The number of new homes being built in Auckland is slowly declining

Property / news

New home construction in Auckland is down 9.4% on a year ago

7th Jun 22, 10:36am by Greg Ninness

The number of new homes being built in Auckland is continuing to slowly decline.

The latest figures from Auckland Council show that the average number of new dwellings receiving Code Compliance Certificates (CCCs) has now declined for four consecutive months.

CCCs are issued when a building is completed, unlike building consents, which are issued before construction commences.

In April this year, 929 CCCs were issued by Auckland Council, down from 1223 in March and 990 in April last year.

In the 12 months to the end of April, 13,059 CCCs were issued for new homes, down from 13,130 in March and 13,209 in April last year.

April was the fourth consecutive month that the rolling 12 month total has declined, and it is now down by 9.4% since it peaked at 14,421 in June last year.

On average 1088 new homes are being completed in Auckland each month, and this figure has also declined for four consecutive months.

The monthly average of new homes peaked at 1202 in June last year, which means that on average 114 fewer homes are now being completed in Auckland every month than at the peak in the middle of last year.

However, the number of homes being built in Auckland remains well up from pre-pandemic levels.

The number of dwellings that received a Code Compliance Certificate in April this year was up 52% compared with April 2019.

The graph below shows the annual trend.

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50 Comments

by Jonny.Foe | 7th Jun 22, 10:41am 1654555291

The business case for building new homes is dropping away quickly as the cost of credit increases, building costs continue to escalate, and house prices retreat. It's a recipe for a complete stall - and lots of firms going bust. If only Govt had a masterplan to start a new Ministry of Works to pick up the slack and build thousands of affordable, warm, homes.

by Independent_Observer | 7th Jun 22, 10:53am 1654556024

Absolutely - as HouseMouse has been predicting.

The two factors of increasing input costs and reducing ability to service debt as rates rise can't continue to head in opposite directions much longer without something breaking. Its like pushing on a string....that will eventually snap.

by DTRH | 7th Jun 22, 4:08pm 1654574913

Quite a lot of building companies have already gone insolvent this years. Things are already broken and inflation is high plus rates will keep climbing and it is very doubtful we will every see crazy low rates again.

by kiwiana02 | 7th Jun 22, 11:07am 1654556847

Govt could also partner with private builders to build new homes, similar to how they did in the post war period. This would also remove the destructive boom bust construction cycle here in NZ. This could include both social housing and Kiwibuild type housing.

by Jonny.Foe | 7th Jun 22, 11:58am 1654559895

Absolutely agree - we have done this before and can do it again. Also worth noting that RBNZ directly financed all that house building.

by HouseMouse | 7th Jun 22, 12:22pm 1654561360

They should have been planning for this but haven’t…

by J.C. | 7th Jun 22, 1:04pm 1654563858

But that would require effort, coordination, sacrifice, and a plan.

Aint going to happen.

by HouseMouse | 7th Jun 22, 1:37pm 1654565845

Exactly.

People might remember the rhetoric of the government 4 or 5 years ago, that if they got a big state home building programme running that it would help mitigate boom/bust in the private sector, but it doesn't quite work that way... could *potentially* work if the government was actually organised and competent.

by Advisor | 7th Jun 22, 1:52pm 1654566735

Govt could also partner with private builders to build new homes. This could include both social housing and Kiwibuild type housing

There is already a crown agency responsible for all of this and more - Kainga Ora. The agency contracts out the development, construction and maintenance of its housing portfolio to private companies.

by HouseMouse | 7th Jun 22, 5:34pm 1654580040

But building companies can’t wait one or two years for Kainga Ora designs to be finalised and consented. If a company is about to go into liquidation it needs the lifeline now, not in a year or two. Unless Kainga Ora have lots of consented schemes, which don’t have build partners, ready to go… even then that’s likely to be too late for distressed building companies.

by The Person | 7th Jun 22, 5:59pm 1654581581

And when the distressed builder goes belly up leaving the taxpayer with a bunch of half complete builds, and the taxpayers union finds out that Kainga Ora knew the builder was distressed when they gave them the work...

by OldSkoolEconomics | 7th Jun 22, 6:44pm 1654584262

Where would the government find cash for this. They just printed and spent it all and the interest on their last splurge is going through the roof... and looking like their tax income might take a tumble with the economy...

Besides if all the kids and tradies leave for better economies we will have plenty empty houses (as well as those that are on the market now and the hundreds that are already nearing completion and wont sell)

by HouseMouse | 7th Jun 22, 7:09pm 1654585798

Yes that is of course the other big issue, keeping a whole lot of building companies solvent to build a whole lot of houses not anticipated to be built (in the short term) would cost a huge amount of money, and would be inflationary.

There's a quite a few reasons why it's not easy to just redeploy a whole lot of builders otherwise deployed in private sector development.

by Jonny.Foe | 7th Jun 22, 8:08pm 1654589329

It would only be inflationary if govt / kainga ora put someone really stupid in charge of procurement. The scale of the investment would be enough to warrant a state buyout of one of the building supplies companies - and long-term international contracts at hedged prices. You'd also go for exclusivity deals with building companies. It's very doable.

by HouseMouse | 7th Jun 22, 9:08pm 1654592890

I agree it's doable.

But I don't think it's doable for the current clowns in power, they are abysmal at executing anything.

by K.W. | 8th Jun 22, 5:02pm 1654664579

Why should the Govt bail out developers who have speculated on building houses without an off the plan buyer in the hope of selling them down the line for more than it cost them to build? Can share market investors get a Govt bail out as well, for buying shares in the hope of selling them down the line for more than they paid for them? What about bitcoin investors? If fly by night development companies want to overpay for land, leverage up and build without a solid business plan and sufficient working capital, they deserve to fail. As Elon Musk said, "its been raining money on fools for far too long".

These are the same developers who paid a million dollars for an old ex-rental house worth half as much, just for the land, and thereby directly contributing to the stupid price rises of established housing over the last few years and shutting out first home buyers. I wont miss them.

by taimaiakka0 | 7th Jun 22, 2:15pm 1654568132

t's a recipe for a complete stall....t's a recipe for a complete Disaster

by newkiwi | 7th Jun 22, 10:53am 1654555980

If the house price drops by another 10% to 20% as predicted by the bank economists, who in their right mind would be building? If people are not building, will the price continue to drop?

by Independent_Observer | 7th Jun 22, 10:56am 1654556168

Builders and developers will be building (because that is how they generate income...). They can't just stop in their tracks....otherwise they will need to find new careers....or move countries (as it the case when a housing market goes bust).

by HouseMouse | 7th Jun 22, 10:58am 1654556317

The answer to your last question is ‘yes’.

so much supply is coming on line, and demand is sinking, that the lack of new house construction that will start to occur over the next 12 months will mean diddly squat in terms of limiting house price falls.

by Sluggy | 8th Jun 22, 10:35am 1654641310

There will be a ton of downward pressure on building product pricing also, all the way back to manufacturers - at least those that have any competition outside of the hardie/carter/fletcher cartel. New builds will be more expensive than used houses, but that is the norm over the long term

by GV 27 | 7th Jun 22, 11:01am 1654556488

Would love to know the proliferation of four-bedders vs. three-bedders coming to market in the last ten years and how that's changed, as the section sizes, number of bedrooms and square footage all seem to be much lower than they were, despite bouyant prices.

A price-per-bedroom index would be revealing, methinks.

by Camel's back | 7th Jun 22, 11:10am 1654557008

The amount of sections coming online is astounding. Down South Auckland there are thousands of sections with power, water and roads, footpaths waiting for a brand new build. The same happening North of Auckland.. I think the pressure on land prices will ease so that will bring down costs but someone will lose.

by Independent_Observer | 7th Jun 22, 11:26am 1654558019

Do you think this is from land bankers trying to release properties to the public now they think the market has turned? Or just coincidental in terms of when those developments were ready for release?

by Ahuhyeah | 7th Jun 22, 12:39pm 1654562348

My guess is the time lapse between the signals of (very) profitable development and getting to market. Everything coming on now probably started 18 months ago.

Could be another 6 - 12 months of "come this far may as well finish it off" before the brakes are flully engaged.

by Nzdan | 7th Jun 22, 12:58pm 1654563537

by Nzdan | 7th Jul 21, 4:05pm

Easy to do when you consider how quickly the market can change, when compared to how long it takes for a development to progress from start to finish.

Imagine how many projects could kick off during good times (resource consent, services in the ground, roads/footpaths/kerb) and by the time they have finished dividing the sections/installing fences ready for titles the market starts to turn. What does the developer do? Can't exactly rip out the pipes and get a credit at Plumbing World.

by Carlos67 | 7th Jun 22, 1:36pm 1654565816

New builds are going to go off a cliff. Speaking of a cliff, houses for sale in Tauranga are falling off my watchlist at an alarming rate, all withdrawn. Sellers are giving up in the current market in droves.

by DTRH | 7th Jun 22, 4:01pm 1654574500

A lot of houses being withdrawn are they now appearing as rentals.

by Final Account | 7th Jun 22, 4:31pm 1654576284

Have to see if they show up as rentals or off the market completely.

Using the 'no one is special and everything is a pattern' observation it is only a matter of time until they appear on the rental market.

EDIT: forgot to save comment and was beaten to it...

by HouseMouse | 7th Jun 22, 1:39pm 1654565949

Exactly.

Although, factor in that a not insignificant number of building projects currently underway will halt mid-way through construction...

by Kjeldorian | 7th Jun 22, 1:41pm 1654566072

I've emailed both red & blue about my proposal about addressing this but yet to hear back.

by HouseMouse | 7th Jun 22, 9:12pm 1654593166

Good luck.

All I've ever received back from Megan Woods (*once* I receive it, after 2-3 months), is defensive, chest-beating tripe.

I wouldn't bother ever again, they seem certain that they are doing everything perfectly and are infallible...

by OldSkoolEconomics | 7th Jun 22, 6:21pm 1654582917

Exactly. Most willnow not finish. Who would keep pumping time and money into a loss.

There will simply be a lot of overgrown half developed buildings until the next boom.

by nktokyo | 7th Jun 22, 11:13am 1654557188

Knock me over with a feather

by WestieAJ | 7th Jun 22, 11:14am 1654557277

A developer that has sunk 1.5m into 800 sqm of city fringe land is now just better to sit on it. Just pay the interest. Better than building the 6 townhouses and losing 100k on each one. Best case they hadn't got round to knocking over or dragging away the existing old home yet. So they can get some rent out of that on the downlow while they wait.

Only those that are past the point of no return will continue to build and hope. Every week hope runs out for some of them. More partially completed mortgagee sale developments to come.

by Averageman | 7th Jun 22, 1:07pm 1654564022

Govt to announce mass state house expansion, and infrastructure build to keep trades here, and fuel the next generation of apprenticeships. Other wise we will loose another generation of tradies to Aussie. Just like post GFC...

by Nzdan | 7th Jun 22, 1:24pm 1654565064

They've already done one thing right, and that's the Targeted Training Apprenticeship Fund.

https://www.tec.govt.nz/funding/funding-and-performance/funding/fund-fi…

The TTAF will cover fees from 1 July 2020 until 31 December 2022 and will be paid directly to tertiary education organisations (TEOs) by us. This will enable TEOs to provide education and training without fees to learners.

by Kjeldorian | 7th Jun 22, 1:31pm 1654565498

Just unfortunate that these learners will graduate into a market that doesn't need them. Likely that taxpayers have spent a truckload of money to educate people who will leave NZ.

(apart from me, I'm utilising the fund to upskill and won't leave)

by Nzdan | 7th Jun 22, 5:16pm 1654578991

Likewise. I'm already in the industry, moved up from Internal Sales into Estimation with a company that looks after me. I have no need to go elsewhere. Won't necessarily need the qualification in the near future, but will likely be beneficial medium to long term.

by kwbrn | 7th Jun 22, 3:37pm 1654573039

I think this is good news for the consumer. Have any of you tried to get a builder lately.

Once things slow down you will see the cost of building drop.

by Kjeldorian | 7th Jun 22, 3:47pm 1654573637

To an extent you will, but not as much as you think/want.

by HouseMouse | 7th Jun 22, 9:15pm 1654593353

It could be good news for the quality of building....did a tour of a few recently completed townhouse builds today, some awful workmanship, and I understand such low quality workmanship is common.

Need a decent cleanout of all the dross in the industry...

by The Person | 7th Jun 22, 4:00pm 1654574443

Given the population in Auckland is currently falling, it's probably a good thing that the number of builds is coming down so we dont overshoot supply too much.

by RichMuhlach | 7th Jun 22, 5:08pm 1654578493

This is exactly it .. we NEED the number of new builds to come down to reduce the oversupply

by RickStrauss | 8th Jun 22, 11:03am 1654643008

Eh, prices are still too high. They need to keep building, and KO needs to employ them to do so. Just how home ownership was made affordable for older generations.

by OldSkoolEconomics | 7th Jun 22, 6:19pm 1654582774

Exactly. If there is demand then we should build. If not then building should stop.

Its how markets should and do work. We have already manipulated housing too much at too great a cost.

It needs to fall and find its level.

by GV 27 | 8th Jun 22, 8:52am 1654635129

There is demand, just not at the price people want to supply new builds into the market. Keeping housing cripplingly unaffordable because a rising tide should never fall will just end up worse for everyone. Last time I checked, builders needed somewhere to live too.

by Crazy Horse | 7th Jun 22, 4:58pm 1654577884

The bank always wins ......but hey aren't new mortgages down 30% they must be feeling the pinch ? ......yes of course sheeple, that's why the interest rates are up, gotta keep the moolah rolling in, no matter the "cost" (to you).... best business model in the world !

by Tee | 8th Jun 22, 6:38am 1654627127

Was Fletcher Building subsidiary stockpiling Gib board, and they had to apologise.

Are we in difficult times, and supply chain issues are here to stay.

by OldSkoolEconomics | 8th Jun 22, 9:00am 1654635629

Supply chains will free up very quickly once consumers stop spending.