For some time now we’ve been seeing housing consents set new records set again and again. In total, 16,656 consents were issued in the 12 months to the end of December, up 10% on the same time the year before. We’re also seeing new records for the types of dwellings being consented with 44% (7,285) of those consents being for townhouses compared with 39% (6,535) for single houses.
There’s a lot to celebrate and the Unitary Plan has certainly helped kick off significant development around the region. Yet at the same time, the housing crisis continues unabated and the records we’re are yet to make up for crater that occured from about the mid-2000’s through to the mid-2010’s that saw annual consents drop to just over 3,100.
There seems to be a couple of reasons for that drop. The first major drop in around 2004/5 seems to stem from the changes to the building act in 2004 which came in response to the leaky homes crisis and would have taken both confidence and capacity out of the market – with resource being diverted to fix up the stock we had. The second drop in 2008 was the impact of the Global Financial Crisis.
But just how much have these record levels of consents over the last few years eaten into our housing shortfall? Have they at all? There are some estimates around but with this post I thought I’d make my own.
For this I started by looking at Stats NZ estimates for how our population has grown between 1996 and 2020. Our total population has grown from 1.116 million in 1996 to 1.717 million in 2020.
I then focused that on looking at just the adult population as children don’t live in houses alone and Auckland’s adult population is growing at more than twice the rate of growth of children and so I think it gives a better representation of what’s needed.
The number of adults in Auckland grew from about 779,000 in 1996 to 1.277 million in 2020. There will various reasons for this growth, such as children becoming adults and immigration but that’s not really the point of this post. You can also see that annual growth below and has similarities to the shape of the consents graph above with with a peak in the early 2000’s and trough during the GFC before strong growth again.
Next I looked at census data on how many dwellings there were in Auckland based on data from the census. This showed we grew from about 380,000 dwellings in 1996 to 538,000 in 2018. To that we can add the number of Code Compliance Certificates (CCCs) the council issued through to 2020 to get an estimate for how many dwellings Auckland had as of the most recent population estimates. That suggests we have about 561,000 dwellings in mid-2020.
When this is compared to the adult population it shows that at the lowest, in 2001, we had one dwelling for just over every 2 adults in Auckland. That figure grew with each subsequent census and in 2020 it stands at nearly 2.3 adults for every dwelling. I suspect a decent chunk of this adult children staying at home for longer due to unaffordable house prices.
From this we can estimate that if we had the same ratio of adults to dwellings as we did in 2001, then in 2020 we should have about 636,000 dwellings. That’s means we have a massive shortfall of about 75,000 dwellings. Furthermore, if you look at how many dwellings are needed to support the population growth shown in the graph above, that shortfall is still growing. For example, about 11,000 CCCs were issued in the year to mid-2020 but Auckland’s adult population grew by about 33,700 meaning we’d need 16,800 dwellings to keep up.
Whether 2001 is the right year to base this on is certainly something that could be up for debate. I haven’t done anything to look at that in more detail but house prices were certainly more affordable then.
Finally, while there is not as much (public) history on CCCs, like there is for consents, what we do have suggests most new dwellings are completed within two years of getting consent and the majority of the rest being under five years. Another way of looking at this is to say the lag for reaching milestones is just over two years. This suggests that the record consents we’re now seeing will take about 26 months to flow through to completed homes. Whether that will be enough to help eat away at the shortfall will depend a lot on what happens with population.
Whatever happens, it’s going to take a very long time to clear that backlog even if population growth slows and we keep building at current rates.
Update: a couple of other graphs I was working on but didn’t originally include as we only have CCC data from 2013 onwards.
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The shortfall is approximately 0 according to Chris Darby.
Don’t perpetuate the racist myth that the housing crisis is because of migration. The important figure is nett migration and that is made up of immigrants plus returning Kiwi’s less emigration.
Nett migration during the Key years was about 270K. It actually fell in his first term and then rose sharply for a whole host of reasons. As for the 20% born overseas, NZ has always been a country that encourages immigration. That figure is not high historically. Migrants in the main add to our country and should not be blamed for an issue that has more to do with legislative and financial regulations that people arriving from overseas for a better life.
Yes, immigration is a wonderful thing, and it’s definitely not the fault of the immigrants, no matter what race they are, that we have not built the housing and infrastructure to keep up with it.
Conflating criticism of excessive immigration with racism is morally repugnant and counterproductive though.
The impact of excessive immigration in NZ has been extremely regressive, and because of that, inherently racist itself. Or for some reason, do those people not count?
Totally agree.
I detest the conflation of arguments for lower immigration with racism/xenophobia.
The racism was on the part of the people that allowed excessive immigration to occur. A Government that was more than happy to rapidly increase the population in a manner that adversely impacted the hopes and dreams of New Zealanders who didn’t have much money. The Key government simply didn’t care about increasing the GDP per capita and allowing people to get training, work and a home. They preferred to allow an influx of cheap labour that enabled employers to avoid capital investment and investment in training and enabled them to take even more profits as returns to capital rather than see the returns to labour rise. Those people are the racists. Shame on them, shame on the people who voted for them.
Agree Miffy. The benefits of high levels of immigration have gone mostly to big business. It’s helped suppress wages etc. This has been contrary to the wellbeing of people near the bottom of the heap in Aotearoa, who are disproportionately Maori/Pasifika
See elephant number 1.
https://thekaka.substack.com/p/three-lonely-and-large-elephants
The population growth mainly due to wrong Government Policy during John Key Government to adopt unlimited immigrants! NZ in the past ten years take in as least one million of immigrants and these immigrants main live in Auckland. Now every 1 in 5 people in NZ is immigrants. Shall NZ not stop taking in more new immigrants, the shortage never cured.
There’s nothing wrong of allowing lots of immigrants into NZ and we should allow a lot more in future. The only issue is we didn’t build enough houses and infrastructure to support it.
Some would say that its not so much the allowing of immigrants that is the issue, but rather the continuous and unsustainable growth of the human population. Personally if NZs population capped out at 5 million because global population stabalised I would say thats a good thing, but I fully accept that other people want to have large families.
The reality is NZ is doing so slowly on work, for example, similar kind of work in other country take a month, but NZ take a year. Look at the road construction between Auckland and Hamilton, it take 10 years but still working on, but if in China, it surely take less than a year. In US, one and a half! Don’t blame insufficient labor, only blame if someone wish is the mindset of those elegant Kiwis! Without reckon your deficiency, looking in so and so number is meaningless.
Hum
There are numerous reasons why it takes so long to build things in NZ.
For one with have the RMA and so it takes a long time to simply select the route, simple things like a tree or a snail can stop projects so its no easy task. You then have the government being largely driven by lobby groups and so you may have one that is for improving transport between cities who starts these things, and then you have another one that is anti-car who then cancels them. Often by the time you have gone through the options and come up with a route you get a change of government who then cancels it only to start it again from scratch 3 years later.
Next we only have so much money and so we can only build so much at a time, meanwhile the government will often only allocate half as much money as is actually required so years are spent redesigning to justify the price.
You then have the labour market which isn’t cheap and the construction industry that is only setup for the work they are doing. If we were building 100km of new expressway a year we would have a massive industry with massive machines, however in reality we only do a few km every year.
None of this really has anything to do with my post however.
The political hurdle for providing the houses and infrastructure is huge though. Just catching up with what we need now would require a huge increase in taxes and rates, or borrowing.
I believe National have used the situation in a cynical and deceptive way, and Labour has had to go along with it.
“Labour has had to go along with it.” Go along with the status quo or go along with the cynical and deceptive conduct? We should expect better for New Zealanders struggling to make ends meet and forge a lifestyle here regardless of who is in power, and our expectations should not change based on who is in office.
Richard,
Ha ha, you list out the points I gave in mind but didn’t mention in my message. Good and thanks. That’s all accuse why the work were so slow and still there. Change the mindset than you (not only you alone), than you may able to find solutions. Secondly, is the Governor know about these problems? If so, than why intake so many immigrants that they cannot digest?
New Zealand does not have a long term plan for sustainable population growth to factor in the side effects of a warming planet.
For years, central government, regional, district and/or city council population planning is basically being short term using the quick fix car based urban sprawl solution.
Those days are over, as New Zealand needs to do some crystal gazing to plan population growth over the next 30 years and what would be the upper limited would be New Zealand’s maximum population growth, that is environmentally sustainable, that can be feed from productive land and where will this growth be, the type of immigrants that can help New Zealand in skills, financial investment, etc that can cope with the side effects of a warming planet.
it is time that the bureaucrats in central government and councils to off their ‘here & now glasses’ and do some serious crystal ball gazing for the future.
No recent NZ government has had a policy of unlimited immigration, we have had a points based system since 1987.
The rate of immigration and migration had a similar range under both Clark and Key. https://www.stats.govt.nz/information-releases/international-migration-june-2020#
Net migration by calendar year (StatsNZ):
2001 31220
2002 60840
2003 41160
2004 13840
2005 11200
2006 16330
2007 10840
2008 12390
2009 18000
2010 -190
2011 -15930
2012 -10470
2013 17800
2014 46780
2015 59140
2016 62230
2017 52520
2018 49360
2019 69350
While there was a net outflow after the GFC, it looks like the numbers since 2014 are much larger than most of the 2000s. And what’s up with 2019???
2019, existing citizens / PR’s coming home. It will be interesting to see 2020.
2020: 44100 (provisional)
Was released by StatsNZ this morning: https://www.stats.govt.nz/news/annual-net-migration-down-in-2020
Using the provisional 2020 number that is 401280 in the last eight years. All done without any plan of where they might live other than bidding up existing house prices and pushing incumbents into overcrowding and homelessness.
I thought bidding up existing house prices was the plan?
Pushing incumbents into overcrowding and homelessness is just an unfortunate side effect. But that is apparently considered an acceptable trade-off.
Net figure???
How? People in minus people out? It’s only cheating number! Are you sure people out are infinite and most important, are people out MUST sell their houses? But people in to buy a house is definite. House shortage come!
Massive problem. On a per capital basis I think our immigration is the highest in the world?
Needs to be at least halved, permanently.
How about doubled (alongside a massive home building programme)
How about stopped completely.
With a massive building program so we can house the people living under trees.
Matt L, you are kidding right?
If not, it’s a worry.
In fairness the most outlandish suggestion in this short thread is stopping immigration completely. With emigration continuing this would result in our population falling.
There are definitely problems associated with rapid growth but not as much as falling populations.
Not when you consider the end result of continuous population increase jezza.
What is the end result of continuous population growth? It’s such a broad statement it’s hard to see where you are going with it.
It basically is a result of bad planning and NIMBYism. Yes, capital gains could have an affect but really is comes down to supply and demand.
Unless the government is going to get involved directly in house pricing, which is incredibly politically risky so they won’t, then they need to support rapid intensification. Auckland’s Unitary Plan has helped increase supply slightly, but when those houses are selling at the same high market prices then they need to keep on pumping them out. It will take a number of years to fix.
There really is a good opportunity to encourage intensification around alternative transport networks (eg shared EV schemes, bus/train/light rail and cycling). They really just need to sort themselves out and do it. They move way too slow.
House prices are the result of regulatory mess where developers hands have been tied behind their backs and I think people are getting sick of it.
I agree with you.
Great analysis Matt. Worrying that despite the huge surge in building consents the housing shortfall is still growing.
That 2005-2010 drop in consents has left the region an incredibly horrible legacy.
Was that the effect of the leaky building crisis that exploded in 2005?
Matt, AC has a monthly housing update on their knowledge Auckland website which included CCC time series. Suggest you have a look at that. In terms of the shortfall I’d make two comments: household formation is, I think, the better comparison (kids live i houses however when a family has quadruplets it doesn’t require a house immediately). Secondly any shortfall could be framed not as an “underlying demand” but also as effective demand which is, as I understand it, appropriate for when a purchasers work in a constrained market.
Yep that series is exactly what I used but it only goes back as far as 2013.
Presumably the ratio of building consents to CCCs is reasonably stable, so you could make a fair assumption about CCC totals in earlier years.
Great analysis, really well thought out. The only thing I would consider as well to the rising prices is that the modelling done is based on the underlying thought that housing is for shelter and will only be used for that purpose. We know that housing is also another investment class for a lot of people.
So the demand is not just population based, it is also based on investment appetite because governments progressively have not tackled the issue of capital gains. Housing as an investment has enjoyed an advantage to other classes because its scope for tax is not high.
How many houses are bought for the purposes of not being occupied in? How many houses are empty right now? Stats we don’t have but something I feel we are naively underestimating both. According to RBNZ monthly lending data, about 20% of new lending every month is to investors. There is a supply issue, definitely systematic issues on the demand side.
The main issue here, as explained by Matt is that there is actually not enough housing here, not investment. The ban on overseas purchases of New Zealand homes in 2017 did nothing to stop the house price rising.
Rodney Dickens (ARA.co.NZ) did some work on this around 2011 and found there was some elasticity around occupancy levels during the GFC – one would suggest as a result of both demand due to economic conditions and the collapse of the building industry in its aftermath. I understand long term trends still indicate more singles and couple households at one end, and larger households at the other.
At least we’re starting to build more appropriate housing at one end but yes, we have a long way to go.
http://Www.sra.co.nz it should be
“house prices were certainly more affordable then”: affordability is more than just price. I wouldn’t be surprised if the inflation adjusted repayments on a 30 year 90% mortgage haven’t changed a huge amount since 2001 due to the massive decrease in interest rates. What has changed of course is the amount of the deposit required.
Ok
Council were massively overstating CCCs, they have now corrected that.
They were?
Another key reason why apartment consents fell away in 04/05 was the plan change by the old Auckland CC that introduced minimum floor areas etc etc.
They really should have done that, some apartments, those that were built around the turn of the century are really too small.
Multi generational living and large household sizes is common among some of our major migrant groups.
More young adults are staying at home, and at least anecdotally it seems that more people are cramming into flats, because of affordability issues.
I suspect average occupancy is higher than 2 5 in Auckland.
I’m surprised its that low too. I was recently a student and live in a flatting situation, 4 people in a 3 bedroom place. 2.5 per dwelling seems quite low, especially considering that there are a lot of houses with at least 3 bedrooms, plenty with more, and not that many people live alone to balance that out.
a lot of the population isn’t made up by adults.
Given it’s based on the total population and the number of dwellings, two figures that are reasonably well known, I doubt it varies massively from Matt’s calculation.
I do wonder how accurate the population count is. I would imagine there is a fair amount of unofficial squatting.
Stats use a number of different methods to calculate the population. For the ratio to go from 2.3 to 2.4 there would need to be an extra 50,000 people hiding in Auckland. I’m not convinced in a developed nation the estimate of population is out by that much.
Incidentally I just noticed Matt’s figure of 2.3 is the number of adults per household. Looks like the number of people per household on average is 2.95.
I am not so confident in Stats NZ…
Also, the undercounting on Census night is fraught, especially as it’s all online now. How confident can we be, especially with so many people in Auckland on Work Visas?
I wouldn’t be at all surprised if the count was out by circa 50k.
But it’s impossible to know.
The Census population count is not the official population count.
As a developed island nation we have a very accurate idea of the population as we know every border movement, every birth and every death.
For there to be 50,000 more in Auckland, there would have to be 50,000 less elsewhere in the country. There is no way this would not have been noticed by either Watercare, Vector or Transpower.
I remember that back in 2000 the issue plastered all over the news was how the ratio of retired people every working person had to support was becoming unsustainable. The issue the population boom has solved is that the increasing median age has been stopped at 37 years old. At least the overhead of the pension is no longer increasing
The issue hasn’t been solved at all. It’s a viscous cycle of ever increasing young people paying for ever increasing retired beneficiaries.
Ah yes, the population ponzi.
We need more working age people to pay for the retirees, then we’re going to need even more working age people again to pay for them when they retire.
Seems like voters from both left and right embrace the theory, despite the fact that it’s the height of rank stupidity on a planet with finite resources.
Some good analysis and overview of what has happened over the last 20 years. Speaking from experience I can confirm a huge handbrake on supply is the difficulty and expense of getting both Resource and Building Consents. This issue is obviously well documented. My real concern is that the proposed changes to the RMA will have no material effect. We now live in a world of expected consultation on all matters, especially environmental and iwi related. There is no way those issues will be wound back. Also, Urban Design is not going to be wound back, so I just can’t see how we are going to get out of this mess. It’s a real problem especially with a lame duck Auckland Council which has no obvious leadership on this issue (yes they have delivered a unitary plan which allows intensification but struggle to provide consents) and a government who despite doing well on a number of fronts have no idea how to increase housing supply.
I agree with you. There should not be individual consultation on every project, we just need to build build build.
The effects of a warming planet is going to force alot off unpopular decisions. The days of sitting on your hands and hope the problem will go away are over.
Sorry Matt but this is an extraordinary leap of logic 🙂
“From this we can estimate that if we had the same ratio of adults to dwellings as we did in 2001, then in 2020 we should have about 636,000 dwellings. That’s means we have a massive shortfall of about 75,000 dwellings.”
What makes 2001 the optimal point to choose? I could choose another year and say Auckland is heading towards a housing surplus.
Does the type of dwelling matter or are we just short “dwellings”?
How is any shortfall distributed? Do we have increased floor area for some coupled with overcrowding for others?
Is there a mismatch between the type of dwelling being constructed and the latent need for dwellings?
Do we have a housing crisis? Yes. Is it due to lack of supply? The question is too simplistic to have a yes or no answer.
Agree.
I think I will find it difficult to take this website seriously anymore when it’s lead writer advocates for a doubling of our already world leading levels of immigration.
I assume it is because he thinks it would provide big support for PT, which it might do to some extent. It woukd also clutter our roads much further, seriously worsen our housing issues, and increase inequality.
And make it impossible to achieve our climate change goals.
Yeah that too.
I don’t get it.
No Jon.
The greater the population the deeper the cuts each of us have to make. Simple.
It makes it easier to achieve climate goals. At least, if those migrants come from East Asia, North America or Europe where the emissions per capita is much higher than in New Zealand.
The best thing New Zealand can do for climate is to take on migrants from high than average emission countries while continuing to have lower than average emissions. As noted above our emissions are from agricultural exports, which aren’t based on population, while one of the main drivers that is population based (electricity consumption) is almost entirely renewable in NZ. That leave our transport and construction sector to further improve.
Taking on migrants combined while increasing sustainable housing and transport is exactly the right approach.
That’s not where Matt L wants the migrants from though.
He clearly has a brain, so i can only assume his love for immigration is because he’s so woke that he never wants to be viewed as the kind of person who would oppose immigration (racist,deplorable etc etc)…therefore in his mind it’s something to be maximized.
That is why New Zealand needs to do some crystal gazing to plan population growth over the next 30 years and what would be the upper limited would be New Zealand’s maximum population growth, that is environmentally sustainable, that can be feed from productive land and where will this growth be, the type of immigrants that can help New Zealand in skills, financial investment, etc that can cope with the side effects of a warming planet.
it is time that the bureaucrats in central government and councils to off their ‘here & now glasses’ and do some serious crystal ball gazing for the future.
Give me a break. Ever been to Sweden? It has about double our population at just over 10M. Again like NZ the density is not that high with one main city , a couple of other largish ones, and then smaller regional cities like NZ. Despite the fact it has double our population, you’ll notice if you travel around it there is still a lot of rural land. It doesn’t appear to be any more populated than NZ is. We could easily fit twice the number of people in here and we would still have plenty of farmland and nature.
Honestly I am sick and tired of hearing the whole “Auckland is full, NZ is full” BS. And many of those immigrants bring skills and money that is in turn invested into this country. But of course all many Kiwis see are the costs, not the benefits. I fully agree with Matt. It’s not an either or situation.
Yeah, and I’m sick of the whole NZ would be soooo much better if we just had 10 million people bullshit.
Guess what Simon? Auckland is passed full. That’s why people are living in cars.
It’s called an alternative viewpoint, which is very different to bullshit. You have a view that the current population (or a bit smaller) is right, which is fair enough but you haven’t provided an argument for this yet.
People living in cars isn’t an argument, all this shows is we haven’t built enough houses for our current population.
Incidentally I don’t think NZ would be soooo much better with 10 million people, however I’ve yet to see a valid argument for why it would be worse.
‘It’s called an alternative viewpoint, which is very different to bullshit.’
That’s true. Perhaps you could remind Simon of that.
‘People living in cars isn’t an argument, all this shows is we haven’t built enough houses for our current population.’
Really? Not having enough houses for our current population seems a pretty good argument to me.
‘Really? Not having enough houses for our current population seems a pretty good argument to me.’
What nonsense! Never heard such a ridiculous argument. We already have a massive housing shortage, you going to stop people giving birth and kick anyone out of Auckland that rents? Technically we have enough houses for the population so anyone without means Auckland is too big. Move to the Countryside mate if you don’t like immigrants..
You seem angry joe.
Would you like a hug?
Not from you, you’ll probably drive me to the Bombay Hills and boot me out of Auckland.
I think the upper limit of New Zealand’s population would be 20 million spread across all 16 regions would be sustainable to cope with a warming planet. This would require intensified environmentally friendly urban planning and development around public transport, walking and cycling and an occasional non fossil fuel power car using manufactured prefabricated dwellings.
You don’t seem to be thinking this through Kris.
Imagine the carbon emissions of building all the things to accommodate a 4x increase in population.
Then imagine the 4x increase (more because we’ve now spent all and more of our allowance on accommodating the 4x increase) in cuts to our own current emissions.
It’s not a per capita system we’re working with here. It’s an overall game.
and I’m sick of people saying ‘Auckland is full’ when its literally single level housing block to block 1km from the CBD. People live in their cars not because Aucklands too full but because there isn’t enough housing for current demand, don’t confuse that with your xenophobia.
I don’t know why we don’t have a huge building boom right now, possibly because of NIMBY officials in the current government.
Maybe we would rather live in that predominantly single level city that is growing slower.
The only people who have rights in this debate are the current population of Auckland, current NZ Citizens, and unborn children/future generations of both.
We don’t owe anything to the 4bn people who would want to move here if they could, they’re not a factor in this debate so why should we build for them?
The focus needs to be on per capita living standard growth for those here now.
How big is our housing crisis?
Extreme.
“if we had the same ratio of adults to dwellings as we did in 2001”
Matt, can you explain why you believe that is something to aim for?
As he said in the post, it’s comparing to the point with the lowest ratio of adults to dwellings.
Yes – I agree; without some context its hard to know why this year and figure has been chosen?
That year was a census year so there was data for that year. However the choice of 2001 as the baseline does seem to be arbitrary and unscientific.
Kia ora katoa
Auckland overall remains relatively low density, and could accomodate many more people through a well-planned (big caveat) programme of densification, so that it resembles more a network of urban villages organised around several large nodes (the biggest of these being Auckland city centre). These villages need to be linked by reliable high quality public transport. This model is very different from the current somewhat haphazard approach to intensification, which is very focussed on the isthmus. Meanwhile Auckland continues to sprawl north and south, and inequity is reinforced.
Purely from a climate perspective, emissions are already comparatively low in the isthmus,esp close to the city centre, so the current approach is a poor emissions strategy. Emissions reductions will come from enabling new and existing residents to experience 15 minute communities across the land area of Auckland.
More generally, New Zealand needs to plan for a much larger population over the next 50 years. There is a real risk that climate change will render parts of Australia’s eastern seaboard close to uninhabitable over that period. Large parts of Asia will experience storm surge and flooding. Our population is likely to grow massively as a result.
Plans for intensification of existing cities now need to lay the seeds for this to occur in a healthy way, and they need to clearly protect heritage and green space, otherwise both will be lost in the rush. We need to embed a strong Maori voice in our systems now so that Maori are equal partners in working out how to deal with this challenge.
Exactly right – could not have put it better.
My first instinctive reaction is ‘fuck that!’ I guess we can have our own version of 501 rejects at least.
We should be planning for an influx of Pacific Islanders though.
Yeah, I’m f*cked if we should let in a single aussie when they’ve been burning and exporting coal like mad for the last 50 years.
If that’s the dystopia we’re headed for, I’m off to live in Wanaka or something.
Auckland Council or even the Government can use Section 16 Part 2 of the Public Works to acquire brown field land around Auckland for intensified environmentally friendly urban development using manufactured prefabricated construction, instead of the current urban sprawl that is being used in Auckland.
The government has been given mandated by voters to sort out the housing crisis, so I don’t to much criticism by voters other than mimbies and land bankers for the government to use Para 16 (1) Part 2 of the Public Works Act.
Unfettered immigration is also arguably a treaty breach – I’m sure Maori didn’t sign up for multiple waves of additional colonization subsequent to the one that dispossessed them. It’s also them who are most affected by the downward wage pressures induced by high immigration.
The inevitable result will be the dilution of Maori down to such a small proportion of the population, that the fledgling bicultural constitutional setup we have will become a red herring.