Population ponzi overruns Auckland dwellings

By Leith van Onselen

With the General Election to be held on 23 September, New Zealand’s National Government remains under heavy pressure for failing to address the country’s worsening housing shortage, especially in Auckland.

Last week’s dwelling consents data from Statistics New Zealand revealed that dwelling consents across country in July continued to fall well short of population growth, with just 30,404 dwellings consented over the year and a weak trend present:

This level of consents pales into insignificance against the hyper population growth, which has seen New Zealand’s population surge by more than 100,000 people, driven by a record high 72,300 net migration:

In the trouble hot spot of Auckland, construction momentum has continued to slow, with just 10,051 dwelling consented in the city over the year and a weak trend present (see first chart above).

According to CoreLogic, Auckland received 35,772 net migrants over the past year, around half of New Zealand’s total:

Whereas total Auckland population growth was 44,500, again around half of New Zealand’s total:

Auckland’s housing shortage was already estimated to be at least 30,000 homes, with 1250 additional homes need to be provided each month just to keep pace with the region’s migration-fuelled population growth.

So clearly, Auckland’s housing market is set to worsen following the release of these figures, causing further pressure for the pro-mass immigration National Government.

Indeed, Westpac economists today have argued in their weekly commentary that Auckland’s housing shortage is going to get worse before it gets better:

New Zealand is wrestling with a large and growing shortage of houses, with the shortfall centred squarely on Auckland. However, strong headwinds in the construction sector mean that building levels are likely to rise only gradually…

Auckland’s population has risen by much more than expected, and home building has not kept pace. This has seen housing market tightness in Auckland rising to acute levels, reflected in a sharp increase in the average number of people per dwelling.

Looking ahead, Auckland’s population is set to continue growing at a rapid pace, with around 290,000 more people expected to settle in the region over the coming decade. Coming on top of the existing tightness in the Auckland housing market, this signals the need for a significant number of new homes in the region.

Despite the growing need for new building in Auckland, headwinds in the construction sector mean that we’re expecting only subdued growth in residential construction over the coming year. And recent developments indicate that growth in construction could be even softer than we’re assuming.

Several factors are providing a brake on residential construction. First is that developers are encountering increasing difficulties accessing finance. This is particularly important in Auckland, given the greater prevalence of medium to high-density housing developments, for which finance can be a significant hurdle.

At the same time, capacity in the construction sector has become stretched following strong increases in building activity over the past few years. This has resulted in building costs rising at a rapid pace, with the cost of building a new home in Auckland up around 40% over the past five years alone…

Looking at the longer-term trend, annual dwelling consent numbers have essentially flatlined at just over 10,000 since the start of this year. And the most recent figures actually point to some softening in building activity over the coming months. Importantly, dwelling consents numbers have plateaued at levels that are still well short of what’s needed to keep up with population growth. Consequently, it’s likely that tightness in the Auckland housing market will get worse before it gets better…

Last week’s Colmar Brunton Poll showed that Labour had overtaken the National Government for the first time in a decade, running on a platform of fundamental housing reform and lower immigration:

The monthly New Zealand immigration data will be released on Thursday 21 September – just two days before the General Election. If it records yet another record immigration intake, it could prove the final nail in the Government’s coffin.

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Comments

  1. Let’s face it they already knew this but with just about every national minister owning multiple property investments why would they care.

    That is why labor is taking a lead and it’s a sure fact it will be a labor NZ first party going forward.

    • The RBA board members also own multiple investment properties.

      A useful sell signal would be to watch for these RBA members or MPs selling their investments. That, however, would assume that they are smarter than the rest of us, although the RBA members have inside info.

    • Why don’t you guys all sell your grossly over-priced real estate to the idiot foreigners and get the fuck out of dodge. The opportunity to cash in at such elevated levels won’t last forever.

  2. The Auckland housing crisus … worsens … what are the net nwew builds less demolitions ? …

    Latest figures suggest that the Auckland house building market is going to need a whole lot more than words and political posturing | interest.co.nz

    http://www.interest.co.nz/opinion/89663/latest-figures-suggest-auckland-house-building-market-going-need-whole-lot-more-words

    By David Hargreaves

    In the run-up to the September 23 election, one good piece of news for the current Government is that the next monthly building consents figures are not due out till six days after the election.

    I reckon that’s good news for National, because the building consents figures themselves might not be so good at all.

    As Westpac economists pointed out this week in a nice summary of where we are in respect of house building, “annual dwelling consent numbers have essentially flatlined at just over 10,000 since the start of this year”. … read more via hyperlink above …

    • Govt in slow lane – Mainfreight boss – NZ Herald

      http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11916491

      Mainfreight chief Don Braid has called time on the Government’s leadership saying New Zealand needs to be led by visionaries – not “a couple of accountants”.

      “I think they’ve stopped listening to us. And I think they think they know better than us. And that’s a problem I think for a Government that’s been around for a long time,” Braid said.

      In a video interview for the Herald’s Mood of the Boardroom Election Survey, Braid acknowledged the National-led Government’s fiscal focus had been invaluable as New Zealand worked its way out of the impact of the Global Financial Crisis. … view and read more via hyperlink above …