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.