The number of new homes being built in Auckland may be starting to decline.
According to Auckland Council, the number of Code Compliance Certificates it issued for new dwellings each month peaked at 1742 in June this year. It then declined to 1557 in July and 1497 in August.
A slowdown in residential construction in Auckland has been well signalled by a decline in the number of new residential building consents being issued in the region.
Code Compliance Certificates (CCCs) are issued when a building is completed while building consents are usually issued before construction work starts, which means CCCs are usually the best measure of the actual supply of new homes coming on stream, while consents are an indication of future supply.
On average it takes around two years from the time a residential building consent is issued until the project receives its CCC.
Statistics NZ figures show monthly new dwelling consents issued in Auckland peaked at 2313 in March last year, but had declined to 1142 in August this year.
However the monthly CCC issuance figures can be volatile, and it would only take a large apartment development to be completed in a single month to push the numbers back up again, so it could be the end of this year before the figures show if there a definite downward trend in new dwelling completions.
If that is the case it is coming at the same time a surge in immigration is likely to be pushing up Auckland's population quite sharply, putting extra demand side pressure on housing supply and potentially pushing up rents.
If migration-driven population growth remains high and new home completions decline significantly, that could lead to the return of the substantial housing shortages that were a feature of Auckland's housing market before the outbreak of Covid-19.
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22 Comments
Actually, these completions are still quite high, and the big immigration surge is largely done with.
When I checked TradeMe yesterday, there had been another surge in townhouses for rent, up to about 470.
Looking further ahead, in 2024 completions will likely be down 30-40% from peak, and this will hit the construction sector (and related sectors) hard.
Assuming immigration levels moderate, the slump in completions should not be a big issue for the rental market until perhaps 2026
Looks like your trademe anecdotes aren't accurate... CCC reporting is painting quite a different picture.
Trademe anecdotes seem wildly inaccurate. They don't seem to properly dump relistings from the count algorithm - so every day you see the numbers rise (particularly in houses) until sometime around 8pm when they all drop out together in a clump.
Not necessarily
completions in June / July might have been put on the market for sale, didn’t sell, then put up for rent as a result
Correct, and the house prices are still over the roof and these migrants are not capable of getting on the property ladder maybe 5% of them. Plus what is happening in this world is very unprecedented. Too high-interest rates and still rising, Inflations, Geo-politics, and etc. Once mortgagee's sales start to kick up these house inventories will still rise up.
Too high-interest rates
Is it the interest rates that are too high, or the amount of debt?
We've had higher rates for much longer previously.
and the big immigration surge is largely done with.
Really? https://www.interest.co.nz/charts/population/net-long-term-migration
The figures in today’s article are to the year to August. Others have posted data showing the immigration surge is falling away.
I'd love to see more analysis linking sales of new builds to consents to builds to completions. It was pretty obvious 12-18 months ago that building was about to crater.
Well, it seemed obvious but you and I were about the only people calling it. So either it wasn’t so obvious, or more likely people and journalists didn’t care or were lazy. Or possibly short termist thinking
next year is when it gets really interesting, when the slump in consents starts to have a really material impact on construction activity
I concur. I know group builders who own franchises. Their sales are down around two thirds from their peaks. There's a big gap between the content being published and what's happening on the ground. This is what happens when commentators use trailing data or consent numbers instead of asking the construction industry what's actually confirmed in their pipelines.
I think a lot of rentals will come on the market because first home owners purchase off the plans, which creates the lag between purchase and supply. I suspect as homes are completed the rental townhouses comes on the market.
I am also unsure if the construction industry will drop that much. I think there is thousands of building consents out there which were not actioned and may still come to the market. Construction prices are falling, the house sale price may be equal to when the land purchased and therefore I suspect supply may continue for a while.
Does anyone have a better understanding than my generic understanding of which jobs the recent surge of immigrants are going to? My broad understanding was that a big %, possibly more than 30-40%, were going in to economically vulnerable sectors such as construction, retail, hospitality
Sectors that have really picked up recruitment over last year: Accommodation / Food Services (+11,000), Transport / Postal / Warehousing (+7,000) , Health and Care Services (+12,000), Construction (+6,000), Manufacturing (+7,000), Public Admin and Safety (+10,000). ICT has picked up - but numbers are small (+1,500).
recent immigrants struggle to get ICT jobs of value, mainly because they lack NZ domain knowledge...
of which jobs the recent surge of immigrants are going to
Who cares provided the agents got their 20k, in the meantime More support for exploited migrant workers as INZ ordered to strengthen checks (msn.com) MBIE is busy growing GDP:
"The government will put in place a six-month programme of short-term basic financial support that can be put towards accommodation and essential living costs for people on the MEPV. In most cases, the support will be delivered by third-party providers contracted by MBIE working with MSD’s Community Connectors."
It's all good ! ....it's got to the point that if prices really do fall further, it will be a sign that the economy is about to tank !....While with everything else going on OUTSIDE Aotearoa, let us all pray for a stabilised property market ....as that seems to be what keeps Auckland (at least) going.
Just listen to the sage advice from our beloved property expert, a Mr T. Alexander - nothing to see here, just relax and KEEP BORROWING (Key point - pardon the pun) and who cares about interest rates - just raise ya rents !! The taxpayer will chip with extra accommodation supplement - no worries mates !
Don't forget the Property Hour on Satdee arvo's on ZB - that will allay ALL your fears with comments from the above, Mr T.A. and other assorted property "experts"....you will all experience "warm fuzzies" after that show :) - absolutely compulsive listening !
C'mon us taxpayers are relying on you PI's to keep this circus going - get out there and buy, buy, buy !! You know in your heart of hearts, you have NOTHING to lose and everything to gain in the most "fair & balanced" property market in the world !
Everyone has got your back and is supporting you and the banks need the cash flow ! So extract as much as possible from your Ten-Ants ( as that is the number of them you will have)
I'll chip in my share of the accommodation supplement with my taxpayer $$$'s - while the banks will smugly sit back in their leather bound chairs and smirk, as they reach record profits - yet again !
We need sales, sales, sales !! ....you RE agents do you part and "MAX MARKET" properties with dreams of endless capital gains and ever increasing rents, due to the endless stream of immigrants to this great, "world class" cosmopolitan city - all equating to YOUR FINANCIAL FREEDOM for ever and eternity !!!
If I was a bit younger, I would be out there buying all I could see, and beyond - sight unseen even !! So don't make the mistake I made by missing this opportunity in this fantastic Auckland market, that represents so much value for your borrowed $$$'s and endless rental return's, topped up by the taxpayer :)
What are you waiting for ???
*** NOT FINANCIAL ADVICE *** *** DO YOUR OWN RESEARCH ***
As someone who is currently in the market (FHB) what forces are in play to keep property prices at this level or higher? We're still considerably above pre-covid valuations and the market was basically stagnant (at least in Auckland) from 2017 to 2020. Unless the reserve bank is going to print more money which seems highly unlikely and interest rates return to sub 4% which also seems unlikely and/or net immigration remains high it seems like the factors that caused the covid spike are no longer there or at the very least running out of steam.
I realise a huge amount of liquidity was pumped into the global economy during covid so who knows how long that will last and the boomers (I assume) have plenty of cash reserves to buy the dip and hedge against inflation. However, it was a black swan event that spiked prices so how can that be sustained over the long term? FYI I'm a complete noob so genuinely trying to wrap my head around this market.
That should push up the price of existing houses and sections, and the Auckland Council are going to stop future subdivisions because of the state of the roads.
All good for investors and homeowners.
I think you're right. Especially with the Party for Landlords about to win and give landlords back the tax breaks they deserve.
Mortgage interest is a legitimate expense, and the current government 'expert' on the subject, Grant Robertson, assured us that rents would fall when the opposite has happened.
There's lots of critics of landlords, but as I always say, if it's so easy and so profitable, borrow $1m, do it yourself and make a fortune.
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