The reason why Auckland is facing the housing challenge it is can be summed up in two words – population growth.
The latest release of data by Stats NZ estimating the country’s population growth since the 2013 census states that Auckland’s population now exceeds 1.5 million people, and in a 7-year period between censuses the population grew by some 11%.
While Auckland’s growth in percentage terms is overshadowed by many other centres, in Auckland’s case 11% represents a massive increase in people of more than 100,000.
That’s equivalent of adding a population greater than that which lives in Palmerston North into Auckland in 7 years.
Over the past decade Auckland has absorbed more people than any other decade in its history.
Try as it might, the building sector cannot keep pace with the demand for homes even though the current construction rate is as high as it was during the 1970s building boom.
Everywhere you look there is organised upheaval as the planners and builders seek to upgrade roading and essential services, schools and medical facilities, and the public services a city the size of Auckland demands.
While frustrating, the current level of upheaval will ultimately give the City an underground rail loop, better major arterial roading, better water and sewage services, cleaner beaches and more effective public transport.
While we regularly read stories of people ‘fleeing the city’, the reality is Auckland acts as a magnet that is constantly drawing in people to it from overseas and other parts of the country.
Their reasons for relocating cover work opportunities, better quality of life and the opportunities such a major metropolis offers.
Auckland is where people in the 2020s will want to be.
It is the growth we see all around us which signals the Auckland housing market is set for a period of gradual growth through this year.
It is now nearly three years since Auckland’s last expanding housing cycle started to wind down, and since then sales numbers have been modest, in comparison to the highs of the last price cycle, and prices have held at the near record levels set in 2016.
The General Election this year may cause a temporary pause in activity, but the scene is set for a new housing growth cycle.
An aspect of the current Auckland housing market that has slipped under the radar of many, and one which could have a major impact on sales and prices in the coming months, is that of restricted choice for potential buyers.
We entered the new year with the lowest number of properties on our books for more than three years and unless there is an immediate inflow of new listings reaching the market, competition among buyers will only intensify, potentially quickly turning the market into a seller’s market.
My major new year wish list for housing would be to see an early easing in the deposit requirement for first time home buyers and those on limited incomes; an easing of the regulations around non-residents buying apartments off the plans (allowing more developments to get to the level of pre-commitments necessary to get them underway); substantial change to the RMA and building regulations that reduce costs and shorten construction times; and a comprehensive rework of the tenancy rules that works on the basis of creating rules which support ‘good tenants/good landlords’ and penalises ‘unacceptable landlords/unacceptable tenants’.
Another wish would be that in the lead in up to the election there are no radical, theoretical ‘answers’ from commentators and decision makers as to how the housing market ‘can be fixed’.
What we need is to build more homes, quicker, and work at holding construction costs.
No grand schemes please, simply focusing on the basics.