Archive | Land use

Monthly building consents up on a few spikes, annual growth sluggish

The building consent figures for new homes issued on Friday were a comparative bright spot. Full figures including comparisons with last year are at the foot, below what I hope is an interactive graph.

Statistics NZ (which now calls itself Stats NZ) said 30,736 new homes were consented in the August 2017 year, compared with previous peaks of 33,251 in the June 2004 year and 40,025 in the February 1974 year.

Stats NZ said: “Monthly building consents for new homes reached a 13-year-high in August 2017, driven by a spike in apartments & retirement village units in Auckland.”

First, it’s not a record.

Second, it’s not enough.

Third, pricing remains askew.

The 3166 consents for new homes were up by 404 on the previous month and by 332 on the previous August. The increases involved several “spikes”, none of which involved standalone housing.

Of Stats NZ’s 4 categories for new homes:

  • Standalone house consents were up by 125 from July and 10 from last August to 2025
  • Apartment consents were up by 17 from July and 152 from last August to 384
  • Retirement village unit consents were up by 150 from July and 223 from last August to 295
  • Suburban townhouse & flat consents were up by 112 from July but down by 53 from last August to 462.

The total floor area was up 14.6% to 550,000m² from 480,000m² in July & 7.2% from 513,000m² last August (Stats NZ said 7.1%), on a number of consents up 14.6% from the 2762 in July and up 11.7% on the 2834 last August. I used to calculate precise shifts in size & costs until Stats NZ explained that the staging of consents for apartment developments, but not the precise matching of costs, meant my calculations were wrong.

In theory, more homes for a smaller increase in floor area would mean the average size/dwelling has fallen, which makes sense given increases in more intensive living quarters, but it’s too hard to calculate from these figures.

Consents for houses in August were just behind those for May (2025 versus 2039) and well ahead of any other month in the last year.

The intensive sectors

The apartments picture looks strong in the last 2 months (367 in July, 384 in August), and the retirement village segment of the market had its biggest month since November 2015 (295, versus 321 in that standout 2015 month).

The intensive housing sector that’s been strongest is suburban townhouses & flats, running well above 300/month in every month except 2 (December & January last summer) since January 2016, and topping 500 twice. Last August was one of those 2 plus-500 months, so the comparative decline to 462 this August is not exactly a fall in the overall context.

Context for the 13-year high

Statistics NZ’s comparison with a monthly figure 13 years ago also needs to be put into context.

Over the last 2 years, total consents for new homes have fallen below 2000 only in January (so twice), and this is the second time they’ve exceeded 3000 (3005 last November, 3166 this August).

If you check back to my February 2005 story (link below), you’ll see consents for new homes that January fell below 2000/month for the first time since February 2003 – another 2-year run of plus-2000s.

The added ingredient: the population rises

Over the 5-year census period 2001-06, the New Zealand population rose by 273,000 to 4.18 million (up an average 54,600/year). It’s now at 4.821 million (up an average 63,600/year over 10 years, or 16.5%/year more than during 2001-06).

At an average 2.7 persons/household, the extra population since 2006 needed an average 23,600 more houses/year, compared to 20,200/year more in the previous 5 years, so a 15.3%/year increase in construction required.

Those averages come with bumps, declines & cycles, and for several months the net inflow of migrants alone has been above 70,000/year. The total population has risen over the last 3 years by 83,000, then 100,000, and this year by 120,000 – and that most recent increase equates to demand for 44,400 homes.

The regulatory & banking responses

Not surprisingly, that huge excess of need over construction encourages speculation. The New Zealand answer, via regulators, has been to create measures discouraging speculation. Construction has been slow to rise.

As I wrote 2 months ago: “Consents for new homes exceeded 30,000/year in the 12 months to October 2016, the first breach of that round figure in 11 years, and there the altimeter has stuck.”

The latest annual figure for consents is 30,736, up just 3.7% on the previous 12 months and enough to cover the population rise of 2 years ago (assuming nothing is demolished and every home newly consented is built).

More intensification, or more difficult?

A feature of the latest consent figures is the 24.8% rise in apartment consents for the last 12 months, from 2409 to 3007. At the bottom of the global financial crisis downturn, 673 apartments were consented in the 12 months to August 2012.

Figures up to February 2015 are not easily compared to those before, because Stats NZ went from 2 categories – apartments in one, including retirement village units, all other housing in the other, seemingly including suburban townhouses & flats in the second category. From March 2015, the statistics were broken into the present 4 categories – houses, apartments, retirement villages, townhouses & flats.

In the 12 months to January 2005, consents were issued for 6065 apartments, up 23.5% on the previous year, in the second 12 months of an immigration spike. That figure was probably for apartments including retirement village units. Since then, intensification has been advocated more & more strongly, promoted, and the tally for all 3 intensive categories for the last 12 months is 9497 units, up 12.5% from 8439 in the previous 12 months.

The questionmarks

But there is a big questionmark over how many of those consents will turn into completed units, because of regulatory clampdowns on investors (including foreign investors) and impacts on first-homebuyers, including banking changes as both the Australian banks & banks in New Zealand (the big 4 owned from Australia) deal with tighter capital adequacy ratios.

One impact hard to spot from outside the finance sector is the size of apartment that a bank will lend on. A small upward shift in bankable unit size can make a one-bedroom unit impossible to buy, and can increase demand for 2-bedroom units, cutting the value of the smaller units (but not necessarily making them a buyable product) and increasing the value of the larger units.

Equally, there are questionmarks over how much immigration will be allowed, depending on who gets to become the NZ Government, and how much emigration there might be as Australia’s economy picks up, particularly in Melbourne construction & the mining sector.

Auckland consents up but slowing

Stats NZ started providing regional consent figures in 1991, and said on Friday 10,265 new homes were consented in Auckland in the August 2017 year, well short of the peak 12,937 in the June 2004 year.

The latest 12-month tally is up 4.2% from 9851 in the previous 12 months and up 19.2% from 8615 in the 12 months to August 2015. So, still rising but slowing, while demand continues to surge.

[The graph below is interactive on the Stats NZ website, and they’ve provided the code to make it interactive here, but it appears I have to use some special fingers as well as thumbs to make it work. Loads of comparative statistics lie below it.]

The national consent numbers for August and the year to August, compared to August last year, and the latest 12 months compared to the previous 12 months:

Total consents for new homes: 3166 (2834), up 11.7%; 30,736 (29,627), up 3.7%
Total values for new homes:  $1.37 billion ($1.18 billion), up 16.2%; $13.12 billion ($12.06 billion), up 8.7%
Standalone homes: 2025 (2015), up 0.5%; 21,239 (21,188), up 0.2%
Apartments: 384 (232), up 65.5%; 3007 (2409), up 24.8%
Retirement village units: 295 (72), up 310%; 1830 (2084), down 12.2%
Suburban townhouses & flats: 462 (515), down 10.3%; 4660 (3946), up 18.1%
Standalone share of consents: 64% (71.1%), 69.1% (71.5%)
Suburban townhouses & flats share of consents: 14.6% (18.2%), 15.2% (13.3%)

Auckland residential consents fall 28.8% for month

Consents for new homes in the Auckland region fell 28.8% this July compared to last July, but rose by 4.5% for the year. Consents for the month rose in 6 wards and fell in 7.

Auckland residential consents for August, compared to August last year, and the latest 12 months compared to the previous 12 months:

Region: 1184 (970), 10,265 (9851)
Rodney: 92 (72), 1024 (953)
Albany: 249 (242), 3036 (2273)
North Shore: 19 (35), 500 (519)
Waitakere: 36 (68), 544 (593)
Waitemata & Gulf: 150 (49), 971 (1061)
Whau: 16 (73), 296 (303)
Albert-Eden-Roskill: 115 (117), 798 (632)
Orakei: 14 (21), 248 (357)
Maungakiekie-Tamaki: 164 (45), 601 (344)
Howick: 73 (42), 394 (585)
Manukau: 48 (20), 432 (441)
Manurewa-Papakura: 115 (112), 952 (1015)
Franklin: 93 (74), 969 (775)

All construction for August compared to August last year, and the latest 12 months compared to the previous 12 months:
Total: $2.127 billion ($1.745 billion), up 21.9%; $19.9 billion ($18.68 billion), up 6.6%
Non-residential: $706 million ($534 million), up 32.3%; $6.375 billion ($6.163 billion), up 3.4%%

Earlier stories:
28 February 2005: Auckland consents tumble in January, average construction cost surges
28 January 2005: Residential construction value up 92% in 4 years, average construction cost up 24%
30 July 2004: Residential growth continues at phenomenal rate in June

Attribution: Statistics NZ tables & release.

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A new understanding of seasonal adjustment

For most of the 18-year lifespan of this website, I’ve steered clear of using Statistics NZ’s seasonally adjusted figures, after attending a seminar where a senior statistician admitted they didn’t know how to deal with Easter.

I also steered clear of US statistics altogether when I discovered the US Bureau of Census & Statistics (now with a similar but slightly different name) used seasonal adjustment on a figures done on a sample base – double jeopardy.

Although you might think this annual event, Easter – with a date known long into the distant future – is something about which everything can be predicted reasonably accurately, and after which accurate comparisons can be made, apparently this was not so.

If they don’t know that, I thought, I’m not going to give you seasonally adjusted figures because they’ll just be guesswork.

Government Statistician Liz MacPherson.

But as a postscript to the monthly building consent figures on Friday, Government Statistician Liz MacPherson added this missive:

Upcoming changes to seasonally adjusted & trend series

“We are improving the way we calculate the seasonally adjusted & trend series in building consents issued. These changes will be introduced in the September 2017 release (published on 31 October 2017).

“All seasonally adjusted series will now include an adjustment for the timing of Easter. This will account for when Easter moves between March & April. This change will affect the entire time series.

“We are also updating the way we treat outliers in the trend for the value of non-residential building consents. Currently, we exclude consents with a value of $50 million or more from the calculation of the trend. This threshold will be increased to $100 million, backdated to 2006.

“Currently, these outliers are only excluded from the monthly trend. For consistency, we will now also exclude these outliers from the quarterly trend.”

About Liz MacPherson:

The Statistics NZ website says: “Liz is passionate about evidence-driven decision-making and sees her role is to ensure New Zealand decision-makers at all levels have access to quality information.

Her view: “Statistics are only valuable if people use them. We collect & analyse them, and it’s vital we make them available in the ways people want them.

“We want the outside world to know what data we have and to use it. If we understand our customers’ needs, we can produce more relevant products & services that are used to make better decisions.

“If we understand our suppliers’ environment, we can better manage their delivery of data and negotiate solutions.

“If we understand what drives our stakeholders, we can collaborate for success.”

After senior roles over 20 years at the Department of Labour, the Ministry of Economic Development and the Ministry of Business, Innovation & Employment (MBIE), Ms MacPherson was appointed Government Statistician & chief executive of Statistics NZ in August 2013.

Every month, as you can see this month, Statistics NZ adds to the changes and the supply of information improves, despite the difficulties the organisation has faced following the Christchurch earthquakes, and again as a result of last year’s Kaikoura quake, which rendered Statistics House in Wellington unoccupiable.

Here’s one of those improvements introduced in July:

We’re making Stats NZ data easier to find

“This release is also available on our beta site, where we’re testing new formats for information releases & news. Help us make data easier to find by visiting the site, reviewing the content that matters to you, and sending us feedback.”

A change last month was to provide interactive charts. One I’ve used today comes with the code to make it work on this website as well as Statistics NZ’s – but, for the moment at least, the interactivity doesn’t work here:

Attribution: Statistics NZ releases.

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Notification sets Whenuapai on course for urbanisation

Auckland Council will publicly notify the proposed plan change tomorrow to rezone 124ha at Whenuapai from the future urban zone to urban zones. The submission period will close on Thursday 19 October and independent commissioners will hear submissions in the first half of 2018.

In the map: The central purple zones are for light industry. The yellow to brown zones are for a range of residential intensities.

It’s the first step in urbanisation of rural Whenuapai and is in the first batch of plan changes under the new unitary plan, now operative in part. Others approved for notification by the council’s planning committee on 5 September were for extension of the Auranga subdivision at Drury and for Fletcher Residential Ltd’s subdivision at the Three Kings quarry.

The plan change for stage 1 development in the south-east corner of Whenuapai provides for 124ha of light industrial land and capacity for 4-5000 homes.

Planning committee chair Chris Darby said a large amount of infrastructure was required for the greenfield area, and the plan change aimed to ensure infrastructure was in place to support all development.

Issues it addresses include managing stormwater run-off and ensuring there are opportunities to enhance the degraded stream & coastal environment, mostly through planting along streams.

The proposed plan change would also protect an historic heritage area in Clarks Lane and an anti-aircraft battery site on Spedding Rd.

Assuming plan change approval, stage 1 construction is likely to occur between 2018-28.

Stage 2 of the larger Whenuapai area is constrained by the new Northern Interceptor wastewater pipeline due to be built in 2026, and transport infrastructure outlined in the supporting growth strategy, which is necessary to support development. A further plan change will be required for stage 2.

Cllr Darby said: Notification of the plan change for stage 1 is a positive sign, showing that we’re moving from the planning phase to actually making land available for real homes that people can live in.

“It follows successful structure planning for the area – the first in a number of structure plans that will eventually pave the way for up to 137,000 new homes in north, north-west & southern greenfield areas.”

Attribution: Council release & committee agenda.

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Second round for Auranga precinct confirms Drury as major growth centre

Drury, 35km south of Auckland’s city centre, is the new centre of activity in the Auckland region, with construction of between 6100 & 10,800 homes anticipated on 1000ha there within 10 years.

That’s a potential population explosion of 30,000 people in an area that was all greenfields 2 years ago, apart from the small Drury township which, at the 2013 census, had 1200 homes and a population of just over 3500 – up by only 140 in 6 years.

Image above: The masterplan for the first stage of Auranga.

A planned, and very large, piece of it is the industrial expansion by Stevenson Group Ltd from its quarry in the hills east of State Highway 1 across to the highway. The company secured planning approval in 2013 to rezone 361ha of rural & quarry land for a mix of industrial & business development.

In 2015, Charles Ma’s Karaka & Drury Ltd had its 68ha Drury precinct 1 proposal approved as a special housing area, projecting its whole development would yield 1000-1500 new homes over 7-9 years, with the first homes ready for occupation by the end of 2017. The land was rural, but zoned future urban under the proposed Auckland unitary plan.

Kiwi Property Group Ltd spotted Drury’s potential and bought some of 51.3ha at Drury in April, with agreements to secure the balance, to create a new town centre next to Stevenson’s site. Kiwi’s 3 greenfield sites are next to the junction of the Southern Motorway, Great South Rd and the North Island main trunk railway line.

Auckland Council’s structure plan map for Drury-Opaheke. The future urban-zoned land, including Auranga 1B, is in yellow. Stevenson’s Drury South industrial precinct, in purple, is at the lower right of the map.

Plan change accepted for notification

Last Tuesday, Mr Ma’s company was at Auckland Council’s planning committee seeking approval to extend its Auranga subdivision from the initial precinct 1, and to rezone the 84.6ha extension as mixed housing urban & mixed housing suburban, providing for about 1300 more homes. The committee accepted the private plan change, which will now be publicly notified & opened to submissions.

There was potential for a hiccup, because the council had already turned down Mr Ma’s request to rezone part of this land in 2015 for 2 main reasons: concerns about the impact of the proposed development on existing transport infrastructure, and the need for a structure plan to be prepared for the wider area.

Structure & catchment plans are the bane of developers’ lives because they invariably follow the developer’s bright ideas – the country has not been mapped out in precise structure plans well in advance of development dreams yet to be dreamt.

The council plans set limits which are often inconvenient, slow in arriving & expensive. For both developer & council, those plans are a cost incurred well before any likely return from development, and subsequent rates payments.

In this case, the council has embarked on its own structure plan process for a wider area running from Drury up Opaheke Rd to Papakura. However, the report to Tuesday’s committee meeting by principal planner Barry Mosley & planning manager Celia Davison acknowledged that Mr Ma’s company had lodged its private plan change before the council embarked on its own Drury-Opaheke structure planning process and it wouldn’t compromise that process, as the land subject to the private plan change request was relatively confined, the proposed land use was the most appropriate and wouldn’t foreclose the consideration of other appropriate outcomes.

“In short,” the council planners wrote, “the council’s ability to pursue a full range of options for the Drury-Opaheke area through the structure plan process will not be constrained by the private plan change request.

“Secondly, bulk infrastructure is already proposed to service land within the adjacent Drury 1 precinct, and preliminary assessments indicate that this bulk infrastructure can be logically & efficiently designed to service the Auranga B1 land & parts of the wider Drury area.”

The council planning committee adopted its refreshed future urban land supply strategy on 4 July, confirming its 1016ha growth target at Drury west of State Highway 1. The council expects land release in that wider area to start in 2022 north of State Highway 22, and in 2028 south of State Highway 22.

Ma to leverage off infrastructure he’s creating in first precinct

Charles Ma at the launch of Auranga stage 1 in October 2016.

Mr Ma’s company intends to leverage off the infrastructure he’s creating in the initial Auranga area to develop the proposed B1 private plan change area.

The whole area requires new trunk wastewater sewerage, with connecting branches. A wastewater pump station is being built at 207 Bremner Rd in the Drury 1 precinct, designed to service a population of 10,000, including the residential component of Stevenson’s Drury South development and its Drury South industrial precinct.

In addition, a site is being reserved for a Watercare Services Ltd pump station that can service additional dwellings and enable Watercare to develop a wider wastewater network.

Watercare & Veolia Water Solutions Technologies NZ Ltd (which took over Papakura District’s water supply before the super-city was created in 2010) are working through a number of possible solutions to ensure security of water supply for Drury. The council planners said: “At this point there is reliance on one bulk supply point via connection to water sourced from the Waikato River. A possible solution to ensuring a backup water supply is to establish a second bulk supply point with connection to a Hunua water source.”

They said transport infrastructure upgrades would be required to enable development within the Drury 1 precinct, and Mr Ma’s Karaka & Drury was finalising an infrastructure funding agreement to enable delivery of upgrades, which will also largely unlock the potential of the Auranga B1 land.

The Karaka & Drury company intends to provide all necessary stormwater infrastructure within Auranga B1.

The council planning committee approved a structure planning programme for Drury-Opaheke on 1 August, to be completed within 12 months. Key strategic issues to be considered in that include:

  • the location of & appropriate number of centres
  • transport infrastructure, including the location & number of train stations
  • the location & mix of residential & commercial/industrial land; and
  • the location, size & function of parks, reserves & community facilities.

The council planners said in their report aspects of the Auranga plan change would need to be tested through the submission & hearings process, but added: “The scope & extent of the changes sought do not, in themselves, threaten the purpose & principles of the Resource Management Act when considered at this preliminary stage. The private plan change request is therefore considered to be in accordance with sound resource management practice.”

Local boards differ on timing

Papakura Local Board members didn’t support the Auranga plan change request now as they considered it premature and that it would place significant pressure on existing infrastructure: “They have also expressed concerns that the request, if accepted (and when combined with current development existing & proposed in the wider area), would adversely impact on the Drury motorway exchange & infrastructure.”

However, the Franklin Local Board supported the proposed plan change in principle, saying it was a logical extension of the existing special housing area & Drury 1 precinct. Franklin board members were also pleased it sought to develop a sustainable new community in an area that is well placed to deliver new centres, jobs & infrastructure improvements, and it could be progressed alongside work on the Drury-Opaheke structure plan. The Franklin board said the council & Mr Ma should seek a partnership approach to make the 2 processes complementary.

Council development programme office general manager John Dunshea told the committee water from the Flanagans Rd bulk supply point would also pass through the Auranga land to the Hingaia Peninsula, which had been constrained by the lack of bulk supply.

Cllr Daniel Newman said Hingaia had already been live-zoned from future urban when it didn’t have the infrastructure to take new housing, but he expected the whole area east of State Highway 1 to face challenges “sooner than in a decade” – Drury East in particular.

“That will make this footprint in this part of Auckland attractive to the market and we will have to do structure planning to implement that.”

Planning committee agenda, Tuesday 5 September
11, Auckland unitary plan (operative in part) – private plan change request from Karaka & Drury Ltd – Auranga B1

Earlier stories:
7 April 2017: Kiwi Property plans new town centre next to Stevenson’s Drury development
31 October 2016: Work starts on 3 striking special housing area projects
24 August 2016: Work set to start after fast approval for Auranga special housing area at Drury
4 July 2015: 2 large special housing areas for Franklin
30 August 2013: Drury South industrial area plan change & MUL extension approved
4 September 2012: Drury South plan changes notified

Attribution: Council committee meeting & agenda.

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Council starts public process for city centre & waterfront planning refresh, plus 3 subdivision plan changes

Auckland Council’s planning committee agreed yesterday to a refresh programme for the city centre & waterfront, but it will be 10 months before the final version of it is decided.

It’s also complicated by requirements evolving for the America’s Cup yachting contest to be held in Auckland in 2019, and where the estimated 30,000m² of land for the bases plus water spaces for the yachts might go.

The large programme of works for city centre & waterfront would be implemented under a review of the original central business district & waterfront plans completed in 2012.

But first the councillors & Independent Maori Statutory Board members have to put their money caps on, in their roles as the finance & performance committee, to prioritise works. That committee’s scheduled to meet (twice) in a fortnight.

And then the whole shebang has to go out to public consultation early next year as part of the council’s long-term plan review, returning to the council for signoff just before the start of the new financial year on 1 July 2018.

3 plan changes & a tidy-up under the new unitary plan

A second novelty yesterday came in the form of 4 plan changes – the first batch under the super-city’s unitary plan, which combines an updated composite of all the district plans of the councils 7 territorial predecessors and also includes an updated regional policy statement.

The unitary plan is still not fully operative, with parts of it before the courts. 2 of the proposed changes to it before the committee yesterday were private – from Karaka & Drury Ltd (Charles Ma) to extend its Auranga subdivision at Drury, and from Fletcher Residential Ltd, recognising an agreement with opponents of the company’s Three Kings quarry residential development.

The other 2 plan changes were brought by the council, one for its rezoning of land at Whenuapai from future urban so development can start on part of it over the next 4 years, with later stages set for development starting in 2028.

The last change, from the council, is to correct technical errors & anomalies discovered in the unitary plan.

  • You can check the detail in the refresh and the plan change proposals through the links below. I’ll roll out articles on each of them, and yesterday’s debate, over the next few hours.

Planning committee agenda, Tuesday 5 September
9, City centre & waterfront planning refresh
11, Auckland unitary plan (operative in part) – private plan change request from Karaka & Drury Ltd – Auranga B1
12, Auckland unitary plan (operative in part) – private plan change request by Fletcher Residential Ltd – Three Kings 
13, Auckland unitary plan (operative in part) – proposed plan change – Whenuapai 
14, Auckland unitary plan (operative in part) – proposed plan change – administrative plan change – to correct technical errors & anomalies

Story, 1 September 2017: Grand downtown & waterfront plans raise the question: The money?

Attribution: Council committee agenda & meeting.

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Home construction remains strong, non-residential slips

Warning: The item below contains a lot of dollar figures & percentages on work completed in the construction sector, hopefully put in perspective.

First, the positive figures for the 12 months through to the June quarter: all work put in place was up $2.6 billion on the previous 12 months to $20.6 billion. Work on new homes was up $1.7 billion to $11 billion, and all residential work was up $1.9 billion to $13.28 billion. Non-residential work rose by $700 million to $7.3 billion.

Work put in place during the latest quarter totalled $5.16 billion – $2.79 billion for new homes, $567 million for other residential work, $1.8 for non-residential.

Now, the percentage shifts.

After strong completion rates right through 2016, building work put in place nationally slumped (comparatively) in the March quarter of this year and growth was low in the June quarter.

Non-residential building work completed in the March quarter was up 5.1% on that quarter in 2016, but fell to 0.2% growth in the June quarter.

Work on new homes rose by 18.9% in the March quarter last year, and then by 26.4%, 27.6% & 24.1% in the next 3 quarters. This year, the growth rate wasn’t sustained but was still positive, falling to 14.8% in the first quarter and to 8.9% in the second.

Those shrinkages took total growth in the first quarter down to 10.9%, and to 4.9% in the second quarter.

On an annual basis, the fall is less visible because the rates of construction are still being held up by the 2016 growth. In the residential sector, after strong growth in 2014 (33.5% in the June 2014 quarter), growth tumbled in mid-2015 to a 9.3% increase in the second quarter and 6.6% in the third. The annual growth rate slipped to 15.9% in the June 2016 year, but rose to 18.4% in the latest 12-month period.

Now, in dollars.

In dollar terms, total work put in place has risen to a new level over the last 4 quarters, from a range down at $3.7 billion in the June 2014 quarter, climbing to $4.9 billion in the June 2016 quarter. Over the last 4 quarters, total work put in place fell just short of $5 billion ($4.935 billion) in the March quarter but was otherwise over $4 billion, reaching $5.157 billion in the latest quarter.

Non-residential work, down at $1.4 billion in early 2015, climbed above $1.6 billion/quarter in 2016, reaching $1.94 billion in the final quarter of the year. This year, non-residential work slipped to $1.68 billion in the first quarter but rose to $1.8 billion in the second.

Work on new homes has been above $2.7 billion/quarter for all the last 4 quarters – $2.8 billion in the December quarter & $2.79 billion in the June 2017 quarter. Annually, that has seen work on new homes rise by $1.7 billion in the last 12 months to $11 billion, and all residential work (including additions & alterations) rise by $1.9 billion to $13.28 billion.

Canterbury winds down, Auckland ramps up

Canterbury’s post-earthquake residential rebuild kept total construction there above $1 billion for every quarter since June 2014, but the total fell to $998 million in the latest quarter.

In Auckland, total work put in place went over the $1 billion mark in the September 2013 quarter, went over $1.5 billion in March 2016 and fell just short of $2 billion ($1.985 billion) in December. This year, it was down to $1.76 billion in the first quarter and back up to $1.95 billion in the second quarter.

Attribution: Statistics NZ tables.

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Grand downtown & waterfront plans raise the question: The money?

Some grand plans to advance Auckland Council’s 5-year-old waterfront & city centre plans will go to the council’s planning committee on Tuesday.

Image above: A Wynyard Quarter “regional destination park” is proposed at the outer point where the idea of an iconic structure was early tossed around.

2 words are central to the planning review: “Whose money?”

Take these 4 statements sprinkled through the report to the committee:

  • “The proposed funding & delivery scenarios are to be interrogated & tested during the long-term plan process. Priority projects will be supported by business cases, including a total value analysis. Once decisions have been made, they will be incorporated into the long-term plan public consultation.”
  • “For Wynyard Quarter, key drivers for the refresh include the need to create more feasible development packages, in order that returns from private development can contribute to the costs of public infrastructure & open space.”
  • “A realignment of the Wynyard Point park… delivering more rational development sites for private investment.”
  • “Funding is in place for the Auckland Transport bus projects but a realignment of or addition to budgets for other projects will be required.”

Those financial points are crucial to how streets around the central city and the waterfront itself are to offer better use, and how public transport will fit, but they aren’t the priority.

What is priority is to unleash a feast of ideas. What ought to be priority is a co-ordinated view of how these ideas can be brought forward practically, and funded.

Weighing on the offer are these:

  • The future of the port’s 2 functions, cruise & cargo
  • Hosting of the America’s Cup and hosting of the APEC (Asia-Pacific Economic Co-operation) meeting, both in 2021.

Devising a programme and working out the requirements for the yachting event make sense because it’s a mega-dollar occasion from which Auckland stands to profit enormously. The visit of the foreign politicians is one the city ought to be able to take in its stride.

The next round of publicly discussing the council’s future port study is scheduled for the planning committee’s October meeting. Again, money is the key feature – firstly, what Auckland stands to lose by sending the freight business out of town; secondly, what it might gain by having a new port conveniently nearby; thirdly, how a cruise sector perhaps treble the size it is now can be accommodated.

Down at ground level, the planning report touches on bus routes, pedestrian & cycle-friendly access between the city waterfront & Wynyard Quarter, and pedestrian boulevarding the city-centre few blocks of Quay St (though it’s not spelled out quite so plainly).

But for all the focus on improving public transport access, the report suggestions emanating from Auckland Transport would have isthmus bus commuters at the bottom of town walking about 3 blocks further than they do now to reach their stop. Without too much cover from the elements.

The whole committee series of workshops has been conducted behind closed doors, and there is no apparent reason for that, other than the belief that participants in a discussion should be free to speak their minds without the rest of the world hearing, without statements being taken out of context, and – most importantly, but usually knocked back to least important – without the public being taken on the discussion journey until something concrete is laid out.

What is mapped out is the use of the public realm – affecting many private interests – and if discussion is public there’s a good chance somebody outside the forum will add an idea that hadn’t been thought of.

Despite the freedom of all that private discussion, the answer to the crucial financial questions is not in the agenda. If the council runs to form, it will skirt the question and the uncertainty will remain.

The report’s authors were Senior Panuku project planning leader Joanna Smith, Panuku & Ateed cruise project manager John Smith and Auckland Transport city centre & rapid transport network initiatives manager Daniel Newcombe.

Plan changes on the way

Also on the agenda for the planning committee’s meeting on Tuesday are a number of plan changes for the Auranga development at Drury, from Fletcher Residential Ltd at 3 Kings, for Whenuapai and to correct technical errors & anomalies in the unitary plan, which is now largely operative.

Planning committee agenda, Tuesday 5 September (9.30am, Town Hall)
9, City centre & waterfront planning refresh
11, Auckland unitary plan (operative in part) – private plan change request from Karaka & Drury Ltd – Auranga B1
12, Auckland unitary plan (operative in part) – private plan change request by Fletcher Residential Ltd – Three Kings 
13, Auckland unitary plan (operative in part) – proposed plan change – Whenuapai 
14, Auckland unitary plan (operative in part) – proposed plan change – administrative plan changeto correct technical errors & anomalies

Attribution: Council committee agenda, mayoral release.

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Housing market share moves away from standalones, but not to apartments

Over the last 5 years, standalones’ share of residential building consents has dropped from around 80% to, in the year to July, just below 70%. The cry from intensification advocates has been “Build up, not out”, so you might suppose the fall in standalones’ market share has been taken up by apartments.

And you’d be wrong. The apartment & retirement village sectors have both been left in the shadow of the suburban townhouses & flats. The demand has been for less garden but still some space, and not too far off the ground.

The statistics don’t differentiate between houses on a full section and cross-leases, but my impression is that cross-leases (including townhouses) are replacing houses on full sections in developments following site aggregation.

These are the shares of consents for houses & townhouses/flats over the last 6 July years:

2012: houses 80.5%, townhouses 6.4%
2013: houses 81.3%, townhouses 7%
2014: houses 76%, townhouses 9.7%
2015: houses 70.6%, townhouses 13.7%
2016: houses 71.5%, townhouses 13%
2017: houses 69.8%, townhouses 15.5%

Apartments & retirement village units shared about 13% of consents in 2012, and about 15% in the last 2 years.

As construction started to grow out of the global financial crisis in 2012, apartments represented only 4% of consents that year, against 9.1% for townhouses.

In the last 2 years, those consent shares rose to 7.7% for apartments and 7.8% for retirement villages in 2016, then to 9.4% for apartments this year, but falling to 5.3% for retirement village units – despite the well publicised growth in the retirement village sector.

More change will occur in Auckland’s suburbs as a result of Auckland Council’s unitary plan replacing all the old zonings, providing for more intensification throughout the suburbs and for taller buildings in & around business centres.

NZ Retail Property Group is developing apartments above its Milford mall and also intends to intensify at Birkenhead, 2 early examples of what will become a trend. On suburban streets, small site aggregations will allow for handfuls of townhouses to be built.

Bolder developers will take on larger aggregations, so you will see bigger developments of townhouses and some apartment blocks, but the focus will remain on adult occupants rather than more space for families.

I’d like to be proven wrong on that point, but I expect it will be some time before we see the US-style condominium developments for family occupancy. The strength of that market in the US, led by large corporate owners, pushed private home ownership down to 62.9% in the second quarter of 2016, the same level it was at in the third quarter of 1965. Ownership peaked at 69.2% in 2004-05. After the 2016 decline, the St Louis Federal Reserve Bank’s index rose to 63.7% in the December 2016 & June 2017 quarters.

Statistics NZ said in 2014, on the basis of the 2013 census, that individual home ownership here fell to 49.8%, down from 53.2% in 2006. In addition, homes owned by family trusts increased from 12.3% in 2006 to 14.8% in 2013, taking the totals in private ownership to 65.5% in 2006, and 64.6% in 2013.

The New Zealand way of doing intensive developments in the last 35 years has been for developers to sell individual units, and construction quality failures don’t seem to have dented the enthusiasm for this kind of individual investment.

The retirement village model could be replicated in the apartment & townhouse development sectors, where a corporate holds ownership for medium-term occupants, but there’s no sign of that happening yet. Developers here still look on development as their function in life, not a develop-&-beyond model.

If we had a more mature sharemarket where long-term thinking was espoused, there would be a natural place for developers & corporate owners of such property, but that, too, is a long way off.

1 September 2017: Consent movement on hold

Attribution: Statistics NZ tables, St Louis Fed chart.

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Consent movement on hold

In Wednesday’s newsletter I wrote: “Figures just released by Statistics NZ – building consents for new homes down 49 in July from July last year at 2762 – a lift in standalone house consents, falls in all 3 intensive housing categories (apartments, retirement village units and suburban townhouses & units).”

The first one relates to standalone housing’s share of the residential market, but I’ve run some statistical comparisons on that in a separate item.

Here are the details from Statistics NZ’s Wednesday release of the July figures:

New home consents up in mixed year

Consents for 2762 new homes were issued nationally in July, the third highest monthly tally this year but below a purple patch of 3 months last June-August.

This year, consents have been over 2700 in 3 months, but were down at 2100 in April, so it’s been a mixed picture.

In those 3 purple months last year, 2752 consents were issued in June, 2811 in July, 2834 in August. The volumes remained high through to December, including 3005 consents issued in November.

The election and constraints by the Reserve Bank & commercial banks have been blamed for a quieter housing period, and a drastic fall in foreign buyers (mostly Chinese) for a decline in the secondary housing market.

Given those circumstances, consent figures close to those of a year ago can be regarded as healthy, but it’s hardly surprising that consent numbers for new homes were up only 4.5% for the year and down 1.7% for the month, led down by all 3 intensive segments of the new housing market.

Annual consent level stuck in narrow band

The 30,404 consents for new homes – only 320 more than for the previous 12 months – maintains the consent level in a band just above 30,000/year, which was reached last October.

The national consent numbers for July and the year to July, compared to July last year, and the latest 12 months compared to the previous 12 months:

Total consents for new homes: 2762 (2811), down 1.7%; 30,404 (29,084), up 4.5%
Total values for new homes:  $1.18 billion ($1.03 billion), up 14.1%; $12.92 billion ($11.75 billion), up 10%
Standalone homes: 1900 (1761), 21,229 (20,790)
Apartments: 367 (425), 2855 (2242)
Retirement village units: 145 (189), 1607 (2278)
Suburban townhouses & flats: 350 (436), 4713 (3774)
Standalone share of consents: 68.8% (62.6%), 69.8% (71.5%)
Suburban townhouses & flats share of consents: 12.7% (15.5%), 15.8% (13.1%)

Auckland residential consents fall 28.8% for month

Consents for new homes in the Auckland region fell 28.8% this July compared to last July, but rose by 4.5% for the year. Consents for the month rose in 6 wards and fell in 7.

Auckland residential consents for July, compared to July last year, and the latest 12 months compared to the previous 12 months:

Region: 774 (1087), 10,051 (9622)
Rodney: 83 (71), 1004 (935)
Albany: 159 (215), 2529 (2250)
North Shore: 38 (18), 516 (502)
Waitakere: 42 (72), 576 (568)
Waitemata & Gulf: 183 (353), 870 (1032)
Whau: 16 (41), 353 (252)
Albert-Eden-Roskill: 14 (55), 800 (525)
Orakei: 27 (20), 255 (366)
Maungakiekie-Tamaki: 34 (16), 482 (388)
Howick: 34 (64), 363 (616)
Manukau: 18 (15), 404 (464)
Manurewa-Papakura: 55 (79), 949 (951)
Franklin: 71 (68), 950 (773)

All construction for July compared to July last year, and the latest 12 months compared to the previous 12 months:
Total: $1.786 billion ($1.675 billion), up 6.6%; $19.53 billion ($18.54 billion), up 5.3%
Non-residential: $576 million ($614 million), down 6.1%; $6.2 billion ($6.3 billion), down 1.5%

1 September 2017: Housing market share moves away from standalones, but not to apartments

Attribution: Statistics NZ tables.

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Top construction achievers all from one company, major awards for Wellington work, scholarships for aspirational projects

Above: Supreme award winner Andrew King.

All 3 young achiever award winners at the NZ Institute of Building on Friday night were from the same company, Dominion Constructors Ltd.

And the winners of the institute’s supreme, innovation & safety awards all won for their work on projects in the Wellington region.

In addition to those special & price category awards, the institute also honoured the convenor of its judging panel, Simon Barnes, and its charitable trust made its inaugural scholarship awards.

The institute awards recognise the professional excellence of individuals in the building & construction process, rather than the project or completed structure.

Supreme award for work on Wellington airport extension

The supreme award went to Hawkins Wellington project director Andrew King for his role in managing the Wellington Airport terminal extension – 6000m2 of combined new build & refurbishment at the southern end of the airport’s main terminal building and the reconfiguration of the airport’s southern apron.

The institute’s judging panel said: “Working within a live airport environment created multiple constraints around access, security, noise & other unique airline requirements. Having to work on a live airport apron meant that workers were placed within 20m of moving aircraft, and worker safety was of paramount importance.

“Due to the extreme operating environment, it was necessary to undertake a significant amount of high risk works out of peak hours. This resulted in nightshifts with up to 70 workers being run across a 22-month period. By utilising the resources & knowledge of the entire team, Andrew was able to deliver a high quality product within an agreed budget & programme.”

Aucklanders collect young achievers awards

James Reed.

This year, as last year, the young achievers awards sponsored by the Building & Construction Industry Training Organisation went to 2 recipients, Dominion Constructors senior project manager James Reed and Dominion Residential project leader Chris Bassett. Another Dominion project manager, Stephen Peters, was highly commended.

Mr Reed began his career with Dominion Constructors in 2007 as a cadet/trainee supervisor and has since undertaken site supervision & project management roles across a range of commercial & civil construction projects, and completed a bachelor of construction management degree.

The judging panel said: “James is Dominion’s youngest senior project manager, and an example of a new breed of construction managers who embrace technology and the advantages it brings to effective site & job management. He is an advocate for building information management (BIM) system and encouraged the company’s other project managers to adopt the technology. As chair of Dominion’s cadet committee, James manages the company’s cadetship programme, which includes 18 cadets.”

Chris Bassett.

Mr Bassett joined the construction industry as a carpentry apprentice straight from school. After a period of self-employment, he worked with a mid-sized company specialising in leaky homes and saw first-hand the results of poor design & workmanship. This provided him with the knowledge & skills to ensure that buildings he’s involved in are watertight. He joined Dominion Constructors in 2011 and within a year was in charge of a $23 million apartment complex.

In 2013 Dominion had identified the growth in multi-residential projects of scale in the Auckland market, and decided to develop specific capability to deliver large residential developments. The company created a residential division and Mr Bassett was part of the new team. He also leads & manages the Dominion apprenticeship programme, which currently has 15 apprentices.

Church restrengthening has ongoing benefits

Kerrin Manuel.

The winner of the innovation award, LT McGuinness Ltd project manager Kerrin Manuel, was driven by budgetary demands (the project was funded by donations & grants) & practicality for the strengthening of the St Mary of the Angels Church in Wellington, a heritage listed building damaged in the 2013 Seddon earthquake. The structure comprises 10 portals, made up of 15m-high archways on supporting columns that hold up both roof & walls. Restrengthening involved new foundation beams, new columns and most of the portals themselves.

The awards judges said: “Given the budgetary constraints, Kerrin developed a quicker & safer way to handle the core job. This involved making the temporary support towers for each portal mobile by adding structural castor wheels. This idea was further developed to become the internal rolling gantry that was ultimately used. Not only was the innovation practical, it cut 15 weeks out of the programme. This innovative approach had immediate benefits for the St Mary of the Angels project, while providing longer-term benefits for the construction industry, as the system can be utilised for other projects.”

It’s not hard, says safety award winner

Sarah McDonald.

Sarah McDonald won the safety award for her work on the $630 million Mackays-Peka Peka Expressway on the Kapiti Coast, delivered by the M2PP Alliance. She was alliance partner Fletcher Construction’s lead operational advisor for the project’s health, safety & wellbeing team and developed a strong safety culture among the teams assembled to deliver the 18km expressway.

The NZIOB judges said: “This was a significant challenge, given that there were up to 600 people working on site at any time. The M2PP Alliance invested $1.5 million into the creation of comprehensive HSW programmes that Sarah developed & put in place. The scale of HSW programmes was immense, with 5100 people delivering over 5 million working hours across the project’s lifetime.

“Sarah not only delivered the extensive induction training, she provided regular toolbox events& information forums, all of which were designed to achieve compliance and to instil a genuine culture change across all teams.

“One of the elements of Sarah’s performance that impressed the judges was that she implemented several key initiatives that could be successfully adapted for use by the wider construction sector.”

Ms McDonald told Friday’s awards function: “A lot of people make health & safety hard. It’s not hard. All we need to do is engage with our people. We used to lose about 20 people/year in 1999, when Site Safe was set up, and we’ve brought that number down.”

WorkSafe NZ statistics show the construction industry has had 39 workplace fatalities since 2010, well behind the 119 in agriculture and just ahead of transport, postal & warehousing (31) and forestry (30).

The construction sector has had 6 fatalities so far this year, the same number as for the whole of 2016.

Ms McDonald also said she’d moved to Site Safe this month to take safety education to a wider audience.

Simon Barnes.

Judging convenor gets award too

Institute fellow & convenor of its judging panel, Simon Barnes, congratulated the award entrants, and was then honoured himself when he received the NZIOB medal, the first time it’s been awarded since 2012.

Mr Barnes, a quantity surveyor, has 40 years’ experience in a wide range of commercial, residential, industrial & retail developments and was awarded the institute medal for his significant contribution to industry practice. He was a director of Davis Langdon and its predecessors for 25 years before its sale to Aecom in 2010. With Scott Beagley & David Doherr, he formed a new project consultancy, Barnes Beagley Doherr Ltd, in 2013.

Category & overall awards (sponsors in brackets):

Supreme award (Gib): Andrew King, Hawkins Wellington project director
Innovation (James Hardie): Excellence, Kerrin Manuel, LT McGuinness project director for St Mary of the Angels Church, Wellington; highly commended, Brett Naylor, Beca digital delivery leader & project director for the Mason Bros building, Wynyard Quarter
Safety (Site Safe): Excellence, Sarah McDonald, M2PP-Fletcher Construction senior health & safety advisor for the Mackays-Peka Peka Expressway, Kapiti Coast
Young achiever (BCITO): Excellence, James Reed, Dominion Constructors project manager; and Chris Bassett, Dominion Constructors project leader; highly commended, Stephen Peters, Dominion Constructors project manager

The winners of the 7 project cost category awards were:

Under $2.5 million (Resene): Excellence, Sam Hill, Hawkins Central project manager for Good Union project, Cambridge; highly commended, Russell Smith, NZ Strong project manager for Auckland Airport project
$2.5-5 million (Steel Construction): Excellence, Greg King, Aspec Construction Ltd site manager & cadet mentor for the Bishop Selwyn Chapel at the Holy Trinity Cathedral, Parnell; highly commended, Scott Crowe, NZ Strong project manager for elective surgery centre link bridge at North Shore Hospital, Takapuna
$5-10 million (Hays Construction): Excellence, David Rayson, Aspec Construction site manager & cadet mentor for a Mackelvie St redevelopment, Ponsonby; highly commended, Ben Tomason, Griffiths & Associates project manager for Hora Hora School batch 11, Whangarei
$10-25 million (Colorsteel): Excellence, Jimmy Corric, with NZ Strong project manager for the Mason Bros building, Wynyard Quarter; highly commended, Anthony Tahana, Hawkins Central site manager for Red Stag sawmill, Hamilton; and Chris Murray, LT McGuinness project manager & quantity surveyor for David Jones department store, Wellington
$25-50 million (Allied Concrete): Excellence, Andrew King, Hawkins Wellington project director for the Wellington Airport terminal extension; highly commended, Aaron Stephens, Fletcher Construction project manager for 133 Molesworth St project, Wellington
$50-75 million (Hilti): Excellence, Tony Kavanagh, Arrow International (NZ) project & design manager for the Rototuna Junior & Senior High School, Hamilton
$75-100 million (Metro Performance Glass): no award
Over $100 million (Aecom): Excellence, John Palm, M2PP Alliance–Fletcher Construction project manager for the Mackays-Peka Peka Expressway, Kapiti Coast

Scholarships to encourage aspiration

On top of the awards for past excellence, the institute’s charitable trust awarded its inaugural scholarships aimed at lifting the construction sector’s sights.

The 2 winners of $10,000 cash prizes are Professor Robyn Phipps from Massey University Auckland and Ged Finch, a post-graduate student from the School of Architecture & Design at Victoria University of Wellington.

Trust chair Gina Jones said: “The trust introduced these awards to encourage aspirational thinking with the potential to advance the design, construction or management of buildings in New Zealand, and thereby enhance the quality of our built environment.”

Professor Robyn Phipps.

The scholarships are intended to encourage recipients from a trade, technical or professional role to pursue a project linked to building through research, practice or professional development. There were 15 entries for the inaugural scholarships.

Intention to advance façade engineering

The trust’s awards panel, 3 past presidents of the institute, said: “Professor Phipps has qualifications in building science & architecture and is internationally recognised as a teacher & researcher in a range of building & construction fields. She’s observed the problems faced by both the designers of new buildings and consenting authorities in assessing building façades to ensure they won’t leak and that they perform all the functions required of modern buildings.

“There are a limited number of façade engineers in New Zealand because there are no home-grown courses of study available, so they have had to obtain their qualifications and experience overseas.”

Professor Phipps, an institute member, will use her award to travel to a centre of excellence in façade engineering, to investigate how to deliver building façade training to suitably qualified building practitioners in this country.

She was highly commended in last year’s institute innovation awards for her project on low cost solar heating for schools.

Aim to cut construction waste at end of lifecycle

Ged Finch.

Mr Finch is a student member of the institute who has a bachelor of architecture studies degree and is completing a master of architecture degree. He has worked as an academic research assistant in New Zealand and for architectural firms overseas, and is researching how best to avoid waste at the end of a building’s lifecycle.

The panel said: “This research is significant, given that some 50% of all New Zealand’s waste (amounting to 1.6 million tonnes annually) is generated by the construction sector. His proposition is that planning & designing for the disassembly of buildings at the end of their useful lives has the potential to greatly reduce the quantity of waste produced.

“The award will enable Mr Finch to conduct fullscale tests of structural & architectural systems that have been designed to eliminate construction waste. This will effectively amount to a ‘real world’ test of those systems.”

To be eligible for an NZIOB Charitable Trust award, applicants must be New Zealand residents or citizens and actively involved in the building & construction industry.

The trust wants to offer these scholarships annually and has begun a fundraising programme so the $20,000 scholarship grants are paid from earnings rather than from capital.

Attribution: Awards, institute releases.

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