Nearly 100,000 homes have been built since higher-density rules began to change the look of Auckland – so does the city still have a housing crisis?
Estate agents, economic planners and would-be house buyers all have different answers to that question, but most seem to agree there’s been some much-needed improvement.
Auckland Council’s chief economist Gary Blick, who has tracked the higher building rate in a report for the council, said housing supply was showing good signs of meeting population growth, but affordability was still not great.
His report comes as the Government directs the council to allow buildings of at least 15 storeys near train stations close to the City Rail Link, and a wider intensification blueprint is being drawn up by the council.
Blick said the median price for a house in Auckland was now about $1 million, or 7.5 times the median household income. In 2000, houses cost about five times the median household income.
“If we still had a multiple of five, the median house price would be $680,000, not $1m,” Blick said.
The report shows the housing boom “hasn’t happened by chance”. It was the result of more flexible planning rules in the Unitary Plan that came into effect in late 2016.
What’s more, Blick said, the vast majority of consented homes had been built. The practice of single homes being replaced with terraced housing or apartments on the same piece of land meant that about 89% of new homes were net additions to Auckland’s housing stock.
The shift towards terraced houses and apartments reflected budget constraints and people’s preference for living closer to jobs, schools, public transport and other amenities.
Council research into the projected supply and demand for housing over 30 years found the Unitary Plan had the capacity for 900,000 homes, of which 650,000 were commercially viable.
A breakdown of the 100,000 new homes built over seven years showed numbers climbed from 10,200 in 2018 to a peak of 18,100 in 2023, driven by strong demand and falling interest rates.
Blick said people took on more debt, money flooded into the housing market, pushing up prices, and developers built a lot more houses.
By 2021, he said, inflation got away, interest rates rose steeply and dampened people’s demand and ability to take on debt. Consents eased to 14,000 last year, albeit still higher than pre-Unitary Plan levels.
“We do get fluctuations across the economic cycle… new homes took off like a rocket and then they cooled down a bit,” he said.
Looking ahead, Blick said the focus should remain on building new houses close to town centres and major transport infrastructure, such as the City Rail Link, but he acknowledged some people wanted to live on the city fringes.
The council and the Government have agreed on a new planning blueprint for the city, allowing greater housing density near major transport routes.
The council has already signed off on more density in the central city and has until October 10 to finalise a plan across the wider city.
As part of the negotiations, Housing Minister Chris Bishop has allowed the council to opt out of the previous Government’s directive allowing three dwellings of up to three storeys on most sites in Auckland.
Natasha Thirani and her husband Vivek, both 32, are close to buying their first home.
Mt Eden, where they rent an apartment, is a dream location, but it is too expensive for their budget of $850,000 for a townhouse with three bedrooms, two bathrooms, a garage and a bit of outdoor space.
They have been looking at properties at The Glade, a masterplanned community in Mt Wellington, but it’s a little beyond their budget and has the added cost of body corporate fees.
Natasha felt it was the best time to get into the housing market, with interest rates falling from 7% to about 4% and plenty of houses to choose from.
However, the experience could be nerve-racking and there were many pros and cons, she said. Her advice for other first-time buyers was not to max out their home loan.
“If you’re looking to buy your first car, you don’t go for a Ferrari or a Porsche. It’s the same when you are buying your first home. It is important you buy it as a first home and not a dream home,” she said.
Asked if the Unitary Plan was doing a good job and about the Government’s directive for greater intensification, Mayor Wayne Brown said the city’s population was set to grow by more than 250,000 over the next decade, more than the population of Wellington City.
“I’ve heard from a heap of developers who’re up for this growth and are prepared to deliver it. They’ve told us they’re on board to provide it in the right places.
“We don’t want growth just anywhere, but we certainly still need more of it. It will be focused where we have invested the most because that’s what makes sense,” the mayor said.
Blick said there were trade-offs with the Government’s directive for greater housing density, saying change could be difficult at times, but the city must be mindful of housing becoming less affordable over time, especially for younger people.
Auckland’s long-running housing crisis appears to have turned a corner on the supply side with the city’s largest real estate company, Barfoot & Thompson, reporting a glut of 6083 unsold homes at the end of May this year, nearly double the figure of 3013 in May 2016.
Managing director Peter Thompson said in April this year: “Buyer choice remains at an all-time high… through a combination of new builds reaching the market and existing properties.”
A survey of real estate agents by economist Tony Alexander this year found that FOMO (fear of missing out) has been replaced with FOOP (fear of overpaying), and that buyers were conscious of house prices falling after they purchased.
Derek Handley is the founder of Aera, a company specialising in helping first-home buyers from start to finish, including financial advice, mortgage brokerage and finding a newly built home.
He said right now, there was a lot of housing available in Auckland, and he could take a young couple and show them five houses across five neighbourhoods in an afternoon.
Auckland did not have a housing crisis, said Handley, it had a mindset crisis where people thought they couldn’t afford a home. He said a couple, aged about 30, could combine their KiwiSaver balances for a deposit on a new townhouse, costing between $600,000 and $650,000.
“It’s a hell of a lot more achievable than what people have been telling themselves over the last X number of years, and it may have something to do with there are so many more brand new homes available,” Handley said.
Councillor Richard Hills, who chairs the policy and planning committee, said it was great to see progress on the housing front over the past eight years, with many new homes closer to transport and jobs, and options for people at different stages of their lives.
Hills said this did not mean all the housing issues were fixed. There was an increase in homelessness across the city, rents were still too expensive for some, and many people, especially younger people, were finding themselves locked out of the dream of purchasing a home as the median house price was about 7.5 times the median household income, far more than 20 or 30 years ago.
Hills said data showed Auckland needed at least 300,000 homes for future residents over the next 30 years, and the sensible place was close to transport corridors and hubs such as rail stations.
“Aucklanders have invested in projects like the City Rail Link, so it makes sense for more people to have good access to it,” Hills said.
The final word goes to Blick: “Auckland’s housing story isn’t perfect, but it is a tale of improvement.”
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