About 1500 fewer new homes are being built in Auckland each year compared to when the market peaked in the middle of last year.
The latest figures from Auckland Council show it issued 12,874 Code Compliance Certificates (CCCs) for new dwellings in the 12 months to July this year, which was 1507 less (-10.5%) than in the 12 months to July last year.
Code Compliance Certificates are issued when a building is completed and are the best measure of new housing supply.
The first graph below shows the trend in the rolling 12 month total since July 2019.
It shows the number of new home completions peaked in the middle of 2021 and has slowly but steadily declined ever since, although the latest figures suggest the decline may have started to flatten out.
That possibility is also supported by the figures from the second graph below, which shows the number of CCCs issued for new dwellings in Auckland per month (the blue line).
The monthly figures can be quite volatile so the second orange line, which shows the monthly average, gives a clearer picture of the trend.
However although the figures clearly show that fewer homes are being completed in Auckland, it does not necessarily mean there is a downturn in the residential building industry.
Auckland Council figures also show that in the first half of 2019, before the Covid pandemic arrived, between 94% and 98% of the new homes being completed in Auckland were receiving their CCCs within two years of obtaining their building consents.
But in the first half of this year that number had dropped to between 78% and 88%.
Clearly, building projects are taking longer to complete and it's likely that the biggest causes of those delays have been pandemic related - things such as lockdowns, supply chain disruptions and a tight labour market.
On an optimistic note, the problems the pandemic caused for the building industry and the supply of new homes should be past their peak.
But given the economic uncertainties currently facing the property market, it remains unclear whether the number of new homes being built will start to bounce back up to its former highs.
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25 Comments
Thank god.
Note: The house pictured is not being built in NZ I'd wager. Looks European. Searching the image reveals it being used in Scotland, Ireland, England, Poland, Italy, Slovakia...
*God
I did do it deliberately to avoid offence. I was brought up in a cult which instilled in me a fear of taking the Lord's name in vain that seems to have stuck with me even though I'm a militant atheist. I should have written "thank the gods" perhaps?
The old gods or the new ones?
3D printing will be the gamechanger ,its still teething ...but its only a matter of time... bonus is the materials might all be recyclable... will come the day when folk just flatten the house and print a new build .
3-D printing , robotic block laying machines , alternative / repurposed materials ... the future is wildly exciting , if we're open minded to new possibilities ... and if we can get the bureaucracies out of the way ... If !
All sounds kind of exciting but there's still a lot of development to do with systems and technology. Currently there hasn't been any cost or time advantage, because just putting walls up is only a small portion of the time and cost to make a building.
Everyone would be better off just living in insulated sheds.
The paradox about all this future tech is that the AI is taking the creative jobs first, not the monotonous ones. Must be smarter than we thought.
Housemouse where are you?
HM has been predicting the downturn for at least 6 months.
Yes I have been saying since early 2021 that a slump will start in second half 2022.
I don’t agree with this analysis that the decline will level out. It will slump quite a lot more.
... apparently Adrian Orr has returned from Jackson Hole with a rejuvenated enthusiasm to crush inflation .... expect the OCR to rise further , and for it to stay up there for longer ... the Fed in America will hit inflation hard with big spikes in their funds rate ... a 100 point initial jump is factored in ...
... where's Phil " the toolman " Twyford when you need him .... more Kiwibuild ... 100 000 more ... let's do this , team of 5 million ...
The labour and material supply issues over the last year will be a major factor in this, I would wager. The large renovation next door to me is still not finished (getting very close, but) and > 8 months overdue, being originally slated for a January 2022 completion.
Talking to the owners, they hit roadblocks at every stage - lockdown late last year, paint colours supply (yes really!), GIB supply, tilers overbooked, even concrete for the driveway they had to wait over a month for. And every milestone was hamstrung by having to wait for council inspection and signoff - during which the builders moved off onto other projects and took a while to come back even after the signoff was given.
Extrapolate that country-wide, and 1500 fewer completions isn't that surprising.
For those with cash. 2023 may be a great time for a a one off private build. Plentiful supply of building materials and tradies hungry for work. Maybe even some discounted land to build on.
And hopefully the new National govt will remove the bright line test on new builds before the end of 2023.
The most recent extension of the bright-line test period, has an exclusion for new build properties. Properties purchased as a new build will only be subject to the bright-line test if they are sold within five years of being purchased.
Yes but another major factor is the one-two punch of rapidly rising interest rates and rapidly lowering house prices. This one-two punch will start to have increasingly greater impact over the next 12 months.
If Labour stay in power expect Government to start picking up the house building slack. A lot of the Piritahi preparatory work is now coming online and Kainga Ora are also looking to ramp up. If National get in, I don't expect they will be as enthusiastic about increasing public housing supply and will want to bolster house prices by holding back supply any way they can as they are more beholden to the landlord interests. I see less housing construction under National.
Labour have been in power 5 years and are still building nowhere near enough housing.
The net addition of state homes in NZ over the past year has been around 1000 homes.
and yet a record total of 35K new dwellings added to the housing stock (minus some demos for brownfield developments).
Stats are "experimenting" with CCC data from councils, recording the proportion of new dwellings that reach each milestone (first inspection, final inspection, code cert), days taken etc based on the quarter the consent was issued.
https://www.stats.govt.nz/experimental/experimental-building-indicators…
We've got 3 reno's going on around us, all in various stages of completion, but the one common factor amongst them is how slow things seem to be going on all sites. I also know of two other newbuilds, slightly further from 'the farm' with similar issues.
The graphs do not support the headline 1,500 odd houses less being built each year.
The graphs show that the houses built for the year ending July 2022 is about the same as the year endn=ing May 2021, and higher than the years before that.
I've heard through reputable sources that resource consent application numbers are down about 25-35% in Wellington and Auckland. That's a critical leading indicator, as resource consent approvals are usually sought before building consents.
I work in this space and enquiries on new builds have gone to near zero.
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