We continue our Auckland real estate series with experts saying it remains a good time to sell.
A leading real estate executive says he hopes the new government can overcome Auckland's housing crisis but doubts it will be possible, at least in the short-term.
Peter Thompson, Managing Director of Barfoot & Thompson, says Auckland's population is expected to push over the 2 million mark by 2020 and the city is likely to need at least 30,000 new homes in that time - so the desire for houses in Auckland and the motivation for vendors to list their homes remains.
"Although a lot of new homes and apartments are being built now, in recent years Auckland has been building only about half the number it needs," he says. "We are not going to get that number (30,000), not in today's environment where the lending rules have been tightened and we have a shortage of skilled tradespeople to build them."
Most observers believe the government's other new initiative - a ban on foreign buyers - will have little effect. Precise numbers have always been hard to identify but some reports place national sales at 1500 a quarter or about 6000 a year.
Similarly, a recent Herald story revealed the number of homes for sale nationally has dropped by almost 50 per cent while prices rose almost by 50 per cent in the past decade - a pointer to the old supply-and-demand equation which most experts say will not alter in the near future.
Thompson says the new government's KiwiBuild programme - it is promising to build 100,000 affordable homes for first home buyers within 10 years and introduce a special KiwiBuild visa to fast-track the hiring of overseas workers - is a good initiative.
The programme, announced by new Housing Minister Phil Twyford, is expected to gradually ramp up over the next three years. There are plans to build medium-density townhouses and terraced housing for $500,000 and under and stand-alone houses for $600,000, mostly on Auckland's fringes such as the northwest and the south.
Harcourts chief executive Chris Kennedy was recently quoted as saying Kiwibuild was an ambitious plan that as yet did not have the workforce numbers to make it happen - and even if it did, he said, 100,000 was still not enough to address the shortage.
Thompson says: "I seriously hope they can do it but with the Reserve Bank having imposed loan-to-value (LVR) restrictions, banks tightening their lending criteria and the shortage of builders at least in the short-term - these things don't help."
He would recommend the new Labour-led government ease the LVR restrictions for first home buyers (they need a 20 per cent deposit while investors are asked for 40 per cent).
"They were the right thing to do at the time they were introduced but they are now having the effect of locking young people out of the market," he says.
Thompson's comments come as concerns over the housing crisis, particularly in Auckland, continue to heighten within the construction and finance sectors.
• In April Westpac's housing property analysis predicted Auckland's population (currently 1.4 million) would increase by almost 300,000 in 10 years and require up to 100,000 new homes
• The NZ Institute of Building says 56,000 more skilled workers are needed in the construction industry by 2022 to meet demand
• Statistic NZ figures released in October showing 80 per cent of the country's 4,600 construction firms have vacancies
• Civil Contractors NZ say not enough people are being drawn into the construction industry
However Thompson believes it is possible future demand will ultimately be met as a lot of new homes are being built in places like Hobsonville, Westgate, Dannemora and Takanini.
There has also been plenty of activity in apartment construction throughout the city.
"People have to appreciate it takes about three years from planning to completion; an apartment complex goes through stages of design and consent before construction can begin," he says.
"Even then there is a large amount of work that takes place underground and which seems to take forever before people start to see any progress.
"If we go back three years, then we are now at the stage of being about 12 months away from the completion of a whole bunch of apartments - I think in this regard we are keeping pace, it's just that people can't see it yet.
"Driving around Auckland recently, I noticed the number of cranes on the skyline - that's where activity is really at and, in the long-term, I think we will be close to meeting future demand."
The construction of apartments in the city was highlighted in August in a report released by property consultants RCG. It said almost 6000 apartment units and terraced residences have been built in Auckland since 2012 with 7600 new apartments and townhouses under construction and a further 3300 units being marketed.
Thompson says the Auckland Unitary Plan is also trying to encourage the development of three-and four- storey apartment complexes in the suburbs.
"So far there has not been a lot of uptake with this concept except in places like Hobsonville and Westgate which are prime examples," he says.
"A lot of developers would build these if they could get access to finance - and I think it would help in meeting demand if they were given some assistance in this way."