Auckland’s population keeps on growing, with a hearty mix of migration and wee bairns. And with that comes demand for development of all kinds. Residential gets most of the attention, and fair enough too: we’re still struggling to build enough homes for everyone who wants to live here.

The Auckland Housing Accord between the government and council is into its third year. I’m eagerly awaiting the release of Auckland Housing Accord Monitoring report #9, hopefully by the end of this month. Will it be a riveting read like Auckland Housing Accord Monitoring report #8, or prescription medication for insomniacs like Auckland Housing Accord Monitoring report #5? Find out right here on TransportBlog.

Seriously, though, getting new homes built is a pressing issue for many reasons. And one of the main tools in the Housing Accord is identifying “Special Housing Areas” where approval processes can be streamlined and new zoning can be used.

The latest ‘tranche’ of SHAs was announced earlier this month, and as with all the other tranches, the urban/ infill/ apartment/ terrace ones have been mapped in the RCG Development Tracker, along with another 600-odd developments in many sectors.

The council has closed off requests for new SHAs, so that they can focus on the requests they already have. With the legislation set to expire in September, there’ll probably be just one more tranche to come.

Building Consents

Building consents are the best measure of how many homes are being built, or about to be built.

In Auckland, 9,251 homes were given building consent in 2015, up 21% from 2014 (7,632 homes). This is progress, but those numbers need to keep growing – to at least 13,000 a year, or even higher to start chipping away at the undersupply.

AKL consents

Down in Canterbury, home building activity is tailing off. Christchurch is still a little way off replacing all the homes lost in the earthquakes, but it’s getting there. The number of building consents peaked in 2014 at almost 6,700 homes were given building consent in 2014, and that’s fallen back to 5,800 for 2015. Many construction workers will look to move up to Auckland where there’s still plenty of demand for new housing.

Chch consents

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  1. “Many construction workers will look to move up to Auckland where there’s still plenty of demand for new housing.”

    Perhaps. But then they’ll find that the rents they need to pay, and the commute times they have to endure, for the “privilege” of working in Auckland, make it “not worth the candle” of moving north in the first place.

    Word will soon get round to other workers down south from those who do initially come north, to not bother moving to Auckland, especially if you have kids and the assumed tide of construction workers from Christchurch will not eventuate.

    However, it may be that their Auckland employers do try and take a leaf out of the Christchurch playbook and decide to buy up lots of houses everywhere and turn them into construction worker housing for the interim.
    As happened in Christchurch post-2011 quake. After all many of their workers are now used to living jammed in like sardines in overcrowded housing, miles from work.
    But that risks further exacerbating the shortfall of housing/accommodation in Auckland.

    So anyone expecting the flood of surplus workers from Christchurch to rush to Aucklands aid, to plug the ever yawning construction/consent gap any time soon? Yeah right.

    In any case, consents ain’t dwellings, you can’t live in a consent. And not every issued consent results in new dwelling(s) in as a timely a fashion as people would like or assume.

    After all many of these consents won’t be “signed off” as delivered housing for 2-3 years. And by then the “housing deficit” will be ten thousand or more dwellings higher than it is today.
    Given we are building only 2/3rds of the minimum we need to cater for the current demand, every year we fall further and further behind in this race, and we have been for years.

    Yes, we’ll get there in the end. but how quickly, and at what cost to current and future Aucklanders is hard to fathom, but one thing is for sure – it won’t be any time soon.

    What is does show is we really do need a complete revamp of the building industry, and not just some tinkering around the edges like “land reforms” , or SHAs, but rather the whole process “from soup to nuts” needs to be redesigned for a 21st century Auckland.

    1. I think I read somewhere Greg that a surprising proportion of the rebuild workforce actually came from Canterbury itself -in the form of higher employee participation rate and a lower unemployment rate. If that is the case then that workforce might just fall back to normal employment ratios rather than shift 1000km north.

      Maybe Auckland should be looking at its own resources both in its labour and land supply markets to fix its housing problems.

      1. I couldn’t agree more that Auckland should look to itself to fix its housing problem, rather than relying on “imported” workers from Christchurch (who as you suggested, would probably already be living in Auckland if thats what they wanted to do) or overseas.

        And don’t forget its not just the builders, plumbers and bricklayers we’re talking about, there are a lot of supporting workers needed too to make them safe and productive “tradies” building the needed dwellings of all ilk.
        Not just the stand alone houses on the edge of the wops.

  2. Hmmm, the chart now shows a dispiriting bounce n detached dwellings in the supply growth, lord knows what the NIMBYs are on about; we’re still building lots of the wrong typology in distant locations…. meh

    1. Yes, there was a bounce in detached homes in January 2016 vs Jan 2015, and a slight decrease in apartments, retirement villages and the like. I’m a bit dispirited too, but at this point any new home is better than no new home.

      1. Each one of these houses is costing Auckland 2x as much as it needs to and sticking us further back into a hole. Each one of these additional houses takes investment potential for 3 apartments and wastes it.

  3. Many construction workers will look to move up to Auckland where there’s still plenty of demand for new housing.

    In Auckland there is high demand and high cost, the profit margins are small. Better to move to Tauranga or Hamilton, where there is increasing demand and much lower cost.

      1. The only “increasing” category is single dwelling houses in mostly exurb developments. There is no “high value” being delivered here, this is a pile on of the steaming proverbial and “a dispiriting bounce”.

      2. it really depends on who is capturing that increased value as contrasted with who is paying the higher costs.

        As I see it, right now its likely Fletcher and associated companies, and building service related “consultants” and “legal advisers” capturing a large part of the higher values to be had from the construction boom.
        Both here in Auckland, and in Christchurch.

        So Angus may be partly right when he says margins are slimmer for developers in Auckland than other places like Tauranga and Hamilton.

        Of course, that doesn’t mean that margins here are insufficient – it mostly means they’re just not as high as elsewhere, and money follows the path of least resistance.

        [after all why take on $1m worth of debt risk for $50K (5%) return in Auckland versus the same $50K return from those other places, from say $750K worth of debt – which mostly means a overall lower level of/less risk needed for the same $ return]

        1. Nope, it is much simpler than that, cost is being captured in land. Nimbys are making money.

        2. Is it Nimbys or speculators making the money from all these land value increases?

          Until a Nimby sells up then all they get is nothing from the increased land value. A speculator? – a very different story.

          A lot of the opposition from Nimbys I’ve read comes from the position that they don’t want ANY changes, including changes to the neighbours property that would impinge on them/their property/rights and they usually don’t want to sell up either.
          Thats hardly a recipe for creaming it, unless they only want those upzoning rights for themselves – but all the Nimbys I’ve heard complaining seme to only want no upzoning – them included.

          And what is a speculator? aren;t they merely someone with bigger pockets than yours [and probably no ute either] who can outbid you for that site and hold on to it until its worth him selling it to someone like you, to build on?

        3. Our nimby-tastic MUL constriction is so tight that land cost now exceeds land value. In this market an up zoning does not benefit the property owner as no one will buy their intact house for development. In this high cost environment the nimby can financially benefit most from halting development as this increases potential rental return on their property and adds to its price.

  4. When does the UP come into force? I wonder if we will see a bump after that. There could be a bit of development capital tied up in sites that aren’t worth developing until then.

    1. Which version?

      My expectation is that the initial plan whilst being important as a process long term won’t be particularly important as the second and subsequent rounds of alterations move to higher levels of density becoming the normal as opposed to the types of topology we see at the moment.

    2. Yes one would logically think that quite a lot of development might ‘activate’ once the UP is operative.
      Why develop now when the operative plans are usually extremely restrictive, and the UP is ‘hopefully’ a lot more enabling.

      1. Which elections? Local Body or General?
        I’d be more worried about next years General than this years local body elections on that score.

        The UP IHP is going to rule on what is or isn’t included in the UP, then the Auckland Council(ors) have to accept it/make that operative, there’s little scope for delay or slective implementation, even if they don’t like the dead rat they get – they have to swallow it whole.

        They can’t pick and choose. And Nick Smith as Minister for the Environment said they have to make the UP active this year as was required by the SuperCity legislation – “or else” [Nick Smith will put in commissioners to do his bidding].

        But even if that comes to pass, next year with a new [or the same old] Central Government in play then they could easily change the entire game: for better, or worse. Via “National Policy Statements” or RMA Act reforms or other tweaks to this and that.

        1. Auckland Council doesn’t have to simply accept of reject the Panel’s recommendations in their entirety. They can reject little bits and replace them with what they want. Each of those little bits they reject can be appealed. The bits they accept cannot be appealed. The problem for Auckland Council is they don’t have a lot of time to do it in so presumably they will get bogged down on the bigger debates.

    3. Right this minute, the Unitary Plan means uncertainty for a lot of developers. In some cases, they’ll be trying frantically to lodge for resource consent under the old rules. In others, they’ll be waiting for the new Unitary Plan rules and hoping, but not knowing, that they’ll be better. The council vote last week was a spanner in the works for that, although the bigger, better funded developers are also involved in the Unitary Plan hearings in a lot of cases.
      The only people who really know where they stand are the ones who own land already identified as a Special Housing Area, and who are pressing ahead with a resource consent, plan change etc on that basis. And even then, the SHA legislation will lapse soon, the new plan will come into effect, and those sites could potentially end up with yet another set of rules.

  5. Hopefully those builders etc returning from Christchurch will allow Auckland construction to move higher as it is quite disappointing to see that despite SHA, a massive housing shortage, not much builder demand overseas we are still building far less homes in Auckland than previous cycles.
    Another thing that the government should have in place now for next time there is a downturn/recession is a plan to keep the builders working so that they don’t leave or stop building and we end up with a situation like the GFC where not much was built in Auckland.

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