Peter Thompson: Attaining world class status creates challenges for Auckland

Peter Thompson, Managing Director, Barfoot & Thompson
Peter Thompson: Attaining world class status creates challenges for Auckland

Data from Statistics NZ show that in February close to 800 new building permits were issued for Auckland, the highest number in any month for more than a decade.

While excellent news in itself, it underlines just how challenging it is for Auckland to get ahead of the housing shortage it is currently in.

A few weeks earlier Statistics NZ told us that in February overseas migration alone added a further 3000 people to Auckland’s population. Based on the average household in Auckland being 3 people, it means that those new arrivals will require in the order of 1000 additional homes to house them.

SEE ALSO: Peter Thompson: Auckland’s tough road to the top

While a strict comparison is not valid as permits are not completed accommodation, the consents approved came up a 200 homes short of what is theoretically required.

Right at the moment housing construction cannot get ahead of the number of people arriving in the City, and that can only mean one thing – the supply shortage will only get tighter.

While many factors contribute to the price pressure on Auckland housing, shortage of supply alone is likely to ensure that over the short term prices will not decrease.


Auckland in league of its own


In recent years many commentators have made the point that in terms of house prices Auckland is now out in a league of its own and is closer to Sydney and Melbourne than other New Zealand cities.

A study by the research organization Motu may well have captured the precise moment this change occurred.

The research was undertaken with support from the Ministry for Business Innovation and Employment, and set out to answer the question whether New Zealand’s and Australia’s housing markets were in fact one or separate markets. The researchers studied prices in 16 cities (8 in each country).

The study’s conclusion was that there was a “weak form of single market” across the countries and it was the same permanent factors that affected price increases in all 16 cities.

It grouped the cities into three historical groups

Price Leaders – Sydney, Melbourne, Brisbane, Adelaide and Canberra

Price Followers – Auckland, Wellington, Perth, Hobart and Darwin

Price Laggards – Christchurch, Hamilton, Tauranga, Dunedin, Napier/Hastings and Palmerston North.

What I found interesting is that around 2012 Auckland shot ahead of its fellow “price followers” and was registering prices which would see it reclassified as a “price leader”.

It supports the contention that Auckland has truly become a leading world city, and that the material gap that has appeared between prices in Auckland and other leading New Zealand cities may well be here to stay.

The full report can be found at and is titled “Two Countries, 16 Cities”.


Young Aucklanders' hearts still set on home ownership

Auckland’s emergence as a world city brings with it many positive aspects for its citizens including work prospects, entertainment and lifestyle.

The converse of this is rising house prices, and this is particularly challenging for those seeking entry to the market for the first time.

There is little research based on what impact this is having on first time buyers in the Auckland market, so to fill this gap we commissioned our own research into the challenges they face.

We interviewed 500 respondents between the ages of 18 and 34, and the confidence level for the research is at the 95% mark.  Then we published their attitudes and intentions in two separate papers.

In summary, the research showed that the house ownership dreams of young Aucklanders bear a striking resemblance to those of previous generations and that in spite of mounting challenges, young Aucklanders still have their hearts set on home ownership.

Like people who are moving to Auckland from other parts of New Zealand and from overseas, our young people want to continue to live in Auckland.

SEE ALSO: Peter Thompson: Auckland’s tough road to the top

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