Jump in Auckland housing consents pushes national total to 11 year high

Property

Big increase in new dwelling consents issued in Auckland in November

19th Jan 17, 11:25am by Greg Ninness

There was a big jump in the number of new dwelling consents issued in Auckland in November, according to the latest figures from Statistics NZ.

These show that consents were issued for 1156 new homes in Auckland during November, well up on the 792 issued in October and the 966 issued in November 2015.

That helped push the total number of new dwelling consents issued throughout the country in November to 2973, which was an 11 year high.

The biggest increases in November were for apartments and townhouses/home units, with consents issued for 1886 new stand alone houses, 375 new apartments, 205 retirement village units and 507 townhouses/home units.

There were rises in the number of new dwelling consents issued in most parts of the country in November, but Wellington went against the trend, with new consents in the capital dropping to 132 from 303 in October.

Although the increase in consents will be a welcome development in Auckland, it is still falling short of the number of new homes that are needed in the region, where at least 1230 new homes need to be built each month just to keep pace with its migration-fuelled population growth.

In the 12 months to November 30,303 new homes were consented throughout the country, up 13.1% on the previous 12 months.

The total value of new dwellings consented in the 12 months to November was $10.68 billion, with another $1.88 billion of structural additions and alterations consented, taking the total value of residential building work consented $12.56 billion, up 21.5% on the previous 12 months.

However commercial building activity has been growing at a much slower rate, with $411 million of non-residential building work consented in November, taking the total value of non-residential consents to $5.98 billion for the 12 months to November, which was up 3.2% compared to the previous 12 months.

In the 12 months to November consents were issued for 2,726,000 square metres of non-residential buidlings which was down 18.7% on the previous 12 months.

That was mainly due to a decline in the number of industrial buildings such as factories and warehouses that were consented, with the value of such work falling to $456 million in the 12 months to November from $535 million in the previous 12 months.

Building consents - residential

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Source: Statistics NZ

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20 Comments

by sharetrader | 19th Jan 17, 11:49am 1484779762

is this not normal for the cycle , building finally ramps up as the market cools, leading to a bigger downturn

by dictator | 19th Jan 17, 12:12pm 1484781174

I've found commercial work has been going strong for the past two years and the low interest rates have made a lot of projects stack up. Although commercial projects need to make business sense to get finance. Commercial consents will just change with the interest rates.

If there ended up being an oversupply of housing I could see it adding to problems in a downturn but we seem to have a serious shortage of housing.

by OpenPensionResolutn | 19th Jan 17, 1:25pm 1484785547

Hysterical Bubble Chasers lining up for a right good spanking.

by Ted Stanton | 19th Jan 17, 2:06pm 1484787989

New houses 5 bedrooms on Albany and Flatbush will sell like hotcakes after Chinese new year Feb.

by dictator | 19th Jan 17, 3:10pm 1484791825

Looking at trademe for Auckland for 5+ bedroom houses there's 8 up for urgent sale, and 54 motivated sellers. Boy they'd better sell like hotcakes or else.

by Ted Stanton | 19th Jan 17, 3:55pm 1484794506

70,000 immigrants will take care of those few 5 bedroom homes after February.

by dictator | 19th Jan 17, 4:04pm 1484795065

A lot of them look like McMansions. I hope the immigrants have better taste.

by OpenPensionResolutn | 19th Jan 17, 4:20pm 1484796016

It's Chinese New Year, not Chinese Gypsy Day. Mythical Chinese Saviours don't suddenly roll up on the 1st of February and holler "House! Want house! Many houses! All the houses!! Give me your crappiest unwanted houses!!!"

If all the previous immigrants haven't taken care of those few 5 bedroom homes already, there's no miracle coming in February.

by Ted Stanton | 20th Jan 17, 12:33am 1484825630

The housing miracle happened last February, March when it took off.
January last year was just as it is this January and the detractors were rubbing their hands with glee as the tide looked like it was going out.
Suddenly a tidal wave of buyers swept a shore and wiped out the old stock lifting the house prices up and away.

by John from Holland | 20th Jan 17, 5:20am 1484842832

This is my first post, so hopefully I won't make a fool of myself :-).

Housing shortage or surplus?
It seems to me that the 70,000 immigrants that want to buy a house for themselves (rather than investment) will generally be migrating as a family, even if the average family size is only 3 the additional housing required would be 23,333 and with 30,303 consents there will be a surplus of 6,970 which should help take some additional heat out of the market. I don't have any insight into what the typical immigrant (family or individual) is, so if anyone does it might help my understanding of the numbers.

I have heard and seen several reports stating large numbers of houses sitting empty in Auckland. Is this true? or fake news?

House prices
I have been looking at the Auckland house prices with wonder and disbelief for a while now, I cannot see that the current price level is sustainable for society let alone at an increasing level.

I understand why the prices have been increasing, there is a strong belief that the prices will continue to rise due to a number of well documented factors. The primary factor is investor confidence.

What i don't understand is how the average kiwi can afford to buy a home at these prices.

I guess we were part of the lucky generation we purchased our first home in 1992 a 3 BRM house in BHB for $116,500, we had a $30,000 deposit, as I recall we had restrictions on how much we could borrow based on our joint income (which was not high) and on the value of the property. These restrictions applied to everyone and buying our first home was affordable, to the point where we were able to pay off the loan in just 7 years. We also renovated the house and by 1994 the value of the house had nearly doubled.

We took advantage of value we added and sold, replicating this we were able to own a beautiful home nearly debt free by 2007.

Perhaps naively we never owned more than one home, we didn't speculate on the property market, we purchased a home and added value to it. again perhaps naively i think this is what most Kiwi's do, a small (perhaps growing) percentage buy multiple house to rent out or in the anticipation of capital gain without adding value, this is enabled by the tax system and the ability to leverage existing assets without the restrictions I mentioned earlier.

If i look at my oldest daughter's situation, she needs to start saving big time for build up a deposit, even to buy the must basic place in BHB the prices are in the 800,000 range, with a 20% deposit she might be able to get a mortgage, but how long will it take to save 160,000? lets stay she is really good and saves 32000 a year, in five years she ready. but hold on the house prices are still growing at 10% per annum right? so the 800,000 is now 1,288,400 and she needs 257,681 deposit to get started, she works hard and saves another 100,000 she has a better job so it only take two years, but i guess you worked out already it still is not enough now she needs 311,792 deposit to buy a house that is now worth 1,558,964.

Doesn't look like the next generation is going to be buying a house anytime soon does it. Ok so now we are getting (got in my case) old and grey and want to sell our house and downsize, who will be able to buy our house then? the next generation?

Why have prices been rising?
Coming back to todays house prices. i think there is no doubt that the price inflation is driven by investor activity, either through pure speculation or through developer activity (adding value and creating wealth).

Firstly speculators.
At some point (lots of people guessing when that point will be reached) the speculator will decide that the peak has been reached and will want to sell. This has been happening in business for centuries, at some point the market changes and the speculative bubble bursts. The highly leveraged are impacted first and hardest, we have seen it time after time. I have been asking myself two questions "what source(s) are the spectators using to gather the knowledge to make their buy/sell decisions" and "what will trigger a massive sell off". Be interested to hear your thoughts on these.

Secondly developers.
I will say I don't particularly like all the infill housing, it looks messy and there not enough community design involved in most of these developments. But they do create additional value from existing assets, historically the original house reduced in worth after the section had be split and the builder and house owner would both make a profit from selling the additional house. Increasing the value of the total.
Well planned multi resident developments are much needed and should be encouraged. Again they are adding value to an existing asset (farm land, orchid etc.), if large enough they will help create new job locations (services, schools etc. will need to be built close by) and help moderate house prices. They can enhance the environment and benefit society as it grows. Good town planning is needed here, with the common good in mind.

by Zachary Smith | 20th Jan 17, 6:39am 1484847584

Welcome aboard John from Holland.
I think you are right about the number of building consents being significant. 30,303 houses would appear to be more than enough to cater for the immigrant influx. What may be happening and what may accelerate is the outflow of people from Auckland to the provinces. Auckland's demographics are changing with many immigrants coming in and long time citizens departing perhaps.

Your point about naivety and house price appreciation is correct I believe. To an outsider house price appreciation in Auckland was an obvious and exploitable phenomenon. Immigrants had made large gains in Sydney and understood that the same thing was going to happen in Auckland. Locals naively thought that things would just carry on the same and that house prices were tied to income. If income didn't go up then house prices wouldn't go up either. Locals were also very unaware, even dismissive, of the appeal of Auckland to the newly affluent immigrants and foreign buyers. Like lambs to the slaughter.

by NorthernLights | 20th Jan 17, 9:47am 1484858842

Then there is Zachary who buys but doesn't know the rides over who failed to take his profits Content to sit in overcrowded Epsom dreaming of more migrants

by Zachary Smith | 20th Jan 17, 10:21am 1484860885

Epsom is not overcrowded at all. It is full of lovely houses and beautiful parks. It only takes me five to fifteen minutes to get to work in the central city.
I am actually anti mass immigration and am only a landlord by accident. My analysis is that places like Auckland are extremely desirable in a globalised world and will appreciate in value out of proportion to local earning power. If the system is like this then this will happen. Personally I would have kept NZ exclusive and focused on the welfare of its own upcoming generations even if it meant fewer cheap eateries.

by Ted Stanton | 20th Jan 17, 12:03pm 1484867024

Have pride in where you live and dont listen to the jealous detractors and first home buyers who want to buy their first home in Epsom or will complain to the Herald.
The Herald will print on the front page about family living in a garage because they are on the dole and dont want to work and criticise hard working families who own a house and use words like "Crisis" and " National shame" it is bullying media.

by NorthernLights | 20th Jan 17, 5:35pm 1484886919

Garbage Zachary you need to explore the better cities in this world Epsom is a backwater

by Zachary Smith | 20th Jan 17, 5:49pm 1484887747

I don't think so. As I have said before the age of the long haul twin-engine jet means that everywhere in the world is just a short hop away from a transit hub city. This is making cities like Auckland expensive. I travelled around the UK, Netherlands, France, Singapore and Germany last year, loved it, but we all thought Auckland was best although I did like Kent.
Mind you being a bit of a backwater is a good thing too. Auckland has the best of both world's really.

by albinodog | 20th Jan 17, 9:04pm 1484899448

Pretty sure its much harder to get money out of china this February compared to February 2016.

by NorthernLights | 21st Jan 17, 4:37am 1484926634

Hi Zachary Glad you escaped Epsom for a few brief weeks last year.
Living permanently somewhere else is different from your holidays You adapt and grow rather than glimpse.
NZ is on many foreigners wish list to visit & I never hear a bad word about it anywhere.
The issue is NZers were never asked about massively increased migrant numbers & money laundering and the result has been
a PM who has resigned and left the mess to someone else. John Key for all the early hype has proved to be mediocre. Any PM would've dealt with ChCh the same or better. He made an ill fated bid at a flag change &
failed with a trade deal. Worse the NZ dairy industry
remains a predominantly bulk seller in the market.
NZ is a fine country but let's not be blinkered it's gods own because it must be better managed to get there

by Aussie_Dude28 | 21st Jan 17, 5:14am 1484928861

Why remove the part in your original comment about New Zealand being a "backwater"?

Many Kiwis are now moving back to New Zealand from Australia,UK,USA,Canada,Europe etc. The brain drain has reversed & long may it continue.

New Zealand needs increased migrant numbers for a while yet with a fast ageing population & the NZ median birth rate is still below replacement level.

300+ non-citizen Kiwis have been deported back to New Zealand from Australia.

A story from 2014 ---> http://www.goldcoastbulletin.com.au/news/kiwis-leaving-the-gold-coast-i…

Ironic considering 40,000-50,000 Kiwis were moving to Australia annually over the last 15 years which now 15% of the total NZ population or 650,000+ New Zealanders live in Australia.

1 Million+ New Zealanders live overseas which is by per capita terms the second highest nationality living abroad behind only the Irish.

New Zealand's demographics are going to be different within a decade as Asians,Maori & Pacific Islanders all have higher median birth rates than Pakeha (White New Zealanders) with a median birth rate that is still declining.

It was reported back in 2012 in the NZHerald that Pakeha would be less than 50% of the population in Auckland by 2016-2017. Asians are now 24-25% of the Auckland population.

31,300 Kiwis moved back to New Zealand from Australia last year & also Kiwis are now returning to New Zealand from the UK with a tougher stance there on immigration.

About time the Australian Government got tougher on New Zealand gangs expanding into Australia such as the Mongrel Mob & Black Power.

The first Chinese settler arrived in New Zealand in 1842 & The first Indian settler arrived in New Zealand in 1810. Former Dunedin Mayor Peter Chin is a descendant of the earliest Chinese immigrants to New Zealand.

by Zachary Smith | 21st Jan 17, 5:48am 1484930887

I don't disagree with any of that Northern Lights. I did speak with my relatives about eventually retiring to somewhere in Kent however they were surprised about that and told me the winter wasn't much fun. I have been suggesting that young Kiwis, especially young men, try Estonia.
The failed flag thing is interesting. I believe people, even immigrants, maybe especially immigrants, value the British history and heritage of NZ and wishing to retain the flag exemplifies that.
Certainly NZ could be better managed and getting overseas Kiwis to return home eventually would be good, maybe with Estonian wives. Many would be highly skilled. Kiwis need to be much more patriotic and less self hating than they are currently. Immigrants want to be Kiwis and Kiwis should show a better example to emulate.