By Greg Ninness
Auckland's population is estimated to have increased by nearly 43,000 in the year to June, with two thirds of the increase coming from migration.
That means Auckland's estimated housing shortage has increased by around 25,000 since 2012, and is continuing to grow.
Statistics NZ estimates Auckland's population grew by 42,700 in the 12 months to June, with the net gain from migration accounting for 28,900 (67.7%) and the natural increase in the population (the excess of births over deaths) accounting for 13,800 (32.4%).
The migration figures include growth from people moving to Auckland from overseas and those moving to Auckland from other parts of New Zealand.
While migration is still accounting for the bulk of Auckland's growth, it was lower than it was in the 12 months to June 2015 and 2016, while growth from the natural increase in the population was higher, although the differences were small (see graph below).
The numbers also suggest that Auckland's housing shortage is continuing to worsen, with interest.co.nz estimating that 14,233 new dwellings would have been required to house the region's population growth in the 12 months to June (based on average household occupancy levels), but only 10,364 were consented, leaving a shortfall of 3869 homes.
The table below plots the trend in Auckland's population growth versus the number of new homes being consented since 2012.
It shows that the shortfall in new housing stock worsened dramatically in the 12 months to June 2014 after the former National government loosened the rules on immigration.
And the housing shortfall has accumulated every year, increasing to almost 25,000 homes by the end of June this year.
That estimate could be on the low side, because the building consent figures make no allowance for existing homes that have been demolished to make way for new ones, or homes that were consented but never built.
The figures show the enormity of the problem confronting the new Labour-led government as it tries to tackle the housing crisis it has inherited from its predecessor.
The figures also suggest that Auckland's housing shortage will continue to worsen unless there is either a significant drop in migration into the region, or a substantial rise in the number of new homes being built.
Net migration in to the region would need to drop back to just over 17,000 a year for the number of new dwellings being consented at current rates to match the increased demand for housing.
But that would do nothing to reduce the existing accumulated shortfall.
So even if there is a combination of reduced immigration and an increase in the construction of new homes, it's likely to be many years before demand and supply for housing in Auckland get back into any sort of equilibrium.
| Auckland's Growing Housing Shortage | |||||||
| Year to June | *Natural increase in population | *Increase from net migration | *Total Increase in population | Estimated no. of new dwellings needed | *No. of new dwellings consented | Annual housing shortfall | Cumulative housing shortfall |
| 2012 | 15,200 | 6500 | 21,700 | 7233 | 4,197 | 3,036 | 3,036 |
| 2013 | 14,700 | 7000 | 21,700 | 7233 | 5,343 | 1,890 | 4,926 |
| 2014 | 14,200 | 19,600 | 33,800 | 11,266 | 6,873 | 4,393 | 9,319 |
| 2015 | 13,900 | 29,100 | 43,000 | 14,333 | 8,300 | 6,033 | 15,352 |
| 2016 | 13,500 | 30,800 | 44,300 | 14,766 | 9,651 | 5,115 | 20,467 |
| 2017 | 13,800 | 28,900 | 42,700 | 14,233 | 10,364 | 3,869 | 24,336 |
| *Source: Statistics NZ | |||||||
47 Comments
I'm sorry but Mike Hosking says your wrong. All immigrants are obviously builders thus the housing shortage is being eased. Furthermore, training locals to build is delusional.
Ironclad reputable reference:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=119…
Breaking down some Hosking rant points:
It is mathematically impossible to build 10,000 extra houses with fewer people. If we don't build enough houses now, how do we build 10,000 a year more - that's more than 27 a day more - with fewer people?
Hosking missing some basic facts:
1. Only around 2,000 migrants were related to building/construction in 2016. Out of what, 72,000 net?
2. Labour's policy includes introducing a new KiwiBuild visa to increase incoming builder numbers.
Basic maths, Mike.
Secondly, his rant on tourism and hospitality misses the ongoing discussion about these importing primarily to drive wage costs down using short-term workers, and the consequent elimination of these as viable career options for locals.
Thirdly, his rant about the student visa mills being important because they bring in $3-4 billion misses the point that they must be justifiable on more bases than simply making money. Before anyone Tourette-yells "Communism!", no, that's not the argument. If dollars are the only concern, then slavery is justifiable.
If we're good at training, and people are prepared to pay big money to come and take advantage of our expertise, why do we want to cut that and not grow it?
Labour are not proposing to reduce numbers of people who come to NZ to study for the sake of study, so any in this bucket will be fine. In fact, Labour will ensure Mike's idealistic portrayal of the industry will be matched more by reality than is currently the case.
Either institutions are about providing good training and will attract people on that basis, or they're not and they won't. Mike should be all for that.
Happy days, New Zealand.
Issue is Kiwibuild plan is 10,000 affordable houses pa.
The biggest cost for a new house today is the cost of the land.
Just where are you going to find cheap sections in AKL - they simply don't exist.
Without much cheaper sections than are available today it is simply not possible to build affordable housing in AKL.
Rich, I suspect NZ's reputation for training is being badly tarnished by the sub-standard PTEs. Pleased the Nationals had belatedly started to close them down but much prefer Labour's idea of disconnecting potential permanent residency and education.
If it is the will of the people of NZ to sell permanent residency / citizenship then lets have the government set up something like TradeMe. My guess at a going rate (I would have paid it 15 years ago) would be $200,000 per family. I remember being astonished that I only had to have the money for my point count not actually pay it.
An annual auction of 130,000 residency visas - what a good idea
Government creates 70,000 new visas each year and tips them into the auction pot
The 50,000 PLT departing residents can auction theirs off and get some money back
A bit like the Customs Import Licences of yesteryear - that worked well
This is one of the issues I have with work permits issued in New Zealand compared to the system used in other countries. I worked in Asia for many years and the work permit I had specified the company I worked for, my position in the company (and by definition the duties I was allowed to perform) as well as the physical address of said company. If I wanted to do the same job for another company I had to apply for a new work permit. If I wanted to do the same job for the same company but in a different branch, that also required a new work permit. While this might sound a bit over the top, it is to ensure that work permits are only issued for positions in which there is a need which cannot be filled locally. Compare this to New Zealand where so many work permits are free of restrictions and the holder can perform any work for any company. I'd love to see the work permit situation tightened up so that you actually have to have a job offer for a specific position first and the employer has to show that it could not be filled locally and then - and only then - is the work permit issued.
I was subject to the same process as an Expat and put up with it as the roles at executive level were worth the effort. It is also helped that my employers had global reputations and HR manuals so I felt comfortable moving my family to some fairly dodgy jurisdictions. I was well looked after.
I openly wonder whether my experience would have been the same with less organised/honest employers. I suspect some NZ employers would abuse the power gained by the restrictions on moving employers
Auckland's population is growing by more than 800 people every week, so good luck to Jacinda with KiwiBuild.
With fewer immigrants, however, there will be less builders, plumbers, electricians, plasterers etc to build 100,000 new homes.
Let's give Jacinda a chance: she deserves it. Her performance has been stunning over the last 2-3 months......
Judgment day comes in three years time.
Jacinda said she will reduce migrant numbers by reducing international student enrollments in low quality PTE courses. Do any of these PTEs even offer construction related courses? No they don't!
Bringing fewer low quality students into NZ will ease housing demand though neutral to housing supply.
It is not the quality of the student it is the implied relationship with potential permanent residency. Many of these Chinese & Indian students will never get it - they are being ripped off and badly exploited by various corrupt agents. A national disgrace - remember the headline last year: "No Sex - no Visa".
I have met Melanesian students doing flight training and also nursing in NZ; their education would not have been exceptional but there were no equivalent courses in their country. These people had no intention of becoming permanent residents so there was no paying kick-backs - hopefully this medium level training will continue.
With fewer immigrants, however, there will be less builders, plumbers, electricians, plasterers etc to build 100,000 new homes
Only if there are quotas for immigrants with those skills. Let's say there are. Say, 10% of total immigrant intake. Using a bit of Hosking and BBQ math, what should the minimum immigration figure be?This should be a walk in the part with someone with your numeracy.
Happy days.
Sorry, but what housing shortage? Nobody can come up with a number.
Except this?
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=116…
What housing shortage. Zero
Prices are debt fuelled, there is no supply demand imbalance.
I'll believe there is an actual supply driven housing shortage when rents are escalating in a similar manner as the home prices. The house rental rate has not kept up with home prices at all, and in some locations such as Auckland, the typical rental is cash flow negative for the investor (assuming cost of money on the debit side of the ledger).
My personal experience is that my rent increased during my nine years of renting here in NZ a total of 2%. Not 2%/year, but 2% over 9 years. My money in term deposits did considerably better than my landlords money that was locked up in the house I rented. And yes, I lived outside of Auckland where home capital appreciation was less than 10% total over those nine years that I rented.
When the market starts driving up the demand for rentals in a similar manner as the specuvestor induced demand for housing drove up the home prices, I'll believe there is an actual housing shortage. There were quite a few places in the US that had housing shortages a decade ago. As soon as the specuvestors started going bankrupt when the price increases stopped, there was a rather large increase in the housing supply... still early days yet as to whether Auckland has a similar trajectory. The sales rate decline, the number of homes on the market increasing, and the relative lack of sales on the lower percentile area are all reminiscent of 2006 in the US.
Those empty houses... well, those are likely to show up on the market rather soon if the home prices continue to sag. As I've said several times before on this site, my expectation is not a quick deflation of prices, but instead a gradual decline on the order of 1% per month. So far, this expectation as been rather accurate.
Finally someone who is talking some sense.
I completely agree, even with rental prop being kept off the market there was clearly a sag.
I've got some very interesting data I've put together if you'd like to look at it around the nationwide and Auckland market, more so in the dynamic between housing deposit growth, recession correlations & comparisons to previous busts around the world.
I've been expecting 2% a month declines from July onwards, every month. And toward Q4 sales volume declines nationally of 35-50%. I'm far more concerned about sales volumes than I am about price movements.
Prices are very sticky to the downside still as debt service hasn't become an issue immediately, if people don't have to sell, they won't. Really doesn't look good though.
There isnt a housing shortage.
There is a population overshoot.
It will correct.
https://growthmadness.org/2007/10/31/six-steps-to-getting-the-global-ec…
Yes such overshoots will correct, but one hopes it can be done without catastrophic side effects such as war or long term degradation of arable lands etc. The informed members of the Greens are well aware of this scenario and we most certainly need them to help curb the environmental rape and pillage that is so evident among humans. Isaac Asimov some decades back calculated how long ot would take for human biomass to equal the size of the then known universe if we continued to breed at the then rate. It was only 300 years so much food for thought. The danger of course sits in exponential math, for example, a doubling of our current 7.6 billion gives us 15.2 billion and we surely do not want to go there. Fortunately, large regions of our planet, especially in better educated countries are rapidly reducing birth rates and sensible countries such as China have of course stronly encouraged such a trend. Here in NZ we are very fortunate that we are not so much a part of the world's population overshoot; however, changing our luck merely to gain cheap labour is very short sighted. This is a must see TED talk.
https://www.ted.com/talks/hans_rosling_shows_the_best_stats_you_ve_ever…
Agree - but I don't see a nice way down - overshoot by definition leads to collapse. Fossil fuel powered food has allowed us this massive overshoot so when the taps stop its going to be a nasty step down. Every calorie of yr supermarket food has around 10 calories of fossil fuel behind it currently... not an easy equation to solve.
NZ produces food for the world overshoot, so our (local) population also doesnt tell the whole story
I really wonder what is happening in Auckland. The headlines scream housing shortage. The media comments on the low rent growth. By my reckoning they have no shortage of rental housing. Trademe today had 4130 properties advertised. That is not a shortage it is a surplus. Compare those figures with Nelson. Auckland's population is 15 times Nelson's and their rental vacancies are 43 times Nelson's. I just let a house at $520. I had advertised it at $500 but the successful tenants wanted to pay more. The rent was $100 up on the previous tenancy of two years. Nelson has a housing crisis and this is driving up rents. The tenants are pushing up the rents not the landlords.
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