Auckland’s housing shortage to become catastrophic

By Leith van Onselen

Last week, Statistics New Zealand released figures showing that construction momentum has continued to slow in Auckland, with just 885 dwelling consents issued in May and 10,379 issued over the year, with a downward trend clearly evident:

With Auckland’s population surging by 44,500 over the past year (see next chart) on the back of 35,800 new migrants, this suggested that Auckland’s housing shortage – already estimated at some 30,000 dwellings – was destined to worsen.

Last week, Statistics New Zealand released updated population projections, which suggested that Auckland’s population could double to more than 3 million in the next 25 years, requiring around 18,000 new dwellings a year to be built. From Interest.co.nz:

The reality is that recent migration figures have been blowing the Stats NZ projections out of the water…

Stats NZ says that at a time of high sustained net migration gains, as experienced in 2014–17, it is reasonable to consider “whether a new migration regime may be unfolding”…

“Beyond the short-term, will Auckland consistently gain 42,500 people every five years through net migration (medium assumption)? Or perhaps as many as 72,500 people every five years (high assumption)? Or possibly net migration gains similar to the current 2016–17 levels?”

And it is those ‘very high’ migration projections as now produced by Stats NZ that suggest a near doubling of Auckland’s population to over 3 million by the early 2040s would be possible, along with a requirement for a much as 90,000 new houses every five years.

Specifically, Stats NZ says the ‘higher migration’ scenario for Auckland would be a net gain of 125,000 every five years, while the ‘very high migration’ scenario would be 175,000 every five years.

These ‘very high’ migration projections as outlined by Stats NZ in fact merely represent what HAS been happening in recent times, with current net inbound migration levels running at around 40,000 a year in Auckland.

Nationally, the new ‘very high’ projections give a national population of 6 million by 2028 and over 7.5 million by the early 2040s.

As far as Auckland is concerned, Stats NZ says a ‘higher migration’ or ‘very high migration’ scenario “implies a demand for new dwellings well above the building levels that have occurred in recent decades”…

Stats NZ says Auckland had an average of about 2.9 people per household (private dwelling) in 2001, 2006, and 2013. Applying this simple ratio to the population projections indicates how many more dwellings need to be built to accommodate the population.

“The projections indicate many more dwellings need to be built in Auckland than was done historically, to accommodate a ‘high’ population projection – an average of 60,000 more dwellings every five years between 2013 and 2043. Under the ‘higher migration scenario’, the average needs to be at least 70,000 new dwellings every five years. And under the ‘very high migration scenario’, the average is closer to 90,000 new dwellings every five years.”

Stats NZ goes on to say that even “these simple illustrative dwelling figures” might under-estimate the demand for housing for any given population projection.

“…Stats NZ’s family and household projections have a more sophisticated methodology than simply assuming a constant average household size. They indicate average household size is likely to decrease slightly with an ageing population. This means more dwellings need to be built to accommodate the same population.”

There is also the prospect that Auckland’s inward migration and population growth will become self-regulating. That is, population growth may start to subside as living standards crash due to extreme traffic congestion, severe housing shortages (and high costs), shortages of social infrastructure (e.g. schools and hospitals), and not enough high paying jobs.

After all, what’s the point of migrating to places like Auckland when they start to resemble the crowded hovels that many of the migrants have left behind?

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