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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Comments

  1. “The Green Party had talked about immigration cuts, but also of lifting the refugee quota.”

    https://www.odt.co.nz/news/dunedin/stance-immigration-more-conservative

    If they mean slash overall immigration while increasing the refugee quota – that is exactly what the Greens in AUS should be offering!

    “Labour had traditionally favoured globalism and cosmopolitan attitudes, but ”has now clearly aligned itself with anti-cosmopolitan feeling”, Dr Edwards said. That could be seen in the party’s proposal to cut net migration by 20,000 a year”

    Good grief! Why is Shorten so braindead.

    “National retained the most open immigration policies of the major parties, because it saw migrants, their skills and capital as ”good for business”.”

    And bad for the unemployment rate. Skills and capital? Cheating on exams to enter NZ/AUS is not a skill. And rather than bring capital to AUS/NZ, a great chunk send 50% of their income (from working in cafes here) to their parents in the 3rd world. They are taking capital away!

    “But National was also ”a pragmatic and populist party that wants to govern”, meaning its principles could ”go out the window” if public opinion demanded it”

    I guess the LNP does not want to rule.

  2. THERE IS HOPE …

    New Zealand General Election 23 September this year …

    Housing Policies – New Zealand Labour Party

    http://www.labour.org.nz/housing

    … extract …

    Remove barriers that are stopping Auckland growing up and out

    Labour will remove the Auckland urban growth boundary and free up density controls. This will give Auckland more options to grow, as well as stopping landbankers profiteering and holding up development. New developments, both in Auckland and the rest of New Zealand, will be funded through innovative infrastructure bonds.
    .
    .
    Following the passing of the Resouce Management Amendment Act back March, Bernard Hickey of Newsroom reported …

    https://pro.newsroom.co.nz/articles/1629-newsroom-pro-s-8-things-at-8-trolling-millennials-is-easy-defamation-retrials-loom

    7. Just in case you missed it…

    One curious coda to the RMA debate that concluded last week was that the Opposition parties plus ACT and United Future all voted again during the third reading debate for amendments that would have abolished Rural Urban Growth Boundaries and allowed the financing of infrastructure bonds paid for with targeted rates.

    The amendments were defeated by National and the Maori Party.

    The irony of a Government that has railed against restrictions on land development by councils voting against removing those restrictions should be noted. And also that the proposal for infrastructure bonds was backed by the right-leaning New Zealand Initiative and voted for by the Greens and Labour. Strange times indeed.

  3. Great news for smart property investors.

    Too bad so sad for the losers without houses.

  4. Tiliqua scincoidesMEMBER

    I need to look into getting some Auckland property. Beautiful city too.

  5. Nick Smith says housing affordability is in the eye of the beholder; Defends government’s track record on Auckland affordable housing supply; Says can’t regulate prices in SHA developments, despite desire for 10% affordable | interest.co.nz

    https://www.interest.co.nz/property/88610/nick-smith-says-housing-affordability-eye-beholder-defends-government%E2%80%99s-track-record

    Nick Smith has defended the government’s track record on boosting Auckland’s affordable housing supply, while admitting affordability levels in the city are not at satisfactory levels.

    The Building and Construction Minister was speaking on Radio NZ about a story that despite the Auckland Housing Accord stipulating 10% of any Special Housing Area development must be ‘affordable’, the Council didn’t in fact have any figures or idea of what prices these houses had been sold for – or whether the houses had even been built.

    Smith said the purpose of the SHAs was primarily focussed on increasing supply in Auckland, not on regulating prices of the houses built. “The Productivity Commission, the independent hearings panel and the Auckland Council all concluded that trying to regulate house prices through the resource consenting process was a nonsense,” he said. … read more via hyperlink above …