The number of new homes being completed in Auckland continued its steady rise in May, with Auckland Council issuing 1296 Code Compliance Certificates (CCCs) for new dwellings.
CCCs are issued when a building is completed, unlike building consents which are issued before construction starts. This means CCCs provide a more reliable indicator of the amount of new housing coming on stream.
The 1296 CCCs issued in May were up 136% compared to May last year, although that month's figures were adversely affected by the COVID-19 pandemic restrictions.
May's figures were up 34% compared to May 2019.
Perhaps the most telling numbers for the amount of new housing being built in Auckland is the 12 month rolling average.
This shows CCCs were issued for 13,957 new dwellings in the 12 months to May this year, up 29% compared to the 12 months to May 2020, and up 57% compared to the 12 months to May 2019.
Those numbers have been steadily increasing since Auckland Council began collating the figures in 2013, with the number of new homes being built in Auckland more than doubling over the last five years.
As the graph below shows, apart from a brief pause during last year's pandemic lockdown, the numbers are continuing to rise.
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37 Comments
Immigration near zero. New build numbers breaking records for the past five years. Yet prices are higher than ever.
If anyone still thinks prices are due to a supply shortage, I'm happy to give them my fool's cap, no questions asked.
Is it just supply and demand ???.....supply is used by like of Orr's and Robertson to hide behind an excuse as do not want to act on ponzi.
Supply is important but not the main and only reason my dear Watson.
Any news about an increase in the house supply is good news!
I'd like to see local authorities play a positive, supportive role in getting new housing projects off the ground - instead of stifling initiatives with their bureaucratic inefficiencies and sheer incompetence.
TTP
Is it just supply and demand ???
You mean supply of and demand for reservoirs of credit? For sure.
Negative real interest rates is creating this seemingly absurd market. People are basically happy to accept a 0% net return on property as it provides a hedge against inflation. The alternative is to put your money in bonds or bank account & get ravaged by inflation. Personally I would gamble my money on property over fiat even with this talk of raising interest rates/ending QE.
"There ain't only three things to gambling," Pearson said. "Knowing the 60/40 end of a proposition, money management, and knowing yourself."
Immigration is somewhat irrelevant to this discussion since most temporary migrants can't buy houses in NZ anyways.
Economists differentiate demand is different from desire in that demand involves ability and willingness to pay for an item available in the market. RBNZ's monetary stimulus to rescue the economy allowed banks to pump up the purchasing power of homebuyers and investors, which suddenly turned desire into demand for thousands across the country.
New housing makes up, at-most, 1-1.5% of total stock in NZ, so that won't alone tip the scale towards supply in the absence of more listings.
Immigration is very relevant. Those temporary migrants have to live somewhere, even if they are renting. Rental demand is a factor in investor demand, and investor demand is a component of overall market demand.
I'm not saying we're going to have a massive over supply anytime soon, but low immigration with solid growth in the rate of new builds is surely a step in the right direction.
It absolutely a step in the right direction.
Hopefully further steps are also taken to ensure new supply remains steady, market reforms keep coming, immigration is targeted towards addressing genuine skill shortages and talent import.
I firmly believe that if NZ property hadn't been ramped up so much, we wouldn't have a skill shortage because the balance between incomes and house prices wouldn't be keeping so many Kiwis overseas and sending more of them away. We have lower incomes and we should have lower house prices.
Yes this is completely true and I personally know of young highly skilled Kiwis working in AU or planning to go to AU, with the main reason being not just higher salary, but especially the possibility to buy a decent house at a more reasonable price in the overall context of a bigger economy.
The NZ real economy, many Kiwis and especially the new generation, are held to ransom by a parasitic minority of housing specuvestors feeding the NZ housing Ponzi and being fed by a reckless ultra-loose monetary policy.
A country that protects and rewards the parasites instead of encouraging true productivity and retaining talent is only headed one way. The people I know who can leave, are actively planning to. It's horrible seeing them completely lose hope here, needing to leave friends and family and move out of their own country just to have a chance at owning a home.
Many of us with homes already also talk strongly of selling up and heading off. What kind of place will this be for their kids in 20 years, if they decide they can even afford them here?
Correct - house prices over the last year drained $360 billion out of the total NZ Economy
House prices over the last year drained $210 billion out of the mouths of FHB's including some parent-banks
$350 Billion = NZ GDP
CJ...
Give me a fools hat then....
Seems obvious to me that supply/demand forces are part of the reason for rising house prices. ( Unitary plan changes was another )...etc..
If inventory of New homes for sale builds up .... then maybe prices will start dropping..??
The forces of supply/demand might be kinda like a mechanical machine..... but not enuf to prevent the excesses of boom/bust.
For me , markets are part machine and part psychology.. eg.. the forces of fear and greed.
And housing, in particular , seems to be slow and inelastic in the way supply increases to meet increasing demand. ie... it has taken a very long time for housing construction to ramp up to current levels..
An interesting graph is dwelling consents /1000 residents ( scroll down linked article )
https://www.interest.co.nz/property/83282/rate-which-new-homes-are-bein…
Its still going to take a while for the increase of supply to catch up with the years of high immigration and low supply, its called a backlog.
I'd say it's a demand issue fueled by easy credit. For every First Home Buyer looking to buy, there's an investor looking to keep them on as a tenant. The investor is not needed, but artificially inflates demand.
Problem is if investors are housing prospective FHB, they aren't "long term" tenants. There were 3205 FHB borrowers in May this year, 3347 in March this year. Put in perspective, the averages in RBNZ C31 from 2014 to 2019 were between 1500 and 2300. We currently have a shortage of workers, might be a shortage of tenants next?
"The investor is not needed, but artificially inflates demand".
Sums it up nicely. Basically clipping the ticket without contributing anything productive at all. Leeches on NZ society who need taxing out of existence.
Exactly! And anyone who wants to live somewhere without buying a house there immediately can get lost too.
Yes they are parasites feeding on a reckless and highly damaging ultra-loose monetary policy that will wreck the NZ economy if not reversed with urgency.
There are a heap of houses going up in and around west central suburbs of Auckland like Mt Roskill, Mt Albert, Avondale, Blockhouse Bay etc. But we aware that they dont all add to the supply as alot of them involving the demolishing of the existing building.
Quite often its 1 down, 2 or 3 up.
Great, its increasing supply but not as much as the numbers make out. Especially if its a 4 or 5 bedder demolished for 3 x 3 bedders
Property investment/speculation has been a forest fire in recent years, yes we currently have minimal immigration but we also have large numbers of kiwis piling in to the market for perceived huge gains in a game where you cant lose.
Having said that....things may be about to change?
None of it changes the land cost and infrastructure/connection/consent cost issues. Without bringing responsibility back to landholdings to go with the privilege, housing will stay extremely expensive.
Is rising.....as anyone with equity has entered into business of building home as in NZ their is no other business where he can make get easy and fast money that too with personal assurance from PM of the country and supported by governor of reserve bank.
NZ, specially Auckland as most houses are ghetto house that are being built or massive house.
Noticed a lot of new apartment blocks popping up in Auckland, are these counted as one CCC for the building or one CCC per unit? Figures might actually be higher if it is the former.
It's per dwelling.
It's per dwelling.
That doesn't answer my question. Is 'a dwelling' a unit or a building? I thought CCCs were for buildings, not units within buildings.
Per unit.
We had 1 CCC issued for several blocks of 10 units.
February 2020 RBNZ dropped OCR from 1.00% to 0.25% (minus 0.75) then pushed LSAP and FLP moneys, out the door, house price index rose 20%, then November Ardern announced she would NOT let prices fall, in reponse, the deep pockets and the top-end of town went ballistic pushing prices up another 10% on the back of that govt guarantee, and Robertson kept making silent announements. Then the Mid-moneid types climed up on the horse when the TAX cut was deferred over 4 years
The local smart money is not so stupid to ignore that
I read a statement by a minister saying he was concerned that Buy To Rent homes might all be bought by investors.
You can't make this stuff up.
We welcome the ramping up on the supply side. Too much money and too little houses to choose from had been plaguing the system for quite a while. We want more variety and options.
Building new homes (especially houses) isn't cheap, they are expensive items. And their high values spill over onto the existing stock. An increased supply doesn't necessarily equate to cheaper house prices. But it does help to house more people!
It does once you get to/past a slight oversupply. Landlords start having to compete for tenants and rents stop going up so no longer cover costs, and similarly there aren't 20 prospective buyers lined up to bid on every soggy old weetbix box built in the 1970s so prices stop increasing.
Limit immigration drastically and keep up the builds. There will come the day when some landlord looks up and down the street and nobody has come to look at the property.
That day is when things start trending in the right direction.
Accidently reported. Agree, that would be a happy day - just the thought makes me smile.
The supply of houses in Auckland is increasing faster than the number of households and has been doing this for some time. This is because more people have been leaving Auckland for other regions than have been coming here. See this report by Ian Mitchell for Auckland Council, looking at trends between 2013-2018 (https://knowledgeauckland.org.nz/publications/intermediate-housing-mark…). Housing supply could well overshoot soon. We may be there already.
Agree, we are likely getting there very soon. The amount of townhouses being built as we speak is borderline ridiculous, we will see for how much they will sell once they flood the market in a few months with raising interest rates.
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