 poos every day is adding 500.000 litres of 'stuff' into already overloaded system that is bursting after every rain! Not mentioning the traffic that is getting worse and worse... where is the planning ??? Where is the logic???
Great news for the Auckland sewage system! 1000 houses occupied by 2 people each (understated) with 2 poos every day is adding 500.000 litres of 'stuff' into already overloaded system that is bursting after every rain! Not mentioning the traffic that is getting worse and worse... where is the planning ??? Where is the logic???
you reckon making everyone go vegan is going to make the issue worse or better ? over to PDK.
Is two poos a day normal? Asking for a friend
And how many of them are lemons? Our code is garbage and the general quality of workmanship is pathetic.
Great to see you post something positive for once QD
Some workmanship is crap for sure. I do believe the supply cartels are also very responsible for the systems, cladding and otherwise, that they peddle. The r and d is done in the field, Harditex, chem free framing timber etc etc....
Is it good for the planet to be building like the clappers when there are so many houses sitting unoccupied, so called ghost houses owned by out of towers, seasonal airbnbs or estate houses left to gain capital. Is that not wasteful? The concept of conservation, avoiding waste, energy expended unnecessarily is as old fashioned and cast aside. Sustainable is now an abstract concept to be written into policy and supported by as much waffle as possible
A few houses in Auckland won't do anything to the planet. It's a rounding error. Take a look at India and China if you want to see planet changing levels of building.
Halting building in Auckland to save the planet is about as worthwhile as holding in farts.
So to the argument that more houses will lead to a drop in house prices or at least a reduction in the rate of increase; has this occurred, even just a small reduction? Doesn't look like it , does it? Again vested interests drive problem solving along a wrong direction.
Many of us have argued that more houses won't change those factors as many investors snap up houses. But a really big question that keeps getting asked but not answered is how many houses are being held empty?
If you solve the underlying issue about affordable supply, then empty homes are less likely to be held empty as there is no unearnt capital gain and thus no incentive to be held empty, and it becomes a non-issue.
And the underlying issue is our land use policy, followed by our consenting policy.
For Govt. to focus on say an empty home tax would be just another treating the symptom not the cause red herring, like all their responses to date.
About five houses by this government. Leave the real work to the private sector. This government has covid 19 vaccines expiring as they don't want to run out, but hey, lets throw it out!!!!
READ THE LABEL AS DIRECTED
Good news if you own shares in Vector.
Who can justify growing prices anymore? We have an obvious oversupply of homes, agents are desperate to sell homes under construction, the problem is we are building what builders profit most from, not what we most need.
I wouldn't say we have an over supply of homes, the number for sale in Tauranga is half what it was a year or so ago. What you have for sale is simply a reflection of the market. The FOMO and the crystal clear market direction of the last few months has sucked all the available buyers into the market. Term Deposits are falling, money is exiting banks and going into housing. What will have the biggest impact now is interest rates and immigration.
So who's buying?
Who's blindly chasing prices?
Great news. But driving past some of these new developments, I can't help wondering if a bit more effort could have gone into the design. Particularly when they'll often bowl some of Auckland's beautiful villas character homes and replace them with some boxy monstrosity.
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