Consents for new homes resumed their upward trend in May after a dip in April, but the rise still looks tentative against the upward lines in immigration & overall population growth.
Statistics NZ reports population growth with a calendar that rises continuously, but its monthly building consent figures appear only at the end of the following month.
The population has risen in the last 12 months from an estimated 4.69 million (97,300 total growth in the 12 months to June 2016, then another 106,000) to 4.796 million now.
At an average 2.7 residents/household, those population increases would have required housing increases of 36,000 homes built in the year to June 2016, and 39,300 built in the last 12 months (ignoring demolition or falling into disuse).
Consents for new homes fall well short of those requirements for actual construction, which means the housing “crisis” which has afflicted New Zealand is either not really a crisis, or politicians, bankers & builders don’t want to supply the solutions that would shrink the ever-widening gap.
Labour has proposed building 10,000 homes/year to start closing the gap. National has used housing accords with local councils to try to lift consent figures while at the same reducing construction conditions for those more quickly consented builds (but which have been slow to get underway) – as the country’s leaky building saga constantly warns that building standards need to rise, not fall.
For any politician to earn my vote, I would expect not just encouraging words but a plan to be laid out well before the 23 September election for fairly precise increases in home construction in various parts of the country, accompanied by financing plans which would require banking sector support for cheaper homes and government programmes to help finance cheaper homes.
And more: I would expect plans for job growth accompanying the construction of new homes – not just in new shops but a wider range of employment that would begin the task of dismantling the Auckland of one-way traffic congestion, and the New Zealand centred purely on Auckland.
Migration is an obvious issue in the housing picture. The net inflow has been boosted by the number of Kiwis returning from Australia, and that seems unlikely to be reversed in the near future as Australia’s federal government continues to stumble and job growth across the Tasman remains illusory.
The net inflow of migrants for the 12 months to May fell just short of 72,000, requiring 26,650 new homes to be built at that 2.7 residents/household average.
Building consents for new homes over those 12 months totalled 30,645, up 8% on the previous year’s 28,387, leaving 4000 consents (and mostly not yet built homes) for internal population growth of 34,000.
It’s plain that these numbers don’t stack up, which means prices will continue to rise while no political solution is evident. Added to that picture, the state of Australia’s major banks has brought warnings to tighten from international banking actors such as the International Monetary Fund, and tightening in Australia means tightening in New Zealand.
In Auckland, the one bright spot in this gloomy economic & financial morass is that the new unitary plan allows intensification over a wide spread of suburbia. Many landowners are now taking sections (or sections with an old house which most likely would be demolished) to market with consent – or ability under the plan – to build perhaps 4 units where one house previously stood.
There is a fear that this will change neighbourhoods – and it will, but not automatically badly. I write this article from a hotel room in Denver, Colorado (on a family visit, off out into the boiling sun today), and beside this pocket of city-fringe hotels there is a steady rise in both apartment living and in replacement of old homes with houses on smaller sections and with terraces & townhouses.
This city, too, believes it has a housing crisis and, like Auckland, is thinking about solutions but doing too little. It’s a city that has apartments right in the centre and many lowrise apartment blocks spread through business areas. New developments in the inner fringes are mostly lowrise – up to 6 storeys (think Britomart’s old buildings to gauge the human scale these changes are being made at). Home sizes? I’m not sure yet.
In Denver, much of the new has charm. New Zealand, and Auckland in particular, has operated on the “build to the max” mantra for decades, and charm is the first thing tossed out the window.
Building to the max (which means pricing to the max) generally rules out Auckland being a charming if over-populated city, but Auckland can develop apace, with more thought about the consequences, and become a pleasant but more populated city.
The consent picture
Standalone homes’ share of the new residential market has been falling gradually, and depending on applications for lumpy intensive construction projects for apartments, retirement villages & suburban townhouses.
In May, standalones represented 73% of the month’s consents, up from 70.6% in April but down from 77.6% in May last year. Over a year, the standalone share fell from 72.1% in the 12 months to May 2016, to 69.4% in the latest 12 months.
The national consent numbers for May and the year to May, compared to May last year, and the latest 12 months compared to the previous 12 months:
Total consents for new homes: 2794 (up 10.9% from 2520), 30,645 (up 8% from 28,387)
Total values for new homes: $1.229 billion (up 14.1% from $1.078 billion); $12.81 billion (up 12% from $11.439 billion)
Standalone homes: 2039 (up 4.2% from 1956); 21,262 (up 3.9% from 20,467)
Apartments: 123 (up 6% from 116); 2881 (up 37.5% from 2095)
Retirement village units: 137 (up 13.2% from 121); 1718 (down 17.2% from 2076)
Suburban townhouses & flats: 495 (up 51.4% from 327); 4784 (up 27.6% from 3749)
Standalone share of consents: 73% for the month (70.6%, 77.6%); 69.4% (72.1%).
Auckland residential consents up 20.9% for month
Consents for new homes in the Auckland region rose 20.9% this May compared to last May, and by 11.1% for the year. Consents for the month rose in 9 wards and fell 4 eastern & southern wards.
Auckland residential consents, month & year compared to that month last year and the previous 12 months:
Region: 885 (732), 10,379 (9434)
Rodney: 159 (76), 965 (945)
Albany: 208 (167), 2549 (2322)
North Shore: 42 (15), 521 (484)
Waitakere: 53 (44), 626 (515)
Waitemata & Gulf: 9 (20), 1093 (852)
Whau: 13 (17), 339 (195)
Albert-Eden-Roskill: 94 (37), 731 (467)
Orakei: 5 (8), 280 (356)
Maungakiekie-Tamaki: 83 (32), 468 (480)
Howick: 33 (84), 401 (658)
Manukau: 33 (30), 397 (498)
Manurewa-Papakura: 65 (106), 1065 (900)
Franklin: 88 (96), 944 (762)
Consents for all new residential construction, including additions & alterations at $1.9 billion, were up 12% for the year to $12.81 billion ($11.439 billion). For the month, residential consents were up 14.1% to $1.229 billion ($1.078 billion).
Across all sectors, consents for the May year were $10 billion up on the level in the May 2012 year at $19.726 billion, and up just under $2 billion (10.9%) on the total for the May 2016 year. Consents in May were up 17.4% ($520 million) to $1.871 billion.
Attribution: Statistics NZ tables.