Auckland apartment boom won't last, according to new report

Auckland apartment numbers are booming. Photo/Richard Robinson

Auckland apartment building is booming, with 2700 new units rising in the city this year and a further 3300 under construction due to be completed next year, according to a new report.

These figures are well up on the 1650 units completed last year, but there are strong indications this trend won't last indefinitely.

A new MarketFlash report from Real estate specialists CBRE finds that while there are big numbers of new apartments under construction, it's likely the building boom will slow down.

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"Despite strong growth in the level of building consents to date, it appears that changes in the development market environment mean that continued growth is not sustainable," the report said.

According to the report, there have been no CBD or fringe launches since September 2017 - indicating a significant slowdown over the past 12 months.

"The CBD market has been particularly quiet, with just two projects launched to market during the past 18 months," the report said.

The report said that the size of the current pre-construction pipeline is fewer than 2000 units - the lowest it has been since 2014.

"With more than 3300 units due for completion in 2019, there is serious potential for the pipeline to shrink further unless there is a material increase in new project launches," the report said.

The report noted that Government actions in regard to investment, rental market regulation, the effectiveness of the Kiwibuild programme and various other initiatives will play an important role in turning this around.

In related news, the RLB Crane Index out at the end of last year showed cranes on residential sites dominated the construction sector: 56 cranes or 46 per cent of those in commission were on private residential, student housing or aged-care projects.

This year's first quarter RLB survey showed 125 long-term cranes up nationally, of which 83 were in Auckland, 13 in Christchurch and 9 in Wellington.

"Auckland continues to dominate New Zealand skies with 83 cranes erected, accounting for 66 per cent of all cranes counted. 33 new cranes have been erected in the Auckland area, and 23 removed from projects that are nearing completion," the crane study found.

The residential sector contributes the largest amount to the crane count, with 48 (57 per cent), although this has seen a decrease of two cranes.

Auckland's residential sector cranes accounted for 89 per cent of all the residential cranes in New Zealand and 38 per cent of all cranes nationally, the March report said.